Every day as I flip through my research I am inundated with “end of the world calls.” Bob Janjuah type calamitous predictions are now common place. Heck, some prominent hedge fund managers have even created their own websites warning about the dangers.
Maybe all these wise guys will be right. Maybe we are about to collapse in an epic 2008 type implosion.
There certainly does seem like a lot to worry about. Debt levels are disturbingly high. Learning nothing from the 2008 crisis, Wall Street bankers keep stuffing money into their own jeans, ignoring Main Street. There are bubbles everywhere, but no one is getting rich except the elite few at the top. The politicians seem more in on the take than interested in actually changing anything. And the stock market is nothing more than a computer controlled manipulated sham.
Tough to argue with all this pessimism about today’s market, right?
But what if I told you all these worries were as old as the hills? Have a look at these editorial cartoons from more than 75 years ago. (I have repeated all today’s worries right above each cartoon.)
Debt levels are disturbingly high.
Learning nothing from the 2008 crisis, Wall Street bankers keep stuffing money into their own jeans, ignoring Main Street.
There are bubbles everywhere, but no one is getting rich except the elite few at the top.
The politicians seem more in on the take than interested in actually changing anything.
And the stock market is nothing more than a computer controlled manipulated sham.
I am not claiming that everything is peachy in today’s environment. We have gotten ourselves into quite a pickle of over indebtedness and dangerous imbalances.
The current market is extremely dangerous and there is a good chance it will find a way of hurting even those who are bearish.
Yet when these cartoons were drawn, conditions seemed equally bleak. But the period many claim to be the golden era of capitalism still lay ahead.
Today, things are far from great, but they are by no means insurmountable.
The cynics will rightly point out it took a World War to pull the global economy out of the funk during which these cartoons were created.
But I am still naive enough to hope it won’t need to descend to that level. I am confident global leaders will find other ways to inflate their way out of this mess.
And when the inflation finally comes, there will all sorts of new dooms-day predictions. Just remember, during the 1970s when we previously experienced inflation problems, the world also seemed like it was coming to an end. Thirty five years ago the most prominent market strategist worked for Salomon Brothers and was nicknamed “Dr Doom.” This was the original permabear MD - not because he thought we would experience a deflationary bust, but because he thought inflation would spiral out of control. Yet the system always finds ways to adapt, and who would have guessed in 1979 that Voclker’s successors would be facing the problem of too little inflation?
The only lesson I offer is that whatever the market is most worried about, it probably will not happen. And in the long run, it all finds a way of working out.
In the mean time, I will leave you with this week’s Economist cover.
You guess how long I think this will be Yellen’s problem…
I am not just a douche bag, but I also play a jerk on TV
I have long given up watching CNBC. The Jerry Springer’ness of the shows pushed me over the edge. I can’t stand the way the hosts berate their guests. Who wants to listen to that?
Not only that, but they are often wrong in their accusations. Investing is a complex nuanced activity. You can’t break everything down to BUY! BUY! BUY! or SELL! SELL! SELL! like Jim Cramer does. Yet CNBC too often just looks at last month’s market move and if the guest has been on the wrong side, hurls cheap insults at them.
Yesterday Tim Seymour won the “CNBC douche bag of the day award ®.”
Tim attacked Bill Fleckenstein for the terrible crime of not being bullish enough. Click here to watch the video.
I have tremendous respect for Bill. He is one of the few short sellers who correctly cashed out at the bottom of the 2008 credit crash because he anticipated the Federal Reserve’s aggressive response. Fleck has also correctly stayed away from shorting during the past decade and patiently waited for another opportunity when Central Banks are no longer able to influence equity prices.
I happen to disagree with Bill’s short term belief that a correction in coming, but that’s what makes a market. I appreciate him sharing his thoughts, and take the opportunity to understand where I might be wrong.
But what Tim Seymour did is just pathetic. He is such a little man. And all I can say is Bravo to Bill for calling him on it.
I am happily returning to my Bloomberg TV, thankful I do not have to suffer through the likes of Tim Seymour.
Thanks for reading and have a great week-end,