Category Archives: Finance

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Forget the bull statue they have in the street in front of the stock exchange — this is the guy who’s taking over in 2015. (Photo by Tambako the Jaguar/Flickr)

John Hussman runs a very large mutual fund whose performance for the past five years has not been great. He is reviled by many of his fellow Masters of the Universe for saying of them, as he did in a recent client newsletter, that Wall Street, collectively, is “quite measurably out of its mind.” Others balance the scorn of the gamblers against the fact that Hussman was saying much the same thing just before the crashes of 2000 and 2008.  In a world whose collective memory maxes out at 90 days, in which logic and mathematics are optional belief systems, Hussman is an historian and number cruncher. What do the numbers tell him? To brace for impact. Continue reading →

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The deadly collapse of an Interstate Highway bridge near Minneapolis in 2007 brought a horrified nation to its feet. Then the nation sat down again. (Photo by mtellin/Flickr)

She was elderly, spry, energetic, and she lived alone in the remains of a genteel Southern plantation, with its Tara-like mansion and sprawling lawns. She was not without means, but she was entirely without staff.  She was telling me how she had recently paved with flagstones the banks of a fairly sizable pond near the mansion’s rear patio. Herself. Mightily impressed, I asked her what she did with her spare time. “Oh,” she sighed, “I like to get a glass of iced tea and just sit out here and listen to the house rot.”

Which is what we Americans have been doing since 1980, when we decided that taxes are evil and must never be raised again for any reason. We’ve been sitting around listening to the country rot. Continue reading →

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If the housing market in the US were in fact recovering, it would be a miracle. Alas, (Wikipedia Photo)

To call it a miracle is to misunderestimate it by at least an order of magnitude: according to the US Commerce Department, sales of new single family homes in August surged 18% from July, and 33% from last year, “offering confirmation,” swooned CNBC, “that the housing recovery remains on course.”

Even while humming its charming little refrain of “Happy,” CNBC, like the many others who sang from the same sheet music, slipped in a few clunkers without elaborating or explaining: one, that new home sales account for only nine percent of the market, and thus (despite CNBC’s offered confirmation) are hardly determinative; and two, that despite the rise in sales, the stock of new houses still unsold hit its highest level in four years. Wait, what? You sell more than you have in six years, and end up with more unsold inventory than you’ve had in four years? Continue reading →

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On Wall Street the party’s almost over, and the music is about to stop. Wall Street’s response: dance harder. (Image by Stock Graphic Designs)

The warnings are coming thick and fast now, from inside the redoubts of the Masters of the Universe, that their world is spinning out of control. I am especially interested in the warnings from the MOTUS themselves, not because they have demonstrated any special ability to forecast, but because they are making noises in a large herd of bulls, knowing that if they set off the stampede they will get hurt.

There is no bigger bull than UBS — it’s the largest asset manager in the world, with nearly two trillion dollars in assets. It told its clients in a newsletter last month that it no longer likes stocks, and it no longer likes bonds. Where you gonna put two billion dollars? Baseball cards? [Thanks to Wolf Richter on WolfStreet.com for bringing this to light.] Continue reading →

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FOR RENT in tony neighborhood, handyman special, low low rent, tenant responsible for maintenance. Any problems, call 1 800 BITE ME. (Photo by Kevin Dooley/Flickr)

I knew a woman with lung cancer who almost blew her face off while sneaking a smoke under an oxygen mask. Wall Street reminds me of her. The Masters of the Universe (hedge fund guys, private equity managers, parasites, whatever you wish to call them) are so addicted to subprime lending they can’t give it up, even though they are still in traction from the last time it blew them up (and evicted ten million Americans from their homes).

Immediately — and I mean, immediately — after the collapse of the subprime-mortgage bubble brought the entire world’s financial system to its knees, the MOTU decided that the remedy to the destruction wrought by subprime mortgages was — subprime rental contracts. (Not to mention subprime auto loans, which is another story.) Continue reading →

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It may be time to put your money under the mattress again.

The list of stock market players who are talking openly about the danger of an imminent crash (in doublespeak, that’s “correction”) is growing fast. This is all the more remarkable when you remember that it is generally against the best interests of players to warn people away from the game at which they are making their money. They are, in a sense, yelling “Fire!” in a crowded casino; either they know nobody is going to pay any attention, or they are sitting next to a pre-dug tunnel out. Or there really is a fire.

Rich people are in general given too much deference in our money-worshiping culture. We don’t do that here. But people who speak against their apparent interests are especially interesting, and it usually behooves us to listen to what they have to say.   Continue reading →