Another sign the zoo has gone nuts. “If you don’t have your own SPAC, you’re nobody.”
By Wolf Richter for WOLF STREET.
The business of SPACs is setting stunning records. A SPAC (special-purpose acquisition company) is a “blank-check company” with no business activity that raises funds from investors via an IPO and will then attempt to use those funds to buy a startup company. For the startup company, getting acquired by a SPAC is an alternative to an IPO. There are fewer disclosures to make, compared to a standard IPO. For Wall Street, there are huge fees to be made. And insiders, including those that start the SPACs, make tons of money. So all the building blocks are in place.
In 2020, an all-time record of $83 billion were raised by SPACs, six times as much as in 2019 ($13.6 billion), according to SPAC Insider’s data. This $83 billion was more than all of the funds that SPACs had raised in all prior years combined, according to Dealogic, and it blew by the $78 billion raised by standard IPOs in 2020, such as Airbnb’s IPO. Everyone and their dog was starting SPACs, from former Speaker of the House Paul Ryan to former NBA star Shaquille O’Neal, going after the hottest stories at the minute.
And in 2021, the SPAC mania accelerated further. “If you don’t have your own SPAC, you’re nobody,” Peter Atwater, founder of Financial Insyghts, told the Wall Street Journal. In the first three weeks of 2021, there have already been 67 SPACs, raising a total of $19 billion, more than in the entire year of 2019:
A special mix of market exuberance, blind confidence that this exuberance will last forever, and a total disdain for valuations are required to create this kind of situation.
To see just how far this mania in SPACs has exploded this year, we can look at the dollars raised per week on average. Turns out, in 2021, $6.4 billion have been raised per week, compared to $1.6 billion per week in 2020. This is where we are so far:
There are currently 287 SPACs, sitting on roughly $90 billion in cash, that are now trying to chase down startups in the hottest sectors of the moment, from anything-EVs to telehealth.
IPO stocks skyrocket.
Stocks after they have gone public have skyrocketed since the March lows. The Renaissance IPO ETF [IPO], which tracks the Renaissance IPO Index, which includes the largest 80% of IPOs over the past two years, has soared by nearly 240% since March 18, totally blowing by and leaving in the dust the S&P 500 Index, which has soared 72% since the March low. This spike in the IPO index comes after it had spent the prior five years roughly on the same trajectory as the S&P 500 Index (data via YCharts):
Fees from SPACs and IPOs are a goldmine for Wall Street Banks.
Banks have now reported their fourth quarter results, including the fees they earned from SPACs and IPOs. In 2020, the top six in equity underwriting fees – Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America, Citigroup, and Jefferies – earned $14.1 billion in fees from SPACs and IPOs, according to the Wall Street Journal, up 89% from 2019:
So everyone is getting rich off this mania in SPACs and IPOs and is having a grand old time. And after everyone has gotten rich off the mania, and extracted fees and unloaded shares and had all the fun, there is then another thing: In prior manias of this type, the aftermath has been very unkind to investors that had made it all possible by buying these shares with that mix of exuberance, blind confidence that this exuberance will last forever, and a total disdain for valuations. Ah yes, this time it’s different, everyone is saying again – another sign that the zoo has gone nuts.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Waiting for the Wolf Street SPAC, cause I know Wolf is not a nobody.
I would suggest you target someone in the “technology field.” Or better yet, in the economic field.
MCH
BLOODY HELL!
I was thinking the same as was reading the article! :)
Question is Who or which bank we’ll appoint to conduct the underwriting?! :)
Duh, Goldman of course, they want anything with dollars attached to it.
If there was actually a temple to money, it would be located at:
200 West St, New York, NY 10282
And the head priests would be a round table of CEOs from GS, MS, JPM, etc.
I heard that GS was more like THE top University for learning the more “dark arts” aspects of economics. A sort of a Hogwarts, for those with “special” talents.
Anyway, their graduates seem to be very successful everywhere they go.
Back to the SPACs. What’s not to like about a “blank check shell corporation”?
The SEC says they have them well regulated.
Maybe I should have said aspects of “finance” rather than “economics”.
Although that may be like choosing “Yeti” over “Sasquatch”, or a “zoo” over “gone nuts”.
Blessed are the flexible, for they shall not be bent out of shape.
MCH,
The problem is ,(you see MCH),
That the BRITS are in on the action (if Nick Corbishley can update us on that please)?
as well as the pesky Singaporeans ! :)
Too much competition for free money now !
How do we get in on the action,
since the “ SEC” is the most “FRIENDLY “ organization to chime our way through with virtually NO repercussion !
???
The Wolf Street SPAC could finance my next book! Maybe….
When will there be SPACs specializing in buying other SPACs? Just because it’s silly doesn’t mean it wouldn’t attract day traders…
We had CDOs of CDOs, so why not?
BTW, Berkshire Hathaway is basically a ginormous SPAC in practice, as are some of the other agglutinating conglomerates.
Only logical, I mean there is an ETF to SPACs already, why not a SPAC for SPACs
I linked a WSJ article below about how SPACs are just a bit nuts. But we will see, a good number will fail I would guess, but we will see how many gets a dance partner.
Absolutely!
And then derivatives, options, CDS, etc, etc, on all of them.
When testifying at a sham “ferret out the guilty” Congressional Posturing…I mean Hearing, after the GFC, Soros calmly said, “They can invent financial instruments much faster than you can write regulatory law”.
(Or something similar, the gist of it is simple.)
Are you kidding me, Soros is probably laughing his ass off playing in this market.
What do you do when you have excess cash that you don’t need, you use it to make other people’s lives miserable… that’s Soros for you in a nutshell.
Don’t believe it? Ask the Brits about what they think of him and what he did the the pound.
Soros himself wasn’t really my point, just his statement.
Now, what’s yours? “Good” filthy rich vs “bad” filthy rich?
Or just your own political programming?
This will only end when there’s a SPAC of SPACs.
You are SPACulating.
I think I saw a comment right on this site from somebody who said “stocks will never fall again, the FED won’t let them.”
This is truly a remarkable mania. And the land grab continues as well. I pay attention to a tiny coastal community in the PNW where building lots were selling for $7,500 just a few years ago. These are in the 8,000 square foot range. I just checked earlier today and there is nothing under $30,000. The speculators got a 4x return in a couple years, and things are pending. Nobody wanted these 5 years ago.
Pretty small postage sized lot. It sounds like a mobile home park.
These are building lots, not a mobile home park. But it’s 100% speculators buying them up. Nobody is building. This is an area of no jobs at all.
Grey’s Harbor?
What they’re doing in my PNW neighborhood is buying all the really old houses on large lots and then building anywhere from 3 to 8 2500 sq ft houses on them. No yard, just enough room to park 2 cars. And since nobody seems to park their cars inside the garage (which appears to be filled with other “stuff”) parking is getting crazy.
I keep telling myself it can’t last, but if it crashes it’s going to be really ugly.
They’re doing the same thing (buying homes on large lots and scraping them) in my son’s Austin, TX neighborhood. My son says that his house is “worth” about $700K but the bare lot would be higher. There’s lots of limestone ledge and expansive soil there…. not an easy place to build anything that’s “level”.
One house around the corner was replaced with 10 houses – all large – on postage stamps and a single curb cut servicing them all.
Paulo: you are revealing yr rural roots. 8k sq. ft. is considered good sized by Vancouver standards. My niece and hub just shelled out over a million there for small house on a 33x 125. Here in Nanaimo a 50 x 100 will be about 200K. It would be an unusually good- sized mobile park lot to be 4K sq. ft.
In my zip code, 55406, most lots are 120 feet deep by 40 feet wide. From Google Earth, these are perfectly laid out in a grid-like pattern.
But for one block on both side of the alley, the lots are 51′ by 126′. Oh yeah, I got eleven extra feet between the houses next to me.
Compared to the suburbs in the Twin Cities, it is a small lot, but for location plus space, it is perfect.
Interesting that Shaq is on board the SPAC train. If I recall correctly, Shaq bought up a lot of Miami’s commercial properties when the 2009 real estate crash hit. He is a very successful business person who can DJ a platter with the best of ’em!
You and others are right. My bad, as they say. I quickly got out the calculator and discovered that is the normal size for these days. Should have checked before commenting.
My first house in Powell River was on a 1/2 acre lot. It had a nice view. My second house in Campbell River was just under 1/2 acre which is unbelievable these days. And today the lots are postage sized….very small. In the last 20 years CR has expanded at a lightning pace, and the houses are crammed in so tight I just wonder why people don’t buy patio homes? The patio home developments look very good. Yes, property is very very expensive and force the density.
If the development is in Greys Harbor, I get it. It is a very beautiful little town, mind you the weather sucks.
I think people will see a changing trend, though. When the Thasis mills shut down the housing prices collapsed. Then, people bought the old homes for fishing cabins and prices climbed again. They dropped 30-40% for awhile and now prices are climbing again. When Gold River mill shut down Europeans flocked there and the same trends occurred. Now, prices are back on the increase. Last year I checked out a lot in Winter Harbour. Couldn’t do it…the drive, the weather, isolation. But I’ll bet someone bought it on spec. Good fishing if you like 350 days of rain per year.
I grew up in Duncan. Youbou housing, in fact anything in Lake Cowichan was sneered at. Jokes were made. The rugby games were pretty nasty; we had fist fights. Now? The place is an absolute trend setter with custom homes and big prices. People commute to Victoria from Lake Cowichan. I can’t imagine it.
I could see commuters driving to Olympia WA across much of the Peninsula. My sister lives on Camano Island. The I-5 is packed with commuters to Everett and Seattle, every day. I’ll bet people from Bellingham even commute to Seattle.
“I could see commuters driving to Olympia WA across much of the Peninsula. My sister lives on Camano Island. The I-5 is packed with commuters to Everett and Seattle, every day. I’ll bet people from Bellingham even commute to Seattle.”
Not many, and not for long. You’d be in the car for 7+ hours a day, just for commuting purposes.
Last time I drove up that way (06) it was pretty much all city from south of Portland to way north of Seattle. Small green area from there to Bellingham. Truck had racks, tool box, etc, and I had my dog with me when I hit the border. Said I was gonna help a friend in Black Creek build a garage/shop and just visit for a couple weeks.
Had me pull over, dragged me inside, and the lady took obvious pleasure in knowing she was going to send me back, as in, “is that all that’s on your record”, “Yes”, “well what about…” Went thru everything on me back to age 18, EVERYTHING. So after they made me wait a another 1/2 hr while they “thought about it”, gave me a paper to take to the US side. I was so pissed off I couldn’t see straight, and lady on US side immediately said, “we have nothing to do with what they do over there”. So I called and cussed out my friend over his F’DUP country after I was a safe 250 mi away from stinking place, and his wife said she was afraid of that and they should have met me. Looked like a sneak in poor working immigrant. 2000 miles for nothing ! Makes me mad thinking about it. Anyway after that, they all just came down here more often, and sometimes we all went on to Baja.
Guess my original point is it’s a LOT more crowded than when I first came up that way in HS in ’63. Glad I got to spend a lot of time around V Island and inland (Pentection) P. George, Dunster (G Uncles place). All the names you guys mention are very familiar and bring back good memories, even Nanaimo. Sorry about all that growth…always thought nasty winter weather would keep people out…guess not, too beautiful.
P,
”Back in the day” when most travel to the coastal areas was by train, and continuing, lots were actually sized to put up a family size tent, and that was all that was permitted.
Many of the coastal areas of CA that I worked in several decades ago had lots of lots that were 40 x 80; by that time, most of them had houses on them, and most of those houses were less than 1,000 SF total. Some had carports or even garages, but many did not.
Many of the carports and garages were converted to bedrooms or utility rooms, and in some places, the local guv mint came through and mandated those conversions be reversed no matter the ”hit” to the current owner.
The really ironic part is that many of those near coastal houses are worth $$MMs today, another example of the worth less nature of our dollar since 1913…
What could possibly go wrong?
I mean SPACS are almost as much of a sure thing as bitcoin…
Trust me, I’m a Realtor.
Trusting Bitcoin is like trusting math. Better leave it to the nerds.
Bitcoin:
“Rat Poison Squared” – Warren Buffett
“Trading Turds” – Charlie Munger
They both sound jelly.
“They both sound jelly.”
Maybe to a crypto thousandaire. To me, not so much. These guys are billionaires. They scoff at the idiocy of what’s going. Crypto is essentially buying and selling air. It’s nothing.
They’re jelly. Those sick old money vacuums want a piece of everything.
It’s all they live for.
People are buying and selling these “coins” when they have absolutely no idea what their utility is, assuming it even exists. They are simply looking to sell it to another sucker for more than they paid. If it goes down, they wait and eventually it goes up and they sell. That has worked for 2 years now. A more reckless environment cannot be found. 100% pure speculation and nothing else.
That could describe the entire equities market at this point. How many people would buy in at these prices if they were told they had to hold them for 20 years?
Or quality like Gamestop…
What’s going on with Gamestop is really a logical evolution of the mob social media movement that’s been going on for years. The same way it influenced elections and twisted the truth and reality, it will change the stock markets as we know it — analysts and other market cheerleaders, like Cramer, no longer have monopoly on influence and perception. Speaking of Crame, on CNBC today:
“Cramer sees small investors ganging up online against Wall Street hedge funds as a new paradigm”
Gamestop reminds me of Pets.com but on the flip 180 degree 20 years later way.
Does Gamestop have a sock puppet mascot too? Singing, “If you leave me now”… or something
Wired has an article describing the social media mob in action. It goes from online harassments to doxing to SWATting, you name it. The victims are mostly the market analysts and researchers who dare to hold a different view of a stock.
Since you are in my area, SR, was just curious if any radical recent changes here, homes or CR (not that I’m ever leaving my rental apt). I know sister is ticked off about Fountain Grove types (since fire) using spare change to move into her Condo HOA off Brush Creek (the one with tons of green space) and screwing with HOA politics. Wolf left us out of last article.
Thanks.
That California Fed chick who is the epitomy of enlighted QE wokefulness said she’s not even thinking about thinking of ending QE & ZIRP because they’re such awesome job creators for y peasantry. Just looks like a lot of unearned profit for the blood sucking vampire squids to me: “In 2020, the top six in equity underwriting fees – Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America, Citigroup, and Jefferies – earned $14.1 billion in fees from SPACs and IPOs, according to the Wall Street Journal, up 89% from 2019”
Neither political party is talking about the FED and the massive inequality they have created. That’s the problem in a nutshell.
This country is a disaster, and no it’s not just the fault of the two parties , the Fed, etc. The truth is it’s the work of everyone including a population that’s more interested in form over substance.
Nice over kind.
Yeah this country is done for. I look forward to escaping it in the near future.
But almost every other country is learning from us
I am not saying that other places are idyllic, but saying every other place is like America is bollocks. A lot of countries including Canada have socialized medical services, for example.
With some help from the ad biz, in defense of disasterously undereducated proles.
I present reality shows as my evidence and rest my case.
I agree. Respectfully, MonkeyBusiness, if the “Federal” Reserve had never been created and a US federal agency had been given its functions instead, we would all be much, much better off and TRILLIONS AND TRILLIONS of dollars gifted to the banksters would not have been effectively lost by the US government. Aside from the CCP, the “Federal” Reserve is most American’s greatest enemy. I believe that it is massively corrupt.
The Federal Reserve didn’t send jobs away to China. America’s politicians and businessmen did. Takes two hands to clap.
The Federal Reserve also didn’t start numerous wars nor did they engage in world empire building. The amount of money we’ve spent on those activities, ………………
This country has far too many enemies than simply the CCP or the Fed.
If the Fed had been a govt dept, i.e., officially at the mercy of the White House, instead of ‘sort of independent’ Powell would have been fired 2 years ago and replaced by some political hack. Go back and read the bashing the Fed took from the WH. When Economic Adviser Gary Cohn was in budget discussion with the WH incumbent, the latter said ‘just print the money’.
When Paul Volcker brought the hammer down to wring out inflation and took the Fed rate to 18%, he would have been fired if the Fed was a direct Fed dept.
What is needed for the Fed is more distance from gov not less. The German CB, Bundesbank is constitutionally independent. Pre-covid Germany had a budget surplus.
“California Fed Chick”……you don’t mean Mother Fellon do you?
LoL LoL ??
If he meant Yellen, I’d think he would have said “troll,” as she appears to resemble one.
So why do women always get judged on their looks and men not so much? Kind of disgusting, IMO.
“So why do women always get judged on their looks and men not so much? Kind of disgusting, IMO.”
Is this some kind of joke? They’ve been calling Trump “Orange Jesus” and all sorts of nasty stuff his entire presidency. I think you have selective outrage.
You have got to admit his look is rather….”excessive”…..for someone his age? Surfer/biker(?) look is not too common among the public servants.
Not Yellen some one else, there is a “lesbian” (MSN term not mine. Full disclosure, I’m gay) with a position at San Fran Fed who expressed her unqualified support for QE & ZIRP).
I’m fortunate to be friends with a number of younger professionals. They are all convinced that American markets are completely corrupt and that the only thing you can really count on is that same corruption — there is no moral hazard Jerome Powell will refuse to bankroll. Buy the dip is their absolute gospel.
It’s kind of charming — they really are believers of a sort.
Joe, they may be right long enough to make a fortune.
I don’t think so. Very few people in an environment like this can actually take profits. Most people are getting rich on paper, but very few will be able to realize these gains.
Indeed. If you’ve made 240% on some spacs, where do you go with your profits?
Taking profits is easier said than done now.
You can see why everything is going up, it literally is just a reflection of the stimulus now.
But at some point people will blink and go to cash and then… it’ll be good to be in cash.
Kenny, it’s quite easy to take profits, it just requires intuition and common sense overriding greed, which is a very powerful human emotion.
But it’s as you said. There isn’t even close to enough cash in the world for everyone to “cash out,” so when people the herd wants to, it’ll be too late for those who haven’t already.
I have a very hard time wrapping my head around this concept, that the value of the assets is entirely dependent on very few people trying to realize that value.
These SPACs remind me of the stock options and restricted stock offered by the tech/startup companies. The largest percentage lands up worthless to the workers because they don’t vest, or they can’t afford to exercise the options and pay all the taxes. It sounds great on paper, but getting the cash out is another story.
They seem to be doing great. I feel foolish for working hard and saving all these years. I made good coin, but it was a real slog. These kids are whizzing by me on the Jerome Powell expressway to easy riches.
These kids grew up playing video games. They intuitively understand manipulated systems and how to manipulate them in turn. They also have a high tolerance for risk and failure. It’s just a big f*king video game they are playing and the money is just points.
Right exactly on the money once again pet,,, thanks for expressing it soooo clearly, as this old guy been wondering what the heck been going on, and your statement seems SO right on.
Even my middle age off spring are now out of the SM after doing well last decade or two.
Guess they are aware of what you wrote, but have tried not to alarm the old guy sticking with paid off RE and cash for now.
Stimulus economic policy always has some negative affects and if ran long enough the negative outweighs the benefits. The negative things are getting pretty obvious: 1) Income Inequality 2) Excessive speculation 3) Destruction of real savings and investment 4) Corrupting influence on society
Well, if you believe that illness is charming…
I’ve had the flu lots of times, and will certainly get it again, and one day it may even kill me. And you are welcome to my flu shot.
+1
If you want something that rises to infinity, look at USA debt, it rises so much is ridiculous!
Good analysis, Wolf. It seems massive amounts of capital from one source or another are pouring into non-productive entities. will it end? I imagine there can only be an end but, as you say, some have been coinining it on that road.
I’m compelled to get a dozen or so of my retired friends together to see if we can gin up an idea for forming our own SPAC. After all, we are already organized as members of our “private” ROMEO club.
Maybe you all should stop looking at it as the stock market going up and start looking at it as the rate of currency destruction. Would you rather own apple at a 40 PE or hold on to USD’s that congress and fed is brrrrr’ing out more of everyday at unprecedented rates?
All of this liquidity is now piling into these cryptos. It’s not even Bitcoin that’s all the rage now, it’s stuff you’ve never even heard of – Uniswap, Aave, Synthetix Network Token, Chainlink, Sushi, Dogecoin….there are THOUSANDS of these things. And people are getting 20% – 30% returns IN A DAY. Meanwhile, Jerome Powell is paying savers .10% a year. Roll out the guillotines already – let’s get this party started for real.
Crypto is a very convenient sink for excess dollars, it’s all virtual, there is an infinite supply of tokens to absorb any demand, and when that “excess liquidity” finally needs to be mopped up, “Chinese Hax0rs” will just take it away and it’s gone. Clean.
I believe the one major selling point for crypto is that the supply is limited (per each crypto). I suppose you could always make a new version, but for whichever crypto sticks around, it has limited number of units. I know this is true for bitcoin but maybe not all the cryptos.
It’s infinitely divisible, so there goes that. It’s Ponzi scheme and the greater fool theory at work.
Sometime last year (can’t remember who said it) I heard what I believe is a great description of cryptos …”it is the fraud with nobody in charge”. Just perfect !
Even the bigtime players in the crypto market celebrate that “pump and dump is not only legal, it’s encouraged.”
DP,
Division as a theory is infinitely possible, but on a computer, division is limited to the number of decimal places the computer can calculate. A 32 bit computer will divide by bigger chunks(less decimal places) than a 64 bit computer(with more decimal places). On a computer division is not infinite, it is the best approximation the machine can calculate.
I’ve never heard the bitcoin crowd discuss this issue. I don’t think most of them have a clue.
Depth Charge, being infinitely divisible has no bearing on the number of coins being limited, so I don’t know why you brought it up.
“Depth Charge, being infinitely divisible has no bearing on the number of coins being limited, so I don’t know why you brought it up.”
Good. You are the kind of person I like to confuse.
Petunia, you don’t need to use the single instructions provided by the processor, which are bounded by the bit width of the processor, do to math. You can do math programmatically and can calculate any value to as many decimal places as you want. All you need is memory and an algorithm. For example, you could search wikipedia for “List of arbitrary-precision arithmetic software” to find a huge list of software libraries that will compute to any precision you want. Those could easily be used by any bitcoin software, assuming the bitcoin protocol supported higher precision representations, which is a change they could make pretty easily assuming they could coordinate.
With regards to Depth Charge’s confusing statement about divisibility, it seems they were confused about what divisibility means and how it relates to the limited supply of bitcoin. The answer is, the two are not related. If I own X bitcoin, or X Santoshis, or whatever, then I can compute and know both what percentage of available bitcoins I have , and what percentage of the maximum number of possible bitcoins I have. Which makes depth charge’s assertion that Bitcoin being infinitely divisible has some bearing on Jeremy Wolff’s statement that it has “a limited number of units” as completely off base as I originally said it was.
“Crypto is a very convenient sink for excess dollars”
Not really. For every guy that buys BTC at $40000, there is a seller laughing his ass off when he takes his $40000 proceeds of the sale to the bank or uses it to buy real stuff.
In other words: there is no “sink” for excess dollars. The amount of dollars doesn’t change when somebody buys crypto or stock. If the price goes up, it only meant that there was a fool who was prepared to pay more for the same thing at that moment in time.
YuShan’s comment is dead on and yet one that 99% of today’s market participants, especially the journalists, simply cannot grasp.
There are however two sinks for excess dollar-credits:
(1) The Federal Reserve sometimes (but not recently) tightens up the money supply;
(2) The banking sector sometimes collectively decides that the party’s about over and it’s time to tighten lending standards.
Wisdom, what is meant by “excess dollar credit?”
@RightNYer:
Dollar-Credit: The original dollar was a coin. Today’s dollars are credit entries in financial computers, with a small minority being pieces of paper. They’re not units of metal anymore, they’re units of credit.
“Excess”: same usage as in fajensen’s post about people having too much credit and using it to buy cryptocurrencies, and YuShan’s point that the excess dollar(credit) isn’t gone, it just changes hands.
Historically it was the role of the central bank to recognize when credit was oversupplied, leading to rampant and unproductive speculation using the excess credit, and then to trim the “excess” credit supply (“take away the punch bowl”) until order was restored.
So $14.1 billion in fees divided by $83 billion raised = almost 17%.
Nice slice of the pie for taking no risk.
Nice Ponzi scheme. Probably perfectly legal too.
Where are the client’s yachts?
That $14 billion comes from SPACS ($83 billion) and IPOs ($78 billion), total of $161 billion. But yes, it’s a huge chunk.
What I find funny is how perma-bulls misuse “this time isn’t different”. Last year when all hell broke lose in March, I was on the mailing list of a fund manager who like most Fed-Kool-Aid-addicted types sent out a “victory” email when the market rebounded in May/June, disparaging the thinking of those who thought about selling in or before March, who had a hard time accepting the prevailing narrative about valuations being justified. He ended the email basically giving a giant F.U., in polite language, to those who tried to say “this time isn’t different”. In his mind, the market rebounding and returning to its “permanently high plateau” was proof that it’s never different “this time”, aka stonks always go up.
And here I sat thinking “reversion to the mean” is what we, the other side, mean when we say “this time isn’t different” to overheated markets…
Banks hold IPO company assets and PE assets on their books. So they have skin in the game. It may be TBTF not technically their skin but putting debt in your books is real, hard work. And if your bank fails and has to call the Fed, you’re in real trouble, because because. Hey look – a widget company with a website!
So the Fed purchases bonds, and the people who sell the bonds take the newly minted dollars, and they spend it on intangible things like cryptocurrency and phantom firms, and the WHEN the mania ends, the people who bought the cryptocurrency and phantom firms have nothing, and the Fed is left holding bonds that can’t be redeemed because the sellers now have nothing. Do I have this right?
Not necessarily. As long as the collateral the Fed holds is of high quality, then the Fed will be fine.
H-Dog: when the FED ask the primary dealers (banks) to sell them bonds, said banks receive credit in their FED account that is not liquid to use. Banks are supposed to loan out their own funds against these credits. Banks are doing this much as they are concerned about defaults in this fantasyland. I suspect banks do use their own money then, to speculate…but don’t know for sure and to what degree. Maybe Wolf knows and can correct me if I am wrong.
I do believe that this FED action is being overplayed by the markets and the most egregiously speculative period in our history may be resulting. The roaring 20’s have nothing on what is going on today. It truly is the distorted upside world of going through the proverbial looking glass.
Finally, the dollar could just have another rally in it and send the whole thing crashing down. Time will tell. Wolf calls it the “zoo”…I call it the “asylum”. Either way completely insane and a real problem of the soul and the spirit as all perspective is lost.
Sorry, typo…meant to say the banks are NOT lending much as they are concerned about defaults….maybe Wolf you can make the correct…thanks.
Ah, thanks. I see how I left the banks out of the cast.
The ancient Greeks had a diagnosis for all this lunacy: wealth addiction. As with all addictions, eventually comes the reckoning. Either go into rehab or die.
I am old and a non productive unit in the economy. It appears however that a competitor has arrived, the SPAC.
Don’t worry…..you will soon be a derivative
Lol! Touche, isnt that the truth!
Banks are currently banking fees on SPACs and IPOs, and soon enough they will be banking fees on Cryptos. Why and how?
Why – the illusion of control:
Last Tuesday Janet Yellen suggested lawmakers “curtail” the use of Bitcoin amid terrorism concerns. She also said cryptocurrency transactions were used “mainly for illicit financing.”
How – force cryto registration and 100% capital requirements:
I think Yellen’s soon to be revealed regulations will require all cryto wallets to be registered and regulated. She will also require all cryto to maintain 100% capital reserve requirements, which will force the cryptos into the regulated hands of the banking, who has infinite free money to support having capital regulations sit idle and do nothing but support unnecessary reserve regulations???
In the end, the banks and govt will control and profit from fees, taxes, and regulation of cryptos. Such elites fear the loss of finacial control, therefore all this will be done in the name of making the world a “safer place”…for the elites, that is…
On a side note, I really never can not understand the insatiable desires of the elites to enhace their power and pad their bank accounts. For example, even someone like Pelosi plays the robinhood saint, while required financial regulations for politicians recently showed she bought 500k-1M of TSLA calls on Dec 2020 that expire in 2022. Why would an 80 year old, worth tens of millions, be so greed and risk obsessed to buy into one of the most crazy gambles of all times? Either she knows something the rest of us are not privy, or she has an extreme greed complex???
From my own experiences, greed is a mental disease/sickness, as I’ve seen it in a Billionaire friend personally, and even in myself at times. Review the monopoly game behavioral studies and videos which show we lose our empathy and get downright nasty as humans once we start dominating others financially, no matter what our backgrounds, race, or genetics. Basically large monetary gains and dominating greed makes us less human. I’ve seen it in myself to be honest, as I was a better person when I was in the bottom 10% than the top 10%. It is human nature to think luck plays no role in financial success, and in order to not feel bad that the bottom 80% are suffering, I think the top 20% tend to fantasy that they are smarter and work harder. I’ve found that not to be the case in the real world as some of my smartest friends are the most poor, and some of my richest friends are the most lazy. But I can tell you for sure than my most content friends are those who own almost nothing, earn just what they need to survive without worry, and have very little expenses to worry about. One pattern they exhibit is they simply do not FOMO (Fear of Missing Out). That requires a much more simple life than most Americans can tolerate as sometimes I think the American meaning of life is “Don’t be bored”, and we as Americans get bored very easily and often (for example, 1 minute commercials are now 7 seconds), and the electronics addictions are making it increasing worse each future generation.
The irony is the electronic addictions are creating future generations which do not need the materialism “stuff” of past generations, so in many ways this current form of crony capitalism is set on the path of an inescapable and inevitable mutations that will most likely end in less future inequality and a reset of the monetary greed mental illness our society is currently suffering.
For a better future, like is most often the case, it has to get worse first in order to force massive changes. So hang in there, this monetary craziness will not last forever…
Great comment.
Jellen saying Crypto’s are used for illicit transactions, makes me laugh. The most used coin in criminal activity is the US dollar. The only difference being that the most lucrative scams have been legalised. Her only worry is losing control.
On your comment about the new generation not buying into material stuff i’d like to say it is replaced by buying into virtual stuff. Less hassle for the creator of it, because there is no manufacturing involved. Which might be something positive in regard there being less pollution. But money will be spent regardless. Question is, will they be able?
On: — that will most likely end in less future inequality —
Be ‘hopeful’. The more people get poor, the less inequality there will be.
That was, is and will be the way of communism and socialism that will rise before it gets abolished for already know reasons. But human nature is not to learn from the past and other’s mistakes. Only to comment on it.
“We all have the right to make our own mistakes” and
“this time it’s different, we will make it work” are the most common excuses for that behaviour.
There is always a future. But it’s not always a bright one for everybody, every time. Fact of life.
You can’t force people to register wallets. That’s the entire point. Wallets are more prolific than grains of sand on the beach. Are you going to register every grain of sand?
I’ll play devil’s advocate and say all wallets are registered. How is that accomplished? Wallets can be forgotten, misplaced, or destroyed permanently. What if your registered wallet is compromised and does something illegal? What if you got in a car accident and don’t even remember what Bitcoin or money even means. You could have 200 copies of you favorite book and split 12 words any combination of those books. Unless you have the words memorized you can’t access it from a courtroom. Fine you win, get your warrant and steal my books. But where is the wallet? 4th amendment and 5th amendment makes it sure difficult to force 12 words from someone’s mouth.
Now consider this, maybe I think Bitcoin is bullshit. But maybe we have a taste for what we want money to look like. And it doesn’t look like fiat.
Millie-
Sorry if you know this already, but a bit of background: the crypto in cryptocurrency doesn’t refer to it being hidden. It refers to the use of cryptographic functions, which are a specific class of functions that are easy to calculate one way, but exceedingly difficult (basically impossible) to calculate in reverse. Take a simple example: multiplying two numbers is easy, but factoring a number into its components is hard. That is, it’s easy to say that 12345 X 6789 = 83,810,205. You don’t even need a computer, a piece of paper and a pen would suffice to do it in a few seconds. But if I gave you the number 83,810,205 and ask you to find its factors, that would require orders of magnitude more time and calculations.
The reason this is important is because people don’t realize that cryptocurrencies are actually far easier to trace than paper cash or even chains of bank accounts in banking havens. Every single bitcoin has its entire transaction history, from the day it was created on a computer, encoded in the public bitcoin ledger. Sure, you might only know that this bitcoin was sold to person X. But as soon as you figure out who that person X is, literally every single bitcoin that ever crossed his hands can be recorded.
You know how people say that every single $20 bill in circulation has a trace amount of cocaine in it because so many have been used in the drug trade? Imagine if you could identify every single $20 bill that ever crossed Pablo Escobar’s account — even 20 years ago — and instantly cancel them, regardless of who has them now. That’s what cryptocurrencies enable.
The fact that it isn’t being done yet is not due to some technological safeguard. The regulators are simply late to the game. All the Federal Reserve has to do, is regulate crypto exchanges, and say that anyone who exchanges crypto for US Dollars must register and agree to abide by Fed rules which would be #1: standard Know-Your-Customer and Anti-Moneylaundering (KYC/AML) laws that every bank already does, and #2: subscribe to a Fed registry of canceled wallets, and if any cryptocurrency ever touched any of those wallets, even 10 years ago, refuse the exchange, and arrest the guy attempting to sell it for the Secret Service to question him (just like they do with counterfeiters today).
Tracking cash is very difficult, because they carry no history. You only know where it is at the time you seize it, but not where it came from. Even tracking bank accounts is hard because you need subpoenas to access bank records, and those can be difficult in banking havens like Panama. In contrast, the bitcoin ledger publicly and securely records the list of every transaction of every bitcoin ever made. If you “seize” a bitcoin (say you arrest a druglord that’s using it), you can trace back every single person who sold him those coins, and then trace every single person who sold those persons those coins, and so on. You don’t need a subpoena. It’s literally available to anyone right now. Sure, you’ll only know that it was wallet X sold to wallet Y who sold to wallet Z. Doesn’t matter. You simply put those wallets on your do-not-transact registry, and no crypto exchange in the world (who doesn’t want federal authorities knocking on their door) will touch any bitcoin that ever went through any of those wallets, regardless of who you are or how legitimate you might be.
BTW, this is a feature, not a bug of cryptocurrencies: the whole reason cryptocurrencies exist is to decentralize authentication of the currency. That is, right now, if someone gives you a $20 bill, you depend on the Fed and the Secret Service to guarantee it’s not counterfeit. Since cryptos have no central authority, how do you prevent someone who has 1 bitcoin from making a 100 copies of them (perfect, digital copies on a hard drive; no need for messy paper copiers), and spending them with 100 different retailers? Easy: the public ledger. The first time he spends that bitcoin, the transaction goes on the public ledger. The next time he tries to spend the same bitcoin, you’re supposed to check the ledger, see that the rightful owner of that bitcoin is now that first retailer, and refuse the transaction.
IOW, this isn’t some “bug” that can be corrected in some future version of bitcoin. It’s *the entire basis* of a cryptocurrency: a decentralized currency that still prevents counterfeiting or creating fake money. Take away the public ledger, and you have a regular currency, complete with a dependence on some external authority to prevent fraudulent transactions.
Anyone who uses bitcoin for fraudulent activity right now should be very, very careful. You might get away with it today. But even if the Fed finally implements controls 10 years from now, your transactions will be available for them to trace. There’s literally no way to scrub the public ledger (that’s why those pesky cryptographic functions are one-way functions :-). Imagine if you’re an 80 year old and the DEA shows up at your door with handcuffs saying they traced a $20 dollar bill you used at Woodstock to buy a bag of weed… That’s what they can do with bitcoin.
“Tracking cash is very difficult, because they carry no history. You only know where it is at the time you seize it, but not where it came from.”
Great information and raises a question – are the serial numbers on paper currency tracked in any way? Can the Fed or anyone pull any history based on when and where an individual bill enters and leaves a bank, based on serial numbers and such? I have no idea and have never seen this discussed anywhere.
I think you are absolutely right on this. The supposed inviolability of transactions offered by blockchain technology, is essentially a dead cert tracking route for your friendly HMRC inspector, to come and greet you, 5 or 10 years after the event and say, yes, this is all the money you owe us. Don’t argue please you have recorded it all yourself.
Not a big problem to intercept a set of transactions and figure out the participants.
Taking it another couple steps further along, imagine a government that decides to unleash its algos onto all the communications that took place on internet over say last 20 years, and whittle out who has been loyal to the “cause” and who was questioning it. Not too dissimilar technically to what google does every day.
There was a wild ceo in charge of a big country out there, just a few days ago gone, replaced by a ccp lookalike, immeasurably more devious. No end to evil someone like that can deliver.
What, you want to go to the hospital to be cured of your cancer? Let me check your comments on the non-MSM media over the years. You may just happen to be one of the deplorables, we’ll let you wait until it turns into grade 4 disease and then we’ll tell you sorry we tried everything but the time wasn’t on your side.
Stan-even the blizzard generated by (prox.) 75million ‘wild (failed) ceo’-worshipping snowflakes will melt eventually. Problem is, will the resulting melt drown all? (…the French/Russian revolutions ate vast numbers of their own…).
may we all find a better day.
The future of crypto is not registered wallets but I think they will regulate it where it touches the real world. For example, once you pay with crypto or try to change it to currency, the receiver will have to prove that the funds are from a legitimate source. That means shops won’t bother with it because it’s too much work. And banks or other exchanges will require paperwork (and demand handling fees) for you to prove where you purchased the crypto, so the government will know where it came from and how much they can tax you.
How many brick & mortar stores accept BitCoin as payment for their goods, have any of you come across?
“From my own experiences, greed is a mental disease/sickness, as I’ve seen it in a Billionaire friend personally, and even in myself at times. Review the monopoly game behavioral studies and videos which show we lose our empathy and get downright nasty as humans once we start dominating others financially, no matter what our backgrounds, race, or genetics. Basically large monetary gains and dominating greed makes us less human. I’ve seen it in myself to be honest, as I was a better person when I was in the bottom 10% than the top 10%.”
It’s my belief that every single billionaire out there is mentally ill to varying degrees, some much worse than others. A few would probably qualify as sociopaths. Lloyd Blankfein’s “we’re doing God’s work” comes to mind.
The greed knows no bounds with these people. I am reminded of John Fogerty’s line, “…when you ask them how much should we give, they only answer more, more, more…” I may have taken that out of context a bit because he was talking about politicians and war, but the point stands. There is never enough for these people.
When you then drill down to find that these are the only people crafting policy, it’s easy to give up and accept that things will never change. When you put the fox in charge of the hen house, your hens are never going to be safe.
Scum always rises to the top in society as well as waste water. It is a truism IMO that many people with sociopathic and evil tendencies gravitate to top positions of power and influence in gubvarmint and business.
It has always been thus, and always will. Such is the drama of humanity. What a dull existence if we were all cut from the same cloth.
“Scum always rises to the top in society as well as waste water.”
This is known as “Imhoff’s Law” – The Organization Of Any Bureaucracy Is Very Much Like A Septic Tank — The REALLY Big Chunks Always Rise To The Top.
Your John Fogerty quote “more, more, more” reminded me. In November 2010, Bernie Sanders published an opinion piece called “The Billionaires Want More, More, More”. It can be found on the interwebs at HuffPost. He nailed it and in the last decade, it’s only gotten worse.
It’s true. They don’t just want what they already have, they want what you and I have, too. They can’t possibly spend it, but they’re competing against their billionaire buddies. It’s about keeping score. You and I are cannon fodder for these psychos.
Lloyd Blankfein was on CNBC this morning peddling his Goldman Sachs bull$it. He said we got rid of chaos and now have a stable government. This clown belongs in Gitmo.
He may want to think again. They are still burning and looting in Portland, Seattle, etc. He has a reservation near the front of the line when the guillotine rollout happens.
I’m starting to boycott purchasing any goods and services from these scumbag corporations if I don’t have to. No more shopping at Whole Foods. No more Amazon orders. Even if I have to pay more or drive another 10 miles to get the item I need , I’m done with them.
Its really simple…People content with fewer assets live simpler and less complicated lives of everyday experiences whereas the lives of the ambitiously wealthy drone on on, the same thing day in and day out, the only difference being they are amassing wealth, which we all know in the end is meaningless. Would you rather be at your computer trading stocks day after day or working sixty hour weeks pushing paper, or traveling the world with the man/woman of your dreams? The not so rich can cruise too, they just have to pay the cruise line instead of owning their own yachts. And traveling can be inexpensive if you want it to be.
That was a wonderful rant, brother! One for the ages. I agree with just about everything, but I would like to point out that initially you said that regulation was unnecessary, then a bit further down you quoted some info Pelosi had released because she was required to by REGULATION! You and everyone else would not have had access to that info without regulation.
This is not an insignificant subject. I am very tired of people criticising regulation by rote. It is drilled into them by the very forces you claim to disdain. The only people who really benefit from no regulation are the billionaires and their enablers. The very same people who own media networks for the sole purpose of distorting our view of the world.
Love your commentary, but…
Been sitting on gold and silver miner stocks since 2011… still waiting (although the phys bought and held since then has done handsomely).
Gak!
(That’s all I got to say).
This a great way to whitewash black market or criminal money (sorry, currency).
Crook A starts the SPAC.
Crooks B, C, D , etc buy into it in relatively small amounts, not to raise suspicion.
After a while A cashes out while taking stupid peoples casino/stimulus money as collateral profit.
Of course all Crooks are in the same gang. So the gang does not lose anything except for the bankers fee.
And it’s all legal because the big banks are into the scheme too and will protect their interests.
Am i just oversimplifying the matter in a sarcastic way? Or am i on to something?
Yes and YES crv,,, but only IMHO as someone who got OUT of the SM in the 1980s,,, and continue to view that mkt as one of the worst examples of crony capitalism ever, especially including all the so called derivatives and now have to add these vehicles reported by Wolf in this article.
Just as actual science based studies suggest very strongly that the ingredients in ”pop” AKA ”soda” are really and truly not any way healthy long term, any kind of rational analyses of these made up vehicles are clear that they are not healthy for the companies, the overall economies of countries, and, especially WE the PEEDONs who continue to get the short end of the shaft via lower and lower ”relative” wages while the manipulators of these vehicles get richer at our expense.
Time and enough for every voter to have the concept and the will to vote to ”Clean House,,, Senate Too,” until we have at least federal elected folks who work to help WE the Peedson, instead of the rich and richer of the oligarchy.
IF this is NOT done, and the guv mint of USA continues to feather the nest of the rich at the expense of the working folks, IMO revolution becomes INEVITABLE.
At that point, clearly, everybody loses.
We’re certainly in bubble territory. One of my coworkers recently mentioned all the fun he is having investing in SPAC’s, while another is talking all about the various ARK funds. Further evidence is found on the M1 Finance blog which earlier this month announced they now have over 3 billion in AUM. This is apparently only a few months after reaching 2 billion. I suppose I too have joined the higher risk crowd with a Paul Merriman influenced portfolio containing a sizable amount of small caps, value, and emerging markets.
Here I was thinking I was going to have a really really good 2021 having just completed my reality distortion device and was getting ready to sell it to those that may need to use it. Seems I’m a dollar short and a day late.
The above post is sarcasm and not meant to be taken seriously other then the fact that it does appear a reality distortion device is in play.
So the earth has, what, 11 years left. When the world is running down, you make the best of what’s still around.
There’s been a party, and you have not been invited.
One of my all time favorite Police tunes. Something tells me Sting will be OK, holed up at his Tuscany villa and vineyard.
I like Synchronicity II, and the lyrics.
In 1998 there was the Global Crossing IPO at $399 million. They built out fiber optics Internet infrastructure. They had revenue, but no income. In 1999 they were worth $47 billion. It was the dot com bubble. In early 2000 professor Robert Shiller published, “Irrational Exuberance.” The tech concentrated NASDAQ index started to sell off. In 2002 Global Crossing filed for bankruptcy. It took more than a decade for the NASDAQ to recover to its 2000 high.
Hot money looking for a fair return.
Misallocation of resources.
The Fed creates this … and will likely help bail out those who go down big enough with some central bank antics.
“total disdain for valuations ”
fake interest rates are the “mother” of disdain for valuations. Asset evaluations are skewed by the false environment perpetuated central bankers.
There are a lot of people with extra dollars to invest chasing more extra dollars.
There are a lot of people chasing real estate higher and higher, people with the ability to pay increasing monthly expenses.
As long as there are extra dollars I see no reason for this to end. And you have to do something with the dollars, even if it is just keeping score at the casino.
As long as there are extra dollars I see no reason for this to end. And you have to do something with the dollars, even if it is just keeping score at the casino.
I am investing in FURNACE myself. Fiat Unlimited Resulting Nationally At Currency Extinction. It will keep you warm in the Kondratiev winter.
Just read this over at Autoblog,
“EVgo to go public via $2.6 billion SPAC deal
The company has more than 800 fast-charging locations across 34 U.S. states”
Those are some mighty expensive charging stations
$3,250,000 per charger.
Let’s say they can do 4 charges a day and take $10 in profit at a time (very unlikely)
$40/day
$14,600/year
3250000/14600 ~ 222 years
P/E ratio?
Is it any worse than Tesla?
No no no, you got this wrong.
You didn’t note the technical details from the original prospectus, it is very clear to see if you have a proper read.
Every charging point is serviced by a mini nuclear power plant (30kg of uranium annually and only 90MW, so no danger of radioactive contamination, none really, no really).
And that squares the figures, of course.
Get your act together already.
“Well. Wasn’t today something?” — Bob and Ray
Bank lending is limited by the supply of viable borrowers, and that’s horrible because it really cuts into volume.
SPACs are hemmed in by the supply of startups, so they haven’t avoided the problem.
John Kenneth Galbraith described in the runup to the crash of ’29 how there was a severe shortage of stocks to trade .. so Investment Trust corporations were formed, and shares in the Investment Trusts were traded on the market to fill the desperate demand.
SO real soon now, the SPACs will be putting their money into each other for lack of anything else. Mark my words.
“John Kenneth Galbraith described in the runup to the crash of ’29 how there was a severe shortage of stocks to trade .. so Investment Trust corporations were formed, and shares in the Investment Trusts were traded on the market to fill the desperate demand.”
Crypto. Wall St. is neck deep in it.
A SPAC is just a Gofundme on steroids.
1) Intractable Endemic Institutional Corruption.
2) Distribution of income along class lines according to political party. Blue middle class buys RE. Red lower middle class storms capitol looking for a meal, turns Congress into Father Joe’s Kitchen.
3) Wall St profits either way.
4) Economic freedoms ‘trump’ symbolic freedom; guns and hate speech. Free to eat, free to eat, thank god I am free to eat.
5) White Flight Express passengers find postage stamp plot in the woods not as good as postage stamp condo in urban high rise, return slowly to the city.
6) PNW is cold and damp, then peak global warming and wood burns. Cold and damp and smoky.
7) New American factories built near rural population centers (in old Walmart stores) bring all manner of urban pollution to the eco-dream. EVs make cities cleaner place to live. Less consumption, more work, none of it rewarding.
8) Some authors refer to new rural nightmare as Soylent Green.
When bloom fades on current WFA trendy fad (and scary pandemic boogeyman is gone), those far flung exburb and rural runaways will slowly trickle back to the cities.
We’ve had FED distortions for more than a decade now. I kind of understand it when people say that they will never let the market go down. I mean, look at what we have now. This is not even a market, it’s a fully rigged system.
I have to be honest in that I’m beyond angry and frustrated with the entire situation. The FED is playing a game of psychological warfare with savers, laughing at and punishing people like myself who didn’t want to gamble. What do I do now, take $10,000 and start daytrading crypto? What a joke.
It ain’t a game of psychological war; it is war. The Fed has stated that it will keep inflation higher than long-term interest rates.
If you buy and hold a 10, 20 or 30 year T-Note, the Fed’s mission is to have the buying power of those dollars at the time of maturity be worth less than they are now.
The joke is that voters of the USA continue to fill the halls of Congress with members of the Red vs Blue duopoly, which is the only power-check onto and over the Fed, and bitch about where we are. (Nothing personal Depth charge if you’re one of those voters.)
There was a smart physicist who once made a comment about expecting a different result from doing the same thing again and again, but it’s all relative ..
Depth Charge:
Just responding to your comment to let u know there are millions of us out here that feel the same way. Savers have gotten screwed since early “2000’s”.
“Greed” is winning out and destroying the globe.
Politicians are not helping.
Too many remain ignorant about “behavioral economics” and salivate at being exposed to so much money to come their way after leaving office(s).
A monumental crash is inevitable.
Remember that comment that was expiated in the post ’08-’09 senate hearings: (Para) “You were selling sh*& and you knew you were selling sh*&?” The response was that (again para) the buyers, “….were sophisticated investors”. That from the then president of Goldman Sachs.
May we all see better days.
““You were selling sh*& and you knew you were selling sh*&?” The response was that (again para) the buyers, “….were sophisticated investors”. That from the then president of Goldman Sachs.”
Again – crypto. These fraudsters are neck deep in it.
@Wolf You say SPACs raise capital through regular IPOs, presumably right after incorporating since they’re just shells. But isn’t there a requirement that a company has existed for some time before it can file for an IPO?
I’m not sure what all the requirements are for an IPO. I know SPACs are doing it on very short notice.
SPACs look for away ‘target’ company before IPO. If they don’t within a set period – 3 months, money will be sent back to ‘spac’ investors -IMHO
After 2 years not 3 months.
The SPACS are something like the Investment Trusts of the late 1920 s, which themselves were something like mutual funds. They were investment entities that held stocks, but they traded just like a stock. People could bid up the Trust to a price higher than the sum of its stocks.
Oddly, a Trust could spawn new Trusts.
When the Oct 29 Crash hit, stocks of ‘real’ companies like US Steel, Radio (RCA) Monkey Ward (Montgomery Ward) took a pounding but the Trusts evaporated.
4 years later Goldman Sachs testified before the Senate about its Investment Trust:
“At what price where the shares offered?”
“One hundred and ten dollars’
“And what are they today?
“One dollar and fifty cents”
The SPACS seem one step further removed: they are ‘holding’ companies that may exist in the future.
4th order derivatives?
Slush funds for India, Israel, and Ireland.
Whence did all this money flow?
One analyst said earnings on the S&P might double by this time next year. Watch these things are the margins (M&A) to see how that is working out.
“One analyst said earnings on the S&P might double by this time next year.”
To go almost back where they were two years ago?
SPACs going nuts. Companies with high short interest going nuts. Tesla making a new high at $900. Bitcoin hitting $42. Inflation heating up in commodities.
It all makes me wonder if the Fed will start talking about a taper. This wouldn’t be the first time the Fed has reversed course on a dime. Like a criminal providing testimony, the Fed is going in circles, trying to explain one untruth with another one. The result is one inconsistent mess with no logic to it. Too bad nobody in Congress has the smarts or the rocks to act like a prosecuting attorney during the Fed oversight sessions.
I hope so. This is the time to do it after election season.
“Inflation heating up in commodities.”
Runaway food prices would really be a gamechanger.
I’m wondering now if we are really in mid-late stages of that famous Mises theory of a ‘crack-up boom’ that Austrians have preached about for so long.
This excerpt from Investopedia seems to describe to me what is going on in our current predicament:
“In the crack-up boom, the central bank attempts to sustain the boom indefinitely without regard to consequences, such as inflation and asset price bubbles.
“The problem comes when the government continuously pours more and more money, injecting it into the economy to give it a short-term boost, which eventually triggers a fundamental breakdown in the economy.
“In their efforts to prevent any downturn in the economy, monetary authorities continue to expand the supply of money and credit at an accelerating pace and avoid turning off the taps of money supply until it is too late …”
We are witnessing history in the making, folks. Hard hats on and brace.
Wasn’t the South Seas Bubble a SPAC?
From memory, not a quote:
‘An investment in investments that are as yet unknown’
Wolf, have you been paying attention to GameStop shares? That thing might as well be a penny stock.
Just two hours ago, it doubled, but now it’s red for the day.
Insane!!!
Sounds like another Hertz situation – where even breathing the word “fundamentals” would elicit ridicule.
Off the press three hours ago:
https://wolfstreet.com/2021/01/25/after-skyrocketing-in-majestic-short-squeeze-gamestop-shares-collapse-54-in-hours-the-zoo-has-gone-nuts/
On Business Insider:
“Nancy Pelosi has plowed up to $1 million into bullish bets on Tesla stock”
This is all you need to know
I’m going all in on CAPS, er digital implants, backed by the tooth fairy.
\\\THE LAST LAP\\\
Commentator#1> …the bell is ringing, they are going into the last lap! What a race!
Commentator#2> Do you think they know what’s at the end of the road?
Commentator#1> Ahead is the end…The pit of empires, the path many great ideas take, all in the name of good.
Commentator#2> So they will all get stuck in the pit, and not get out?
Commentator#1> Only the ones who have been played, which is most of the world. The ones who organized the game will later write books about how they were the good guys and it was all a misunderstanding…from self-exile in Switzerland, France or the Caribbean.
Commentator#2> So why is everyone still running? They can see the pit in front of themselves, it’s obvious?!
Commentator#1> The ones that have, don’t care. Their money will keep them safe. The ones that have little, are greedy and are lead into the pit with the prospect of more. And the ones who have nothing, have no choice.
Commentator#2> Is there anyone sane here? Someone who can should from the top of the hill, and warn everyone?
Commentator#1> Yes, there are those. They and the ones who listen to them will share the fate of their brethren, but not to the same extent.
Commentator#2> So there is no hope?
Commentator#2> On the contrary. The PIT is the hope!
\\\END\\\
What this market is craving for is a penny stock which is a riddle as to why it has value, locked in an enigma of P/E, bought mysteriously by SPACs, and then traded for cryptocurrency, so one could score illicit drugs, weaponry or carnal porn online.
Was in the Giant supermarket today making another complaint for poor service and lack of inventory. Talked to the management about a few items that I purchase regularly that were no longer on the shelves. He took my number. Never got a call. Apparently, they could care less about serving the customers in the customers in the DC area. Went to another Giant and got the same BS. He told me that they were cutting out items left and right. No reason was given for this. The Parent Company is in Boston (Stop & Shop). That conglomerate is owned by some overseas company in Holland.
Of course this time is not different!
The central banks are creating trillion upon trillion fiat dollars and buying everything in sight.
That’s just like things have always been. LMAO
The people who think there’s going to be a massive ‘reversion to the mean’ are the ones who have some splainin to do.
Because when has that ever happened when central banks destroyed their currencies?
it’s almost impossible to comment on here. these ads keep screwing up my typing . it’s ridiculous and it takes forever to type in a comment.