Don’t forget the two rounds of PPP grants to businesses. They were called loans but they are grants because they do not need to be repaid in most cases.
Not only that, but people were stuck in their houses all day. It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc.
Further, Goods YoY inflation has been flat/negative since 2013, so most supply chains probably weren't really being stressed much (and maybe even atrophying slowly) when the sudden surge in demand hit.
I think there are quite a few structural changes that might keep inflation alive for longer: climate change and political measures to mitigate them result eg in higher energy and housing costs, globalization seem to have peaked, second round effects like wage increases already appear. Inflation may well got kick started last year.
But most of that stimulus didn't end up in the hands of consumers.
People weren't purchasing Pelotons with $600 stimulus checks. The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place. (I do fully agree that stay-at-home orders motivated some purchases, though - but again, the sort of people who could actually stay at home and take meetings from their home office instead of driving around town delivering Pelotons were the sort of people who already had the cash to spare for these things, anyway.)
That stimulus ended up in the hands of business owners, which effectively caused a partition: because business owners, as a group, had more money, they could all raise prices and afford it. But the working class, as a group, did not have noticeably more money.
In other words, there was a sharp rise in inflation - for the owning class. The effect was the same as if there were two neighboring countries, and one experiences inflation. That country's cost of living goes up, but so do their wages and the valuations of the things they own. So they're fine, and effectively they can buy things from the second country for even cheaper in terms of purchasing power. But people in the other country find it harder to afford to buy things from the first country. They're the ones most hurt by inflation.
Your example only works if both countries use the same currency. If they don't the country suffering inflation will have a devalued currency, so their buying power relative to the other country will have collapsed.
> People weren't purchasing Pelotons with $600 stimulus checks.
Anecdotally, they totally were. In my immediate friends group, families that were eligible for stimulus (making around $120K/yr) spent it on luxury items including photo cameras and as a downpayment for new cars. I don't know anyone who bought a peloton but extrapolating what I saw in my circle, it's totally believable.
> The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place.
That's not true at all. The cutoff for a married couple to get stimulus checks was 150k combined per year, which is a lot of money in the majority of the country. I was making 135k, 40k more than the median income for my state, and my wife and I got thousands of dollars in stimulus money. We ended up each buying $1200 Herman-Miller office chairs since we were stuck at home on our computers all day.
>I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending.
It is naive - because people go off the outrage posts and ignore reality. Stimulus checks were disbursed between March 2020 and March 2021 - it's been almost a year since the last stimulus and people are still harping on it.
We've been here before... printing of significant amounts of money to solve big problems can work well to get through the problem, but the after effects can be painful.
>>[1]People in Paris were getting rich — and they were getting rich fast. In fact, it was so hard to describe how rich everyone was becoming that a new word was needed and the term “millionaire” was coined in 1719.
>>[1]The people of France could thank a Scotsman with a penchant for gambling, the printing of new paper money, and all the vast riches that surely would be found in the New World for their sudden wealth
>>[1]Realizing that the paper money was only going to continue being a problem, over a few months France again allowed transactions to be conducted in metal currency. Further, it limited the uses for paper money to buying government debt issuances, in this way, taking on debt from its citizens in order to prevent the financial system from collapsing completely. Through these actions, by the end of 1720, Law’s original money-printing bank shut its doors, with the Mississippi Company dwindling towards the same by the end of 1721.
Or fun stuff like the tulip mania, when supply and a little bit of euphoria made things silly:
>>[2]The Dutch Tulip Bulb Market Bubble was one of the most famous asset bubbles and crashes of all time. At the height of the bubble, tulips sold for approximately 10,000 guilders, equal to the value of a mansion on the Amsterdam Grand Canal.
>>[2]Additionally, because of the timing in tulip cultivation, there was always a few years of lag between demand pressures and supply. Under normal conditions, this wasn't an issue since future consumption was contracted for a year or more in advance. Because the 1630's rise in prices occurred so rapidly and after bulbs were already planted for the year, growers would not have had an opportunity to increase production in response to price.
I am as far from an inflation hawk as you can get. I basically think that any government can both print money and avoid inflation bar external shocks with a modicum of common sense, e.g. don't pay people not working to piss off the French and Belgians: https://www.theholocaustexplained.org/the-nazi-rise-to-power...
Yet we did just that. People not working being paid for existing at a time when the real economy went into cardiac arrest by every measure of actual productivity. Instead of giving people money to chase goods stuck in ports the government should have spent that money on building up infrastructure and have people out doors away from covid.
Were I a betting man I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s.
> Instead of giving people money to chase goods stuck in ports the government should have spent that money on building up infrastructure and have people out doors away from covid.
This statement makes no sense: even (most? all?) construction was shut down during (pre-vaccine) 2020 for periods of time to reduce the spread of COVID. At least it was where I was.
Further, the people staying at home were often in the service sector: retail, restaurants, etc.
Even when the restrictions were lifted a bit, you can't simply take random people who were doing one job and throw them onto a construction site and expect them to be useful (never mind productive/efficient). The number of companies and people available at any given time to do this is at any particular instant of time is finite, and most were probably on a contract. Certainly over time people can shift careers, but that is not instantaneous change.
Depending on the "infrastructure" you want to do/build, you need lead time to actually design what you want to build, do surveys, get permits, and order materials. And because of global supply chain issues, a lot of materials were in short supply: lumber being the most publicized, but shipping pallets were an issue as well (there was a good Odd Lots podcast episode on them), as were the obscure things such as truss plates.
Maintaining infrastructure is a great idea, but you don't "just" do it. Outside of 'simply' tarmac repaving the surface of a road, most everything else takes a few months of planning.
You're right you don't just do go out and do that stuff, but it's been delayed by political forces for years. We could have been well past the initial stages by now.
>This statement makes no sense: even (most? all?) construction was shut down during (pre-vaccine) 2020 for periods of time to reduce the spread of COVID. At least it was where I was.
Yes, and? All it would have taken was to call them vital workers, or whatever the local equivalent was, and they could have kept working. That was a political decision and covid still spread among vital workers. Adding construction would have changed very little in the grand scheme of things.
As for the rest building isn't software design. Unless people start getting physically in the way of each other more people on a site means the project gets done faster. If nothing else the real tradies would appreciate having a gofer each.
"Unless people start getting physically in the way of each other more people on a site means the project gets done faster."
Have you worked construction?
If they're clueless, then they will slow you down with mistakes and questions/training. Not to mention many parts of construction require skilled trades (electric, plumbing, carpentry, masonry, etc), some of which require licenses.
> Not to mention many parts of construction require skilled trades (electric, plumbing, carpentry, masonry, etc), some of which require licenses.
There's smaller and smaller areas of construction that is unskilled nowadays AFAICT. Unless you're just there to lift stuff and/or literally dig ditches (which is often done with machines), there's not much that can be done by some rando off the street. Even the day labourers that are found around Home Depot (probably?) have areas of knowledge, even if it's just framing.
Certainly some areas could be picked up fairly quickly (spreading/trowling and/or screeding concrete?), in most other areas there's some specialized knowledge. Especially if it has to meet code, which is getting more stringent over time. A YouTube channel of someone who does building inspections:
At lot of the inspectors are a joke, so you have to mess up pretty bad to fail.
I had an inspector come out to verify my generator hookup and interlock switch. He asked a few basic questions, but that was it. He didn't ask nor look at how the legs of the panel were balanced or anything. Later he sent me a letter saying I needed to mark the generator receptacle with the max wattage. Um yeah, that was already on there...
Yes, being unskilled on a construction site is called being an apprentice. No one complains about having too many apprentices around when they can get you everything you need without you needing to get off the ladder.
Usually they differentiate. Apprentices for a skilled trade usually have some sort of training. This is especially true for union positions in licensed trades (like electricians). Apprentices eventually move into a position to do the job, whereas unskilled laborers just continue to move materials around.
"No one complains about having too many apprentices around when they can get you everything you need without you needing to get off the ladder."
Except when they are "clueless". Then they'll waste your time by bringing you the wrong thing.
>Were I a betting man I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s.
You see this is what I have been thinking as well. We have the corruption and rot being exposed on a daily basis by all the new Left media. Do we honestly think the capital class is that stupid that they haven't thought of some way to extinguish the rise of progressivism when the playbook is out in the open? They are probably 10 steps ahead of any populist movement. The left frequently cites FDR and how things turned around after the people had enough and were at the breaking point. They say its in the cusp of happening again. Yes that could happen again but with the rise of technology and big data, I can't possibly believe that the capitalist class hasn't used this ability to simulate every probable outcome to counteract this.
I am reminded of the excitement I was feeling in the run up to Bernie almost clinching the presidential nomination. His campaign was firing on all cylinders and was just destroying everyone else in the race. I got a false sense of victory when I took seriously the crying that all the mainstream media pundits started to do after his stunning victory in Nevada. It was all a ruse in the end. At the last second before Super Tuesday (the day that would have cemented Sanders victory) the Democratic leadership(Obama and others) made a deal with Klobuchar and Buttigieg to drop out and side with Biden in a move that left the Sanders campaign with no time left to recover. I saw things like Universal Healthcare, stopping the MIC and other progressive goals literally crumble in my hands after that day. Looking back, I should have seen what happened to Jeremy Corybn in the UK and treated it as a canary in the coal mine. Now with Biden having done absolutely less than nothing, I feel as if at least half of the Millenial generation and some of Gen Z has been completely written off at this point. The oldest in this cohort is turning forty and there is no way for them to make up for lost gains in this corrupt rotten scenario.
I'm really scared about the future. They are now gunning for the last stable career in the US (software engineering/IT) and while I am in my 30s and been in the industry for ~10 years now, I can't be reasonably sure that I can make it to the finish line of retirement without this career disappearing or being severely curtailed by automation/outsourcing/etc. I guess every generation has this fear.
>The left frequently cites FDR and how things turned around after the people had enough and were at the breaking point.
The New Deal did very little to stop the great depression until WWII started. People forget that everything in the New Deal was still too little too late and it was only fixed when the federal government debt was 20% of the US economy for 5 years between 1941 and 1946.
I forget the details, but wasn't a major part of the issue that they tried to address it from a fiscal point of view and largely ignored or used the wrong monetary policies?
While I had hoped Bernie would have been elected, at this point I don't think much would have changed if Bernie had been president. If anything, it probably would've made Joe Manchin dig his heels in even further.
At this point I think they know 2022 is gone, and are aiming for a fighting chance in 2024. The only real difference between a president bernie and a president biden, is that in 2023 and 2024, leading up to the election, when the republican congress refuses to do anything, Bernie would sign EOs that would help people, and Biden just MIGHT sign them (being able to use the excuse that republicans wont work with him to do it).
IMO, the only good thing that was ever going to come from these 4 years was not having Trump as president, and possibly an EO reducing student debt and an EO rescheduling marijuana. Nothing else progressive was going to happen even with a president Bernie. And those two EOS might still happen from Biden, but who really knows.
>While I had hoped Bernie would have been elected, at this point I don't think much would have changed if Bernie had been president. If anything, it probably would've made Joe Manchin dig his heels in even further.
I respectfully disagree. Did you know that in 2016 in the Democratic primary in West Virginia Bernie won all 55 counties and in one country Hillary Clinton finished in third place? West Virginia has an extremely strong history in fighting for workers rights. The whole term 'redneck' came from the red bandanas the coal miners used to wear when protesting for better working conditions.
Bernie was very clear on how he would handle Joe Manchin: He would go into WV in every county and publicly hold rallies showing the state how much Manchin is holding them back from the things that they want. He would take every opportunity to embarrass and pressure Manchin. Finally, he and Biden have one more angle. Manchin's daughter is the one behind the whole Epipen price gouging scandal. There is plenty to go after her with. That would certainly light a fire under his rear end. Biden has not even tried any real pressure and for that is all on him.
>MO, the only good thing that was ever going to come from these 4 years was not having Trump as president, and possibly an EO reducing student debt and an EO rescheduling marijuana.
That is enough to rally the base and get them fired up and work to expand on the purple states to gain seats. He blew a perfect opportunity.
I appreciate the sentiment and the enthusiam, however I am skeptical. I was born, raised, and went to school in west virginia. Bernie might win the democratic primary against Hillary Clinton or Obama but he stands no chance in the general election. The socialism is a bridge too far. Its why Manchin is acting like he is. Though I'm no fan of Manchin for local and personal reasons that go deeper than current national politics. His uncle was sleazy and so are him and his daughter (who have already survived scandal).
Fun story: One of my friends had a photo with Manchin once when he was governor, he literally picked her up and placed her somewhere else like a child. The dude sucks.
Yes but people can be forgiven for not seeing how Brexit would have affected how the US turned out. Something like that had not happened in this current generation's memory.
>Certain groups have used the UK to refine their methods (cambridge analytica etc) to use on the big prize.
We like to think they are wildly different from each other. Turns out the two countries are still very similar in values and mentality.
Even more so with the internet increasing communication. Social problems from the US have been imported to the UK because of wide spread communication between people on both sides of the pond and a mostly shared language.
Outsourcing did damage silicon valley. Do you see Apple still building Macs there? Or any chips being built there anymore? Silicon valley wasn't always the land of ad-based companies you know, it was silicon. That's mostly offshored now with the current version being a shadow of its former self.
Do you think all those employees building Macs and chips managed to get into SW development before their jobs were offshored?
As a child of the 90s, my views are quite skewed but it seems like such a different era. It was the era of "Hackers' and the Matrix. When you could actually afford some decent property in the valley still. When it wasn't a complete homeless dump(or at least as much as it is now). Every computer you bought was seriously much better than the last. But yeah, my late father did have the concern of outsourcing to India in the mid 2000s. That was back when it was thought that India was the next superpower before China just raced past them.
I don't think it's actually a conspiracy or plan in that way, but Pelosi, Schumer, and Biden are definitely greatly concerned with discrediting the ideologies and plans of those further to the left than them.
You're not familiar with the fact that there are people to the left of establishment Democrats? We could start with the Democratic Socialists of America (DSA); India Walton, who won the Democratic primary for mayor of Buffalo; or even the Bernie Sanders campaign. It gets more left from there, beyond electoral campaigns.
Sure, but it doesn't seem any are in national office. In the context of "Pelosi, Schumer, and Biden" wanting to keep "plans" away, it would seem that those plans would have to have some amount of publicity to begin with. There are an absurd number of plans by those not in office that have no publicity, and thus would be unknowable to the reader. That's why I was asking for clarification.
Right, Pelosi, Schumer, Biden, and similar, want to do their best to keep anyone with such plans out of power, and make sure they do not threaten the power of those in power. That's all I'm saying.
The comment at the top here was "I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s."
Yeah, and I don't understand what plans are being avoided. If anything it seems the extended unemployment, advanced tax credits, etc seems to have paved the way for UBI, etc. Sure, the conservative side is against it, but once Rome starts handing out free bread... once constituents realize they hold the keys to the coffers... assistance programs only grow... When people are getting something out of it, that's an entirely different dynamic than stagflation.
Another reminder, these are the relief payments made to Americans over one year:
March 27, 2020: The payments for the first checks were $1,200
December 2020: The payments for the second checks were $600.
March 2021: The payments for the third checks was $1,400.
Total payments over a year: $3,200
A total of $850 billion was disbursed. The total payments work out to $266.66/month. I don't understand how disconnected people have to be to be angry over $266.66/month.
Compare that disbursement with PPP loans. I don't see the same gnashing of teeth over the forgiven loans (remember a lot of them were not used for their intended purpose):
More than half of the $4 trillion approved by Congress this spring was targeted to businesses ...
Much of the money was issued to companies regardless of whether they were impacted by the pandemic or used it to pay employees.
The bill included $651 billion in business tax breaks that often went to companies unaffected by the pandemic and others that laid off thousands of workers. The Cheesecake Factory, for example, furloughed 41,000 people, and said it will claim a tax break worth $50 million.
...
Billions more went to the Federal Reserve to help stabilize markets, and those efforts enabled many companies — including Wells Fargo, AT&T and Carnival, the cruise company — to borrow at lower rates while also laying off thousands of workers.
...
More than 210 hotel owners received PPP funds, for example, and have yet to rehire most of their staffs, according to Unite Here, the union whose members staff the properties. Among them: Omni Hotels & Resorts, a chain controlled by Texas billionaire Robert Rowling. A group of Omni properties received between $30 million and $71 million from the PPP while also furloughing workers and cutting off their health insurance coverage.
> As a reminder, if people were paid by their measure of actual productivity, minimum wage would be $24/hr
Huh? What does one have to do with the other? Minimum wage just means that jobs that pay less than a certain amount are forbidden. It has nothing to do with productivity per se.
In Singapore our minimum wage is 0. Yet people are still paid. And paid rather well actually. When productivity changes over time, we don't adjust that figure. But wages do adjust, thanks to market forces.
The only relationship minimum wage laws have with productivity is that if you raise minimum wage much faster than productivity, your economy is gonna have a really bad time. The reverse is not a problem.
>The only relationship minimum wage laws have with productivity is that if you raise minimum wage much faster than productivity, your economy is gonna have a really bad time. The reverse is not a problem.
Except for the folks, who you know, are responsible for that productivity!
Competition is what's supposed to drive up wages until they equal marginal productivity.
If you don't have enough labour market competition for that, you should look into easing barriers to entry. So you can: invite foreign companies to set up shop, encourage existing companies to branch out (eg allow WalMart to offer bank services like they wanted to; allow banks to sell coffee, like they wanted to), encourage start-ups. Perhaps try to move taxation away from labour and capital, and towards land.
> I don't understand how disconnected people have to be to be angry over $266.66/month.
I have a feeling that some of the angry people are people who made too much money to qualify for the stimulus. I certainly didnt hear of anyone returning their payments.
> I basically think that any government can both print money and avoid inflation bar external shocks with a modicum of common sense, [...]
It's all a question of how much money you are printing, and what your inflation targets are.
The Fed is supposed to 'print' just enough money to hit 2% inflation.
If the fiscal side is doing weird stuff (or not doing weird stuff), the Fed is supposed to accomodate that by printing more or less money, so they still hit their 2% target.
This started out interesting but strayed into rant territory pretty quickly.
"Tesla will be reporting earnings just as this article goes to publication today. But in my view, any “fundamental” news coming from Tesla’s earnings is rather meaningless. Why? Because we’re talking about a company completely divorced from any semblance of fundamental value."
Author: complains that investors are ignoring fundamentals
Stopped reading at “tesla is a car company”. When I read that, it shows how little research has been done and not trusting anything else. Hate and downvote all you want, anyone who did basic research on the company, IP, and execution knows how bad that narrative will age. Its not about loving or hating Elon, its simple business.
While the P/E compression during a recession is completely normal, and yes, Tesla is overvalued looking stricly at P/E, they will survive a recession blow much better than a lot of companies because of their cash balance, margings, and operationnal excellence. Drops are expected and serious investors will see this as a unique buying opportunity. It could go down 90% for all I care, I would buy more shares.
If you are in the market for day trading, get out for a while because at times like this you will mostly get burned unless you really know what you are doing.
If you are in the long run, did your research, you shouldn’t sweat at reading all this doomsday material vs. any stocks you own. its as bad as bulls saying tesla will reach 5000 by the end of the year.
Remember in P/E the E is earnings, not revenue. Their P/E is probably astronomical. The only thing that suggests P/E isn't an accurate indicator for them is massive growth. Nobody can really say what E will be when the growth slows or stops. Nor do we know when it will.
Exactly, wall street is following guidance or lower while they are striving to exceed that by a lot, and are succeeding extremely well so far, but being realistic and doing your own research vs. trusting online “sources” for confirmation biases was my point.
Wow lots of passion you should see the points going up and down on this one ;).
The P/E for the latest quarter is about 100. At that valuation, growth only has to keep up for a year or two to hit a reasonable P/E. If you think growth will continue for longer, the stock is cheap.
I agree with everything else you said except your first sentence. Saying that Tesla is a car company isn't untrue and there's no reason for you to have such a visceral reaction to it.
Tesla has made no indication that they'd ever license their self-driving or sensor tech to others. Pretty much every other project Tesla has suggested is vaporware. The one and only thing they'll successfully produce and launch, possibly in our lifetimes, is cars.
And yes, the car part of their company is not important to them, but it's what they're making, and it's what we're buying. It's also the weakest part of their company. Despite their production numbers being relatively low, the QC issues and service issues are pretty noticeable. They absolutely need to fix them to reach the average customer, which they'll need to. To reach full potential of their current stock values, they can't just rely on tech savvy individuals looking to overlook QC issues.
It's like saying "Apple isn't a phone company, it's a services company." Even though that might be true in a sense in terms of their revenue, the iPhone is the lynch pin of their business. If they fucked up iCloud and Apple TV+ and the App Store, it'd suck, but the company would survive. If they majorly fuck up the next iPhone? Probabaly not.
Elon Musk has stated at least twice that they would be willing to license FSD to others.
Grid energy storage is a successful and growing business segment. It doesn't yet have the scale of the car business but to call it vaporware is dishonest.
Not sure about the timeline, but regardless I wasn't aware of the tweet.
But I still stand by my comment, his tweets are somewhat irrelevant given how many false promises he has made. He made a statement years ago that he'd let other companies use his supercharger network, but dragged his feet on it. Until very recently where they've started piloting the project in Norway.
OK, but you realize you can say that about all the big techs now? Google is not an ad company. It’s really an “AI” company with far more valuable R&D. Same with Facebook.
If we are looking at tech companies purely from research assets accrued, I have to say Facebook is a bargain here. And even more so with Google.
Tesla on the other hand is more of a marketing company. Their R&D spend does not match all the hype. If they’re rolling out a revolutionary humanoid robot, I have to think that’s going to cost them more than $2B per year to develop.
Waymo and Deepmind are currently money sinks for Google constantly running at a loss and only supposed by Google's massive ad-funded war-chest. Same for Facebook's/Meta's endeavors into VR where Quest goggles are sold at a loss to consumer.
Please wake me up when Waymo and Deepening generate any profit on their own, without any funding from the mother ship, that doesn't revolve around ad targeting.
Of course I asked for profitable business when I challenged your claim that Google is an AI/ML company. If that business line is not profitable but ad revenue is the main engine that keeps the lights on, then Google is first and foremost an ad company that also happens to fund AI/ML and other endeavors but at a loss.
What generates revenue is what defines a company straight and simple not what they want to call themselves, since they all say their mission is making the world a better place and other such BS.
Please check that I only rebutted the claims that Google and Facebook ares ad companies and not ML companies, that's it. I didn't reply to anything mentioning Tesla and I can't be held accountable for other discussions in this thread, that I didn't take part in.
The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes is smiling. In exchange for that we've got only 5%ish inflation, driven partly by a newly-tight labour market in which people can actually negotiate incomes upward, and partly by a big spike in natural gas prices? I would absolutely take it. (Roughly the same pattern is seen in the UK, and most of Europe; I'm not sure how well it applies to emerging economies)
There are two standard remedies for inflation: monetary tightening (raise interest rates) and fiscal tightening (raise taxes). Both of those operate on inflation by pushing unemployment back up and reducing the amount of money chasing goods. Both are eminently feasible if action is needed against inflation.
I agree they had to spend the money to prevent a depression. I don’t think anyone is here contesting the amount of money unleashed. However, I am really disappointed with where that money went. It went into “non-productive” assets and activities.
I’m confused what you mean by non-productive in this sense. In my country, the vast majority of aid money was in the form of massive “loans” to companies that were later forgiven presumably to avoid them going under/bankrupt.
A lot of money in the US went to businesses through the PPP and similar programs. That was mostly a good thing as far as keeping businesses from closing or laying off workers. But I think pumping up non-productive assets was the second-order effect, where tons of stimulus money that people didn’t need immediately got dumped into speculative stocks, real estate, etc. the alternative would have been keeping it in savings accounts earning 0.01% while you saw all your friends “getting rich” YOLOing on meme stocks.
Non productive would be referring to stimulus checks and child tax credit money in the US, you will hear stories about families making 10-15k and using it for Disney trips, all that did was incentivize not working and paying of people that made the decision to have to many kids. It’s also caused the bottom of he job market to see increased pay while the middle and upper markets get pay decreases in the form on inflation. All in all not worth it IMO.
My understanding was that the stimulus checks and child tax credit were not remotely a majority of the money spent; that most of it went to corporations.
My problem is - there are sooooo many things that need done in this country.
I am not sure why everyone thinks it is cruel and unusual punishment to ask people to do some of those things that need done (burying power lines in cities, as one example) in exchange for money.
Why is it so barbaric to give people a job? Theoretically, there are plenty of low-skilled workers that could've been trained to do needed skilled work during this time - instead of waiting 3 months for low-skilled labor demand to pick back up.
Now - for the rest of their lives - they could be high skilled laborers. Instead, we paid people to just wait.
Agreed. We desperately need a few large scale public projects. But the country (US) is so divided that no one’s going to agree to anything that selectively benefits one region over another.
Our large scale public projects always seem to end up being villified due to massive overuns, nepotism, embezzlement, and at best mismanagement. It typically benefits one small area too. If we want public opinion to change on these efforts, we need to change the track record to build trust for bigger and bigger projects.
You are right to point out that MIC related projects like those helped society. And so did the internet, obviously. But infrastructure projects like the big dig are far more common at various scales across the US. Typically they increase the value of land owned by sponsors or relatives of sponsors of the effort, or hire a series of contractors with relationships to the sponsor.
Considering that the Big Dig was financed on super low interest rates - my understanding mostly in ~2000-2004 dollars (which have turned into $0.5 or less and are headed lower) - it really wasn't THAT bad of a deal.
That comes out to ~$500M a year - which sounds absurd - but that pretty massively benefits ~500k+ people per year. That's ~$1000 per person per year - which still sounds absurd - until you factor in that half of that will be paid in $0.5 and a quarter of that might be paid in $0.25 or less.
And then when you factor in that that monstrous highway is gone forever, and Boston will likely be around much longer than another ~20 years - it honestly doesn't sound like a bad deal.
NYC's second avenue subway - at ~$3Bn per stop - if each stop increases ridership by ~30k people - which generates ~$48M per year in revenue, which is theoretically ~30% less than the ongoing maintenance cost (https://media4.manhattan-institute.org/sites/default/files/f...) - is pretty similar.
IIUC - currently MTA runs at loss of about $7 per month per resident. That seems like an absolute bargain even for people who don't take the train. The reduction in traffic and cars should be worth way more than that to most people in NYC.
Conceptually, I agree with you - but the reality is that many of the skilled jobs you describe take a long time to get trained. Power line technician is a 4 year apprenticeship.
Lack of state capacity, really: there is no way that level of labor mobilization could have happened, and people would have screamed about it every step of the way. The US absolutely hates anything that looks like government expansion, unless it has camo on it.
I suppose it could have been the 1037th Non-Combat Plumber Division and everyone would have been fine with that.
For those able to change jobs or find jobs in the <1yr window yes, for the rest, pay adjustment largely didn't meet inflation, so they got a pay cut. And those that were saving to buy a house or car saw the price of those things shoot away from their efforts while those savings lost value. I also worry that those who took jobs for massive raises will be on shakey ground afterwards. And those that hired in before or after resenting them for it.
I don't really buy inflation at 7%. If you drill into the numbers it's mostly (1) energy prices returning to pre-covid levels and (2) huge increases in new & used cars due to chip shortages. The rest of the numbers are a more pedestrian 2-4%
Be careful. There's a big difference in impact of modest inflation like in the US at the moment vs hyperinflation.
The Fed handled the monetary side of the pandemic reasonably well. Inflation overshot a bit, yes. But it's far cry compared to when they caused a slowdown in the housing market to become the Great Recession in 2008-ish.
People with savings and salaries got a nice 7% wealth tax this year
The government, with it's massive 20 trillion dollar debt, got a nice 7% write down on the debt, so they can quickly spend this voucher again in a matter of weeks.
Venezuela (and almost all the classic hyperinflation cases) are forex crises. You can't print foreign currency, which you need to buy goods on the international market; and the collapse by mismanagement of Venuela's oil industry and any other export industries means that the currency is just going to keep devaluing as the trade fails to balance.
> That salaries are picking up doesn't mean real salaries have improved.
It is however a necessary condition for real salaries to improve that nominal salaries improve. Which needs a tight labour market.
Your assertion assumes that demand would not have contracted in April 2020 absent government intervention, which seems suspect. Unless you believe no one would have adopted any pandemic precautions absent activity restrictions, thereby averting any demand drop in, say, the entertainment and hospitality sectors.
> People kept receiving salaries, and unemployment benefits. So financial position and income of families was always strong
I'm confused; weren't you arguing above that unemployment concerns shouldn't have motivated government spending because the drop in demand was artificial? You can't bolster that position by saying that the demand stayed strong because of unemployment benefits and salaries that went out despite people staying home; those spending categories (PPP loans and enhanced unemployment benefits) were a government subsidy to keep demand from cratering.
> Once you paid people to dig holes and cover them again, you can't really get that money back.
That doesn't matter though? If someone's unemployed, their labor is wasted, and you can't get it back. The money spent is not destroyed, it re-enters the economy when the workers you gave it to immediately spend it, and comes back to the government when they pay income or sales tax.
You can reverse fiscal stimulus by putting up taxes.
> The money spent is not destroyed, it re-enters the economy when the workers you gave it to immediately spend it, and comes back to the government when they pay income or sales tax.
Be careful to keep the nominal and the real separate.
Destroying money is great! The Fed can just print more to make up the difference.
Equivalently buying stuff from China, and China hoarding the money they got forever is great, too. You got stuff, and the Chinese only got some database entries.
> If someone's unemployed, their labor is wasted, and you can't get it back.
Yes. (Though the leisure they enjoy isn't necessarily completely worthless. But let's ignore that for now.)
And we find that in general the private sector makes more productive use of people's labour (in real terms). Especially when compared not to the day-to-day running of existing civil servants, but to make-work schemes.
The Fed 'printing' money increases private sector spending and private sector employment.
> You can reverse fiscal stimulus by putting up taxes.
Taxes don't remove the money from the hands of the people you paid to dig the holes and cover them up again.
More importantly: taxes have substantial deadweight losses. Taxes cause real productivity losses.
(Just to be clear: I'm all in favour of financing the government from taxes that have low or zero deadweight losses, like property taxes or land value taxes.)
Selling assets from the central bank balance sheet on the open market has no deadweight losses.
Seems the opposite to me, especially when if you add post-2010 to the data set:
There was hardy any useful stimulus in the US post-2008 because Obama (D) was in the Whitehouse and the GOP-controlled Congress didn't want to help him out. So it was mostly just monetary policy (Fed) that did things, and it was a long slog of pain to get unemployment down and get the economy going.
With COVID we had monetary policy (as before) but also fiscal policy (Treasury), and I think that fewer people suffered economically. Especially since the Fed can only work 'internal' to the financial system, but it takes the Treasury to get cheques-in-hands.
(Certainly the two scenarios are not directly compatible, but it seems obvious to me that fiscal can have more direct impact on regular people's lives, e.g., average savings rate increased.)
The 2008-ish recession saw the Fed pay banks to keep money off the market. No wonder that economic activity remained sluggish.
For the 2020 recession, you had the Fed drop reserve requirements for bank, and move to average inflation targeting, and in general move much more aggressively.
See also Japan: since the 1990s they had a long history of fiscal stimulus and monetary tightness. When Abe came to power a few years ago, he loosened monetary policy, and the Japanese nominal GDP started to grow again.
> The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes is smiling. In exchange for that we've got only 5%ish inflation, driven partly by a newly-tight labour market in which people can actually negotiate incomes upward, and partly by a big spike in natural gas prices? I would absolutely take it.
Me too. I would take that deal again.
As I recall, for a few weeks in early-to-mid 2020, the world was in the grip of fear, consumers everywhere had drastically cut their spending, and businesses everywhere were in free fall. Government intervention stopped the free fall. I know of several small and midsize businesses that briefly considered Chapter 11 and of one billionaire who had his lawyers draft personal bankruptcy filings during those few weeks. Every CEO and business founder I know took out a PPP loan -- and no one repaid it. The moment government money started flowing, everyone changed their tune. I'm 100% sure that, had it not been for all that government intervention (fiscal and monetary), we would be in the throes of a horrific Great Depression right now.
That said, I think there will likely be two significant costs to all the "mopping up" to be done by central banks (stopping their purchases of government bonds to replace holdings that mature, reducing the pool of capital available for buying government bonds, and raising rates): (1) asset prices are likely to decline, perhaps significantly (that is what has happened in other periods of voluntary/involuntary monetary tightening throughout history), and (2) we will likely have to suffer through a normal recession -- much better than a Great Depression, but still, not fun.
I would take inflation that can be managed over the alternative that could have happened had the government not intervened. However and if I understood things correctly, it appears that banks, financial entities and ultra rich individuals got money absolutely for free; no strings attached. The rest of the population got stimulus checks , asset prices appreciation followed by inflation which will eventually eat away any appreciation at best if not do more damage. I don’t think society will appreciate this deal in the long run. Desperate politicians and ideologues will exploit this imbalance.
> banks, financial entities and ultra rich individuals got money absolutely for free
[citation needed]: please distinguish between gifts and loans, bearing in mind that a loan written off other than in bankruptcy can be counted as a gift.
There is a big problem that most of the consumer spending goes through Jeff Bezos who gets to keep a percentage of it, but that's not the same as directly giving him money, and happens regardless of the stimulus or not.
> driven partly by a newly-tight labour market in which people can actually negotiate incomes upward
This is the big point I think the title article is missing. And I think its going to take some time for the bubble to pop, they tend to be self-sustaining, but it may shift its focus off of Peloton and the winners early in the pandemic. I wouldn't bet against TSLA right now.
There's likely to be another boom later this year as Omicron goes away (even if we get another wave later) driven by positive emotions. Right now all the animal spirits are maximally negative and they're pretty poised for a reversal.
The Fed also won't act sharply enough to spike unemployment this year.
The author makes a few good points, but I'm not convinced by the overall thesis, which seems to be supported by a few anecdotes (meme stocks) and speculation. Notably, he went all out with Apple and he was wrong. Apple both reported great sales and guided well for the future.
Highly insightful. The pandemic stimulus isn't the only cause though, more like the icing on the cake. The experimental QE and ZIRP policies probably won't be looked at too kindly 50 years from now when economists are still trying to understand and prevent another "Everything Bubble" from ever forming again.
The next 10-15 years for investors are likely to be much more challenging than the last. How do you navigate such a climate with extreme overvaluation in all asset classes? That's why I'm building sophisticated algotrading models at https://grizzlybulls.com to help determine when to hedge and produce positive absolute returns regardless of market environment.
In the past few weeks, Nasdaq top 100 lost something like $4T in value which is more than what we lost back in 2020. That’s a lot of money. And also consider the money lost in crypto. People are going to be more prudent with their spend and money.
> Mr. Market extrapolated a one-time demand surge into the indefinite future
Mr. Market is apparently a total idiot and can't distinguish infinity from unity.
Somehow all these Zero Hedge wanabee's would be more credible if they could predict some event, on the basis of their favorite cumulated "idiocy" metric. Expressed in observable outcomes, that would come to pass within a defined period.
Its called falsifiability [0]. Otherwise its a lot of hyperventilation, angst and/or hidden political agendas
Interesting, everyone is seeing different reasons here. The link doesn't mention it, now the guardian says, that it's the looming danger of war in Europe:
"“Dealers are worried about the prospect of a war in eastern Europe, as the human and economic cost would be huge. Some central European economies, like Germany, are heavily dependent on energy from Russia, and should a war break out, it’s a possibility those energy supply lines would be cut, which would cripple economic output in the EU,” David Madden, a market analyst at Equiti Capital, told Reuters."
It seems as if it is hard to trust any one source, when it comes to macroeconomics; i mean there are a lot of biases, and everyone seems to be looking for confirmation of his own world view.
Everyone has their own reasons because people are trying to simplify things down to just a couple of variables. The problem is that there are many variables all tied to each other in complex ways which just can't be simplified that much. You can't just look at one action, no matter how large, and claim that it was bad because of a problem it caused. The relations between all the variables means that a different action or inaction may have ended in the same problem coming about via an alternate path of cause and effect.
There is a lot of talk about inflation. But isn’t inflation most of the time a temporary phenomenon, because productivity and innovation catches up. When there is inflation its the perfect time for people and businesses to pivot to disruptive technologies and products.
For example, in late 2000s oil went up as high as $150 per barrel, gas was super expensive. People started talking about electric cars and renewable energy, companies like Tesla took advantage of that. Also fracking started coming online after that period and oil became relatively cheaper over a long period.
Serious question: I keep seeing opinions about the inflation and supply chain problems being purely the result of the stimulus, and they feel, well, ideological. To what extent is this simply the effect of the pandemic? In my own family, we’ve spent way less on travel and more on things over the last couple of years.
Put another way, isn’t this the product of a combination of factors and not just because of the stimulus? I’m not convinced supporting people out of work through no fault of their own is a bad idea.
I think it is wrong to generalize from Peleton to Tesla to Apple. These are not at all driven by the same thing. Plus the latest Apple earnings have already proven the author wrong.
You can't generalize speculation or growth stocks with value stocks. Cut out meme stocks or recently IPO companies, for they skew the data for an overall economy analysis.
On Apple, if you compare a 1 month (from new year's heights) market correction with major direct or indirect competitors (quick sampling) before their earnings: Microsoft, AMD, NVidia, Amazon, Netflix showed 15-30% decline, while Apple was only -10%, S&P500 -9%. This downturn was mainly based on [unfounded] fear sentiment outlook (bear/short speculation by media): supply chain disruptions, fed hikes, Ukraine war. More on this below.
After earnings, Apple was ~+10pts or -5%, while S&P -7.5% on 1 month avg. Because Apple is diversified (and successful) in so many present (and future) industries, you can prob. treat it as a better indicator/peg for the US economy - if you don't want to be involved with "blood money" stocks inside popular ETFs (Meta, J&J, etc.) No wonder Buffett holds Apple as a majority stake in his portfolio (~49%).
If you want to see how unfounded the fears above are and how those newly printed dollars will eventually flow into the system/economy (and not just "disappear"), take a look at these sources:
[1b] The fed printed money for the 2008 crisis and lowered int. rates to nearly zero (though less scale), 2nd P/E peak now (dejavu?). Notice the marked crisis periods.
https://fred.stlouisfed.org/series/M2
[2a] Interest hikes: Fed plans 3-4 till 2023, but will not top 2% (media estimates). Gov likely not rise it too much like the 1980s, since we are still recovering from the pandemic.
Peloton and Docusign are two drastically different companies, on very different trajectories. Before the pandemic, the busiest mall in my town had a Peloton pop up store that was a ghost town EVERY time I walked by it (I couldn’t even count the amount of times I went by it). This narrative about “pandemic stocks” just feels like lazy regurgitation without looking in depth. PS Tesla did fine with earnings.
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[ 2.7 ms ] story [ 246 ms ] threadYou might want to take at the numbers involved (this is just the US, other countries also had huge packages):
https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_20...
https://en.wikipedia.org/wiki/CARES_Act
As any graph comparing CPI-Goods versus CPI-Services will show:
* https://ritholtz.com/2021/11/structural-or-transitory/
Further, Goods YoY inflation has been flat/negative since 2013, so most supply chains probably weren't really being stressed much (and maybe even atrophying slowly) when the sudden surge in demand hit.
People weren't purchasing Pelotons with $600 stimulus checks. The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place. (I do fully agree that stay-at-home orders motivated some purchases, though - but again, the sort of people who could actually stay at home and take meetings from their home office instead of driving around town delivering Pelotons were the sort of people who already had the cash to spare for these things, anyway.)
That stimulus ended up in the hands of business owners, which effectively caused a partition: because business owners, as a group, had more money, they could all raise prices and afford it. But the working class, as a group, did not have noticeably more money.
In other words, there was a sharp rise in inflation - for the owning class. The effect was the same as if there were two neighboring countries, and one experiences inflation. That country's cost of living goes up, but so do their wages and the valuations of the things they own. So they're fine, and effectively they can buy things from the second country for even cheaper in terms of purchasing power. But people in the other country find it harder to afford to buy things from the first country. They're the ones most hurt by inflation.
Anecdotally, they totally were. In my immediate friends group, families that were eligible for stimulus (making around $120K/yr) spent it on luxury items including photo cameras and as a downpayment for new cars. I don't know anyone who bought a peloton but extrapolating what I saw in my circle, it's totally believable.
That's not true at all. The cutoff for a married couple to get stimulus checks was 150k combined per year, which is a lot of money in the majority of the country. I was making 135k, 40k more than the median income for my state, and my wife and I got thousands of dollars in stimulus money. We ended up each buying $1200 Herman-Miller office chairs since we were stuck at home on our computers all day.
$850 billion was distributed to Americans via stimulus checks (over a year, amounting to aboutn $266/month).
The remainder (5 TRILLION) was distributed to corporations and the Feds plunge protection team.
https://www.washingtonpost.com/graphics/2020/business/corona...
It is naive - because people go off the outrage posts and ignore reality. Stimulus checks were disbursed between March 2020 and March 2021 - it's been almost a year since the last stimulus and people are still harping on it.
>>[1]People in Paris were getting rich — and they were getting rich fast. In fact, it was so hard to describe how rich everyone was becoming that a new word was needed and the term “millionaire” was coined in 1719.
>>[1]The people of France could thank a Scotsman with a penchant for gambling, the printing of new paper money, and all the vast riches that surely would be found in the New World for their sudden wealth
>>[1]Realizing that the paper money was only going to continue being a problem, over a few months France again allowed transactions to be conducted in metal currency. Further, it limited the uses for paper money to buying government debt issuances, in this way, taking on debt from its citizens in order to prevent the financial system from collapsing completely. Through these actions, by the end of 1720, Law’s original money-printing bank shut its doors, with the Mississippi Company dwindling towards the same by the end of 1721.
Or fun stuff like the tulip mania, when supply and a little bit of euphoria made things silly:
>>[2]The Dutch Tulip Bulb Market Bubble was one of the most famous asset bubbles and crashes of all time. At the height of the bubble, tulips sold for approximately 10,000 guilders, equal to the value of a mansion on the Amsterdam Grand Canal.
>>[2]Additionally, because of the timing in tulip cultivation, there was always a few years of lag between demand pressures and supply. Under normal conditions, this wasn't an issue since future consumption was contracted for a year or more in advance. Because the 1630's rise in prices occurred so rapidly and after bulbs were already planted for the year, growers would not have had an opportunity to increase production in response to price.
[1] https://newsletter.butwhatfor.com/p/john-law-and-the-mississ... [2] https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...
Yet we did just that. People not working being paid for existing at a time when the real economy went into cardiac arrest by every measure of actual productivity. Instead of giving people money to chase goods stuck in ports the government should have spent that money on building up infrastructure and have people out doors away from covid.
Were I a betting man I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s.
This statement makes no sense: even (most? all?) construction was shut down during (pre-vaccine) 2020 for periods of time to reduce the spread of COVID. At least it was where I was.
Further, the people staying at home were often in the service sector: retail, restaurants, etc.
Even when the restrictions were lifted a bit, you can't simply take random people who were doing one job and throw them onto a construction site and expect them to be useful (never mind productive/efficient). The number of companies and people available at any given time to do this is at any particular instant of time is finite, and most were probably on a contract. Certainly over time people can shift careers, but that is not instantaneous change.
Depending on the "infrastructure" you want to do/build, you need lead time to actually design what you want to build, do surveys, get permits, and order materials. And because of global supply chain issues, a lot of materials were in short supply: lumber being the most publicized, but shipping pallets were an issue as well (there was a good Odd Lots podcast episode on them), as were the obscure things such as truss plates.
Maintaining infrastructure is a great idea, but you don't "just" do it. Outside of 'simply' tarmac repaving the surface of a road, most everything else takes a few months of planning.
Yes, and? All it would have taken was to call them vital workers, or whatever the local equivalent was, and they could have kept working. That was a political decision and covid still spread among vital workers. Adding construction would have changed very little in the grand scheme of things.
As for the rest building isn't software design. Unless people start getting physically in the way of each other more people on a site means the project gets done faster. If nothing else the real tradies would appreciate having a gofer each.
Have you worked construction?
If they're clueless, then they will slow you down with mistakes and questions/training. Not to mention many parts of construction require skilled trades (electric, plumbing, carpentry, masonry, etc), some of which require licenses.
There's smaller and smaller areas of construction that is unskilled nowadays AFAICT. Unless you're just there to lift stuff and/or literally dig ditches (which is often done with machines), there's not much that can be done by some rando off the street. Even the day labourers that are found around Home Depot (probably?) have areas of knowledge, even if it's just framing.
Certainly some areas could be picked up fairly quickly (spreading/trowling and/or screeding concrete?), in most other areas there's some specialized knowledge. Especially if it has to meet code, which is getting more stringent over time. A YouTube channel of someone who does building inspections:
* https://www.youtube.com/watch?v=326J5b_1ydI
* https://www.youtube.com/watch?v=xD3Vo6WTsXA
Quite a few subtle places that one can mess up, even if you're a licensed professional (e.g., electrician) and are supposed to know better.
I had an inspector come out to verify my generator hookup and interlock switch. He asked a few basic questions, but that was it. He didn't ask nor look at how the legs of the panel were balanced or anything. Later he sent me a letter saying I needed to mark the generator receptacle with the max wattage. Um yeah, that was already on there...
It's all about the permit money.
"No one complains about having too many apprentices around when they can get you everything you need without you needing to get off the ladder."
Except when they are "clueless". Then they'll waste your time by bringing you the wrong thing.
You see this is what I have been thinking as well. We have the corruption and rot being exposed on a daily basis by all the new Left media. Do we honestly think the capital class is that stupid that they haven't thought of some way to extinguish the rise of progressivism when the playbook is out in the open? They are probably 10 steps ahead of any populist movement. The left frequently cites FDR and how things turned around after the people had enough and were at the breaking point. They say its in the cusp of happening again. Yes that could happen again but with the rise of technology and big data, I can't possibly believe that the capitalist class hasn't used this ability to simulate every probable outcome to counteract this.
I am reminded of the excitement I was feeling in the run up to Bernie almost clinching the presidential nomination. His campaign was firing on all cylinders and was just destroying everyone else in the race. I got a false sense of victory when I took seriously the crying that all the mainstream media pundits started to do after his stunning victory in Nevada. It was all a ruse in the end. At the last second before Super Tuesday (the day that would have cemented Sanders victory) the Democratic leadership(Obama and others) made a deal with Klobuchar and Buttigieg to drop out and side with Biden in a move that left the Sanders campaign with no time left to recover. I saw things like Universal Healthcare, stopping the MIC and other progressive goals literally crumble in my hands after that day. Looking back, I should have seen what happened to Jeremy Corybn in the UK and treated it as a canary in the coal mine. Now with Biden having done absolutely less than nothing, I feel as if at least half of the Millenial generation and some of Gen Z has been completely written off at this point. The oldest in this cohort is turning forty and there is no way for them to make up for lost gains in this corrupt rotten scenario.
I'm really scared about the future. They are now gunning for the last stable career in the US (software engineering/IT) and while I am in my 30s and been in the industry for ~10 years now, I can't be reasonably sure that I can make it to the finish line of retirement without this career disappearing or being severely curtailed by automation/outsourcing/etc. I guess every generation has this fear.
The New Deal did very little to stop the great depression until WWII started. People forget that everything in the New Deal was still too little too late and it was only fixed when the federal government debt was 20% of the US economy for 5 years between 1941 and 1946.
At this point I think they know 2022 is gone, and are aiming for a fighting chance in 2024. The only real difference between a president bernie and a president biden, is that in 2023 and 2024, leading up to the election, when the republican congress refuses to do anything, Bernie would sign EOs that would help people, and Biden just MIGHT sign them (being able to use the excuse that republicans wont work with him to do it).
IMO, the only good thing that was ever going to come from these 4 years was not having Trump as president, and possibly an EO reducing student debt and an EO rescheduling marijuana. Nothing else progressive was going to happen even with a president Bernie. And those two EOS might still happen from Biden, but who really knows.
I respectfully disagree. Did you know that in 2016 in the Democratic primary in West Virginia Bernie won all 55 counties and in one country Hillary Clinton finished in third place? West Virginia has an extremely strong history in fighting for workers rights. The whole term 'redneck' came from the red bandanas the coal miners used to wear when protesting for better working conditions.
Bernie was very clear on how he would handle Joe Manchin: He would go into WV in every county and publicly hold rallies showing the state how much Manchin is holding them back from the things that they want. He would take every opportunity to embarrass and pressure Manchin. Finally, he and Biden have one more angle. Manchin's daughter is the one behind the whole Epipen price gouging scandal. There is plenty to go after her with. That would certainly light a fire under his rear end. Biden has not even tried any real pressure and for that is all on him.
>MO, the only good thing that was ever going to come from these 4 years was not having Trump as president, and possibly an EO reducing student debt and an EO rescheduling marijuana.
That is enough to rally the base and get them fired up and work to expand on the purple states to gain seats. He blew a perfect opportunity.
Fun story: One of my friends had a photo with Manchin once when he was governor, he literally picked her up and placed her somewhere else like a child. The dude sucks.
Brexit was a canary for Trump but that was also ignored
Certain groups have used the UK to refine their methods (cambridge analytica etc) to use on the big prize.
>Certain groups have used the UK to refine their methods (cambridge analytica etc) to use on the big prize.
We like to think they are wildly different from each other. Turns out the two countries are still very similar in values and mentality.
Do you think all those employees building Macs and chips managed to get into SW development before their jobs were offshored?
I am reminded by this presentation I saw(and was shown to teachers all around the country) in the early to mid 2000s.:https://www.youtube.com/watch?v=FdTOFkhaplo
Its crazy just thinking back to those times.
The comment at the top here was "I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s."
It's a conspiracy in the same way that looting a shop in the middle of a riot is a conspiracy.
Even in states with left leaning politicians, most construction was shut down. There were people questioning why outdoor construction was shut down.
Are people still on this canard?
As a reminder, if people were paid by their measure of actual productivity, minimum wage would be $24/hr (see: https://www.counterpunch.org/2020/01/24/what-the-minimum-wag...)
Another reminder, these are the relief payments made to Americans over one year:
A total of $850 billion was disbursed. The total payments work out to $266.66/month. I don't understand how disconnected people have to be to be angry over $266.66/month.Compare that disbursement with PPP loans. I don't see the same gnashing of teeth over the forgiven loans (remember a lot of them were not used for their intended purpose):
https://www.sba.gov/funding-programs/loans/covid-19-relief-o...
And "paying people to exist" amount is completely dwarfed by corporate bailouts and tax breaks:https://www.washingtonpost.com/graphics/2020/business/corona...
... All data in: https://www.covidmoneytracker.org/So please, lets stop it with this right wing nonsense that people were paid to not work while ignoring the rest.
Huh? What does one have to do with the other? Minimum wage just means that jobs that pay less than a certain amount are forbidden. It has nothing to do with productivity per se.
In Singapore our minimum wage is 0. Yet people are still paid. And paid rather well actually. When productivity changes over time, we don't adjust that figure. But wages do adjust, thanks to market forces.
The only relationship minimum wage laws have with productivity is that if you raise minimum wage much faster than productivity, your economy is gonna have a really bad time. The reverse is not a problem.
Except for the folks, who you know, are responsible for that productivity!
If you don't have enough labour market competition for that, you should look into easing barriers to entry. So you can: invite foreign companies to set up shop, encourage existing companies to branch out (eg allow WalMart to offer bank services like they wanted to; allow banks to sell coffee, like they wanted to), encourage start-ups. Perhaps try to move taxation away from labour and capital, and towards land.
I have a feeling that some of the angry people are people who made too much money to qualify for the stimulus. I certainly didnt hear of anyone returning their payments.
It's all a question of how much money you are printing, and what your inflation targets are.
The Fed is supposed to 'print' just enough money to hit 2% inflation.
If the fiscal side is doing weird stuff (or not doing weird stuff), the Fed is supposed to accomodate that by printing more or less money, so they still hit their 2% target.
Just wish I could just go into my time machine for 2025 onwards
https://www.businessinsider.com/personal-finance/fed-taperin...
"Tesla will be reporting earnings just as this article goes to publication today. But in my view, any “fundamental” news coming from Tesla’s earnings is rather meaningless. Why? Because we’re talking about a company completely divorced from any semblance of fundamental value."
Author: complains that investors are ignoring fundamentals
Also Author: ignores fundamentals
While the P/E compression during a recession is completely normal, and yes, Tesla is overvalued looking stricly at P/E, they will survive a recession blow much better than a lot of companies because of their cash balance, margings, and operationnal excellence. Drops are expected and serious investors will see this as a unique buying opportunity. It could go down 90% for all I care, I would buy more shares.
If you are in the market for day trading, get out for a while because at times like this you will mostly get burned unless you really know what you are doing.
If you are in the long run, did your research, you shouldn’t sweat at reading all this doomsday material vs. any stocks you own. its as bad as bulls saying tesla will reach 5000 by the end of the year.
Wow lots of passion you should see the points going up and down on this one ;).
Tesla has made no indication that they'd ever license their self-driving or sensor tech to others. Pretty much every other project Tesla has suggested is vaporware. The one and only thing they'll successfully produce and launch, possibly in our lifetimes, is cars.
And yes, the car part of their company is not important to them, but it's what they're making, and it's what we're buying. It's also the weakest part of their company. Despite their production numbers being relatively low, the QC issues and service issues are pretty noticeable. They absolutely need to fix them to reach the average customer, which they'll need to. To reach full potential of their current stock values, they can't just rely on tech savvy individuals looking to overlook QC issues.
It's like saying "Apple isn't a phone company, it's a services company." Even though that might be true in a sense in terms of their revenue, the iPhone is the lynch pin of their business. If they fucked up iCloud and Apple TV+ and the App Store, it'd suck, but the company would survive. If they majorly fuck up the next iPhone? Probabaly not.
Grid energy storage is a successful and growing business segment. It doesn't yet have the scale of the car business but to call it vaporware is dishonest.
Do you mean self-driving or "self-driving"?
But I still stand by my comment, his tweets are somewhat irrelevant given how many false promises he has made. He made a statement years ago that he'd let other companies use his supercharger network, but dragged his feet on it. Until very recently where they've started piloting the project in Norway.
If we are looking at tech companies purely from research assets accrued, I have to say Facebook is a bargain here. And even more so with Google.
Tesla on the other hand is more of a marketing company. Their R&D spend does not match all the hype. If they’re rolling out a revolutionary humanoid robot, I have to think that’s going to cost them more than $2B per year to develop.
And which AI products do Google and Facebook sell to their customers for revenue?
Google and Facebook are ad companies plain and simple and invest into AI R&D to further improve their ad targeting capabilities.
Please wake me up when Waymo and Deepening generate any profit on their own, without any funding from the mother ship, that doesn't revolve around ad targeting.
I wouldn't be surprised if Tesla is operating it's AI efforts at a loss as well.
What generates revenue is what defines a company straight and simple not what they want to call themselves, since they all say their mission is making the world a better place and other such BS.
Anyway, no point in continuing it.
And its not-quite-mirror, labor force participation: https://www.bls.gov/charts/employment-situation/civilian-lab...
The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes is smiling. In exchange for that we've got only 5%ish inflation, driven partly by a newly-tight labour market in which people can actually negotiate incomes upward, and partly by a big spike in natural gas prices? I would absolutely take it. (Roughly the same pattern is seen in the UK, and most of Europe; I'm not sure how well it applies to emerging economies)
There are two standard remedies for inflation: monetary tightening (raise interest rates) and fiscal tightening (raise taxes). Both of those operate on inflation by pushing unemployment back up and reducing the amount of money chasing goods. Both are eminently feasible if action is needed against inflation.
What makes you think that temporary measures will avoid a permanent impact on the economy ? These measures only delayed the impact.
I am not sure why everyone thinks it is cruel and unusual punishment to ask people to do some of those things that need done (burying power lines in cities, as one example) in exchange for money.
Why is it so barbaric to give people a job? Theoretically, there are plenty of low-skilled workers that could've been trained to do needed skilled work during this time - instead of waiting 3 months for low-skilled labor demand to pick back up.
Now - for the rest of their lives - they could be high skilled laborers. Instead, we paid people to just wait.
I agree that it was better than doing nothing.
Or that the Manhattan Project was only good for New Mexico and Washington.
It'll cost ~$21Bn total with financing - but that goes until 2038: https://www.google.com/amp/s/www.boston.com/uncategorized/no...
That comes out to ~$500M a year - which sounds absurd - but that pretty massively benefits ~500k+ people per year. That's ~$1000 per person per year - which still sounds absurd - until you factor in that half of that will be paid in $0.5 and a quarter of that might be paid in $0.25 or less.
And then when you factor in that that monstrous highway is gone forever, and Boston will likely be around much longer than another ~20 years - it honestly doesn't sound like a bad deal.
NYC's second avenue subway - at ~$3Bn per stop - if each stop increases ridership by ~30k people - which generates ~$48M per year in revenue, which is theoretically ~30% less than the ongoing maintenance cost (https://media4.manhattan-institute.org/sites/default/files/f...) - is pretty similar.
IIUC - currently MTA runs at loss of about $7 per month per resident. That seems like an absolute bargain even for people who don't take the train. The reduction in traffic and cars should be worth way more than that to most people in NYC.
I suppose it could have been the 1037th Non-Combat Plumber Division and everyone would have been fine with that.
Militaries in other countries are evolving to do more public works and less defense / offense.
A lot of the infrastructure to facilitate it (the hiring, training, coordination, etc) is there.
World's leading country in inflation, Venezuela, has terrible wages.
Inflation makes people overworked, by forcing them so sell under fair price. Wages are sticky, prices are not.
That salaries are picking up doesn't mean real salaries have improved. They have not.
The Fed handled the monetary side of the pandemic reasonably well. Inflation overshot a bit, yes. But it's far cry compared to when they caused a slowdown in the housing market to become the Great Recession in 2008-ish.
People with savings and salaries got a nice 7% wealth tax this year
The government, with it's massive 20 trillion dollar debt, got a nice 7% write down on the debt, so they can quickly spend this voucher again in a matter of weeks.
Venezuela (and almost all the classic hyperinflation cases) are forex crises. You can't print foreign currency, which you need to buy goods on the international market; and the collapse by mismanagement of Venuela's oil industry and any other export industries means that the currency is just going to keep devaluing as the trade fails to balance.
> That salaries are picking up doesn't mean real salaries have improved.
It is however a necessary condition for real salaries to improve that nominal salaries improve. Which needs a tight labour market.
As soon as the restrictions were lifted, companies started hiring again
It was never ever ever a demand problem, only of supply.
Unfortunately, people are too ideological and blind to diagnose issues correctly.
People kept receiving salaries, and unemployment benefits. So financial position and income of families was always strong
There's no precautionary savings cycle.. People engaged in financial risk taking by buying houses like never before
I'm confused; weren't you arguing above that unemployment concerns shouldn't have motivated government spending because the drop in demand was artificial? You can't bolster that position by saying that the demand stayed strong because of unemployment benefits and salaries that went out despite people staying home; those spending categories (PPP loans and enhanced unemployment benefits) were a government subsidy to keep demand from cratering.
The personal savings rate tripled in early 2020: https://fred.stlouisfed.org/series/PSAVERT
Fiscal tightening doesn't do anything about inflation. See eg the fiscal cliff of 2013 for an example.
specially when the central bank has the tendency to print money to buy government debt, so public solvency is never an issue
You can't really reverse fiscal stimulus. Once you paid people to dig holes and cover them again, you can't really get that money back.
Yes, public solvency is not an issue for governments that borrow in their own currency. But that's a separate concern.
That doesn't matter though? If someone's unemployed, their labor is wasted, and you can't get it back. The money spent is not destroyed, it re-enters the economy when the workers you gave it to immediately spend it, and comes back to the government when they pay income or sales tax.
You can reverse fiscal stimulus by putting up taxes.
Be careful to keep the nominal and the real separate.
Destroying money is great! The Fed can just print more to make up the difference.
Equivalently buying stuff from China, and China hoarding the money they got forever is great, too. You got stuff, and the Chinese only got some database entries.
> If someone's unemployed, their labor is wasted, and you can't get it back.
Yes. (Though the leisure they enjoy isn't necessarily completely worthless. But let's ignore that for now.)
And we find that in general the private sector makes more productive use of people's labour (in real terms). Especially when compared not to the day-to-day running of existing civil servants, but to make-work schemes.
The Fed 'printing' money increases private sector spending and private sector employment.
> You can reverse fiscal stimulus by putting up taxes.
Taxes don't remove the money from the hands of the people you paid to dig the holes and cover them up again.
More importantly: taxes have substantial deadweight losses. Taxes cause real productivity losses.
(Just to be clear: I'm all in favour of financing the government from taxes that have low or zero deadweight losses, like property taxes or land value taxes.)
Selling assets from the central bank balance sheet on the open market has no deadweight losses.
You can do that.... but watch the markets tumble and the interest rates skyrocket... and the politicians and bankers panic!
There was hardy any useful stimulus in the US post-2008 because Obama (D) was in the Whitehouse and the GOP-controlled Congress didn't want to help him out. So it was mostly just monetary policy (Fed) that did things, and it was a long slog of pain to get unemployment down and get the economy going.
With COVID we had monetary policy (as before) but also fiscal policy (Treasury), and I think that fewer people suffered economically. Especially since the Fed can only work 'internal' to the financial system, but it takes the Treasury to get cheques-in-hands.
(Certainly the two scenarios are not directly compatible, but it seems obvious to me that fiscal can have more direct impact on regular people's lives, e.g., average savings rate increased.)
For the 2020 recession, you had the Fed drop reserve requirements for bank, and move to average inflation targeting, and in general move much more aggressively.
See also Japan: since the 1990s they had a long history of fiscal stimulus and monetary tightness. When Abe came to power a few years ago, he loosened monetary policy, and the Japanese nominal GDP started to grow again.
Me too. I would take that deal again.
As I recall, for a few weeks in early-to-mid 2020, the world was in the grip of fear, consumers everywhere had drastically cut their spending, and businesses everywhere were in free fall. Government intervention stopped the free fall. I know of several small and midsize businesses that briefly considered Chapter 11 and of one billionaire who had his lawyers draft personal bankruptcy filings during those few weeks. Every CEO and business founder I know took out a PPP loan -- and no one repaid it. The moment government money started flowing, everyone changed their tune. I'm 100% sure that, had it not been for all that government intervention (fiscal and monetary), we would be in the throes of a horrific Great Depression right now.
That said, I think there will likely be two significant costs to all the "mopping up" to be done by central banks (stopping their purchases of government bonds to replace holdings that mature, reducing the pool of capital available for buying government bonds, and raising rates): (1) asset prices are likely to decline, perhaps significantly (that is what has happened in other periods of voluntary/involuntary monetary tightening throughout history), and (2) we will likely have to suffer through a normal recession -- much better than a Great Depression, but still, not fun.
[citation needed]: please distinguish between gifts and loans, bearing in mind that a loan written off other than in bankruptcy can be counted as a gift.
There is a big problem that most of the consumer spending goes through Jeff Bezos who gets to keep a percentage of it, but that's not the same as directly giving him money, and happens regardless of the stimulus or not.
This is the big point I think the title article is missing. And I think its going to take some time for the bubble to pop, they tend to be self-sustaining, but it may shift its focus off of Peloton and the winners early in the pandemic. I wouldn't bet against TSLA right now.
There's likely to be another boom later this year as Omicron goes away (even if we get another wave later) driven by positive emotions. Right now all the animal spirits are maximally negative and they're pretty poised for a reversal.
The Fed also won't act sharply enough to spike unemployment this year.
The next 10-15 years for investors are likely to be much more challenging than the last. How do you navigate such a climate with extreme overvaluation in all asset classes? That's why I'm building sophisticated algotrading models at https://grizzlybulls.com to help determine when to hedge and produce positive absolute returns regardless of market environment.
Mr. Market is apparently a total idiot and can't distinguish infinity from unity.
Somehow all these Zero Hedge wanabee's would be more credible if they could predict some event, on the basis of their favorite cumulated "idiocy" metric. Expressed in observable outcomes, that would come to pass within a defined period.
Its called falsifiability [0]. Otherwise its a lot of hyperventilation, angst and/or hidden political agendas
[0] https://en.wikipedia.org/wiki/Falsifiability
https://www.theguardian.com/business/2022/jan/24/us-stock-ma...
It seems as if it is hard to trust any one source, when it comes to macroeconomics; i mean there are a lot of biases, and everyone seems to be looking for confirmation of his own world view.
For example, in late 2000s oil went up as high as $150 per barrel, gas was super expensive. People started talking about electric cars and renewable energy, companies like Tesla took advantage of that. Also fracking started coming online after that period and oil became relatively cheaper over a long period.
Well, not all of us. Just people who work for a living and pay significant taxes, and people who were responsible and saved.
There may be enough votes in people who aren't in those categories to elect another tax-and-spender.
Put another way, isn’t this the product of a combination of factors and not just because of the stimulus? I’m not convinced supporting people out of work through no fault of their own is a bad idea.
On Apple, if you compare a 1 month (from new year's heights) market correction with major direct or indirect competitors (quick sampling) before their earnings: Microsoft, AMD, NVidia, Amazon, Netflix showed 15-30% decline, while Apple was only -10%, S&P500 -9%. This downturn was mainly based on [unfounded] fear sentiment outlook (bear/short speculation by media): supply chain disruptions, fed hikes, Ukraine war. More on this below.
After earnings, Apple was ~+10pts or -5%, while S&P -7.5% on 1 month avg. Because Apple is diversified (and successful) in so many present (and future) industries, you can prob. treat it as a better indicator/peg for the US economy - if you don't want to be involved with "blood money" stocks inside popular ETFs (Meta, J&J, etc.) No wonder Buffett holds Apple as a majority stake in his portfolio (~49%).
If you want to see how unfounded the fears above are and how those newly printed dollars will eventually flow into the system/economy (and not just "disappear"), take a look at these sources:
[1a] P/E ratio: 1st peak caused on 2007 caused by 1st iPhone announcement and later decrease caused by mortgage crises or earnings increase? https://www.macrotrends.net/stocks/charts/AAPL/apple/pe-rati...
[1b] The fed printed money for the 2008 crisis and lowered int. rates to nearly zero (though less scale), 2nd P/E peak now (dejavu?). Notice the marked crisis periods. https://fred.stlouisfed.org/series/M2
[2a] Interest hikes: Fed plans 3-4 till 2023, but will not top 2% (media estimates). Gov likely not rise it too much like the 1980s, since we are still recovering from the pandemic.
See the 2016-2020 hike? This could have been affected by Trump's corporate tax reform, but the stock market went on a parabolic rise since then https://tradingeconomics.com/united-states/interest-rate
[2b] Historical effect on hikes https://www.forbes.com/sites/kristinmckenna/2022/01/24/how-d...
[3] Historical effect on wars https://www.investopedia.com/solving-the-war-puzzle-4780889
Fearmongering has been used in the last crisis to sell gold, this time is crypto.
PS: This was just a quick analysis, would love to hear from experts.
1. Include Google and Tesla as current and future competitors
2. Disney and Google as "blood money" inside Etfs (advertising, sports betting, crypto [Tesla])
https://news.ycombinator.com/item?id=30148364
3. 2018 dip (repeat): https://www.cnbc.com/2021/12/08/why-this-month-echoes-decemb....
1. AMD rise due to crypto demand - 2017 https://www.cnbc.com/2017/07/26/wall-street-stunned-over-amd...
2. Downplayed by CEO - 2021 https://www.theverge.com/2021/9/27/22697339/amd-crypto-minin...
3. Best mining GPU - 2022: https://www.windowscentral.com/best-gpus-crypto-mining