Tag Archives: doom and gloom

And Fear No Darkness

This is going viral: And Fear No Darkness

Despite its length, it’s not very convincing. It’s more like a belief than an argument. It’s just the author’s hunch based on some 4th turning ‘theory’ that there is a 50% chance there will be some sort of civilization-ending crisis in the 21st century. Falsifying it is like trying to prove a negative. Such eschatological predictions go back centuries, and despite crisis such has ww1 & 2 and 911, civilization caries on anyway. Marx predicted 150 years ago that capitalism would doom society..still hasn’t happened.

If you think there will be crisis, why not put your money where your mouth is, such as by betting against the stock market and then making the prediction and bet public….if a mere 5% decline in 2008 of GDP growth can cause a 50% decline in the stock market, civilization need not have to collapse very far to realize a substantial profit…easy, huh. (I’m not advocating anyone do this, but opinions and hunches are a dime a dozen; much rarer is someone who puts up skin in the game.)

Now look at the seventy years since 1945, the close of this last crisis. Once again the population has tripled. This time all over the world, pushing up against food, water and political limitations and cracking the facade of the nation-state lines drawn after the Great Wars. The waves of immigration have just begun and already they are breaking down the great peace of the second half of the 20th Century. Just wait until millions of refugees balloon into tens or hundreds of millions displaced by climate change, famine and civil disorder.

Since 2013 or so, immigration is THE issue that separates the ‘mainstream right’ from the ‘dissident right’. Immigration, particularly Islamic immigration in to Europe, is on the minds of millions of people right now…it is the most important issue, and is why Trump won and Brexit happened. I underestimated the importance of this issue until only recently. London Mayor Sadiq Khan is right that ‘terror attacks are part and parcel of living in a great global city,’ only because the leadership is powerless/unwilling to do much about it, so there will be more terrorism. So what does this have to do with collapse? Mass Islamic immigration and terror is symptomatic of the collapse of leadership of France, Ireland, Germany, and Britain, and this may spread to other countries, too. Eventually, leadership collapse may lead lead to economic collapse, or at least a radical change in demographic and the transformation of much of Europe into a quasi-Islamic state. It will probably take the equivalent of another 911–or worse–for the leaders of Europe to get their act together. But in disagreement with the author, this doesn’t mean total civilization collapse. China, Russia, and America will fill the void of a dying/fading Europe. Economically, this is happening already, as China and America continue to pull ahead of the rest of the world.

Fallacy of Composition

Between 2008-2010, during the depths and aftermath of the financial crisis, pundits envisioned that the ‘old’ status quo would be replaced by a more egalitarian ‘new’ one of less wealth inequality, as well as slower economic growth and asset price stagnation, which some called ‘the new normal’. With the U.S. stock market and and U.S. economy in its eighth strait year of expansion, how wrong they were. All pre-2008 trends are not only intact, but have accelerated, as I predicted in 2011 they would. Had you asked pundits in 2009 that seven years later we would still be in an economic expansion and bull market, the answer would have been a unanimous ‘no’, save for myself and maybe one or two others out of hundreds. But the expansion, already in its eight year, is actually accelerating right now, prompting the fed to raise rates and boost the rate hike outlook for 2017-2019. The fed foresees three rate hikes for 2017 alone, although I doubt more than two will materialize.

The biggest and most common pitfall in predicting the economy, and why so many people got the 2009-2016 bull market wrong, is the fallacy of composition, in which one assumes that a singe single piece of data is indicative or representative the entire economy, when it’s really just predictive of the single data point and not necessarily more. Or in the words of Freud, sometimes a cigar is just a cigar.

The fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some part of the whole (or even of every proper part). For example: “This fragment of metal cannot be fractured with a hammer, therefore the machine of which it is a part cannot be fractured with a hammer.” This is clearly fallacious, because many machines can be broken apart, without any of those parts being able to be fractured.

Weak job data and a low labor force participation rate is evidence of a weak labor market but not necessarily a weak economy, nor does weakness in one area (labor)mean weakness in another (profits and earnings). The United States economy is bigger than the labor market, although the labor market is an important component of it.

Culture, states, politicians, and national and local governments, too, are just components of a bigger conglomeration. The fallacy is invoked again in the assumption that the failure of one component means failure of the entire system. So the question is, how many components must fail before the entire system fails, and when. That is harder to answer.

Related: The Overton Bubble

It’s Not Okay

This is pretty funny…there is a backlash by some Wait But Why readers, most of whom are on the ‘left’, who didn’t agree with Tim Urban’s optimistic assessment that ‘America would be okay’ after Trump winning, that Trump’s inexperience isn’t a big deal, and that most Trump supporters are not ‘stupid, racist, xenophobic fucks’. Some readers rebutted that, despite not all Trump supporters being racist, that Tim, as a ‘white heterosexual male’, was dismissive or deaf to the concerns of minorities, for whom it may not be so easy to simply gloss over the possibly of racial violence engendered by Trump’s win, spurring Tim to hurriedly pen a response to defend his original view and offer clarifications.

In Tim’s defense, incidents of racism and violence at Trump rallies and by Trump supporters are very uncommon, but if and when they occur, get far more media coverage than incidents of violence and hate by the left against Trump supporters, creating the false impression that the Trump and his supporters are collectively racist and violent. The media is a like a giant magnifying glass, focusing only on a handful of stories and narratives and in the process distorting the public’s perception of reality.

It’s estimated only 1% of readers post comments, which is why comment sections almost never paint a complete picture of the readership but rather are representative of only a vocal minority. Tim says his original post was read by a million people – that is a lot. By contrast, maybe only ten or so vigorously disagreed, posting impassioned responses in the comments, a ratio of about 1/100,000 of total readers. But now this vocal minority has Tim’s attention, and he must stop whatever it is he’s doing to give priority to them over the 999,990 other readers. What a waste of time.

To put it another way, imagine a huge rock concert in Madison Square Garden…20,000 people are in attendance, which is the maximum occupancy, and as the show is underway, amidst the cheering audience a fan yells ‘You suck!’, and the band stops their set to engage in a one-on-one dialogue with this person to inquire as to why their performance sucks, despise the fact that everyone else is entertained, and then after the concert the band redoes their set and rewrites their songs to take into account the feedback from this single disgruntled fan.

This is part of the reason this blog doesn’t have comments: not enough readers to make it worthwhile (especially when having to deal with the tons of database-clogging spam this blog gets when comments are enabled); I don’t want to be swayed too much; and in an era where ‘free speech’ is paramount, any form of censorship is frowned upon, so rather than ever having to delete a comment, it’s easier to just not have any.

And then even after Tim’s apology, some readers are still not happy, using it against him as evidence of him dissembling his true emotions and being phony.

There is no pleasing some people.

But the weird thing is, based on my own observations such as the example above, readers, especially online, tend to react with more hostility to optimism than pessimism. The left doesn’t want to be told that America is not dying, that Trump will not kill the US economy, or that Trump supporters are not evil people. Optimism tends to elicit rebuke whereas pessimism is met with acclamation, both for ‘left-wing’ and the ‘right-wing’ communities. Why is bad news so appealing. Why do we want to be told everything is doomed, when destruction and misery are generally things sane people seek to avoid.

The answer, I suspect, is two-fold:

First, the far-left (OWS, BLM, etc.) subscribes to a Rousseau worldview, which has a very negative view of human nature, humanity, and civilization. Rousseau believed that the default state of man is the ‘noble savage’, which is corrupted by civilization and modernity. Similarly, the far-left believes that modern civilization is part and parcel with sexism and ‘institutional racism’ that arises from it – the two are inseparable – and that early history, before the advent of capitalism, industrialization, and ‘gender roles’, was more peaceful and egalitarian. Being told that ‘everything is okay’ is an affront to this, because it implies that there is no more sexism and racism and that the state need not intercede to try to create equality. For the far-left, their work is never done, and only with the total destruction private property and the creation a ‘gender/race blind society’ will they be placated and ‘everything will be okay’. Hobbes famously described life as being ‘nasty, brutish and short’. [1] Similarly, the far-left believes that life is brutish and short for minorities (which only includes Blacks, not Asians (who don’t count, apparently)), who are at constant war with police and a government that wants them dead or imprisoned.

The second reason, for myself and others who aren’t far-leftists, hits closer to home. Doom and gloom may be an excuse for not having to take personal responsibility for one’s own actions, as a way of compartmentalizing, shifting blame, or reconciling failure. Others want to believe that the system is ‘rigged’ and that if they fail, it’s someone else’s fault, not their own. Conspiracy theories are a way of shifting blame from the ‘self’ to the ‘collective’ (culture, government, civilization, society, economy, etc.). If ‘everything is okay’ then there is no good excuse to fail, and if you fail, it’s your fault for not playing the game correctly, not the ‘system’. This is like being told ‘hate the player, not the game’. It’s patronizing and dismissive, because sometimes there are legitimate reasons to ‘hate the game’ if the game inherently rigged or unfair in some way. Trump won by empathizing and commiserating with voters and their concerns, not hand-waving them away as ‘everything being okay’ when in the minds of voters things aren’t okay.

We live in an age of ‘scientific enlightenment and reason’, which presupposes people strive to rational, correct, and reasonable, not irrational, wrong, and mistaken. Being wrong and failing, when there is such so much information readily available (such as online) and so much technological advancement, and in an economy and culture where wealth, achievement, and success is so important, is considered unacceptable. As I explain in the ongoing series Wealth, Intellectualism, and Individualism, post-2008 economic and social trends put a lot of precedence on individualism, be it capitalism or the acquisition of social capital. Because so much is expected of individuals, and the pressure to ‘keep up’ is so strong, wishing the whole system would just collapse under the weight of progress, is catharsis for some and an unshackling of this burden.

[1] According to Hobbes, this description applies to the uncivilized, the opposite of the ‘noble savage’, as justification for his support of monarchy. Similarly, the far-left also believes humans, particularly white males, are intrinsically corrupted, but the left uses this as justification for supporting far-left policy, with the role of the state to ‘purify’ humanity.

No, a Trump victory will not doom the US economy and stock market

A recession is the confluence of many factors that converge at roughly the same time. Trump being inaugurated will not suddenly cause producers to stop producing, consumers to stop consuming, and manufactures to stop manufacturing. Similarly, Britain leaving the EU in June of 2016 didn’t cause economic activity to suddenly stall, contrary to the predictions of collapse if Britain left. Instead, Britain’s economy has has surpassed expectations:

Growth in the three months to September dropped to 0.5 per cent, down from 0.7 per cent in the April to June quarter, according to data from the Office for National Statistics (ONS).

Despite the slowdown the figures are stronger than the 0.3 per cent, expected by economists.

Britain’s economy has now grown for 15 quarters in a row, and is 8.2 per cent higher than the pre-economic downturn peak in early 2008.

The figures also beat the latest forecast from the Bank of England policymakers, who were predicting that third quarter growth would come in at 0.1 per cent.

And also:

BOOM AND BUST Britain’s post-Brexit economy is growing faster than expected… just as Europe’s falters

Eurozone economic growth remains steady as EU shows no negative effects from Brexit

Economy to grow faster than expected into 2017 as UK sustains post-Brexit performance

It’s official: economy doing fine after Brexit

It confirms not just that there was no immediate economic collapse after the referendum vote, despite the political vacuum and financial market turmoil, but that the economy continued to grow at a very decent rate. All the business surveys that pointed to the opposite outcome were wrong, and should from now on be treated as far less useful by the financial establishment.

So from multiple sources, that pretty much puts a nail in the coffin for the post-Brexit collapse predictions.

But being wrong most of the time won’t stop these useless pundits and ‘research firms’ from continuing to make sensationalist, incorrect predictions about the impact of pivotal events, be it the secession of Britain from the EU or the election of Trump. Nor will it stop the useless, hype and ad-driven financial media from broadcasting these predictions. In fact there is a symbiosis, between the two – research firms and the media. If these research firms made sober predictions, the media wouldn’t care (only hype and doom and gloom sells). These research firms are businesses and need predictions broadcast by the general media, as a form of free advertising in the hope of using the publicity to get clients who will pay for in-depth research. Likewise, the financial media needs clickbait stories with the veneer of credibility that comes from a ‘research firm’, to generate ad-dollars. The financial media is about creating the illusion of useful content so they can sell advertising…that’s pretty much it.

Here is one such example of a dire Brexit prediction produced by a firm, that made the rounds by the major media such as CNN in the days leading up to the vote, Brexit could trigger European stock market crash:

“Based on the stress test scenario, we expect a drop of 24% in U.K. equities over two to three months,” he said.
A drop of that size would wipe hundreds of billions off the value of pensions and other investment funds.
Morokoff said European stocks could fall by about 20%, and Wall Street wouldn’t escape either.

Instead, European stocks only fell 10% and US stocks fell 5% – for just two days – before immediately rebounding to new highs, and as the headlines above show, there were no long-standing economic ramifications.

And another one: ‘Brexit impact will be worse than the 2008 crash’

But back to Trump and the 2016 presidential election, yet again, the media is trotting out the doom and gloom.

Opinion: The stock market could crash if Donald Trump is elected president

Trump’s policies would curtail imports and slam the brakes on the U.S. economy

This assumes Trump is able to get his policies through congresses, which may prove difficult. But another source says it it would be easy to withdraw from NAFTA. Second, the author assumes that Trump’s polices would be harmful, or that Trump somehow wants to deliberately tank the economy for his own political gain. Repealing NAFTA, for example, may cause slower growth, but it’s worth keeping in mind that the economy was able to grow just fine in the 80′s and early 90′s without it.

Table 1.1 of the Fund’s World Economic Outlook covers the main points: a baseline forecast of 3.1% global GDP growth this year and 3.4% in 2017. This represented a nudge down from the projections in April, with signs of weakening perceived in the U.S., the eurozone, and of course the United Kingdom (grappling with the consequences of impending Brexit — the big and potentially traumatic step of leaving the European Union).

The difference between 3.4% growth and 3.1% growth is imperceptible. Also, calculating and predicting GDP growth is an imprecise science. Since 2009, US GDP growth has been kinda sluggish and revised downward many times, yet the S&P 500 is up 200% since then, so what. Profits and earnings are growing faster than GDP, and that’s what really matters to stocks.

And some more idiocy: This is what could happen to the stock market if Donald Trump wins

“If we were to go in 70/30 [for Clinton], and we think the market is 10 percent higher under Clinton than Trump, if Clinton wins it should be up about 3 percent and if Trump wins, it should go down 7 percent,” said Eric Zitzewitz, economics professor at Dartmouth College. He and Justin Wolfers of the University of Michigan studied the market effect of the first debate in a Brookings paper. Clinton’s odds in the prediction markets had been closer to 80 percent, and at that level, a Trump victory would have triggered an 8 to 10 percent sell-off, he said.

So by that logic, if the odds go to 99%, the market falls 99%? lol.

This I agree with:

Bruce Bittles, chief investment strategist at Baird, has a different view and he believes a Trump victory could result in a V-shaped move in the market, as Wall Street reflects later on positive tax changes and the looser regulatory environment Trump supports.

Even ‘reputable’ sources such as the New York Times fall for the hype, but being they are pro-Clinton they will entertain any nonsense that makes Trump looks bad:

he conventional wisdom is that, right off the bat, the stock market would fall precipitously. Simon Johnson, the Massachusetts Institute of Technology economist, posited that Mr. Trump’s presidency would “likely cause the stock market to crash and plunge the world into recession.” He predicted that Mr. Trump’s “anti-trade policies would cause a sharp slowdown, much like the British are experiencing” after their vote to exit the European Union.

Again, another absurd prediction by a research firm, the Massachusetts Institute of Technology. Yes, a very prestigious institution, but nonetheless one that will never pass on the opportunity for free publicity.

sharp slowdown, much like the British are experiencing…but as the links above show, it wasn’t a sharp slowdown…he can’t even get his facts strait.

And another researcher:

“Putting aside their personalities and policy proposals, it will likely not matter who the next president is when it comes to where markets go,” Mr. Boockvar wrote in a note to clients. “As we are in the second-longest bull market of all time, and as we approach the eighth year of this economic expansion,” he wrote, “odds are high that whoever the next president is, they will preside over a recession, a bear market and rising debts and deficits.”

LOL…as if he has any way of knowing. Bull markets don’t die of old age. They die when the fundamentals fail. Right now, the fundamentals are looking decent (not stellar, but certainly not bad enough to indicate a recession). Facebook, Netflix, Microsoft, Disney, Nike, and Google reported yet another quarter of strong earnings. Consumer spending, GDP growth, durable goods, exports, job growth, unemployment, etc. all holding steady.

A selloff on a Trump victory will be a good buying opportunity. Market participants have become so conditioned to buying the dips, any selling will be short lived. But also, as post-Brexit Europe shows (as well as dozens of other examples over the past decade), doom and gloom predictions almost always fall short of reality.

Post-election rioting and crisis: It’s not going to happen

The media is entertaining the laughable premise that there may be rioting and revolting en mass should either Trump or Hilary become president.

As I have said again and again, the media, by in large, is useless. It’s a giant time-suck that fools people into believing they are being informed, when it’s really about pushing advertising spliced between hype and sensationalism. Without advertising, the vast majority of media would have no reason to exist, as it creates no economic value on its own nor has any redeeming value to society. There’s a saying, ‘voting is bad for your soul’. So is the media.

Nowadays, anyone can create ‘news site’ or write an article for a supposedly reputable site and pass it off as being authoritative. Here is one such example: After Trump loses: An ominous American future imagined, in which the author speculates that a Clinton presidency may lead to mass rioting and economic collapse. And there are other articles that speculate the opposite, that there will be crisis and revolt should Trump win, which is equally risible. Although I want Trump to win, and America will do better under Trump than Clinton, the stakes aren’t as high as the media hype would suggest. Every four years, it’s the ‘election of the century’, a ‘new paradigm’, and ‘all or nothing’, and other premonitions that this election is more important than the 45 or so others that preceded it and the world didn’t come to an end, but this one will.

So why won’t there be rioting? Many years ago, some people were concerned that activating the newly built Large Hadron Collider would trigger a chain reaction that would turn the world into a super-dense blob of ‘strange matter’ and of course ending all life in the process. Then some scientists calculated that similar heavy-ion collisions occur naturally, such as on the moon, which obviously after billions of years hasn’t turned into a ball of goo, and thus it was reasonable to assume the collider was safe.

Likewise, the much worse conditions have existed in the past, but nothing has happened beyond sporadic outbursts such as the Watts riots in 1965 and the 1992 Los Angeles riots. if Americans were going to rebel en masse they would have done so in the late 1970’s – a period of high inflation and, overall, a much worse economy. Or during the Great Depression, which was even worse. The misery index, generally regarded as a measure of well-being and is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate, is – historically speaking – low:

But that’s not a complete picture, nor is it a vindication of Obama or Clinton. Rather, thank the ingenuity of free market capitalism and America’s best and brightest whose innovations boost living standards and create jobs, as well as thank America’s reserve currency status that keeps borrowing costs and inflation low. Americans may think they have it bad and find many reasons to complain, but other countries have it much worse.

From Brookings Are Americans better off than they were a decade or two ago?

The bottom line: According to this metric, Americans enjoy a high level of economic welfare relative to most other countries, and the level of Americans’ well-being has continued to improve over the past few decades despite the severe disruptions of the last one. However, the rate of improvement has slowed noticeably in recent years, consistent with the growing sense of dissatisfaction evident in polls and politics.

Other factors play a role, and as I discuss in Explaining America’s Economic and Social Stability, America owes its stability to its strong economy, culture of consumption and innovation, large geographic size, and cultural heterogeneity.

The Trajectory of America

From Social Matter: SWPLs, Amerikaners, The Alt-Right, And The Coming State

This passage stood out:

The system is decaying and unsustainable. It is increasingly liquidating a limited pool of capital to keep the economic charade going, while all the real productivity, and the culture of hardworking self-reliance that goes with it, goes overseas.

See one of three outcomes:

1. A continuation of what we have now, as the contributions of America’s smartest, most productive are sufficient to offset the decay, or as some call ‘entropy’ vs. ‘order’. In the tug-of-war between productivity vs. decay and parasitism, the former is still winning, although the gap may be narrowing. There is evidence of it narrowing (rising rates of out of wedlock births, growing entitlement spending, etc., for example), but also evidence it isn’t (technological progress, steady GDP growth, etc.).

I predict this will be the most likely ‘trajectory’ – a continuation of what we have now. Although there will more internecine strife and racial division in America, the general economy will remain intact, thanks mainly to the contributions of America’s most economically productive and America’s overall global economic dominance and strength, particularity for intellectual property.

This mistake is some assume that because there is some evidence of decay, that the whole system must fail.

America’s Protestant work ethic, punitive justice system, and culture of individualism that prizes merit, are probably contributing factors for America’s stability and economic success, compared to its peers that seem to constantly struggle with corruption, high inflation, and economic stagnation. Although East Asian countries score well on achievement tests and have high national IQs, their culture is a more collectivist one. Same for Northern Europe, which is also more collectivist than America.

Anatoly Karlin has done extensive research on this.

Related: Explaining America’s Economic and Social Stability

2. Figurative collapse – ‘entropy’ gradually wins, and the American economic and cultural hegemony is significantly weakened. The stock market may crash and fail to ever recover. There may be high inflation due to capital flight out of the US dollar and treasuries, as well as ‘cognitive flight’ of America’s smartest and most productive. In the process, America becomes more like Europe or Japan, as possibly China fills the power vacuum. I don’t see this happening – it could happen but seems improbable. Some argue that America is already in this state, but the actual economic data and other trends suggests otherwise.

3. Literal collapse, possibly due to nuclear war, terrorism, or civil war, resulting in substantial devastation, economic disruption, and loss of life. The Civil War is probably the closest America has come to this.

The Logical Inconsistency of Collapse-ism

From Aeon Physics is on the verge of an Earth-shattering discovery

The mere announcement of what might be the first signs of a new particle, delivered at the end-of-the-year LHC seminar on 15 December 2015, sent theorists into a frenzy. Expectations are so high that there are already 338 scientific papers on the possible nature of this new particle.

But how is this possible if the world is supposed to be an ‘idiocracy’, as some insist it is.

This is one of a handful of topics where some on the ‘alt right’ may be logically inconsistent. They gaze in awe at technology, mathematics, and physics discoveries but then advocate ‘collapse-ism’. But collapse of society would grind this math and science progress to a halt. But you can’t have your collapse and get to keep your innovation too. I imagine in a collapsed society the first proprieties will be rebuilding, not abstract cerebral endeavors.

Maybe there are a couple ways around this:

Collapse-ists rationalize that the short-term inconvenience and disruption of collapse is offset by the long-terms gains engendered by a new, better regime. This is a consequentialist argument.

Maybe even in a collapsed society scientific output will not fall too much. This sounds like wishful thinking. However, there is evidence that the Middle Ages, which followed the collapse of the Roman Empire and preceded the Renaissance, was not stagnant.

Perhaps a collapsed society will have a greater appreciation for the sciences.

It’s hard to imagine a billionaire like Peter Thiel, who has voiced criticism of democracy, trading his wealth and status for a hypothetical, post-collapse society where everything is reset, democracy is gone, but all or most of his money is gone. Many of of those on the right who seek collapse may recant when they realize the consequences it may entail.

Failed Predictions of the Demise of the EU

‘The EU Is on the Verge of Collapse’—An Interview

Just like many pundits predicted the financial problem of 2008 would follow a similar trajectory as the Great Depression, which it didn’t, now many predict the EU will collapse like the Soviet Union.

I’ve also I’ve noticed a trend recently of sites on the ‘right’ legitimizing Soros by linking to his commentary, almost in agreement that, yes, economic crisis is inevitable, as Soros says it is, and crisis is ‘good’. Soros, like most leftists, seeks crisis so that Communism or some sort leftist government can be enacted during the rebuilding phase, which happened in the aftermath of the Great Depression, October Revolution, and other examples in history, and even recently in 2008 with the election of Obama. The ‘right’ could be mistaken to believe that they will rise to power should there be an economic reset, not the left. Historically speaking, economic crisis and upheaval has always benefited the left. If Soros, a liberal, is seeking crisis, it’s because he probably knows he (the left) will gain even more power during the rebuilding phase.

From my earlier Soros article, Soros: It’s the 2008 crisis all over again:

If civilization falters or completely fails, what makes the right certain the left won’t take over, creating something worse than we already have?

Also, Soros, like most liberals, has a really bad track record at predicting stuff. Another liberal, Krugman, as some may have forgotten, predicted in 2011 & 2012 that the Euro would fail, which has yet to happen.

And also, many failed predictions and sensationalism by the left about global warming.

Failed predictions in 2010-2012 about Euro collapse; failed predictions between 2008-2010 of economic crisis relapse; predictions of bear markets and recession – all wrong. Meanwhile, the market keeps going up.

As for the US economy, yes, the labor market is weak, as it has been since 2009 and will likely remain due to automation and other factors, and oil is low, but the rest of the economy isn’t that bad. GDP will also remain slow, and it would not surprise me if eventually the 30-year treasury yield falls below 1.5% an then 10-year yield below .5%. But due to strong consumer spending and exports in spite of weak GDP and anemic job market, multinational companies will continue to print cash, and that bodes will for stock prices. In the past week, Bank of America, Goldman, and Jp Morgan crushed earnings estimates for the 24th time in a row, as far back as the recovery began in 2009. Netflix also crushed earnings, and I expect Google, Facebook and Amazon to also beat earnings, as they always have… [1] The new Star Wars movie has officially grossed $2 billion. Too many people are expecting or want a repeat of 1929, 2000 or 2008 again, but it’s just not in the cards, sorry.

‘Doom and gloom’ seems like another form of activism and wishful thinking, which rationalists and realists categorically oppose unless the data affirms such doom and gloom, which it doesn’t yet.

The ‘Brexit’ is another Europe-related story that has been passed around in recent months, which like Soros’ wrong predictions, has failed to materialize into anything beyond sensationalist headlines and scaremongering.

Related: How the liberal media is always wrong

[1] They did, with Facebook, Google, and Amazon posting blow-up numbers and Facebook and Amazon stock both surging over 8%.

Explaining America’s Economic and Social Stability

Fred Reed ponders the ‘endgame ‘ for America.

Things do not look good. The country is disintegrating. The borders are open, against the will of much of the population. Our universities are in sharp decline, the students a rebellious unschooled rabble portending a peasant future. The economy gutters and standards of living fall. Jobs are few and becoming fewer. Racial animosity is high and rising, with blacks out of control and looting at will.

It is hard to see how this can continue without Something Happening. Yet no sign exists that the tide will abate—that standards and discipline will be reimiposed in academe, that grade schools will cease being indoctrination camps, that immigration will be stopped, that blacks will become calm and content, that some new form of economic order will halt the slide into semi-impoverishment.

He mentions moral decay, economic malaise, and civil unrest as reasons for some sort of cataclysmic change.

I tend to resist doom and gloom predictions about the United States because the economic data doesn’t support it and such predictions have a long track record of being wrong. The ‘something happening’ will likely only be a continuation of the the way things are, but more so. The best prediction of tomorrow or next week is today or last week.

The universities, despite the media attention they get, are only a small part of the US economy, which is mostly consumer and intellectual-property driven. If people keep buying stuff, exporters keep exporting, and high-IQ people keep innovating and creating companies, the economy will likely keep chugging along in spite of the moral decay, as I’ve written about here. Or at least that’s the way it’s been for the past 200 or so years of American history. In the 60′s you had the Vietnam protests and Nixon’s ‘silent majority’ against social changes, yet the economy and stock market not only preserved, it boomed. Racial strife goes back to the inception of the United States – it’s nothing new and it’s not going to improve. That’s not to say I condone this social change, but it’s not going to influence my economic or investing outlooks.

As others have mentioned, the labor market will continue to change, with more ‘gig’ jobs and fewer salaried ones. Technology will make certain things cheaper (food, clothes, electronics), but some services may still remain expensive (college, healthcare, rent, insurance, daycare, phone bill).

Somewhat counter-intuitively, America’s diversity and geographic size may be behind its long-term resiliency, as other countries have suffered from upheaval, civil war, and revolution. It’s this apparent ‘disorder’ and heterogeneity that engenders stability whereas homogeneity may give rise to either nationalism or mutiny. Similar to how prisons try to separate groups to prevent communication and hence upheaval, this system works on a greater scale in America, but automatically. Revolution is more likely when everyone has the same language, same shared interests and is crowded, than if everyone is different and spaced far apart. Geographically, America is a huge country with stark cultural differences between various regions that are spaced thousands of miles apart. Manhattanites and Deep-Southerners for example diametric opposites.

The success of capitalism, markets, and trade is also a major reason for America’s stability, providing enough for everyone of all socioeconomic levels, whereas countries that fail to provide these bare minimums tend to fall under disarray. Also, the reserve currency status of the US dollar allows cheap borrowing to fund social programs to help the underclass, paid for by bond holders.

Related: The Second ‘Great Experiment

In Search of ‘Reset’

As the passage below from a Reddit post below illustrates, many seek collapse, doom and gloom, or reset – to change the ‘game of life’ that they perceive as rigged or unfair, seeing Trump as a ‘messianic’ figure who will reshuffle the deck, with frustrated voters hoping they will get a better ‘hand’ under a Trump presidency:

If there’s a global emotional illness related to economic decline, my suspicion would be that it’s a form of collapse-impatience. The bottom fifty percent of America (as well as most of the developed world) is gradually being pressed into a corner, with rising student debts, rising rents, declining real wages and a general decline in their standard of living. They’re reaching a point where they’ve had enough and just want to see the house burned down. People don’t complain or riot, because they feel too backed into a corner to do that.

Related: The Millennial Backlash Against The Baby Boomers

Which seems to echo what I wrote in a 2014 post, Our New Era:

…Because it speaks about the New Era which we’re all living in – a reality that is unmovable and omnipresent. It’s indifferent to our wants, needs or desires. Either you adapt, thrive, or fall between the cracks. The rest of the world is being molded in the likeness of Stanford, rather than Stanford resembling the rest of the world. In an era of economic abundance, scarcity is prevalent – by design. This may seem unfair, but in a hyper-meritocracy like we have today, not everyone can reap the fruits of prosperity. Some will be left behind. Others think it’s a phase that will pass- that once a threshold of inequality is breached everything will come crashing down and the game will be reset, the deck reshuffled, and the cards re-dealt.

…and from Ross Douthat about the rise of Trump:

That rise has four building blocks. First, his strongest supporters have entirely legitimate grievances. The core of that support is a white working class that the Democratic Party has half-abandoned and the Republican Party has poorly served — a cohort facing social breakdown and economic stagnation, and stuck with a liberal party offering condescension and open borders and a conservative party offering foreign quagmires and capital gains tax cuts. Trump’s support is broader than just these voters, but they’re the reason he’s a phenomenon, a force.

Ross Douthat is like that savant who can draw a cityscape from a single helicopter ride. There is so much detail in his articles. He seems to have his pulse on society, politics, and economics better than any other pundit.

This part is also interesting:

Others, especially in the intelligentsia, have a kind of highbrow nihilism about our politics, a sense that American democracy’s decadence — or the Republican Party’s decadence, in particular — is so advanced that a cleansing Trumpian fire might be just the thing we need.

I have also noticed a trend of smart, well-read people (the opposite of the stereotypical Trump supporter) supporting Trump or rebuking childish leftist criticisms against him. [1] Trump represents an honesty, rawness, and purity that is missing from politics, even if the intelligentsia don’t agree with most of his policies.

It’s also interesting how we’re all taking about the same stuff even though communication is limited to some forums and blogs, with distances between individuals. It’s kinda fascinating how converging ideas spring into existence from disparate sources, whether it’s Reddit, New York Times, or blogs.

The game likely won’t be reset, sorry. Economically, Europe (except Eastern Europe) has been circling the drain since 2008, and will likely collapse economically and socially before America does. It just keep getting worse and worse there. But same for Brasil and other emerging economies.

[1] An example is given here discussing a blog post by he Archdruid Report.

A second example, on Salon, is a professor who is a Sanders supporter, rebuking the media lies about Trump that ‘all Mexicans are rapists’ when Trump clearly didn’t mean that.

You might well dislike Trump’s words. I did. But let’s not make it worse. He did not say that all Mexicans are rapists. Yet that’s what many commentators did. For example, Politico misquoted Trump by omitting his phrase about “good people.” They said he was “demonizing Mexicans as rapists.” They argued that Mexicans do not really commit more rapes in the U.S. than whites. But that’s not what Trump claimed.

Third, Camille Paglia, professor of University of the Arts in Philadelphia and a Clinton Democrat and libertarian who opposes laws against prostitution, pornography, drugs, and abortion, prefers Trump over Hillary.

This fiery endorsement blew me away because it demonstrated how Trump was directly engaging with a diverse coalition in ways that the mainstream media had completely missed. I felt, and still do, that Trump is far too impetuous and thin-skinned in his amusingly rambling, improvisational style. The American president, who can spook markets or spark a war with a rash phrase, must be more coolly circumspect.

Nevertheless, Trump’s fearless candor and brash energy feel like a great gust of fresh air, sweeping the tedious clichés and constant guilt-tripping of political correctness out to sea. Unlike Hillary Clinton, whose every word and policy statement on the campaign trail are spoon-fed to her by a giant paid staff and army of shadowy advisors, Trump is his own man, with a steely “damn the torpedoes” attitude. He has a swaggering retro machismo that will give hives to the Steinem cabal.