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Rocky VIII: An Economic Metaphor Part 1

8/14/19

It is 1:14 PM. The Dow is off 722 points after an already crappy previous week.

You’ve missed me haven’t you?

I have been away too long. I have been toiling away in the shop making furniture and trinkets. I do that to get away from the moronspeak[1] that is American politics. And there is a glut of morons speaking in the last few years.

Note the date. It is more significant than you might know. It is surely more significant than the “experts” on TV know. But three months from now they will review tape and say, “See? This is where it started to really unravel. I knew it all along.”

On 19 January of this year I made a case against tariffs as economic policy or foreign policy. So far, my conclusions have been proven correct. And today, I was heralded to my laptop by absolutely terrifying words from the FOX Business channel. These words are repeated at the outset of every market crash.


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Varney: Trump! Trump! He’s our man…

If you read my stuff you’ll know what those words are: “It’s different this time.” Stuart Varney – I tune in every morning even though Varney is a Trump cheerleader every day, rain or shine – is backing up these words up saying that the severe yield inversion we see in U.S. Treasuries is different from previous inversions.

Why? He says it is because money is pouring in from all over the world, retreating to the safety of our economy.

There are three problems with that assessment:

  1. Money is doing that because we have created weakness AND instability across the globe with our tariff debacle.
  2. The computers that trigger sell-offs on Wall Street and average people who don’t take a philosophical long view when they see their 401Ks trashed, CANNOT consider nuance. For that matter neither do most professional investors. They read fundamentals. If you fuck with the fundamentals they panic.
  3. Money does this all the time when Europe is broke. It pours in even when we are in an actual recession.   So money pouring in won’t save us from this world-wide slow down.

Some are saying the slide is due to riots in Hong Kong. Well…maybe 100 points can be attributed to that. But the real reason was the announcement that the 10-year yield was at 1.58!

So how did we get here and how will all this end. I’ll use an analogy I’ve employed on social media, trying to explain reality to morons on both sides of the political fence.

Beating up Rocky Balboa.

Our story opens with Rocky (the US economy) going toe to toe with Apollo Creed (economic planners). Rocky got beaten badly in 2008 when people thought they could defy the laws of economics and create false value in the housing market. They spent more than a decade trying to push mortgages on people who could not pay them back and encouraging homeowners to treat their homes like an ATM machine. We all know how the fight ended. Both fighters ended up in the hospital. Rocky lost.

I will leave the abuses of politicians and a corrupt Central Bank that occurred before the rematch for another time. But Rocky did meet with Apollo during the election of 2016. That was when manager Mickey (Donald Trump) said we are not going to fight the way we are expected to. Apollo expects to see a plodding southpaw this time. But we will switch and be controversial and confrontational.

That was all it took. It was a tough battle. Rocky rallied late in the fight banging at the planners ribs with deregulation, deregulation, again and again, until the planners were spitting up blood. And then WHAM! Tax cuts to the chin!

After going the distance (eight years of Obama)[2] and actually creating economic growth, especially with the tax cuts, Rocky was staggering to his corner. He was blind in one eye, his nose was broken. Rocky’s arm were now to heavy to lift. He was out of adrenaline. In his words even “his hair hurts.”

For some reason, at that very moment, Mickey decided to put Clubber Lang, Tommy Gunn and Ivan Drago (multiple tariff fights) into the ring to FIGHT ROCKY immediately!

Now, all during the run up to the original rematch and through the fight itself, Mickey’s detractors said he should be fired. He was a racist, a hater. He was Hitler. This didn’t stop when the economy emerged victorious. But Mickey is none of those things. He has lots of faults to be sure. Some asshole talked him into letting the other three into the ring. But that is the only legitimate reason Mickey can be impeached. According the boxing commission (the US Constitution) Mickey has no right to create a fight (install tariffs) and certainly not when his fighter is so vulnerable. Only licensed promoters (Congress) can do that.

But Mickey says, “I am doing this for Rocky’s well-being (national security).” Of course, everyone listening, including the ones who want the fight to go on, know those words are unadulterated bullshit. Too many think that since Rocky beat Creed Mickey is now their god and can do no wrong. They will make every excuse for him.

So how is this new fight shaping up?

Tell ya what. I’ll call that from ring-side in my next article.

Here’s a preview: Everyone is bleeding and looking for an exit.


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[1] I made that word up as homage to George Orwell. But it encapsulates perfectly my view of modern discourse.

[2] Obama’s legacy will be saying “1.5% growth is the new normal” and “it was Bush’s fault.”

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