Timing & trends

Falling Into the Abyss Between Wall Street and Main Street

I know this runs counter to every dominant narrative, but a vaccine doesn’t really matter, opening up doesn’t really matter, and the size of the “free money” stimulus checks doesn’t matter.

What matters is that the nation is falling into the abyss that’s opened between Wall Street and Main Street.

And nothing will stave off the collapse of the social order other than a fundamental re-ordering of the way we create and distribute money and political power, as money buys political influence.

The last economic tide with widespread benefits to Main Street was 30 years ago. Since then, the Federal Reserve and other central banks have incentivized globalization and financialization, two dynamics that favor mobile capital and financier skims and scams…CLICK for complete article

Trouble’s Coming, I Don’t Know When, But It’s Coming

Investment guru Jim Chanos warns savvy investors that the seemingly endless soaring stock market is near the end.

“Trouble’s coming, I don’t know when, but it’s coming,” the short-selling legend who just cashed in a roughly $100 million winning bet recently told the Financial Times.

Chanos just earned nine-figures by shorting Wirecard ahead of its collapse, according to sources cited in the FT story.

Chanos is a famed for helping to expose some of the most famous financial frauds, including Enron, Baldwin-United and Drexel Burnham. His firm, Kynikos Associates, just celebrated its 35th anniversary.

He claimed we’re in a “golden age of fraud,” describing the current market climate as rife with euphoria, investor fear of missing out and “post-truth” politics — “a really fertile field for people to play fast and loose with the truth, and for corporate wrongdoers to get away with it for a long time,” he said. Full Story

 

Passive Fingerprints Are All Over This Crazy Market

 

This topic is not just of importance to investors. The underlying theme has serious consequences for the economy.

Passive investing is, by definition, a misallocation of capital. Stocks are bought based on market cap. Passive investors do not acquire them for their ability to create productive economic growth and generate healthy earnings streams. The more capital squandered chasing companies with low growth potential and/or are poorly run, the lower productivity growth will be.

Passive strategies have taken enormous market share from active managers over the last decade. The clues are seen in short term inefficiencies like the table shown above. One can also witness them in long term, once dependable rules of thumb.

As we have written, productivity growth is essential. Without it, the economy will continue to rely on more debt to grow. That is an unsustainable model for prosperity.  Full Article

 

What Were You Thinking?

 

At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking? Full Story

 

The Most Read Post of The Month

Michael Schellenberger is one of the best known environmental activists in the English speaking world. Time Magazine named him one of the “Heroes of the Environment.” He is regular columnist at Forbes Magazine. On June 29th he wrote the following column apologizing for climate alarmism. Forbes removed the column and refused to say why but you can read it here. ~ Mike

Renowned Green Activist Apologizes For The Climate Scare

On behalf of environmentalists everywhere, I would like to formally apologize for the climate scare we created over the last 30 years. Climate change is happening.

It’s just not the end of the world. It’s not even our most serious environmental problem.

I may seem like a strange person to be saying all of this. I have been a climate activist for 20 years and an environmentalist for 30.

But as an energy expert asked by Congress to provide objective expert testimony, and invited by the Intergovernmental Panel on Climate Change (IPCC) to serve as an Expert Reviewer of its next Assessment Report, I feel an obligation to apologize for how badly we environmentalists have misled the public.

Here are some facts few people know:

  • Humans are not causing a “sixth mass extinction”
  • The Amazon is not “the lungs of the world”
  • Climate change is not making natural disasters worse
  • Fires have declined 25% around the world since 2003
  • The amount of land we use for meat — humankind’s biggest use of land — has declined by an area nearly as large as Alaska
  • The build-up of wood fuel and more houses near forests,not climate change, explain why there are more, and more dangerous, fires in Australia and California
  • Carbon emissions have been declining in rich nations for decades and peaked in Britain, Germany, and France in the mid-seventies
  • Adapting to life below sea level made the Netherlands rich not poor
  • We produce 25% more food than we need and food surpluses will continue to rise as the world gets hotter
  • Habitat loss and the direct killing of wild animals are bigger threats to species than climate change
  • Wood fuel is far worse for people and wildlife than fossil fuels
  • Preventing future pandemics requires more not less “industrial” agriculture

I know that the above facts will sound like “climate denialism” to many people. But that just shows the power of climate alarmism.

In reality, the above facts come from the best-available scientific studies, including those conducted by or accepted by the IPCC, the Food and Agriculture Organization of the United Nations (FAO), the International Union for the Conservation of Nature (IUCN) and other leading scientific bodies.

Some people will, when they read this imagine that I’m some right-wing anti-environmentalist. I’m not. At 17, I lived in Nicaragua to show solidarity with the Sandinista socialist revolution. At 23 I raised money for Guatemalan women’s cooperatives.

In my early 20s, I lived in the semi-Amazon doing research with small farmers fighting land invasions. At 26 I helped expose poor conditions at Nike factories in Asia.

I became an environmentalist at 16 when I threw a fundraiser for Rainforest Action Network. At 27 I helped save the last unprotected ancient redwoods in California.

In my 30s I advocated renewables and successfully helped persuade the Obama administration to invest $90 billion into them.

Over the last few years, I helped save enough nuclear plants from being replaced by fossil fuels to prevent a sharp increase in emissions.

Until last year, I mostly avoided speaking out against the climate scare. Partly that’s because I was embarrassed.

After all, I am as guilty of alarmism as any other environmentalist. For years, I referred to climate change as an “existential” threat to human civilization, and called it a “crisis.”

But mostly I was scared. I remained quiet about the climate disinformation campaign because I was afraid of losing friends and funding.

The few times I summoned the courage to defend climate science from those who misrepresent it I suffered harsh consequences. And so I mostly stood by and did next to nothing as my fellow environmentalists terrified the public.

I even stood by as people in the White House and many in the news media tried to destroy the reputation and career of an outstanding scientist, good man, and friend of mine, Roger Pielke, Jr., a lifelong progressive Democrat and environmentalist who testified in favor of carbon regulations.

Why did they do that? Because his research proves natural disasters aren’t getting worse.

But then, last year, things spiraled out of control.

Alexandria Ocasio-Cortez said, “The world is going to end in twelve years if we don’t address climate change.” Britain’s most high-profile environmental group claimed: “Climate Change Kills Children.”

The world’s most influential green journalist, Bill McKibben, called climate change the “greatest challenge humans have ever faced” and said it would “wipe out civilizations.”

Mainstream journalists reported, repeatedly, that the Amazon was “the lungs of the world,” and that deforestation was like a nuclear bomb going off.

As a result, half of the people surveyed around the world last year said they thought climate change would make humanity extinct. And in January, one out of five British children told pollsters they were having nightmares about climate change.

Whether or not you have children you must see how wrong this is. I admit I may be sensitive because I have a teenage daughter.

After we talked about the science she was reassured. But her friends are deeply misinformed and thus, understandably, frightened.

I thus decided I had to speak out. I knew that writing a few articles wouldn’t be enough. I needed a book to properly lay out all of the evidence.

And so my formal apology for our fear-mongering comes in the form of my new book, Apocalypse Never: Why Environmental Alarmism Hurts Us All.

It is based on two decades of research and three decades of environmental activism. At 400 pages, with 100 of them endnotes, Apocalypse Never covers climate change, deforestation, plastic waste, species extinction, industrialization, meat, nuclear energy, and renewables.

Some highlights from the book:

  • Factories and modern farming are the keys to human liberation and environmental progress
  • The most important thing for saving the environment is producing more food, particularly meat, on less land
  • The most important thing for reducing air pollution and carbon emissions is moving from wood to coal to petroleum to natural gas to uranium
  • 100% renewables would require increasing the land used for energy from today’s 0.5% to 50%
  • We should want cities, farms, and power plants to have higher, not lower, power densities
  • Vegetarianism reduces one’s emissions by less than 4%
  • Greenpeace didn’t save the whales, switching from whale oil to petroleum and palm oil did
  • “Free-range” beef would require 20 times more land and produce 300% more emissions
  • Greenpeace dogmatism worsened forest fragmentation of the Amazon
  • The colonialist approach to gorilla conservation in the Congo produced a backlash that may have resulted in the killing of 250 elephants

Why were we all so misled?

In the final three chapters of Apocalypse Never I expose the financial, political, and ideological motivations. Environmental groups have accepted hundreds of millions of dollars from fossil fuel interests.

Groups motivated by anti-humanist beliefs forced the World Bank to stop trying to end poverty and instead make poverty “sustainable.”

And status anxiety, depression, and hostility to modern civilization are behind much of the alarmism

Once you realize just how badly misinformed we have been, often by people with plainly unsavory or unhealthy motivations, it is hard not to feel duped.

Will Apocalypse Never make any difference? There are certainly reasons to doubt it.

The news media have been making apocalyptic pronouncements about climate change since the late 1980s, and do not seem disposed to stop.

The ideology behind environmental alarmism — Malthusianism — has been repeatedly debunked for 200 years and yet is more powerful than ever.

But there are also reasons to believe that environmental alarmism will, if not come to an end, have diminishing cultural power.

The coronavirus pandemic is an actual crisis that puts the climate “crisis” into perspective. Even if you think we have overreacted, Covid-19 has killed nearly 500,000 people and shattered economies around the globe.

Scientific institutions including WHO and IPCC have undermined their credibility through the repeated politicization of science. Their future existence and relevance depend on new leadership and serious reform.

Facts still matter, and social media is allowing for a wider range of new and independent voices to outcompete alarmist environmental journalists at legacy publications.

Nations are reorienting toward the national interest and away from Malthusianism and neoliberalism, which is good for nuclear and bad for renewables.

The evidence is overwhelming that our high-energy civilization is better for people and nature than the low-energy civilization that climate alarmists would return us to.

And the invitations I received from IPCC and Congress late last year after I published a series of criticisms of climate alarmism, are signs of a growing openness to new thinking about climate change and the environment.

Another sign is the response to my book from climate scientists, conservationists, and environmental scholars.

Apocalypse Never is an extremely important book,” writes Richard Rhodes, the Pulitzer-winning author of The Making of the Atomic Bomb. “This may be the most important book on the environment ever written,” says one of the fathers of modern climate science Tom Wigley.

“We environmentalists condemn those with antithetical views of being ignorant of science and susceptible to confirmation bias,” wrote the former head of The Nature Conservancy, Steve McCormick. “But too often we are guilty of the same.  Shellenberger offers ‘tough love:’ a challenge to entrenched orthodoxies and rigid, self-defeating mindsets. Apocalypse Never serves up occasionally stinging, but always well-crafted, evidence-based points of view that will help develop the ‘mental muscle’ we need to envision and design not only a hopeful, but an attainable, future.”

That is all that I had hoped for in writing it. If you’ve made it this far, I hope you’ll agree that it’s perhaps not as strange as it seems that a lifelong environmentalist, progressive, and climate activist felt the need to speak out against the alarmism.

I further hope that you’ll accept my apology.

Michael Shellenberger is author of several bestselling books., including Apocalypse Never.

 

Liberal Elites Surrender To The New Left

Smiley Face Liberalism
The collapse of liberal elites under a leftist offensive has been in the making for years.
By Daniel Henninger

The people in the streets—idealistic protesters, full time activists, anarchists—are the young men and women of the current American left. The people running the country’s institutions—mayors, cultural leaders, media executives, business managers—are a generation older and cut from the cloth of traditional American liberalism. Give the left some credit: After tolerating their liberal betters for years, they knew when the opportunity had arrived to push them over the cliff. They have just taken it. Events of the past four weeks have produced a lot of agog reactions, but among the most interesting have come from European friends who came to the U.S. years ago in search of what can only be called the American dream. Now they are asking: Why is there so little resistance to what is going on? How could cancel culture happen in a country with legally protected speech? Why has there been no defense of private property—which remains, believe it or not, a big idea in the minds of  foreign born citizens, from taxi drivers to builders of new companies? The quick collapse of America’s elites under this left-wing offensive is striking and a historic event. Within a week of the left going after monuments to U.S. presidents—George Washington, Thomas Jefferson, Ulysses S. Grant—the head of the American
Museum of Natural History in New York said she had no problem with dismantling history, and asked the city to take down its statue of Teddy Roosevelt on the grounds that it is offensive to blacks and Native Americans, which is absolutely disputable.

In Brooklyn, residents are in despair over nightly fireworks noise, shootings and killings as the police, under threat of prosecution or firing, have pulled back. On Monday evening, Borough President Eric Adams responded with a solution: “empower” community groups to discuss with residents the dangers of shooting aerial bombs at each other. How did the capitulation happen so fast? In fact, it was a long time coming. It is hardly an insight by now to blame this on the schools. But revisiting 30 years of educational irresponsibility seems necessary, insofar as the reality of the moment represents an erasure of history. If U.S. Grant, just toppled in San Francisco, was a racist, American history has indeed ceased to exist. History has a way of returning, and some day it will record how a generation of university presidents produced this result. In the 1980s and early ’90s, when the notion of speech-codes emerged with formal restrictions on words and speech, the seeds of today’s cancel culture were planted with the acquiescence of university leaders. When liberal professors embarked on tenure denials for conservative colleagues, who were important ballast to the growing group think, campus administrators caved.
Then when the students turned on some of these same liberal professors, with accusations of racism, they caved again.

These rocks rolled steadily downhill with barely a peep of public resistance from trustees. In the 1990s, Yale famously returned a $20 million donation from alumnus Lee Bass to create a curriculum in Western civilization,   a k a history. These acts of denial as liberal traditions eroded were mostly petty self-interest. If you didn’t lose your job, you were OK. This is what “silence is compliance” really looks like.

Here is why this is relevant to what happened so quickly the past four weeks. Liberal tolerance (their one cardinal virtue) eventually degraded into rote acceptance. They claimed to be defending evolving standards but eventually there were none.The activists’ steady descent into irrational and illogical claims was impossible to miss. It became obvious that wokeness had turned into a weapon, but liberal leadership blandly let it happen.
Even more important to understanding recent events is a recognition of how the left eliminated traditional liberalism’s moral leadership.

For decades, liberals have made claims of moral authority in the U.S.’s political life—through depressions, wars, the civil-rights movement. In recent years, the left has successfully established, at least among elites, that we live in a society with few constants of moral behavior. But if even the idea of a functioning consensus about morality has been erased, then no one has moral authority. About all that’s left is smiley face liberalism.The organized, professional left has played its hand well, filling the void of a no-longer relevant liberalism with an authoritative, reductionist assertion of “systemic” guilt—secular guilt being the most powerful political idea of our time—in matters of race and gender.By now, displaced liberal elites have so little self-confidence that they fear even criticism from their children or teenage grandchildren for trespassing the new racial and gender orthodoxies.

Will it last? I think people across the political spectrum are shell-shocked by the events of these weeks, especially the Taliban-like smashing of monuments and the embrace of lawlessness as an official ideology, with no credible push back from Joe Biden or other prominent Democrats. But if history teaches us anything, it’s that the American electorate won’t be pushed around permanently. Write henninger@wsj.com.