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What If There’s A Depression?
Nobody expects a recession.
Ok, that's not true. Let me rephrase: Almost nobody sees a recession.
Funny how nobody sees a recession when cash levels of asset managers are at the lows.
What if?
What is
Simple
I think
What if
What is
A depression is just one of the many unthinkable events I now put a non-zero probability on. In this moment, it feels like nearly anything is possible.
I actually envision more of a 1970’s style grinding bear market, like we saw after the Arab oil embargo. The market fell about 45% over a two-year period. That led to recession, inflation, rising unemployment, and eventually “stagflation” that persisted for several years. When I graduated high school in 1982, the unemployment rate was over 10%. People tend to view the 1970’s with some nostalgia now, but things were really bad then.
Tangentially, can you imagine if Zelenskyy were to reject Trump’s final “negotiated” treaty, and Russia were to re-escalate its war efforts? Europe would have to rally around Ukraine, Trump could at least temporarily walk away from negotiations, and we could potentially have a geopolitical re-alignment in Europe, without the U.S., or with the U.S. actually supporting some Russian claims. That wouldn’t be good for trade either. It makes my head spin.
It’s certainly interesting how calmly everyone is taking the U.S. now being ruled by an unpredictable mad king who is taking steps to consolidate power. So you have that and a goal to dramatically remake U.S. government spending. And apparently the geopolitical situation in Europe is about to become unpredictable. And possibly a pandemic looming but this time with an anti-vaxx kook in charge of prevention, and so on. Then the whole Deepseek saga illustrating how an unexpected technological development in a technology most of us probably don’t understand at a deep level could also be a black swan fragility event. Time to buy stocks? I don’t know. Is there an alternative? It makes “it looks like the sun, so maybe it’s a god” seem like a less bad investment rationale by comparison at least.
I think tariffs, DOGE and us foreign policies might be distractions. What worries me most is the constitution in the last ten years of enormously powerful monopolies. H and others explained the power of network and the ascent to deity of the leaders of the GAFAM and Musk backbin 2017. The historical parallel i see is with 1890 not 1930. The most dangerous affront to US democracy is the idleness of the competition bureau. I think the real goal is to thwart any effort to reign in the centibillionaires. Here’s a clue: Trump killed the miraculously accepted pillar 2 global tax and is taking aim at every country (europe, canada) trying to implement a pillar 1-gafam tax. Putin and Xi can keep them out which is why they get a break. Others are accused of museling “freedom of expression” (JD Vance, remember where he made his money). That gets little press unfortunately. We have new rubber barons and nobody seems to care in the US.
Is there an ETF for american monpolies? That’s what i would like to buy but otherwise S&P500 is a good proxy, hence TINA. And could last 10 years. Resistance seems futile.
Sorry to be a harbinger of bad news, but my sources tell me that your brain surgeons in the inner circle will be forcing Ukraine to virtually surrender to Russia, within weeks, otherwise the US will abandon Europe, specifically eastern and northern Europe.
That Nomura research may be on to something.
Ganishka on Heisenberg Report, never thought I’d see that.
Trump believes he can shake up world order on his economic terms, the US will be the winner and he’ll personally be the biggest financial winner of all. I wonder if he has an exit strategy for Musk. Historically the capo lets his lieutenants get only so close and then they’re shown the door – or worse. Trump is always transactional. I wonder what’s in his contract with Putin.