Tag Archives: Everything bubble

Doug Casey on Whether the “Everything Bubble” Has Finally Found Its Pin

Posted on May 19, 2022 | Leave a comment

Sneak peak: it has. From Doug Casey at internationalman.com:

International Man: Recently, large tech stocks lost over $1 trillion in value in just a few days. Many of these companies have been trading at insane earnings multiples for a long time.

Has the bubble finally popped?

Doug Casey: It actually started popping about a year ago—but now people are starting to notice that lots of these stocks are down not just down 50%, but 75%, and 90%.

Several classes of stocks are getting hurt particularly badly. One is the zombie companies that took advantage of low-interest rates and overleveraged. They borrowed a lot of money in order to pay dividends and buy back shares. The borrowing had little to do with growing the actual business. Now they can’t pay back the debt they’ve taken on since interest rates have gone up.

Continue reading→

Leave a comment

Posted in Business, Currencies, Debt, Economics, Economy, Financial markets, Government

Tagged , ,

Pipe Dream Economics, by MN Gordon

Posted on September 17, 2021 | Leave a comment

No matter what economic contingency or calamity presents itself, you can always borrow. From MN Gordon at economicprism.com:

Fiscal policy, as opposed to monetary policy, is more readily understood by the average working stiff.  Income taxes, budget deficits, the national debt.  These are all tangible things people can grasp a hold of, if they care to.

The consequences of zero interest rate policy (ZIRP) or quantitative easing (QE), however, are less obvious to the casual observer.  They may experience the wild booms and busts of central bank caused price distortions, yet never connect the dots back to the Fed.  Some may falsely condemn capitalism.

The industrious wage earner may also find that, despite working harder and harder, their lot in life never improves.  It may even regress.  Still, many won’t recognize heavy handed monetary policy as factors for their disappointment.

The recent college graduate making a subsistence wage at a franchise coffee shop, and buried under $50,000 in student loan debt, may be deeply aware that something is radically wrong.  How come the cost of school is at such disparity with the value it provides, they may ask?

Nonetheless, they won’t likely connect the bubble in student loan debt, or the massive building boom on college campuses, to the Fed’s mass credit creation machine.  However, they may contemplate the broken promises that led them down such a futile path.

Obviously, one can’t assign all liability for the broad population’s financial stagnation to the Fed.  Lethargy and sloth certainly play a hand in a person’s financial trajectory.  So, too, industriousness and ingenuity can overcome ZIRP.

There are many examples of smart and ambitious fellows who’ve succeeded in the face of the obstacles coming out of Washington.  Swimming upstream hasn’t bothered them one bit.

Continue reading→

Leave a comment

Posted in Business, Collapse, Debt, Economics, Economy, Financial markets, Governments, Media, Politics

Tagged ,

Please Don’t Pop Our Precious Bubble! by Charles Hugh Smith

Posted on September 9, 2021 | Leave a comment

Trees don’t grow to the sky and financial bubbles pop. From Charles Hugh Smith at oftwominds.com:

It’s a peculiarity of the human psyche that it’s remarkably easy to be swept up in bubble mania and remarkably difficult to be swept up in the same way by the bubble’s inevitable collapse.

Allow me to summarize the dominant zeitgeist in America at this juncture of history: Grab yourself a big gooey hunk of happiness by turning a few thousand bucks into millions– anyone can do it as long as they visualize abundance and join the crowd minting millions.

Beneath the bravado and euphoric confidence in our God-given right to mint millions out of chump change, a secret plea lurks unspoken: please don’t pop our precious bubble! The big gooey hunk of happiness available to all depends on one special form of magic spell: If we don’t call the bubble a bubble, it won’t pop.

And so Wall Street shills spew endless “research” (heh) proclaiming that the forward price-earnings ratio of 21.1 will only slightly exceed past norms, and so on–in summary: If we don’t call the bubble a bubble, it won’t pop.

What differentiates this bubble from the 1720 South Seas Bubble, the 2000 dot-com bubble or the 2007-08 housing bubble is: this bubble includes every asset class and has sucked the entire populace and economy into its magic maw.

The bubble has swept up housing, stocks, junk bonds, commodities, cryptocurrencies, NFTs, and numerous collectibles–the bulk of America’s household assets are now firmly lodged in the maw of the Everything Bubble.

Continue reading→

Leave a comment

Posted in Business, Collapse, Debt, Economy, Financial markets

Tagged

Is Anyone Willing to Call the Top of the Everything Bubble? by Charles Hugh Smith

Posted on September 7, 2021 | Leave a comment

Charles Hugh Smith is bravely calling the top of the everything bubble for sometime this month. Many of us won’t be too surprised if he’s right. From Charles Hugh Smith at oftwominds.com:

Can extremes become too extreme to continue higher? We’re about to find out.

Is anyone willing to call the top of the Everything bubble? The short answer is no. Anyone earning money managing other people’s money cannot afford to be wrong, and so everyone in the herd prevaricates on timing. The herd has seen what happens to those who call the top and then twist in the wind as the market continues rocketing higher.

Money managers live in segments of three months. If you miss one quarter, the clock starts ticking. If the S&P 500 beats your fund’s return a second time because you were bearish in a bubble, your doom is sealed.

When the bubble finally pops and everyone but a handful of secretive Bears is crushed, the rationalization will cover everyone’s failure: “nobody could have seen this coming.”

Actually, everyone can see it coming, but the tsunami of central bank liquidity has washed away any semblance of rationality. My friend and colleague Zeus Y. recently summarized the consequences of this decoupling of markets and reality:

“I used to be with the Bears until the uncoupling was complete when the Fed started guaranteeing non-investment grade junk bonds. At that point, any semblance of sanity, much less probity, much less integrity was gone. Rinse and repeat with digital dollars going into the tens and even hundreds of trillions of dollars.

For two decades we fiscal sanity-ists have been assuming SOME baseline reality. I see none in sight and still plenty of assets to plunder and pump and still resources to suck and suckers to shake down. The system is running hot and wild on its own algorithms, and actual people are lying back and simply lapping up the “passive” income created by delusion-made-reality.

Continue reading→

Leave a comment

Posted in Banking, Business, Debt, Economy, Financial markets, Governments, Investing

Tagged ,

Here’s How ‘Everything Bubbles’ Pop, by Charles Hugh Smith

Posted on May 10, 2021 | Leave a comment

The bubbles won’t pop all at once, but once they get going, it should be a wonder to behold. From Charles Hugh Smith at oftwominds.com:

But weirdly, and irrationally, bubbles pop anyway.

At long last, the moment you’ve been hoping for has arrived: you’re pitching your screenplay to a producer. Your agent is cautious but you’re confident nobody else has concocted a story as outlandish as yours. Your agent gives you the nod and you’re off and running:

Writer: Two guys start a cryptocurrency as a joke to parody the crypto craze, and they name it KittyCoin. It goes nowhere but then the greatest speculative bubble of all time takes off, it’s the dot-com and housing bubble times 100 but in everything, and within a couple months the entire economy is dependent on this bubble, and the bubble is dependent on KittyCoin, which has shot up 15,000 percent in a few weeks. A celebrity CEO who’s been promoting KittyCoin is invited to host a failing TV variety show, and now the whole economy depends on KittyCoin soaring even higher.

Producer: So it’s ‘The Big Short’ plus ‘Network’.

Writer: Something like that, only zanier.

Producer: I get the zaniness but it’s so implausible — it’s preposterous.

Writer: It’s an absurdist comedy.

Producer: But it ends with everyone being wiped out.

Writer: OK, a tragi-comedy.

And here we are, in the Greatest Bubble of All Time (GBOAT) hanging on the thin thread of speculators rotating out of one bubble into another even more improbable bubble. If there is no heir-apparent for the rotation, then players rotate back into an asset that already reached bubblicious heights and is awaiting the next booster.

The Everything Bubble is one for the ages, but alas, even the most glorious global Tulip Bulb manias crash back to Earth. So how do Everything Bubbles end? Like every other bubble ends:

Preposterous moves to implausible which moves to plausible which moves to inevitable. In other words, bubbles inflating to even more outlandish valuations are no longer merely plausible, they’ve become inevitable: the Federal Reserve will continue printing money forever, Americans have trillions of dollars in stimmy and savings they’re itching to spend, and so on.

Continue reading→

Leave a comment

Posted in Banking, Business, Collapse, Currencies, Debt, Economics, Economy, Financial markets, Governments

Tagged

We’re in a Bubble that’s Too Big To Fail, by Mark E. Jeftovic

Posted on March 15, 2021 | Leave a comment

Keeping the bubble inflated requires ever-increasing injections of fiat debt, but sooner or later not even those injections will keep the bubble from popping. From Mark E. Jeftovic at bombthrower.com:

I’ve been hearing the phrase “Everything Bubble” come up more often lately. This isn’t a new phrase, Graham Summers was among the first to coin it in his 2017 book “The Everything Bubble: The Endgame for Central Bank Policy”:

“The Everything Bubble chronicles the creation and evolution of the US financial system, starting with the founding of the US Federal Reserve in 1913 and leading up to the present era of serial bubbles: the Tech Bubble of the ‘90s, the Housing Bubble of the early ‘00s and the current bubble in US sovereign bonds, which are also called Treasuries.

Because these bonds serve as the foundation of our current financial system, when they are in a bubble, it means that all risk assets (truly EVERYTHING), are in a bubble, hence our title, The Everything Bubble. In this sense, the Everything Bubble represents the proverbial end game for central bank policy: the final speculative frenzy induced by Federal Reserve overreach.”

Most recently the idea of the Everything Bubble came up on Coindesk’s Breakdown with NLW edition about NFT’s and the record setting sale of Beeple’s The First Five Thousand Days for $69 million USD. I say this as a guy who has been into crypto since 2013 and is getting even more involved today: I don’t get NFTs. Or rather, it only makes sense why they’re selling for such excessive valuations when you consider it to be a phenomenon occurring within the dynamics of an Everything Bubble.

Endgame is another theme asserting itself, that’s what Grant Williams and Bill Fleckenstein call their podcast (it recently went premium, but the first bunch of episodes are widely available across all major platforms). In Grant Williams’ February newsletter (“Let Them Eat Risk”), he afforded a lot of coverage to Bitcoin, including a piece by Ray Dalio and Rana Faroohar’s “Bitcoin’s Rise Reflects America’s Decline” (originally an op ed for the Financial Times).

What struck me about her piece, and to a similar extent, Dalio’s, was this recognition that even if they hadn’t themselves embraced the idea of crypto, it would be a mistake to dismiss crypto-currencies as merely a speculative bubble. Said differently, even Bitcoin skeptics are beginning to understand that Bitcoin’s rise means something. It portends a shift. A big one:

“A little over 100 years ago, there was a bubble asset that rose and fell wildly over the course of a decade. People who held it would have lost 100 per cent of their money five different times. They would have, at various points, made huge fortunes, or seen the value of their asset destroyed by hyperinflation.

The asset I’m referring to is gold priced in Weimar marks. If this reminds you of bitcoin, you are not alone. In his newsletter Tree Rings, analyst Luke Gromen looked at the startling similarities in the volatility of gold in Weimar Germany and bitcoin today. His conclusion? Bitcoin isn’t so much a bubble as “the last functioning fire alarm” warning us of some very big geopolitical changes ahead.” (emphasis added)

Continue reading→

Leave a comment

Posted in Banking, Business, Debt, Financial markets, Governments

Tagged ,

Is This The Biggest Financial Bubble Ever? Hell Yes It Is, by John Rubino

Posted on February 9, 2021 | Leave a comment

It’s hard to argue with John Rubino; this is undoubtedly the biggest financial bubble ever. From Rubino at dollarcollapse.com:

If you’re over 40 you’ve lived through at least three epic financial bubbles: junk bonds in the 1980s, tech stocks in the 1990s, and housing in the 2000s. Each was spectacular in its own way, and each threatened to take down the whole financial system when it burst.

But they pale next to what’s happening today. Where those past bubbles were sector-specific, which is to say the mania and resulting carnage occurred mostly within one asset class, today’s bubble is spread across, well, pretty much everything – hence the term “everything bubble.”

When this one pops there won’t be a lot of hiding places.

Way too much money
Most bubbles start when an influx of outside cash sends the price of something up dramatically. This captures the imagination of the broader investing public and the process takes on a life of its own, culminating in an orgy of bad decisions and eventually a wipe-out of the easy fortunes made on the way up.

So to understand the everything bubble, let’s start at the beginning with that influx of outside money. This time it’s coming from the Federal Reserve in what can only be described as the mother of all print runs. M2, a medium-broad measure of the US money supply, has more than tripled so far in this century, and lately the arc has gone vertical, rising by nearly a third in just the past year.

M2 everything bubble

Continue reading→

Leave a comment

Posted in Banking, Business, Collapse, Currencies, Debt, Economy, Financial markets, Money

Tagged , , ,