US Stocks Are Now The Most Over-Priced Since The 2000 Crash – 01.26.17

  • On March 30, 1999, the Wall Street Journal’s front page headline blasted the good news across the world:
  • “Dow Industrials Top 10,000”
  • The day before, the all-important US stock index, the Dow Jones Industrial Average, closed above 10,000 for the first time in history.
  • It was a major milestone, and investors cheered.
  • A few investors, however, were concerned.
  • They felt that US stocks were too expensive, and the entire market was in a dangerous bubble.
  • But the Wall Street Journal answered those naysayers, as the headline of the second article on the front page ominously read:
  • “If this is a bubble, it sure is hard to pop.”
  • They were right. Sort of. The Dow Jones Industrial Average continued to climb for the next 8 1/2 months.
  • But on January 14, 2000, it peaked… and then started a horrible 2-year decline that wiped $5 trillion of wealth from investors.
  • Yesterday the Dow Jones Industrial Average hit another major milestone: 20,000.

Read more at:US Stocks Are Now The Most Over-Priced Since The 2000 Crash


“Exceptional” USA Only 18th In World For Transparency – 01.26.17

  • After coming out of a 2016 Presidential election cycle in which one candidate was the subject of multiple federal investigations related to illegal pay-to-play activities as well as the illegal destruction of federal records subject to a Congressional subpoena, perhaps it shouldn’t be so shocking that the United States was ranked 18th on Transparency International’s 2016 “Corruption Perceptions Index.”  But irrespective of our expectations, here is how the United States stacks up against other countries in terms of mass corruption of our publicly elected officials and the institutions they run.
  • And while the United States may not suffer from the widespread issues that plague the most corrupt nations of the world, certainly there is a growing distrust of the public institutions in Washington D.C. and the lifelong politicians that have all somehow managed to amass substantial fortunes from their careers in “public service”.

Read more at:“Exceptional” USA Only 18th In World For Transparency


How The Obama Administration Quietly Bailed Out Private Equity Landlords At The Expense Of The Middle Class – 01.25.17


  • So how much did Blackstone promise to give to the Obama library for this huge grift, um, parting gift?
  • As regular readers may recall, private equity firms piled into buying foreclosed single family homes on the belief that if the government (in this case, Fannie and Freddie) was selling, they wanted to be buying. And they also convinced themselves that technology would somehow allow them to manage geographically dispersed single family homes, which is inherently a hand-on business, more efficiently than mom-and-pop or small scale operators, many of whom had a cost advantage by having some of the principals provide services (as in doing their own plumbing and electrical, so effectively “buying” those services at wholesale prices).
  • The most disciplined operators did well by getting in early and buying only very discounted properties, so that they had a good cash on cash return on the rentals. It would be attractive for them to hold long term, which would also give them lots of latitude regarding an exit. The lack of time pressure would mean they could sell the homes individually, even through “rent to own” deals with the higher credit quality tenants.

Read more at:How The Obama Administration Quietly Bailed Out Private Equity Landlords At The Expense Of The Middle Class


2017’s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal) – 01.25.17

  • Forget about NAFTA or OPEC or TPP or crowd size or hand size or any other acronym or stat or concept that obsesses the financial press these days. Only two numbers actually matter.
  • The first is $20 trillion, which is the level the US federal debt will exceed sometime around June of this year.
  • To put $20 trillion into perspective, it’s about $160,000 per US taxpayer, and exists in addition to the mortgage, credit card, auto, and student debt that our hypothetical taxpayer probably carries. It is in short, way too much for the average wage slave to manage without some kind of existential crisis.
  • It’s also way more than it used to be. During his tenure, president George W. Bush (2000 – 2008) nearly doubled the government’s debt, which is to say his administration borrowed as much as all its predecessors from Washington through Clinton combined.

Read more at:2017’s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal)


Germany Unleashes New ‘Ministry Of Truth – 01.25.17

  • It seems that all ideas suspected of being “populist” — or simply those ideas without the blessing of the elites — will now be banned in Germany. This restriction applies to criticism of the government (especially regarding immigration and energy policies), of the EU, of Islam, of government officials and of the media.
  • As in communist dictatorships, the more obvious the failings of the government, the more aggressively the establishment attacks those who speak out about them.
  • Large companies such as Deutsche Telekom (T-Mobile), BMW, Mercedes-Benz and the supermarket chain REWE obeyed straightaway and promised to place Breitbart on the blacklist immediately, and never to advertise there again.
  • A plucky little pizza delivery service responded to the blacklisting demand by declaring that it was “not the morality police”. The company was denounced by Der Spiegel as “inept”, and after “protests from customers”, it ended up capitulating, as the newspaper reported with much satisfaction.

Read more at:Germany Unleashes New ‘Ministry Of Truth


Central Bankers, Politicians, & Why Frank Zappa Was Right – 01.24.17

  • Politics & Investing
  • Frank Zappa said politics is the entertainment branch of industry. We have noted that unprincipled centrists pose a threat to sustainability and have offended all by suggesting conservatives can be as economically impractical as progressives. That may not be how to win friends and influence people, but it does leave us free to objectively analyze political influences over economies and markets.
  • Central Banks
  • They say politics is about making choices, and so the debate about whether central banks are political is a non-starter. They are. Central banks ultimately exist to ensure the safety and soundness of banks by avoiding credit deflation. They are primarily charged with the task of maintaining economic liquidity, which all political parties endorse. The question of whether they have partisan leanings is less important.

Read more at:Central Bankers, Politicians, & Why Frank Zappa Was Right


In Blow To Theresa May, UK Supreme Court Rules Parliament Must Vote Before Brexit Can Start – 01.24.17 –

  • In a blow to Theresa May’s ambitions to implement a “clean Brexit”, on Tuesday morning UK’s Supreme Court ruled the UK Prime Minister can’t start the Brexit process without approval from Parliament, a decision that could potentially complicate her path toward a clear break from the European Union. Eight justices voted against the government and three voted in favor of it, in a decision that was widely expected.
  • The case had been brought by a group of British citizens opposed to Brexit with the help of some of the U.K.’s top constitutional lawyers. Spearheading the legal challenge were British businesswoman Gina Miller and hairdresser Deir Dos Santos. Grahame Pigney, a France-based expatriate who used crowdfunding from more than 4,000 people to pay for lawyers, joined the suit as a co-party

Read more at: In Blow To Theresa May, UK Supreme Court Rules Parliament Must Vote Before Brexit Can Start