Have We Hit The Top?

[Luca]

It's incredibly interesting to look at US history and observe some of the class wars in the early 20th century, workers faced similar problems as of today: 

 

Some cartoons from around 1882 period (note, Jay Gould was not a Jew)

 

 

 

 

 

 

 

 

 

[Luca]

I think its worth to keep that in the back of mind, these businesses are great, massive and very strong. Regulators seem to be very weak.

 

The overall economy looks rather anemic while we have massive stock market ralleys. That wealth that is pumped into the markets and that is used for buybacks and dividends could have been someones wage or an investment into real infrastructure, universities, education etc. Just as a side note. 

 

Meanwhile China is doing the exact opposite: Regulation, forced wage increases, common prosperity, forcing businesses to cover benefits for employees etc, banning harmful technology, banning harmful education companies, preventing gaming for youngsters etc

 

From what I observe, I think the latter is better for the overall economy and society and increases the longevity of the system, political stability and future runway. 

[Castanza]

1 hour ago, Luca said:

This especially can keep the party afloat for a long time, top percentile earners/owners will keep buying up assets/invest into the index while most people struggle to make ends need. 

 

Then we have this trend with subscriptions, which further hides the lack of purchasing power, 50% of people leasing their iphones, Xbox Subscription, now soon monthly car subscription because most cant buy a new car etc. The mega caps that can offer these subscriptions will benefit and continue to grow, be unharmed by their position while the rest of the economy isnt looking well. 

@mattee2264 thanks for your perspective on this topic as well. Something I’ve. Even thinking about as well. 
 

@Luca Yeah the subscription lifestyle has always been something that’s troubled me. Works well for both consumers and companies during good times. But throw in a scenario where consumers dump their subs in mass and you now have one hell of a rug pull for a lot of companies if it lingers. A lot could absorbs that without issue because they are diversified, but there are definitely some sectors and markets where this might not be the case. Big reason why I almost completely avoid investing in content. 
 

Any good books or podcasts you’ve listened to on the these topics (stagnant capitalism)? More and more it feels like the beer to foam ratio of capitalism is getting worse for the majority of people. Is this policy driven or a natural feature? 

[Spekulatius]

@Luca when you look at recent changes in how antitrust is viewed in the Biden admin , you realize that there is a shift going on. The current antitrust view is much broader than then view since Reagan cam into power (just look at market dominance and when it doubt approve). That game is over - the new view is multipolar based on consumer, employment POV, tech angle etc.

 

The bickering about mergers not getting approved and stonewall from the special sit investors is a clear sign that things are changing and my guess is that will be the case even if the administration is going to change.

 

See the odd lots podcast interview I posted in the podcast thread.

[Castanza]

2 minutes ago, Spekulatius said:

@Luca when you look at recent changes in how antitrust is viewed in the Biden admin , you realize that there is a shift going on. The current antitrust view is much broader than then view since Reagan cam into power (just look at market dominance and when it doubt approve). That game is over - the new view is multipolar based on consumer, employment POV, tech angle etc.

 

The bickering about mergers not getting approved and stonewall from the special sit investors is a clear sign that things are changing and my guess is that will be the case even if the administration is going to change.

 

See the odd lots podcast interview I posted in the podcast thread.

It’s a crazy tough situation for politicians tbh. Covid didn’t help as it naturally grew “monopolies” in some markets because certain companies were just natural beneficiaries that could better serve in the manner needed at the time vs smaller guys. But at the same time politicians also hurt a lot of small companies as well (maybe more local decision making). 
 

Regulation and antitrust has been interesting and again politicians are in a tough place. They target MSFT and ATVI deal which makes no sense to me. Then they talk a tough game against companies like Amazon with unions, but will that chicken ever come home to roost? What would happen to Amazon if all of a sudden they have a union and have to pay their logistics employees $47/hr with time and a half, plus better benefits? Likely wouldn’t be great for their logistics segment that desperately needs AWS funding. Maybe regulators go further and make Amazon separate AWS from logistics and quit the pass through funding. Also would be devastating. 
 

In short, the mega caps that are eating everyone’s lunch are also the same companies that provide a ton of economic and value add services to consumers. How do you regulate that and reign things in? S&P would crater if there was any serious regulation on FAANG forcing spin offs, manufacturing changes, wage increase etc. These companies were built during easy money times and their roots run deep. 
 

Todays economy coupled with the behemoth companies seems very much like a damned if I do damned if I don’t situation from a regulators perspective. 

[Gregmal]

@dealraker

 

That was such a good and thought provoking post. And just like that, it’s gone LOL. 
 

So many people have choices they either aren’t aware of, or refuse to acknowledge. 

[Jaygo]

To me inequality is probably not going to fix without a major cultural shift in America. Having rich and poor is totally ok as long as the tide is rising but with politicians trying to fix inequality without getting to the root of the problem they are just making it hard for everyone. Is antitrust going to fix our problems.? we need more Jeff Bezos not less.

 

I say a cultural shift because when I look at Canada and the US I cant help but think that it is full of idiots. I'm not trying to be an asshole but our culture tends to reward mediocrity and generally dumb behavior. Look at the wasteland that is pop culture for a moment and see what our children's receptors are being fired by. ( jersey shore, my 600lb life, morons on TikTok, all the lib bullshit, Jerry springer, the view, people were eating tide pods for F sake.) that combined with legalizing and condoning drug use and it would appear we are in an era of underachieving or something akin to China's century of humiliation.

 

This tidal wave of stupidity is of course is not applicable to everybody and that is why we have massive inequality. To say that myself, a guy who is up at 4:30 to setup my crew, and studies history and economics for fun is not going to vastly outperform someone who scrolls Instagram all day, eats soap for kicks and puts in the bare minimum at work and life is a joke.

 

If you want to fix inequality long term without failed socialist experiments you need to make being smart cool, make honesty, hard work and success something to take pride in again. 

 

[james22]

23 hours ago, Spekulatius said:

Until inflation really rears it's ugly head, that is. After that it's much less clear what is more palpable.

 

Inflation looks like free lunch but isn't.

 

[Luca]

7 minutes ago, james22 said:

 

Sorry but this is so simplified, i can not take it seriously. First, US universities do have problems and tuition fees are just one. Second, a government is not a private household but this meme portraits it as such, third: Could you explain specifically how you relate the current economic situation with this meme you posted? 

 

Thanks! 

[dealraker]

5 hours ago, Gregmal said:

@dealraker

 

That was such a good and thought provoking post. And just like that, it’s gone LOL. 
 

So many people have choices they either aren’t aware of, or refuse to acknowledge. 

I felt I may expose my neighbor- single as her husband died young not long ago- who I adore.  Writing isn't my comfort zone.  

Edited August 12, 2023 by dealraker

[maxthetrade]

9 hours ago, Luca said:

I listen to Yanis Varoufakis sometimes (ex finance minister greece) and although I disagree with his proposed solutions (leaving capitalism), this sort of "stagnated capitalism" with trillions of euros that are not invested, no growth for majority, increasing concentration of companies, widening wealth inequality, separation of financial markets and real economy (SP 500 booming while median person not seeing anything) rings a bell here. 

 

I couldn't diasagree more. Varoufakis is a complete idiot of the worst kind. Just look how well Greece has done without his crappy socialist ideas. What Europe and the western world needs is less regulation and red tape, less Nanny State and more entrepreneurism!

[maxthetrade]

BTW, hilarious video by Jan Böhmermann back from the years of the Euro crisis when Varoufakis was finance minister of Greece:

 

 

[Gregmal]

Yea I think a lot of the tells with respect to these fool policies and their soundness lies with how and what the people championing them get out of it.  Look at the John Kerry Climate Enrichment Scheme. Or if they even live by the same principals they preach…most don’t. People saying defund the police who have personal security teams. I’ve got a neighbor at my lakehouse, a local politician(albeit a failed one, she ran and lost) who flies every flag you can think of, except the American flag. Big socialist, huge on open borders even though we are probably the last area in America to be effected by it….and yet! Her house is completely fenced in. Signs everywhere letting everyone know it’s private property and trespassers will be prosecuted; this after buying the house from a beloved old conservative couple in the community who used to welcome people to cut through their driveway to get from the top of the community down to the lake….

[maxthetrade]

Greg, the main problem with modern democracies is that most people are too dumb to understand our modern fast changing complex world and have absolutely no understanding of economics. They're scared by some bullshit they are told by some demagogue and can't think through it by themself. 

When I was in school they told us computers would destroy jobs, acid rain (remember that one??) would destroy our forests and nuclear waste would kill all of us if the ozone hole didn't finish us earlier. Guess what, computers created lots of jobs and increased productivity, we installed flue gas desulfurization units, replaced chlorofluorcarbons and nuclear waste will probably be a precious resource someday. 

[Spooky]

Agree that one of the government’s jobs should be to break up monopolies to promote healthy competition, otherwise part of the capitalistic system breaks down with some companies extracting monopoly rents and driving up the cost of living (just look at Canadian banking, Telcos, etc.). Personally I am also anti union - this hampers North American competitiveness versus countries like China.

 

A big problem also seems to be regulatory capture where the winners / incumbents can dictate the regulation to stifle competition or give them advantages.  
 

An idea that I like would be to give everyone a trust account when they are born with something like the Vanguard total US ETF that no one can touch until they are 18+. This would give everyone a stake in the economy and shift peoples mindsets to having an ownership mentality. 

[james22]

4 hours ago, Luca said:

Sorry but this is so simplified, i can not take it seriously. First, US universities do have problems and tuition fees are just one. Second, a government is not a private household but this meme portraits it as such, third: Could you explain specifically how you relate the current economic situation with this meme you posted? 

 

Thanks! 

 

Are you very, very young?

[brobro777]

Come on guys, you gotta give people a break. People are dumber now because they can get away with it. Look at me, back in the 90s I used to be able to remember phone numbers pretty well but now I can't remember anything because it's all on my iphone! 

[Luca]

9 hours ago, maxthetrade said:

 

I couldn't diasagree more. Varoufakis is a complete idiot of the worst kind. Just look how well Greece has done without his crappy socialist ideas. What Europe and the western world needs is less regulation and red tape, less Nanny State and more entrepreneurism!

I never promoted socialism nor talked about his left policies, what i think where he is right is with the lack of investment, concentration of markets and too little growth for the little man. 

Less regulation would strengthen monopolies and weaken average consumers because nobody wants to pay good salaries. More entrepreneurism needs people to actually have money to start businesses, in that regard there needs to be less barriers to start your own business (less regulations and taxes for small and medium enterprises) etc. There needs to be a smart regulating state that can't be bought.

Edited August 13, 2023 by Luca

[james22]

[Parsad]

https://finance.yahoo.com/news/us-facing-debt-storm-heres-201501407.html

 

Cheers!

[treasurehunt]

17 hours ago, james22 said:

 

Data from FRED does not match up with this chart. Any thoughts on why there is a discrepancy?

 

https://fred.stlouisfed.org/series/CPALTT01USQ659N

 

[james22]

Sorry, didn't provide a link: 

 

https://alexberenson.substack.com/p/how-we-stopped-inflation-without?

 

No idea why any discrepancy.

[Luca]

On 8/12/2023 at 4:08 PM, Castanza said:

@Luca Yeah the subscription lifestyle has always been something that’s troubled me. Works well for both consumers and companies during good times. But throw in a scenario where consumers dump their subs in mass and you now have one hell of a rug pull for a lot of companies if it lingers. A lot could absorbs that without issue because they are diversified, but there are definitely some sectors and markets where this might not be the case. Big reason why I almost completely avoid investing in content. 
 

Any good books or podcasts you’ve listened to on the these topics (stagnant capitalism)? More and more it feels like the beer to foam ratio of capitalism is getting worse for the majority of people. Is this policy driven or a natural feature? 

Lots of it was in german, i will send you stuff thats worth reading and watching the coming weeks, i did post an interesting video by asianometry in the samsung thread, it sort of goes into this whole monopolization combination with influencing government+stagnating wages for majority: 

 

 

[Castanza]

https://podcasts.apple.com/us/podcast/odd-lots/id1056200096?i=1000624132170
 

Good discussion from Krugman. Goes over quite a few topics covered in this thread; specifically productivity. 
 

Makes me wonder, perhaps I should have forgone the engineering degree and stuck with driving for Big Brown. 170k/yr up to 8 weeks vacation and a pension to top it off doesn’t sound half bad anymore

[Castanza]

2 hours ago, Luca said:

Lots of it was in german, i will send you stuff thats worth reading and watching the coming weeks, i did post an interesting video by asianometry in the samsung thread, it sort of goes into this whole monopolization combination with influencing government+stagnating wages for majority: 

 

 

Thanks I’ll check it out