Monday , September 16 2019
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Charles Hugh Smith
At readers' request, I've prepared a biography. I am not confident this is the right length or has the desired information; the whole project veers uncomfortably close to PR. On the other hand, who wants to read a boring bio? I am reminded of the "Peanuts" comic character Lucy, who once issued this terse biographical summary: "A man was born, he lived, he died." All undoubtedly true, but somewhat lacking in narrative.

Charles Hugh Smith

What a Relief that the U.S. and Global Economies Are Booming

Doing more of what's failed for ten years will finally fail spectacularly.. It was a huge relief to see the charts of the Baltic Dry Index (BDI) and the U.S. retail sector ETF (RTH): both have soared to the moon, signaling that both the U.S. and global economies are booming: the BDI is widely regarded as a proxy for global shipping, which is a proxy for global trade and economic activity. Amazon is 18% of the RTH basket of retail stocks, but the rest are conventional bricks and mortar...

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The Inevitable Bursting of Our Bubble Economy

All of America's bubbles will pop, and sooner rather than later. Financial bubbles manifest three dynamics: the one we're most familiar with is human greed, the desire to exploit a windfall and catch a work-free ride to riches. The second dynamic gets much less attention: financial manias arise when there is no other more productive, profitable use for capital, and these periods occur when there is an abundance of credit available to inflate the bubbles. Humans respond to the incentives...

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How Deep Is the Rot in America’s Institutions?

Either we root out every last source of rot by investigating, indicting and jailing every wrong-doer and everyone who conspired to protect the guilty in the Epstein case, or America will have sealed its final fall. When you discover rot in an apparently sound structure, the first question is: how far has the rot penetrated? If the rot has reached the foundation and turned it to mush, the structure is one wind-storm from collapse. How deep has the rot of corruption, fraud, abuse of power,...

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These Are Not Signs of a Healthy Market

If these three charts reflect a "normal" "healthy" Bull market, then why are they so uncommon? The implicit narrative of the latest rally in stocks is that this is just another normal rally in the ongoing 10-year long Bull market. Nice, but do these three charts look "normal" to you? Let's take a quick glance at a daily chart of the S&P 500 (SPX), a weekly chart of TLT, the exchange-traded fund of the US Treasury 20-year bond, and silver. In other words, let's look at three different...

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Will Everything Change in 2020-2025 or Will Nothing Change?

Any domino-like expanding crisis will unfold in a status quo lacking any coherent response. Longtime readers know I've often referenced The Fourth Turning, the book that makes the case for an 80-year cycle of existential crisis in U.S. history. The first crisis was the constitutional process (1781) following the end of the Revolutionary War, whether the states could agree on a federal structure; the 2nd crisis was the Civil War (1861) and the 3rd crisis was global war-- World War II...

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Labor Day Reflections on Retirement and Working for 49 Years

What happens when these monstrous speculative bubbles pop? Let's start by stipulating that if I'd taken a gummit job right out of college, I could have retired 19 years ago. Instead, I've been self-employed for most of the 49 years I've been working, and I'm still grinding it out at 65. By the standards of the FIRE movement (financial independence, retire early), I've blown it. The basic idea of FIRE is to live frugally and save up a hefty nestegg to fund an early comfortable retirement....

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Dear Trump Advisors: Prop the Market Up Now and Lose in 2020, or Let the Market Crash and Win in 2020

The Everything Bubble has topped out, and trying to push it higher for the next 14 months is a sure way to increase the damage next year. One of the more reliable truisms is that Americans vote their pocketbook: if their wallets are being thinned (by recession, stock market declines, high inflation/stagnant wages, etc.), they throw the incumbent out, even if they loved him the previous year when their wallets were getting fatter. (Think Bush I, who maintained high approval ratings but...

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The Fantasy of Central Bank “Growth” Is Finally Imploding

Having destroyed discipline, central banks have no way out of the corner they've painted us into. It was such a wonderful fantasy: just give a handful of bankers, financiers and corporations trillions of dollars at near-zero rates of interest, and this flood of credit and cash into the apex of the wealth-power pyramid would magically generate a new round of investments in productivity-improving infrastructure and equipment, which would trickle down to the masses in the form of higher...

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The Benefits of a Profoundly Shattering Recession

Does anyone really think The Everything Bubble can just keep inflating forever? What do I mean by a profoundly shattering recession? I mean, a systemic, crushing recession that can't be reversed with central bank magic, a recession that only deepens with time. The last real recession was roughly two generations ago in 1981; younger generations have no experience of a profound recession, and perhaps older folks have forgotten the shock, angst and bitterness. A profoundly shattering...

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Is the U.S. Becoming a Third World Nation?

This is a chart of an informal kleptocracy which cloaks itself in the faux finery of democracy and a (rigged) "market" economy. Back in the day, nations that didn't qualify as either developed (First World) or developing (Second World) were by default Third World, impoverished, corrupt and what we now refer to as failed states--governments that were incapable of improving the lives of their people and the machinery of governance, generally as a result of corruption and self-serving elites,...

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