Tuesday, May 20, 2014

Moral Normcore

“Normcore” is a label for the current fashion trend of wearing undistinctive, unremarkable clothing—but the word itself is exploding across the American zeitgeist. Somehow, people sense that the word describes more than just fashion.

I agree: To me, the term “Normcore” seems to describes how we as individuals and as a society are facing up to—or rather, not facing up to—the excesses, distortions, injustices and perversions sprouting like weeds across the America landscape.

First, let’s define what we’re talking about: Fashion website Idol Eyes describes Normcore as “[an] understated, nondescript style. The desire to fit in rather than stand out.” Wikipedia defines it as “stylized blandness”. New York Magazine says that Normcore “[embraces] sameness deliberately as a new way of being cool, rather than striving for ‘difference’ or ‘authenticity.’”

In other words, Normcore is situational conformity: The desire to not stand out in any given context. The pro-active effort to comply with and adhere to the dominant outlook of the group.

Understood in that sense—understood as the desire to conform, or to at least acquiesce to the norm of the group—the term “Normcore” describes contemporary American morality to a T.

Moral Normcore, to coin a phrase, is the desire to neither cause offense by expressing a difference in moral opinion, nor stand out by making a moral judgment about that which we think is clearly wrong. It is the “Not-that-there’s-anything-wrong-with-that/No Judgment” moral outlook. It is to conform and acquiesce to actions, beliefs and statements of others which we find morally objectionable, if not outright wrong. It is timidity and silence in the face of moral transgressions, transgressions carried out by a vocal minority, or by the majority itself. Transgressions to which we object to—often virulently object to—often justifiably and rationally object to—but to which we remain silent, for fear of retaliation, or fear of being marginalized.

We see this every day. We experience this every day. We ourselves are guilty of Moral Normcore almost every day.

Thursday, May 1, 2014

Only In America, Part I

The New York Times has a front-page story about how Federal prosecutors are getting tough on the banksters. The headline: “Long Seen As Immune, Two Wall Street Banks Become Targets”.

But look closer. The two “targets” of government prosecutors are BNP Paribas and Credit Suisse: The latter for offering tax shelters to American clients, the former for making deals with Sudan and other blacklisted countries.

Meanwhile, Goldman Sachs’ front-running of its own clients? Bank of America’s shameful, shameless mortgage scam loan business? Robo-signings? High Frequency Trading? Collusion on interest rates? All that and much much more, the government regulators have let slide.

They are going after two minor banks—two minor foreign banks, which did not receive any American government largesse (i.e., taxpayer dollars) when the Too Big To Fail banks were bailed out in 2008—while letting the big fish swim away, untouched.

And the New York Times has the gall to say, “The banks are finally getting their due!”

See, this is why it’s becoming too depressing to blog. Like Capt. Willard said: The bullshit piles up so fast, you need wings to stay above it.

Wednesday, April 30, 2014

The Twitter In The Coalmine: The End of Asset Price Inflation?

Poor dead Twitter-bird . . .
So Twitter (TWTR) released some user figures, and they are not good. Bottom line, they’re losing money, and their user-base is shrinking—which is why their stock took an 11% tumble in after-hours trading as I write these words. From a high of 71.31 back in December 2013, to 42.62 at the close on Tuesday (April 29)—and then down to 37.83 in after-hours trading once the news came out.

In other words, Twitter’s stock has fallen nearly 50% in four months. Eeesh!

Friday, March 21, 2014

A Chinese Shadow Bank Bailout May Mean A Crash In U.S. Treasury Bonds

This article is adapted from a post which originally appeared at my Strategic Planning Group. Go to the preview page to see what it’s about.

China’s economy in 2014 is remarkably similar to America’s in 2008: Both were fueled by real estate speculation, both speculative bubbles a product of cheap-and-cheerful shadow-bank financing.

And just like the U.S. in 2008, China in 2014 is looking down the barrel of a Minsky Moment: The point at which servicing debt levels becomes unsustainable, and there are no reserve cushions large enough to absorb the losses.

Lots of people are pointing this out; Mish Shedlock had a piece about it this morning, and he and others are right to worry that a shadow banking collapse will be bad for China.

But it will be even worse for the U.S.: Because after all—unlike the United States in 2008—China in 2014 has the reserves to buy its way out of the hole it’s in.

In 2008, the U.S. shadow banking sector began its collapse when real-estate backed bonds turned out to be a lot dodgier than originally thought. This set off a systemic domino effect. We all know how the Global Financial Crisis of 2008 (GFC) played out.

Wednesday, February 12, 2014

The Trouble with IRA’s and 401(k)’s

Last week, The Daily Reckoning ranked me Number 5 on their list of “The 50 Best Investing Blogs”. All I have to say is, Thanks!
Individual retirement accounts seem like the answer to a lot of people’s prayers.

Every month, you deposit a set amount of money into your individual retirement account, whether it’s a 401(k), a regular IRA, a Roth-IRA, or any of the variants (403(b), most 457 plans, the Federal government’s Thrift Savings Plan, Obama’s new MyRA, etc.). That money that you contribute is discounted from your tax bill. So far, so good.

Once your money is in the account, it’s invested in stocks, bonds, or other paper assets. As it is invested in these paper assets, the amount of money in your retirement account grows as the paper assets rise in value and/or receive dividends or yields of whatever sort. Again, so far, so good.

By the time you retire, or so goes the idea, your individual retirement account will have grown in value so much that you will have a nice little nest egg. It will have grown from three sources: Number one, it will have grown from your monthly contributions; number two, it will have grown from the rise in the value of stocks or bonds in the account; and number three, it will have grown from the dividends or yields of those stocks and bonds.

This nest egg will be so big by the time you retire that you will have more than enough to receive a nice pension until the end of your days, and live your golden years worry-free.


Wrong. Oh so very, very wrong. Government-approved and IRS-compliant individual retirement plans work only in theory—but in practice they will not be enough to help you build a nest egg on which to retire. Far from it. Here’s why.

Friday, January 10, 2014

Why America Breaks Our Hearts

A man named LK dropped me an e-mail, in response to my Falling Forward piece.

In the piece, I discussed the inability of the United States to adjust after the end of the Cold War. My crazed ramblings garnered a great deal of reaction, both positive and negative—but LK’s e-mail stood out.

The first words that caught my eye fairly smacked me upside the head:
Wake up and realize you are married to a whore!
I’m recently married with a new baby—LK’s words did not sit very well with me at all. Who does this guy think he is?, I thought to myself, in the first flush of anger at this perceived insult.

But just a quick glance down the e-mail, and I realized LK wasn’t trying to insult me. It wasn’t even me that he was was writing to. I was just the focus he used to express his pain—a pain and hurt that I’ve felt too, a pain and hurt that over the last few years has grown worse and worse.

The pain and hurt that is the United States of America.

LK’s e-mail continued:

Monday, January 6, 2014

The Fed Is Playing Global Pump-and-Dump

People often criticize me for objecting to the Federal Reserve’s Quantitative Easing (QE) and Zero Interest-Rate Policy (ZIRP) on the grounds that they are setting the stage for hyperinflation and a dollar collapse. Since neither has arrived—yet—people mock me, often pretty badly: “Hey Lira! How's that 2% ‘hyperinflation’ working out for ya!

“The left side reminds me of Dow Jones.”
“Hmm! There does seem to be
a family resemblance . . .”
Funny-funny hardy-har-har.


But even if you don’t buy that QE and ZIRP will lead to a dollar collapse, you do have to admit that these Fed policies have severely brainwashed investors.

Why ‘brainwashed’? Because today, due to the Fed’s policies, stock prices are booming—we’re about to crack 16,500 on the Dow Jones, NASDAQ is well on its way to 4,200, and the S&P is close to 1,850—all record highs.

What’s wrong with record highs? What’s wrong with booming stock prices? Absolutely nothing—unless you look at the two-year charts and realize that these three indices are not reflecting a robust, booming economy. Rather, they have had unrelenting climbs that have been openly—and exclusively—caused by QE and ZIRP.

Which has brainwashed investors into dismissing value. Today, all investors are momentum-chasing pump-and-dumpers who are not worrying about fundamentals, or worrying about the long-term health and well-being of a company.

All they have been brainwashed into caring about is the rise in a stock’s price.

Which is pretty funny, if you think about it: These investors might shun penny-stocks, they might buy and sell stocks by way of “respectable” brokerage houses—but these investors are behaving exactly like the suckers taken for a ride by sketchy boiler rooms operating out of north Jersey.

And we all know how those poor saps usually end up: Broke, holding on to worthless stock certificates not worth the paper they’re printed on.

Why is this happening? Easy, because of the Fed’s QE and ZIRP have so flattened the yield curve across Treasuries and the rest of the bond markets, that anything yielding better than 5%—in any asset class, not just bonds—quickly gets priced up.

They call Treasuries the “benchmark” for a reason: As the (supposedly) safest asset class, they set the yield curve for all assets in all classes—not just in other bonds, but in equities and real estate as well. If Treasury yields are minimal, then a “normal” yield in a riskier asset class will also be minimal.

Look at the following chart: