Last month, I not-so-gently suggested that America’s vaccine misinformation epidemic may have crossed the threshold from public health risk to tragicomedy.
That assessment wasn’t based on any quantitative analysis. If asked, I couldn’t tell you exactly where that threshold is or define it with any kind of precision.
Mitch McConnell’s efforts to feign incredulity at vaccine hesitancy notwithstanding, the fact that a large subset of the population was eager to embrace conspiracy theories and cite “liberty” while refusing to get a shot was entirely predictable. Americans are arguably more detached from reality than they’ve ever been. Anyone who’s even a semblance of persuasive can convince millions of people to believe total falsehoods. Meanwhile, we learned last year that civic responsibility is now such a foreign concept that some citizens would sooner hatch a plot to overthrow their local government than they would shift the star-spangled bandanas they’re already wearing down a few inches to cover their nose and mouth instead of their bald spot.
So, there wasn’t anything particularly surprising about the fact that tens of millions of Americans refused to be vaccinated. Let’s not forget that last November, tens of millions of Americans voted for authoritarian rule. The country was on the brink of stumbling into one of modernity’s greatest sociopolitical ironies: The abolition of democracy by way of the ballot box.
The concept of “owning” the country’s liberals became so popular during the Trump years that an entire cottage industry grew up around it. You could make a small fortune peddling various trinkets, like overpriced coffee mugs emblazoned with “liberal tears.” What started as a kind of meme within a meme (you might tweet a picture of Barack Obama riding a bicycle next to a picture of Vladimir Putin shooting a rifle and caption it with a hashtag about “owning the libs,” for example) careened wildly, but inevitably, towards a series of increasingly absurd “self-owns.” In the penultimate act, “owning the libs” meant voting away the country’s democracy. Then, a few months later, “owning the libs” manifested in a botched attempt to take over Congress, an endeavor so comically misbegotten that it could easily pass for the plot of a dark comedy. At some point, the demonstrable risk to the republic crossed the threshold into tragicomedic farce.
Not surprisingly given the constituency overlap, we’ve seen the same absurd progression vis-à-vis the pandemic. Initially, defending “liberty” meant doing embarrassing things in public like berating shoppers and employees at Trader Joe’s while refusing to wear a mask. Then it meant breaking into your own gym. Then it meant kidnapping Gretchen Whitmer. And then, in 2021, it meant risking intubation despite the availability of free vaccines. Finally, starting this summer, defending liberty and “owning the libs” meant overdosing on horse dewormer.
I was reminded of this progression on Wednesday while reading some boilerplate bearish commentary on equities. There’s no doubt in my mind that many of the Pied Pipers who, in the dozen years since the financial crisis, have insisted time and again that a “grand reset” which purges misallocated capital is right around the corner, initially believed as much. In fact, I’d go so far as to say the most infamous of all such charlatans didn’t actually become a charlatan until some years after Lehman.
The term “permabears” is so clichéd that it belies the damage done by the dozens of commentators to which the label is often affixed. Not all such commentators are nefarious people. Some of them I quite like. Some of them I occasionally quote. But others are charlatans in the truest sense, and unfortunately, some of the “good” permabears are in their thrall. (That sounds a bit melodramatic. But that wasn’t my intent. I tried to find a less theatrical synonym for “thrall,” but the thesaurus failed me.)
Deutsche Bank’s Aleksandar Kocic captured the problem elegantly in 2019. “The post-2008 period can be seen effectively as an exoneration of fear,” he said, noting that “fear has become a sign of wisdom, elevated to a new heuristic as well as a course of considerable profit.”
Months earlier, I wrote something similar. “It’s interesting how insanity becomes contagious,” I said, in late 2018, during the worst December for US equities since the Great Depression. “The underlying force that binds everything together — this process — is that fear has become the new cognitive principle,” the same article read. “And fear is self-reinforcing. If you spread fear, it looks like you have a deep knowledge of things. If you’re calm, it’s like being ignorant.”
I had to learn that lesson the hard way when I started writing for public consumption more than a half-decade ago. At first, I flattered myself that my wit and analytical ability explained how I was able to build a readership so quickly out of nowhere. After a year (give or take) it became apparent that only a tiny fraction of the people reading my work had any interest whatsoever in what I was actually saying. All they wanted was a cynical narrator and a foreboding cadence. They wanted to “own the bulls.” I was just the newest conduit for what, at that point, was an eight-year-old quest to perpetuate a false narrative about the supposed inevitability of economic oblivion.
I’ve spent the last four years engaged in an effort to distinguish my “brand” (a misnomer of sorts) and otherwise refine my written cadence so that it would be virtually indistinguishable from my actual voice were readers to ever converse with me in person. This site is what it is today because of that effort. It was among the smartest decisions I’ve ever made. Pandering to the lowest common denominator may be profitable, but it’s never a good idea in the long-term.
The tie that binds all of the above together is the impossibility of disavowing the manifestly absurd. Conceding mistakes is never easy, but admitting to complicity and/or gullibility vis-à-vis the objectively ridiculous is very often impossible due to the associated psychological distress. The situation becomes more acute when the narrative was never plausible in the first place. In short, it’s exceedingly distressing to admit that you’re a moron. It’s much easier to double, triple and quadruple down.
For example, “Donald Trump, President of the United States” was never going to work. It was destined to end in some kind of disaster. We are, after all, talking about a man who made himself the exception to the rule that “the house always wins” in the casino business. The impossibility of a good outcome was well-known to everyone, including Trump, which is one reason he abandoned the idea on countless occasions dating back decades.
Refusing to wear masks and keep a safe distance from your fellows when the world is beset with a highly-contagious, airborne virus was similarly destined to end in some kind of disaster, as was refusing a free vaccination which promised, at the very least, to materially reduce the odds of COVID-related hospitalization and death.
The idea that the global economy was going to succumb to a total meltdown or some kind of abrupt collapse precipitating anarchy, was extraordinarily far-fetched even during the darkest days of the financial crisis. Hank Paulson used some dramatic language while negotiating for his famous “bazooka,” but nobody seriously believed that by 2010, society would be organized into tribes of marauding bandits (or something). The handful of people who realized how bad things were likely to get weren’t buying loincloths and spears just prior to the subprime meltdown. They were buying swaps.
And yet, to this day, there remains a massive audience so convinced of the idea that the grand reset is coming, that the market for such content still supports at least one multimillion dollar web portal, countless smaller sites and God only knows how many expensive newsletters and paid “services.” I’ve said it before, and I’ll say it again: It’s absolutely certain that many of you read one or more articles from such sources every week, probably without realizing it.
By now, that kind of content (often interspersed with cherry-picked sellside quotes, warped economics, lazy analysis and other shameless distortions) has clearly crossed the threshold into tragicomedy. And just as far-right provocateurs resort to sillier and sillier methods for “owning the libs” and liberty crusaders pay the ultimate price to “own the virus,” so too are the market’s charlatans and their millions of readers and social media followers now engaged in a “self-own” of truly epic proportions — they’re “owning the bulls” by losing money. Or “owning the establishment” by being wrong for the 12th year in a row.
Being complicit in the absurd means becoming pot-committed — unable to concede reality without confronting existential questions about yourself. Typically, the messengers believe they’re somehow not in the same compromised position as the people they’re profiting from (politically, monetarily or, in many cases, both). In fact, they’re in a far worse position. If there’s anything more dangerous than riding a bear, it’s riding a tiger.
Well crafted article. And the primary reason I subscribe-
It used to be that the expression about odd experiences was”You can’t make this stuff up cause no one would believe you”
We are in the world where opinions pass as knowledge, the ridiculous is a form of reliability.
Careful for what you ask for seems to be the only penalty. Resentments to the left of me, resentments to the right of me, all overblown by opinions becoming credo.
Thank you Mr. H. Even when you are riled I see that it leads to a resolution.
The truth as best you can discern, with wit and flare. All I ever asked for. Read you on SA years ago and have been reading you ever since. I recall the 30 seconds of indecision when you pay-walled and the famous permabear you occasionally re-posted. Would love to hear more of your origin myth but the shadowy hints are fun as well. See you tomorrow.
Americans have good reasons to revolt, but it appears that many have turned the guns on themselves. The GOP’s use of culture wars to separate (potential) coalition forces is so brilliant that it must be an accident. Or evil.
“Divide ac Regulae”
Divide and rule
My argument for a viable 3rd political party.
Buy-side / short-side / options
I am reminded of your earlier nod to the ‘perma-bulls’ in mainstream financial media. I bring this up because of the apt comparison of the moral hazards wrought by profit accrued by buy-side AND sell-side outlets.
When push comes to shove, is there a line in the sand between the Fed buying bonds and ETFs? I doubt it.
Contrary views are necessary, or nothing would trade. Every trade has a right and a wrong side for a given time frame. That there are some willing to hold views so contrary that they accept being on the losing side of the trade for a decade or longer is – well, it’s very generous of them 🙂
I have a friend like that. As long as I’ve known him – 15 years? – he’s been a prophet of doom. The financial system is crumbling, the dollar is becoming worthless, the only thing worth owning is gold and real estate. “Just you wait and see.” Lately, only gold and real estate far from the coming chaos.
He’s also highly educated, professionally successful, financially well-off, with a lovely family. So he hasn’t allowed his – my word for it is psychosis – to damage him too much. I like to think that it is merely a form of entertainment and self-affirmation, that it helps him feel smart and special.
I just checked on LT price charts of the two asset classes that this friend claims are the only things one can own (gold and RE). Looks like he’s potentially done okay. GLD has matched SP500 from 2005–now on a price basis, although a big laggard including dividends. And RE . . .
Your (consistent and correct) use of poker metaphor suggests you’ve done more than just dabble in the dark arts of rounding. Given your background, I’ll bet you’ve got some pretty good stories. My best involves Jerry Yang showing up for a $60 MTT after he busted out at the Bay101 WTP. It’s not a very good story (But he is a nice guy).
I think the purists would make their own loincloths from the hides of animals that they have killed and skinned, rather than purchase them.
good point
I think it is time for that great persuader you spoke of to get on his social media horse and ride to every corner of the ‘net preaching the gospel of horse deworming pills and urging his millions of followers to get them and take them NOW.
I would think a few bears might think a 2%FCF yield for a mid single digit grower might prove foolish in light of a 1.3% “risk free” rate with 2-3% inflation (negative reals) in the investing rather than trading time horizon. Sure, there are names that look attractive in absolute terms but most stocks can only be justified on rates that may not be sustainable in the longer run. So people rent stocks, smart enough to get out (happen all the time, right?). And if rates do stay at these levels will growth be there to drive future cash flow?
If someone if stupid enough to stand on principle to “own” some group for no good reason then that is silly. If FCF yields were 8% (remember those days? They were available just 7-9 years ago) then it is really silly. But at current FCF yields, concerns about future growth (productivity, population growth, wealth concentration, etc), manufactured rates, etc maybe “owning” some group is a factor but maybe not the #1 factor.
For absolute investors (some of us really do still exist) it is a challenge to believe that discount rates will remain to current levels while future cash flows that are priced in will be achieved. When I find something priced attractively I will gladly commit but those moments are few and far between nowadays imo.
“Perma – (whatevers)” are always more about ego than actual ideas and analysis…
H – I very much appreciate you taking the journey of public, written expression. What you have created here in the Heisenberg Report is a very good thing because you provide a place for thinking people to engage. That is well worth $7 per month.
I grew up in an American society in which I was taught how to use my mind. I subscribe to your site because I benefit through the discussion of political, economic, and market topics. The clarity of your voice most distinguishes you. Bjarne Knausgard’s writing has similar character and captures my interest, though his scope differs.
I think it is only natural that your views and the ways you express yourself evolve over time. I recall reading you – about five years ago – and noting bearish points you made then. I guessed you may have made a few bucks in bearish investments, which I did not begrudge. Though you firmly expressed yourself, I did not perceive you as being staked to a particular point of view. I reckoned you were like me – sorting out the complexity of balancing the merits of differing investment strategies.
I’m a technical writer and communicator who takes pains at finding word combinations to untangle the complexities that enable software products. Though I write professionally in a technical landscape, I’m most impressed that voice itself – expressed through words and actions – can rise above all landscapes. Your clear voice and thinking certainly raise perspective successfully on the variety of issues and questions you cover on your site, which helps me gain perspective about the ebb and flow of markets, economics and politics.
An important virtue of our country’s founders was their ability to exercise language, without which we might still be loyal subjects of the UK. The first amendment of our constitution describes freedom of speech. But our people’s and society’s collective communications and actions are subject to human limitation. Some Americans right now appear to be misguided. Madison Cawthorn’s dumb rhetoric is only the most recent example of the ongoing, slow-moving, political crisis in our country, wherein some among us promote a false impression of reality itself. The ideas and actions of these people challenge basic tenets of our democracy. In this context, rational thought and clearly spoken words have increased value.
American society has a conservative tradition. Today Joe Biden gives us a familiar example of that tradition. That’s why he was elected. The people who formerly called themselves conservative have been utterly radicalized. Even AOC, in fundamental aspects, is more conservative than Madison Cawthorn. I pray that the disease of “free radicals” confusing our politics today will be mitigated over time. But it’s not a done deal. We don’t know what will happen next.
In the midst of the confusion, your voice helps to promote simple clarity about politics, markets, and economics. God forbid, our economy turns lower and gives the radicals a talking point to promote autocracy. But your honest, clear, written thoughts help to support a more rational and clear perspective of the variables we all have to confront while navigating our markets, politics, and economy.
Good job, Heisenberg! I say, “Here here!” Your contribution has value and serves a good purpose, especially at this time in regard to the national and international politics and economics. Please keep it going. And thanks for the link to the dictionary of idioms. It’s new to me, which is also good.
Bjarne is significantly smarter than me. 🙂
Maybe- but most of the time I have no idea what he is saying. So that doesn’t help me much.
You are also way smarter than me, however, I am actually increasing my knowledge, even if not my IQ, due to reading The Heisenberg Report.
Hear, hear!
First time posting, however I’ve been reading your articles for years. Loved this article. I just can’t get over the following sentence, “Anyone who’s even a semblance of persuasive can convince millions of people to believe total falsehoods.”. Is there a word missing from this sentence? Persuasive what?
Not sure I understand the question. Persuasive is an adjective.