THE WOLF STREET REPORT: Tech Bust Takes Next Step: Layoffs & Hiring Freezes

Dotcom Bust 2 has begun. Only bigger (you can also download the WOLF STREET REPORT wherever you get your podcasts).

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  179 comments for “THE WOLF STREET REPORT: Tech Bust Takes Next Step: Layoffs & Hiring Freezes

  1. Island Teal says:

    1st…OK I’ll take it. Nothing else other to contribute other than everyone have a good Memorial Day Weekend and remember what it is really a celebration about.

    • Apple says:

      Real estate?

      • Pea Sea says:

        Real estate affordability, which is only a memory.

      • Enlightened Libertarian says:

        FYI I read an article a couple of days ago about “negative leverage” in multi family RE and how that is becoming normal.
        Investors are getting for yeild so desperate they are willing to pay cap rates lower than their mortgage rates.

        • Nwerner says:

          This is correct. Bridge lenders flooded the market over the past 2 years with rates that were indexed to SOFR rather than the 10T. In any of the darling markets cap rates are presently in the 3.25 to 3.50% range while lending rates are a spread of about 350 to 370 bps over SOFR (can vary between trailing and term but term is more common with bridges – currently approaching 1.05% and climbing daily in anticipation of mext Fed meeting) and adjust monthly. Many lenders require a cap be purchased and the price for these caps has gone up significantly but is softening now alongside the forward curve. The loans still need to meet debt yield parameters and the required equity is rising accordingly.

    • dang says:

      In that vein, one patriot that is never recognized is Woody Guthrie, a near-do-well, itinerant, playing a guitar with the inscription this machine ……, who wrote our unofficial anthem:

      This Land is Your Land

      I understand it was favorably received by the GI’s.

      • dang says:

        I listened to your narrative and thought it was refreshing to hear a master analyst describe mayhem, so dispassionately.

        • dang says:

          The cruel kindness of capitalism recovers their money by selling off their shares to mom and pop

          Fools who are used to it, after 15 years of QE’s suppression of risk.

        • dang says:

          Obviously, they are a buy at these, rock bottom prices. Off 65 to 80 pct. I may be compelled to get in on the ground floor, meanwhile the stock market price of the shares in this opportunity ascend without me owning a single share of the winning ticket. I feel ashamed of my conservative view of the uncertain future.

      • Jakeleg says:

        For what it’s worth: Woody’s song is just new lyrics to an old song, “When the world’s on fire” popularized by the Carter Family. Might be more appropriate to today’s world.

  2. Nathan Dumbrowski says:

    Very timely Audio blog or podcast post. Great article Wolf
    Myself, mid-hire with a large financial organization. Leadership did make a comment that we might be going into a hiring freeze based on the markets. As is so often what I see on Wolf Street the data hits home with my real life

    I sense that we are heading south for the winter. Death spiral post punch bowl

    • John H. says:

      Nathan Dumbrowski-

      “Death spiral post punch bowl”

      “Death spiral” is far too apocalyptic. Imminent extinction is not upon us (barring nuclear war, Yellowstone dome burst, or Swift-Tuttle type catastrophes). One man’s death spiral is another’s doorway to opportunity. Many commenters on this site will be buyers in the 30-40-50-?? percent dips that will repeatedly come their way, and the world will not die.

      Another of T. Kuhn’s “paradigm shifts” seems to be upon us, though. Expectations for the remainder of the decade will be adjusted down to realistic post-binge levels. No more 8% S&P return assumptions for financial planners for this decade. Low single digits will be the round-trip reality; selectivity will be in style; “buy and hold” not so much…

      A decade in stock-return purgatory seems about right for the monetary gluttony of the last decade

      • Wolf Richter says:

        The “death spiral” in the podcast refers to the process that biotech IPOs are going through right now, and it’s an appropriate description for those companies because they’re collapsing and shutting down in large numbers.

        • Harry Houndstooth says:

          Again, Wolf has distilled the truth, and even ascertained that the asset bubble might take years to correct.
          For those of us who have to show our boss (wife) that the brokerage account is increasing in value, we have been relegated to use SRTY, SQQQ and SDOW as triple short the averages to profit. Listening to Wolf describe individual stocks that have lost an enormous amount might make us lament that we did not profit from their demise. I can assure you that this is insider game: the best shorts are not available to us, since any share to be borrowed in an obvious short is not available and if it is, you will be the sucker, because you will get the margin call before it collapses. I have learned this by paying for my education.
          Clearly, the froth has been sucked out of the market and lower prints are ahead of us.
          Bear markets are characterized by steep, swift, rallies which scare humans out of their short positions.
          On this Memorial Day 2022, we have the possibility that the markets may continue the rally into 7am on Tuesday, May 31 in the premarket. If so, I will be buying more SRTY, SQQQ and SDOW.

          If the markets go higher, I am ready. I am only 27% invested.

      • Walter Putnam says:

        Written by someone young, inexperienced or ignorant. I’m old and have known many a man or woman who life kicked the shit out of and it was, definitely, not an opportunity.

        • Greg Hamilton says:

          I think John H. was referring to the politically connected. The $40 billion just passed by congress is quite an “opportunity.”

        • Harvey Mushman says:

          I’m old too. At my company they call software bugs “opportunities”. I hate that!!!

        • joe2 says:

          Yeah. Got to laugh. Whatever. Everything dies.
          Play stupid games, win stupid prizes.
          Die ignorant.

      • John H. says:


        I surely agree that there will be many corporate deaths — some startling. Probably a raft of zombies and merge-outs too.

        My comment was more a reaction to what I (perhaps incorrectly) perceived as a repeat by ND that the that the world is moving into a death spiral. I’ve read too many embellished ZeroHedge headlines, I guess.

        Walter Putnam-

        The older I grow the more I distrust the familiar doctrine that age brings wisdom.
        – H.L. Mencken, Prejudices (1922)

      • joe2 says:

        “Expectations for the remainder of the decade will be adjusted down”

        As per the WEF. Suck it up serf. Don’t drive and don’t eat. And BTW ignore that private jet on the runway – we pay offsets to a company that publishes brochures telling you not to heat your home.

        Who’s’s this “we” you speak of kemosabi?

        But, go for it if that’s your thing.

    • Jay says:

      Totally off topic article from yahoo finance:

      So according to the Fed, its MBS holdings are now worth $164B less as of 3/31, and mortgages rates have shot up even more and may continue to 6% or higher which would lower their value even more.

      As of Q1, the Fed is holding $330B to $458B in unrealized losses on its balance sheet and that amount will most likely grow higher. Granted, it’s all unrealized and only really matters, I assume, if the Fed decides to sell assets.

      How does the Fed’s intention to unwind down to $6B or less in assets not end well? We are in totally uncharted territory that no one really seems to be able to predict how the QT will likely end. Sure, I know the Fed can’t go bankrupt, but are we approaching the point at which confidence in the US dollar is about to come into question due to terrible decisions by the Fed’s & Congress? If that happens, yields spike like nobody’s business and would take us back to the days of Volcker for all the wrong reasons.

      Is this why the Fed is slow poking things? They just don’t know how this will play out like they should?

      • Wolf Richter says:

        This loss is disclosed on the Fed’s weekly balance sheet, EVERY WEEK, and I have reported on it forever, and most recently a month ago — see link and chart below. Some kiddo Reuters reporter finally woke up and reported on what I have been reporting on forever. I have no idea why these people at Reuters are making such a fuss about this. Clickbait?

        These are the unamortized premiums that the Fed paid over face value. The Fed is amortizing them in a straight line to zero by maturity date. That’s why the balance is now declining. By the time a particular bond matures, and runs off the balance sheet, this loss (unamortized premium) will be zero for that bond, and there will not be a loss at that time. In other words, the Fed is taking the losses of this amortization on a constant basis while its earning a vast amount in interest income. And that’s how that should be done. There is nothing funny or secret about this.

        But it seems people don’t read my Fed articles attentively enough, and then when Reuters (picked up by Yahoo) starts circulating clickbait about it, it’s suddenly all the rage:

        • Jay says:

          My apologies, Wolf! Certainly something to keep an eye on like you’re doing, but far from the sky is falling chicken littles.


        • Wolf Richter says:

          No problem. I just get pissed at these reporters at Reuters and elsewhere that suddenly wake up and then don’t know what they’re talking about.

  3. Sit23 says:

    Have an idea. Create a business model. Have an IPO. Use the money raised to set up the business. Give the profits generated back to the shareholders as dividends. Let the share price go where it reflects the business and it’s profit. Does anyone remember when that’s how it worked?

    • matt says:

      Why expend all that effort trying to make a profit when you can get filthy rich in one tenth of the time regardless of whether the business is actually viable or not?

      • Cas127 says:


        But the weird, hard to explain thing is just how easily money for some doomed, business-plan-less “tech” companies can get raised (in very, very large amounts) while other “tech” companies (perhaps with more viable…if less theoretically scalable) ideas spend years trying to raise dollar one.

        There does appear to be some hazy, “inside baseball” element involved in the capital raising process (too many shortsighted/fearful VCs, invt bankers screwing their buyside clients, etc.?) that leads to these transparently goofy outcomes – repeatedly.

        It would be valuable if we could get an experienced insider’s practical point of view on just why the “Rule of the Underpants Gnomes” continues unabated.

        • SandyV says:

          I have a gut feeling that it is about who you know…

        • 91B20 1stCav (AUS) says:

          …and the inherent irresistability of the Ponzi to many of our species…


          may we all find a better day.

        • Lisa_Hooker says:

          My friend, we have gone from TANSTAFFL sage advice to BOHICA. It is sad.

    • Motorcycle Guy says:

      I can give you the specifics as to how that used to work;
      In 1989, the broker/dealer I was associated with was merged into what was then Prudential Bache Securities. Bache, Halsey, Stewart & Shields had been an active player in the IPO game and the head of Prudential Bache (George Ball) decided to reactivate their participation in bringing small young companies public.
      The criteria for the Capital Markets Group to even consider looking at the company as a possible IPO candidate was;
      1) The company had to have been in business for a minimum of five years,
      2) The company had to have been profitable for at least three of the five years and,
      3) their financial statements had to have been audited by one of the (at that time) Big Eight Accounting firms.
      My how times have changed.

      • historicus says:

        Diligence and Prudence. A lost arts.
        But I will point to the Fed and what they have done. They created the reckless nature of it all…
        they intentionally forced investors to take more risk by pounding long rates. And the same effect rippled through the investment banking community…..put money to work, find a yield, take more risk, get deals done, get the fees, etc.
        When the Fed admitted they forced the investors to take more risk, they skewed risk return ratios, altered traditional PE ratio considerations and other analysis. Was this really their duty, to force recklessness?

      • Rudolf says:

        Big Eight (now Four) audit, pffft. You just have to post rocket emojis now and keep on posting memes to get immense profits in no time.

        It’s called science, my man.

        (I’ll leave /s just in case)

      • Augustus Frost says:

        When investment banks were partnerships, the partners actually gave a cr*p about the firm’s reputation or at least seemed to a lot more than C-Suite executives in publicly owned firms do now.

        I don’t remember when these firms first obtained limited liability but that’s when Wall Street really started going off the rails.

        In the late 80’s, I aspired to work for some of these firms but never did. I mostly have contempt for the ones which still survive now.

        • Confused says:

          August Frost,

          I, too, think the old arrangement was better for society. With the current set up, the officers receive the profits and the shareholders eat the losses.

        • John H. says:

          Double or triple liability was a thing. Shared hazard.

          “In the United States, state law often mandated that banks chartered under their authority be subject to “double” liability: that is, in case of the bank’s failure, shareholders would be liable for twice the amount they had originally paid for their shares; some states mandated “triple” liability.”

          – Richard S. Grossman and Masami Imai, Contingent Capital and Bank Risk-Taking: Evidence from British Equity Markets before World War I

    • perpetual perp says:

      Not to be too picky, but putting some profits into retained earnings is probably a wise move. Back in the day, pre-wild west capitalism and tax cheating, it was from retained earnings where production improvements arose.

      • historicus says:

        And especially for the firms that are bailed out by the Treasury ala 2008.
        Big shot investment banks that pull down their equity each year with massive bonuses and compensations…..
        IF bailed by the Treasury or Fed, THEN I suggest a 5 year escrow for partners in the bailed out firm which would hold bonuses, etc. with rolling payouts. This fund would be depleted FIRST, before any government assistance, if required, is delivered going forward.

    • Bobber says:

      Or, get an ownership position and money from parents when they die. Don’t pay tax. Seems to be Plan A for most wealthy people.

    • RH says:

      You forget that now accounting and other frauds are slowly becoming part of the traditions. I wrote a song to the music of an old song that I just heard “Born Free” from an ancient movie about lions. I call it “Ode to the Parasites: Banksters, Financiers, Fed leaders, and CCP cadres.” It is copyrighted but these are some of its lyrics:

      “Born thieves, for thieving is easy, to cheat, to lie, and to steal,
      Born thieves, defrauding is fun, to lie, to cheat, and to steal,
      To steal, just kill those to defy you,

      Just bribe, to plunder, and rob,
      No matter what crimes you commit,
      You are free, with no prison walls around you,
      No matter what crimes you commit,

      Born thieves, for thieving is easy, to cheat, to lie, and to steal,
      You creep, and slink to steal power,
      Your money was as free as the grass,
      You are free, so your life is worth living,
      Sucking blood from all of your brothers,
      As you ruin the lives of the poor…”

      It goes on in a similar vein.

    • Mike G says:

      Work the latest buzzwords like “cloud”, “biotech” and “sharing economy” into the plan and you’ll do a lot better. These days it’s mostly about the hat, not the cattle.

  4. Michael Engel says:

    Let’s gamble on $100 in the local casino, for fun and entertainment. SPX monthly :
    1) There was a high, Dec 2021 high, a green bar, DM #10.
    2) Jan 2022 breached Dec 2021 low, but closed above, so it doesn’t matter.
    3) Feb closed May high, a setup bar. Two consecutive green bars : May & June is a good thing : DM #11. The trend is up : SPX might cont higher for several months reaching 4,600 – 4,700 area, completing DM #13.
    7) Exogenous causes send the market down in May and June, breaching
    May low. But, June will end as green. SPX will move up reaching the 4,600 – 4,700 area, completing DM #13.
    8) In order to cont the bull market SPX must close > Dec 2021 high, don’t matter when.
    9) In order to cont the bear market SPX must close < May 2022 low, don't matter how long it will take. Breaching May low isn't good enough.

  5. Michael Engel says:

    AI is so smart, thanks AI…

  6. Michael Engel says:

    AI, I got your VIN # number, to shut u down.

  7. Dano says:

    Before I retired (earlier) in life, I spent pretty much my adult life in the employment business. I recall several of these cycles. They start slow, and then they build over time. The excess money, greed, and insanity needs to get wrung out of the system so we can start again fresh and lean.

    Unfortunately, the Fed, drunk on its own fantasies of control, has not allowed markets to clear the dead wood for a very long time. Much like our “managed” forests, our managed “wealth effect” has built up significant dead wood in lead of a “prescribed burn”.

    Listening to Danielle DiMartino-Booth the other day on a podcast, she outright said she believed the goal of the Fed was a “controlled demolition”. And, that while Powell could try to lay off a lot of blame in other directions, he never addressed housing. He owns that inflated mess.

    Where I currently live now, as well as where I’m looking to move in a few months, the average house prices are up ~$200k over the last two years. Compared to some other areas that’s nothing.

    Can the Fed prescribe a burn to remove this excess before they destroy their precious “wealth effect” that is really the basis for our monetarily crack-addicted economy? I seriously have my doubts. Will they cry “Uncle” well before they should? Probably.

    Stagflationary depression, here we come.

    • polistra says:

      Excellent analogy with managed forests!!!!!

      • Josh says:

        Especially timely given that the largest fire in New Mexico history is currently burning and it started due to a controlled fire that didn’t go as expected. Of course if they didn’t at least attempt a controlled fire lightning or something else would eventually have started it. There is too much dry wood out there.

        • Apple says:

          As the climate changes, this will become a very common occurrence.

          10,000 acres near Abilene burned this past week.

        • Anthony says:

          USA forest fires are down 80% since around the year 1900, Just to quote many of the graphs from the US Forestry people…

        • VintageVNvet says:

          It IS timely, but very lacking in long term data, for this very bad fires in NM and clearly elsewhere..
          BAD to the Bone, is just a very early start to the very very bad fires in NM,,,
          However, those fires are just an early indication of how very very badly our ”bad lands” have been ”managed” for eva
          Good Luck and GOD BLESS to all of the folks having to put up with the very very bad management BY and FOR the GUVMINT…

        • kam says:


          “As the climate changes, this will become a very common occurrence.”
          Forests and brush fires have been occurring for thousands of years. They do not require Political drum beating to start and burn.
          BUT let government employees (authority with no personal responsibility) be in charge, by doing prescription burning in the Spring instead of late fall and winter, then of course, blame it on Climate Change. Or fairies.

    • Mike E says:

      Agree with polistra, the analogy to managing forests is most apt. Too much dry tinder now for a controlled burn

      • kam says:

        Prescribed burning at this time of year in New Mexico is the equivalent of lighting a match in a gas shed.

    • Maria G says:

      Why would they change course and crash the party unless they really really have to? It’s only happened once, under Volcker. After all, the only purpose of America is fake paper wealth. Citizens are consumers, the country itself a corporation. Like the Titanic, the band will be playing to the last minute.

    • Augustus Frost says:

      Can the FRB pull the rabbit out of the hat you describe?


      Believing it is a belief in magic.

      The vast majority of Americans are destined to become poorer or a lot poorer over the indefinite future.

      It doesn’t matter that household “wealth” is near an all-time high, even after 2022 YTD performance. It’s mostly fake: inflated stock prices, inflated real estate values, and debt. Especially the last one where the more debt the government and corporate sector accumulate, the “wealthier” the household sector becomes.

      • Escierto says:

        In most ways, the US is a Third World banana republic. Not even a good one. The quality of life is higher in many other countries. More Americans should see the world instead of swallowing packaged propaganda.

        • Dan Romig says:

          Food is growing in the garden. Rode my bicycle along the Mississippi and saw two eagles perched by their nest way up in a pine tree; eggs will hatch anytime. Grilled a nice dinner on the back patio.

          Life is good in Minneapolis.

    • Wisdom Seeker says:

      It’s not a managed forest. That would imply a benign intent.

      It’s financial colonization via the Cantillon Effect: newly-printed money and credit are available preferentially to big-money insiders, who reap a business advantage over everyone else.

      In the end, the colonizers own the country. The faster the Fed prints and the more the government spends, the worse things get.

      They used to call it fascism, this sort of government/corporate cronyism, but now we just call it normal…

      • Drake says:

        Like the $5 Trillion the government pumped out there into the hands of working people?

        You get crumbs.
        They get an all you can eat epicurean smorgasbord.

        Cantillon Effect? Then once they own the assets, it’s time for “wartime”sanctions to raise prices on what they sell and lots of greenwashing to make you feel good about self-denial.

    • historicus says:

      Free markets conduct “prescribed burns” all by themselves. They are called “corrections” because the “correct”. These corrections flush excesses and the poorly financed, expose fragilities, and leave the markets with only the stronger “trees”.
      The Central Bankers have denied this process of corrections and cycles, allowing excesses to build. Eventually there is the flush, and the event becomes systemic threatening in nature. Enter the central bankers to accrue more power, self author more policy. Round and round we go.
      Central banking power and interference in markets grows, and the cycle begins anew.

  8. Old school says:

    Wealth affect may disappear pretty quick. Imagine inflation running hot for two years so that your expenses go up 20% and your portfolio stair stepping down by 60% over that time. Then the divorce comes and you have to sell your home in a down market. In two years you have basically lost 20 years of your life.

    • COWG says:

      “ Then the divorce comes and you have to sell your home in a down market. In two years you have basically lost 20 years of your life.”

      As well as a significant portion of the remainder of your life if you had to split IRAs, pension, cash accounts, sale of other assets, etc…

      In some states, marriage for as little as ten years qualifies for 50% of retirement assets…

      Depending on your age, that would be a body blow you might have trouble recovering from…

      • phleep says:

        The illiquidity of homes can be a big trap in any life transition. I lucked out with my divorce: I kept the house, paid off the ex in about 2001. With a bit of a blip (GFC 2008), it has been roses ever since. But then comes another turn of the wheel. Having a home now almost free and clear and at a good buy-in is a nice thing — almost thirty years, one divorce and one GFC later.

        Housing could use some financial innovation. Robert Schiller hinted at some of this in his book, The New Financial Order (circa 2003). He had ideas for bona fide innovation, not the shell games that have proliferated.

        • Augustus Frost says:

          “Housing could use some financial innovation.”

          Sounds nonsensical to me. What exactly do you have in mind?

          Housing is a consumer good with a long shelf life, not an “investment”.

          Without the current illusion of long-term though still temporary fake government created stability from the fiat money monopoly and loan guarantees, housing prices are too erratic to function as prudent collateral for long term financing.

    • Karryn says:

      You cannot lose what you never had. Those numbers on the screen are just paper vapor. Your proceeds aren’t realized until you consumed them.

      • historicus says:

        “Take your profits…..before someone else does.”
        an old trader adage

      • Cookdoggie says:

        Those numbers on the screen are financial energy. True, they don’t mean anything until they are consumed. But that doesn’t mean you try to consume them all at once. Then what? Keep calm and carry on, pay attention but ignore the noise.

    • Cold in the Midwest says:

      Sobering observation. Nowadays it is frequently not IF the divorce is coming, but WHEN.

      Not always the case, but often enough to be a prescient warning.

  9. SocalJimObjects says:

    Remember Adam Neumann? He’s the guy behind WeWork, and now he’s back with a new project that’s crypto related. What could go wrong really?

    • Djreef says:

      He’ll be standing in the unemployment line right next to us in a couple of years.

      • phleep says:

        Not at the rate he devours other fools’ money. He is gifted that way.

      • SocalJimObjects says:

        Wrong. He won’t, but with his “help” that unemployment line will be 20 or 30 times longer than normal.

        • David Hall says:

          My niece is studying nursing. She is required to work as a CNA in one of her accredited classes. $30 an hour in Boston. She wants to be an RN. She is more likely to get extra hours than unemployment.

          Biotech start ups that could not invent a cure for small cell lung cancer etc. might have to default..

        • Let’s try to remain calm and objective, yeah? If the unemployment rate is 5% and it increases 20 times, it means ever person is unemployed, so 30 times would be what? One of the problems we have is the acceptance of hyperbole. (Listening to people speculate that a recovery has already begun and hoping that this speculation is true; reading headlines about a collapse that is in the single digits which would represent a decline to most of us; etc.) It seems this website is dedicated to looking at data, so let’s try to honor this by limiting the nonsense.

  10. Michael Engel says:

    1) Q1 2022 GDP was higher +1.6% > Q4 2021. In real terms Q1 was negative, but it doesn’t matter.
    2) With a strong dollar and loaded warehouses import from China will fall.
    3) NDX is down, because consumers are cashing in spending on dentists,
    diagnostic, fancy cars and restaurants.
    4) SPX was down 5% between Jan 3 and Mar 31. Between Apr 1 and Jun
    30 SPX might be up, or slightly down. We don’t know, there is more than a month to go. June might be a positive surprise.
    5) In order to start a recession we need two consecutive quarters down. We didn’t even start the countdown.
    6) It’s not likely to have a recession in 2022, but SPX might turn down
    from Sept/Oct 2022 lower high…
    7) Carvana and friends are subprime traders.

  11. Brant Lee says:

    At the end of the day, most of the companies Wolf mentions I can do without. IN fact, we all would probably be better off without them.

    Yeah, Microsoft got it all up and running but they were well paid. Bill, we don’t need your monopoly and control anymore. Go home.

    • Augustus Frost says:

      For Windows and Office, Microsoft uses planned obsolescence and poor secure coding practices to enforce a rent seeking quasi-monopoly. Without it, sales of both would have collapsed long ago, as there is limited incremental utility for most users since I first used both in 1993. They have extracted hundreds of billions from the economy over this period while providing little increased value in return.

      • COWG says:

        I’ve always referred to Microsoft as the company who convinced the world that an 80% solution to your problem was good enough…

        For the other 20%, it’s not their fault…

        Microsoft is probably responsible for IT employment by a factor of 10…

      • Drake says:

        Libreoffice is free my friend.

  12. w.c.l. says:

    If Carvana goes out of business, what are they going to do with all those giant vending machines?

    • OutsideTheBox says:


    • Dr Pangloss says:

      Storage units with a view!

    • John H. says:

      Bentham’s Panopticon.

      • drifterprof says:

        Haven’t read Panopticon, but recently read (“Debt: The First 500 Years”) about Bentham’s brother Samuel, who gave him the idea. British capitalism had serious problems paying cash wages, so dockworkers were enraged when the government started trying to eliminate workplace pilfering (to compensate for not being adequately paid).

        “Samuel Bentham, the engineer put in charge of reforming the dockyards, had to turn them into a regular police state in order to institute a regime of pure wage labor” … with “a giant tower in the middle to guarantee constant surveillance, an idea that was later borrowed by his brother Jeremy for the famous Panopticon.”

    • Anthony A. says:

      Convert them into circular apartments.

    • Wolf Richter says:

      They’re not really delivering that many cars through them. This was hocus-pocus that looks good on pictures. Like other online used car dealers, they’re delivering vehicles to the buyers on special flatbed trucks.

  13. historicus says:

    Also of note…
    Businesses are attempting to move their tech production facilities out of China….
    and at what cost to relocate?
    and what of Starbucks, McDonalds …et al walking away from all their facilities in Russia?

    • Harry Houndstooth says:

      McDonalds entered Russia pre-Perestroika. They had to purchase and manage their own potato fields to get potatoes of high enough quality to be sold as a McDonald’s french fry. Same with the beef. They were greeted with lines around the block when they opened.

      In the past 32 years, McDonald’s became an integral part of most young Russians life. Date night often included a visit to a place where everything was clean and the food quality was consistently excellent.

      Nine percent of McDonald’s global sales come from Russia and Ukraine. Since the invasion of Ukraine, McDonald’s closed all the restaurants in Russia, while they kept paying the employees. Now they have decided to sell them. They are not going back.

      I rarely eat at McDonald’s, but I will be looking for healthy choices there in the future.

      I love the way they do business.

  14. perpetual perp says:

    The correction will come after the Oligarchy tucks away the loot.

    • drifterprof says:

      “Top Coinbase Executives Have Unloaded $1,200,000,000 Worth of Shares Since the Exchange’s Public Listing”

      Seems like a lot of money to tuck away. Oligarchs may start forming their own separate countries. Maybe in Meta world?

  15. perpetual perp says:

    “Taxes are theft” the libertarian fantasists holler. Dopes. The real taxes are the money now being stuffed into Oligarch bank accounts. You want to break this ‘rope a dope economy’? Go back to the 1950s progressive tax rates. Break the Oligarchy before it breaks us.

    • Apple says:

      That sounds like *gasp* Socailism.

    • Wolfbay says:

      Can you imagine actually raising taxes to cover government spending as it should be? The economy would collapse and they will never cut spending to match tax collections. Taxing billionaires at 90% would only cover spending for a few months.

    • Greg Hamilton says:

      The oligarch’s money is all in foundations. Increasing the tax rates will not harm them, it will only decrease social mobility. If you want to go after the oligarchs go after the foundations and endowments. This will never happen because the oligarchs control the political class. Citizen’s United etc.

    • Augustus Frost says:

      Yet someone else who has it backwards.

      The less government has to sell in the form of spending, regulation or taxation, the fewer who will waste their time trying to buy politicians or influence government policy.

      There is no such thing as an activist expansionary government that hasn’t been or won’t be captured by elites. It’s never happened even once in history anywhere at any scale. Elites always control the government without exception.

      The populist dream where the elites can be plundered to finance the wishes of the majority will never happen anywhere, ever.

      • drifterprof says:

        By the early 1900s, elites had already captured the government. This was way before it became activist / expansionist in the way you describe. The highest government positions, were held and controlled by oligarchs (for example, cabinet secretaries in the executive branch were held by oligarchs themselves sitting on multiple corporate boards of directors, or by puppets owned the oligarchs.

        A different kind of expansionism eventually bankrupted the United States – American capitalism’s expansionism based on global power, profit, and world hegemony.

        The elites dream where the masses can be plundered to finance the wishes of the top 1% of wealth-holders will never persist anywhere ever.

        The word “plunder” means to take by force or wrongfully. It’s obviously simplistic, hyperbolic and crass generalization to use the word “plunder” to describe taxing the ultra-rich or taking other democratic measures to redistribute wealth.

    • Happy1 says:

      50s tax rates worked then because there was no alternative to the US as the rest of the world was either smoking ruin or commmunis or both. Business and capital would flee overseas in a minute.

  16. Crush the Peasants! says:

    ESO money printing goes boom.

  17. breamrod says:

    Wylie coyote has just started to realize he’s over the cliff! The fall will be coming when the fed starts to shrink their balance sheet which as Wolf mentions hasn’t even started yet.

  18. JoshWx says:

    Considering the phenomenal amount of job openings that remain active, a small number of tech layoffs and “hiring freezes” will struggle to put much of a dent in an otherwise red hot job market. If the # of “quits” aka employee turnover, begins to noticeable decrease than we’ve likely reached an inflection point in the broader job market. But for now, I’d expect employment #s to remain bullish which should cushion the impact of inflation. We’d need a massive amount of layoffs and hiring freezes to send the economy back into the shitter. And as far as remote work goes, don’t expect that trend to revert any time soon.

    • Josh says:

      I agree that I don’t see remote work ending any time soon while Covid is still a thing. I’m not sure why but I didn’t know more than 1 person with Covid at a time these past 2 years but all of a sudden I know over 10 that’s gotten it in the last 2 weeks.

      Don’t you think hiring freezes are contagious? If you see a competitor cutting back, you are presumably experiencing the same issues (e.g. inflation) and will face pressure to cut back. Even if your direct competitors are not cutting back yet, you see your customers cutting back and a potential recession in the future so you also cut back to be safe.

      • JoshWx says:

        I do think hiring freezes are contagious, of sorts, but there is a stark difference between a “hiring freeze” and an actual layoff. Even if a lot of companies reduce their number of active job postings, as long as hordes of employees aren’t losing their jobs, unemployment will remain low and *most* consumers should have the means to cope with high inflation (assuming inflation doesn’t get any worse). If inflation remains high, earnings continue to miss estimates and the stock market continues to underperform, then I think a broader-scale contraction of the job market is more likely.

        I dig the name by the way :)

      • Escierto says:

        Everyone in my extended family of 22 has gotten covid over the past two years, some more than once. I am the only one who has never tested positive.

    • Augustus Frost says:

      Zombie (“tech” or otherwise) companies collectively employ or provide employment for many millions.

      Credit conditions haven’t tightened sufficiently to make it really noticeable – yet – but that’s coming later.

      It’s not just rising interest rates though that’s part of it. it’s the ability to borrow at all which is only partly dependent upon whatever arbitrary rate the FRB sets the FFR.

  19. Whatsmynameagain says:

    This is a weird thing to be angry about. These are people. The CEOs and upper management (not usually people imo since they’ve no humanity) are the ones making the decisions that are about to muck up these people’s lives. Direct your anger there…

  20. Winston says:

    Carvana is as stupid a business concept as many prior to the bust. Who is dumb enough to buy a USED CAR sight unseen?

    An auto mechanic on YouTube with over 5 million subscribers, Scotty Kilmer, has several videos specifically about them including one entitled, “The Dumbest Way to Buy a Car.” Who are the people stupid enough to fund this sort of thing?

    • SoCalBeachDude says:

      There are many internet automotive transactions both on the wholesale and the retail basis and this is a highly efficient and intelligent way to handle the resale of cars and is becoming increasingly popular in all of the price classes for used vehicles. Looking at a few cars on local dealers lots was the stupid way to buy used cars and that will increasingly be going away along with a lot of dealers.

    • Old School says:

      When the hurdle rate is zero in real terms about any kind of business idea can be peddled.

      • Winston says:

        One of his several videos on Carvana:

        Don’t Buy a Car from Carvana Before Watching This
        Carvana Tried Screwing Over My Customer, So We Got Even

        In that video, one of Kilmer’s customers paid around 20k for a 70k miles Jeep from Carvana. During the 100 day warranty they took it to a Dodge dealer, told them to fix everything that needed fixing, and they had to do 10k worth of repairs after which Kilmer scanned it again to make sure everything was done. So, that wasn’t a bad deal in the end for the customer, but he said that Carvana would probably have financial issues if everyone did this AS THEY SHOULD.

        He also says that Carvana prices are higher than Blue Book prices which are already at ripoff levels because of the incentives of the owners of Blue Book because of the fact that you, but not dealers, pay those prices. Also, he advises that you should never buy any used car without personally having it scanned for problems before you buy it.

        • Wolf Richter says:


          “…they took it to a Dodge dealer, told them to fix everything that needed fixing, and they had to do 10k worth of repairs…”

          Jesuslordalmighty, do you even understand how idiotic this is? You go to a dealer with a car that has no problems, and you have no complaints, and there are no issues, and the service advisor doesn’t even know how to write up the repair order because there is nothing to repair, and you tell the service advisor to fix anything that might need fixing and you’ll pay for it, and then the shop puts in a new engine to make a buck…. And then you’re suing the seller??? Good luck in court. Andy idiot can file a lawsuit, that’s for sure. If I were Carvana, I would countersue you, and possibly sue the lawyer that filed the suit.

        • SoCalBeachDude says:


        • Pea Sea says:

          Take a deep breath and read it again, Wolf.

    • Wolf Richter says:


      “Who is dumb enough to buy a USED CAR sight unseen?”

      Lots of people do it. If you buy a standard 2-year-old former rental car with 40K miles, chances are that it’s going to be fine. And if something is wrong, you’ve a few days to undo the deal. You can check Carfax and see the title history and other issues before you buy.

      Even CarMax (which has huge dealership) is doing lots of online deals.

      Buying a 10-year old car with 150k miles is something I wouldn’t do sight-unseen. But heck, who am I to talk? People buy houses sight-unseen these days.

      • Northeaster says:

        Carfax doesn’t work for rental companies who self-insure (many do).

        • Wolf Richter says:

          When my wife scraped the quarter panel and the rear door against some pole in a parking garage, denting both of them (which cost a crapload of money to fix), we paid the body shop directly because we’re also self-insured for that type of damage, and it didn’t show up on Carfax. That’s normal, and expected. But Carfax will tell you if the vehicle has a flood title, or has been totaled, and whether it was a rental company that owned it previously.

        • Winston says:

          Kilmer also has videos on Carfax’s unreliability when it comes to an accurate accounting of a car’s history.

        • Dan Romig says:

          When I saw my 2016 M4 being listed at the Penske BMW dealership at the end of April 2020, I saw on the Carfax listing that it was a lease-owned vehicle from Georgia.

          Bingo! No Minnesota road salt to get into everything and corrode away the undercarriage. A quick motorbike ride to the shop and an inspection of the car’s fit & finish; and a look up at the vehicle from the ground showed what Carfax had reported.

          That was what I wanted in a used car — not from Minnesota or places with salt in the winter & not from California.

          When I bought it, the original documentation showed that the car was indeed from ‘United BMW of Gwinnet Place’ in Duluth, GA.

          She has never seen any salt. She never will. Thank you Carfax.

          (I do move it every few weeks in the garage during the winter to prevent tire flat spots, keep it on a tender, and start the engine for a brief time when rolling it.)

        • Winston says:

          “When I saw my 2016 M4 being listed”

          A happy customer providing an example of when Carfax can be useful. You should see what Kilmer says about used BMW’s from his continuing 50 years of auto mechanic experience, the repair difficulties and expense.

          BTW, rather than listening to the anecdotes of some on a financial blog, I’ll go with the advice from an expert mechanic with 50 years of experience and no reason to lie.

        • Wolf Richter says:


          So you prefer to listen to the lies that the seller will tell you? Good luck to you!

          You people need to get real. If you don’t like Carfax, all you have are the lies that the seller tells you.

          A “mechanic” who spends an hour looking at a two-year used car can be helpful. But with modern cars, you cannot see much from the outside in an hour. So there is no guarantee that you will know what all is wrong with the car.

          You can/should do your own checking: look for signs of flooding, look for signs of repaints, etc.

          Buying a used car is always a risk, and it’s all about mitigating that risk. Carfax is a huge tool in that respect. Believing the lies of the seller is not helpful.

          Carfax is the most basic check. And if you don’t check Carfax before buying a used car, you can’t be helped.

        • Halibut says:

          Same experience as Wolf. I paid a body shop out of pocket and they handed me some slip of paper to file somewhere (I forget where?)… Assuming I wanted it to show up on a CarFax… Yeah, I filed it ;-)

      • Harry Houndstooth says:

        I paid for college by buying distressed vehicles, rehabilitating them and reselling them. Hundreds of them. Rule #1 is the fastest surest way to make a quick buck is paint a car that needs a paint job. The seller always knows more than the buyer. I never took checks. Just dead presidents, thank you.

        I only buy new cars now. I keep my Toyotas 20 years. Oil, brakes, batteries. Any other way to decrease the cost of personal transportation is an illusion, IMHO.

  21. The Colorado Kid says:

    Brings back some not so fond memories, and yes, these are real people getting laid off. It’s not a great feeling, especially if you have kids and a mortgage.

    • phleep says:

      Granted, but if one build’s one’s house (and kids, etc.) on economic froth and sand, you know how smart of a foundation that is.

      That is as much wagering as what the stock touts’ side of this was. Or more.

  22. smashsc says:

    Burn non-existent gasoline surpluses driving to an office? Have more automobile accidents driving to an office, and not be able to get parts to fix my vehicle? No thanks. I’m plenty productive in my home office due to elimination of the “oh, you’re here, can you jump into this conference room to answer a few questions during this 2 hour meeting” (w/o a fixed agenda). Me: Just ping me on Slack when you have questions, I’m busy providing value to the company in the 10 other things I have in my backlog.

  23. Michael Engel says:

    1) Putin confiscated 800 Mcdonald’s in Russia. // Asimov 1966 :
    2) Russia confiscated $5M worth of John Deer DE tractors in Ukraine. DE turned off the VIN, punishing the thieves. Justice was done. Mayday : DE plunged from 450 to 300 within a month.
    3) Traders fear that Russian cyber experts will turn off every US farmer’s
    John Deer tractor, or Bayern Monsanto seed roster, causing a global starvation.
    4) AAPL is down because cyber might turn off every IPhone parts or screen VIN.
    5) GM and Ford are down, because Russian cyber attack will shut down every Silverado & F-150’s engine VIN.
    6) The unexpected can happen fast.

    • Wolf Richter says:

      That’s pretty funny as far as explanation why these stocks are down.

      • Michael Engel says:

        1) Prety funny : “I cannot breath, I cannot breath” : when Medtronic MDT PB840 emergency rooms breathing machines broke, hospital technician replaced the broken parts, but only MDT technicians knew the VIN code. MDT PB840 ventilators didn’t work.
        2) People died, because MDT technicians couldn’t come during the crisis .A Polish guy es MDT worker, stole the VIN codes, send them to emergency rooms, saved life. This guy is a criminal. It’s a crime against section 1201 DMCA to protect SF billionaires, up to 5 years in prison and $500K fine.
        3) We are exposed to VIN data day and night.
        4) Techno antennas transmit data on speed, destinations, music, restaurants, family… selling them to others without our permission.
        5) Every part in your engine have VIN code. your local mechanic
        cannot replace parts without the VIN code. It’s a war against small businesses.
        6) Local technician couldn’t replace AAPL screens, because AAPL
        locked the code, until the gov helped the little guys.
        7) Farmers biggest expense are parts and repairs. Farmers cannot replace parts , until DE technician drive on a dirt road to their shop, to click the code.
        8) AI delete certain music. Police, during 2020 riots, played the music
        and the media deleted the riots.
        9) Don’t want to bore u with more funny stories…but subprime
        lenders can repo your F-150 and sell it again, twice, three times, four…

        • phleep says:

          I see a case there for unified cyber-command and cyber industrial complex. MSFT might be a lynchpin?

        • tom10 says:

          Thats why the age of used cars on the road keeps increasing.
          As long as it does not rust away, we can keep them running.

        • Anthony A. says:

          Michael, no one is going to turn off anything on my 2005 Mustang except me with the ignition key. And it has a VIN.

        • Wolf Richter says:

          Michael Engel,

          Your laundry list is full of freaking BS.

        • S16 says:

          All that weed you’ve been smoking has made you paranoid.

        • TheRealMRDyno says:

          ME’s posts are pretty trippy, but I have seen with my own eyes lots of machines that can’t be modified without secure codes, and that can be disabled with those same codes. He’s not all wrong.

        • John H. says:


          Several years ago wife was driving home form nearby town on freeway (about 1 hour away), and “check engine” light on her Audi goes on.

          She pulls over to apron and calls servicing dealership. They say “not to drive over 50 mph, and bring it in ASAP.”

          She does. They inspect the car, then tell her that the indicator light was tripped “by Audi,” who wanted some relatively minor service update addressed.

          Not saying this makes Michael Engel’s fears entirely plausible. And yet….

        • Kenny Logouts says:

          Without wanting to trudge too much into detail, Michael isn’t far from the bleak reality here.

          OTA is a big part of modern machinery/cars.

          As much as OTA and transparent updates might be a cheap value add for people and their products, it’s also a method to tie consumers into your products and we know where that can end.

          Sadly it’s also a vulnerability, or attack added attack surface.

          Even simple things like proper updates to an iPhone or Windows 11 can break features and cause big problems.

          We’ve heavily exposed the material world, much of what we depend upon, to networks, and the vulnerabilities will always move ahead of the protections offered.

    • SomethingStinks says:

      You must think Stranger Things is a true story.

  24. Island Teal says:

    WeWork, Caravana, WFH.🤡🤡🤡💸💸💸
    During the last few months of relocating our family I used 2 more candidates to add to the list of companies that have taken what should be simple transactions and by utilizing “Experience Management” have complicated and made things stupid while employing multi levels of morons sitting in their PJ’s WFH.
    Imagine having people making a phone call to tell you are going to get an emailed Survey. These 2 “winners” are MAYFAIR and PODS 🤡🤡🤡

    • Josh says:

      PODS seems like a great idea to me but they haven’t been able to nail the logistics so they get horrible reviews. I think there is a real business there though.

      • Dan Romig says:

        PODS was started in the Twin Cities by John Reimann.

        His younger brother is a friend and former colleague of mine (I’m now retired). John played high school and college hockey at Providence with a family member of mine. He is a good man.

        Nice people can succeed, eh.

    • phleep says:

      It is the absolutely classic agency problem: people left to add fixes and solutions will (self-deal in the conflict of interest and so) manufacture them. When government does it, it has been labeled “public choice theory.” But anyone is subject to these tendencies. Why sell good steak when you can sell all sorts of distracting sizzle?

      There is so much bloatware and creepy spyware and just plain stupid-ware creeping into “upgrades” and “features” these days, adding negative value, it makes me ill and outraged. The design is cluttered and brainless. common-sense things are hidden in nests of misdirection.

      And yeah, the nicest people in the world might be responsible. I want someone who can do good design and execution, even if they are sociopaths.

  25. David Hall says:

    A drug patent lasts about 20 years from the date of filing. Biotech firms need to be producing more than hype about future returns. They need more than revenue growth. Check the bottom line. Patent cliffs are a threat to future profits as competition from generic drug makers increases when the drug patent expires.

  26. SoCalBeachDude says:


    • COWG says:

      Did you catch the part where he said the WFH bunch was “ lazy”…

      Where have I heard that before…


  27. SoCalBeachDude says:

    CNBC: Start-up investors are warning of dark days ahead as boom times are ‘unambiguously over’…

    With tech stocks cratering through the first five months of 2022 and the Nasdaq on pace for its second-worst quarter since the 2008 financial crisis, start-up investors are telling their portfolio companies they won’t be spared in the fallout, and that conditions could be worsening.

    “It will be a longer recovery and while we can’t predict how long, we can advise you on ways to prepare and get through to the other side,” Sequoia Capital, the legendary venture firm known for early bets on Google, Apple and WhatsApp, wrote in a 52-page presentation titled “Adapting to Endure,” a copy of which CNBC obtained.

  28. Old School says:

    EU has been ran by unaccountable leaders for a while and are now at crunch time. They are going to have to pay the price for green energy poor planning by rising prices for food and energy while economy is too weak to get off the zero bound.

    I read a few years back that world will spend money on green until consumer can’t handle the cost any more. I think EU may be there and will have to take a pause.

  29. Gabby Cat says:

    Interestingly enough the healthcare organization I work for has been hammered by resignations. With all of the open positions they have decided not to back fill many of them as of Thursday. Now they are reviewing all upper level positions (ones that get end of year bonuses) to see if they are really required. On top they pulled the rug on employees raises matching inflation. Each quarter they promised they would make wages positive. Now that will not happen. They are taking Powell wage request to heart. Wish us luck!

    • Michael says:

      It’s very strange where I work. The company called everyone to come back to the office on July 2021. They began to come back but when they realized most of the senior management was working remotely they began to slowly disappear. Generating a layoff list would be pretty easy by doing a headcount over the course of a week. If you are not on PTO, sick time, or approved leave of absence you win the lottery

      • Pea Sea says:

        Maybe start by laying off the senior management who thought it was a good idea to insist that everybody but their own special selves go back to the office.

    • Cookdoggie says:

      “Now they are reviewing all upper level positions (ones that get end of year bonuses) to see if they are really required”

      That’s easy: nope. But who are the ones doing the review? Exactly.

  30. SoCalBeachDude says:

    Oh well, easy come, easy go:

    BI: Elon Musk, Jeff Bezos and Bill Gates lose $115 billion in five months

  31. Iona says:

    Saw a video on auto backed securities last night. The comments were eye opening – lots of people got big loans with no income verification, just a credit check and many used their stimmy checks. Who buys these loans, how much is out there and is there systemic risk from all this? If so, who is going to take the fall?

    And as a software engineer, quite a few job postings over the last year or so we’re crypto related. Changing the world, vc funded, red flags all over the place.

    • Wolf Richter says:

      These auto-backed ABS are bonds that are owned by private sector investors, such as bond funds, pension funds, and others. You might have some in your bond fund. If yes, you will take the loss.

      Autos are a relatively low risk, even during a crisis. They’re quick and easy to repossess — just send out the repo moan — unlike homes where foreclosure processes can take years; and they’re easy for the repoman to locate today thanks to the electronics; and they’re a very liquid asset that can be sold at any of the auctions that take place every week around the country. But yes, your pension fund or bond fund might take some losses.

  32. RickV says:

    As always, good summary on the current state of economic affairs. I’ll be watching how QT effects treasury and MBS yields starting next month, and how much has already been front run.

    • DawnsEarlyLight says:

      Let’s hope the fed stays the course. The nedia heads are already pushing for minimal rate increases and no qt, due to to the coming fabulous summer business expected by hotels and resorts!

  33. What an amazing commentary. Wolf, who are you? You are hitting the ball out of the park every week. Thank you for what you are doing!

  34. So true says:

    There be massive layoffs coming late this summer and rest of year in many industries as stagflation hits and companies get zero’d out.

  35. ru82 says:

    I guess consumers are still willing to pay hugh prices to travel

    In 2019 you could get a room at the Breakers, a five-star resort in Palm Beach, for $350 a night in June—proof that, once upon a time, Florida’s unbearable summer humidity made for outstanding deals. Check a weekend in June 2022, and you’ll find that the prices have quadrupled, with entry-level rooms going for $1,450.

    I saw that happen last year. Hotels at a a spot i visit that normally go for 350 a night on the beach we’re selling for 1000.

    • Halibut says:

      In the old days, April 15 to September 15 was bargain days in south Florida. But rates quadrupled in winter.

    • unamused says:

      “Hotels at a a spot i visit that normally go for 350 a night on the beach we’re selling for 1000.”

      That’s unfortunate. A posh hotel in the Philippines with all the amenities goes for $48 a night, about the same as dinner for twenty, and they don’t have massacres every day.

  36. Breamrod says:

    a week in seaside fla. at a nice home 12K! I couldn’t believe it.

    • ru82 says:

      Here are headlines on Bloomberg businessweek

      -Vacation Renters will not find bargains this summer
      -This summer hotel rates will keep you up at night
      -Snagging a table at a hot restaurant will be tough this summer
      – Dizzying gas prices may stall your summer road trip
      – Its going to be a great summer for car rental companies – but not for you
      – vacationers had back to the skis, and so do the airlines
      – freedom to travel this summer will come with a hefty price.

      • Wolf Richter says:


        There is a contradiction here in the predictions. Either: “Dizzying gas prices may stall your summer road trip” or “Its going to be a great summer for car rental companies” — they cannot both be true. Think about it… if consumers are slowed by high gas prices, they’re even more slowed by high gas prices AND high rental car prices. Or they’re not slowed much at all, neither by gas nor by rental car prices, and they just do what they want to do.

        HUGE number of tourists in San Francisco this weekend (seems to be mostly domestic, still practically no tourism from China, Japan, and Korea). I don’t think I’ve ever seen our area this crowded on Memorial Day weekend. Not like Americans are staying home at the moment.

        • ru82 says:

          I agree Wolf. Just headlines. I just wanted to show the current mood of the main stream news. Good points on contradiction though of the headlines. Sometimes my post are meant to be a bit sarcastic but may not come off that way.

          I know people, who I would say have net worth of 1 million or make 150k or more a year, are taking more vacations on average than they did pre-covid and they just complain about prices but are moving forward with the vacation plans. I think it is a lot is pent up demand on their part. Making up for lost vacation time.

          I think the high gas, lodging, and rental car prices will probably hurt the low income people and they may not take a big vacation or as many vacations. But then again, they may have some pent up demand too and just do the YOLO and put it on the credit card?

          One friend told me he is heading from a midwest city to California this summer to visit his son and take a vacation. He said he will be paying $600 one way to California and almost $1200 round trip. In the past the round trip would be about $500 to $600 at the most. A good bargain flight in the past would be $350 round trip. He just said…we are going no matter what.

          Another friend who fits into this upper middle class as I described, is taking 3 vacation this summer. Usually only 1 or at most 2. He is usually a bargain hunter and he just said…WTH….we are going to New York for 8 days this summer and will pay whatever we need to pay. Right after he told me that I just read an article that New York Hotel prices rank the highest price increase from 2021. Up 60% over summer of 2021.

          So either people still have a lot of discretionary income or they are spending savings or they are putting onto a credit card to pay later. I have no idea but it looks like it will be a boon for vacation resorts, hotels, and car rental companies this summer?

        • SocalJimObjects says:

          Chinese people from Mainland China are NOT allowed to fly out from anywhere in China for tourism. Necessary business only, of which vacation is not one.

        • Wolf Richter says:

          Correct. The Japanese can leave, but still have to jump through some hoops to leave, and then they have to jump through very high hoops when they want to come back to Japan. It’s just not worth it for a brief vacation.

      • unamused says:

        “freedom to travel this summer will come with a hefty price.”

        I turned my home into a resort so I wouldn’t have to go anywhere.
        Lots cheaper but the service is pretty iffy sometimes.

      • Seen it all before, Bob says:

        – Dizzying gas prices may stall your summer road trip
        – Its going to be a great summer for car rental companies – but not for you
        – vacationers had back to the skies, and so do the airlines

        Based on our plans for the summer, we are planning to fly again to visit relatives after 2.5 years of driving vacations.
        This means we will have to rent a car or Uber once we get there.

        I suspect the airlines, and car rental firms or Uber, will be taking our money this summer.

    • Wolf Richter says:

      Yes, and if anyone actually rented at that price for a week, it’s a sign stocks and cryptos haven’t nearly plunged enough.

    • unamused says:


      Less than half what I paid for a big pile of old stones in the Massif Central.
      No beach though.

  37. ru82 says:

    Here is something that also has dumbfounded me. I have had my eye on a vacation condo complex area I could afford on the Gulf of Mexico for the past 12 months. I made an offer last October for $400k. The seller wanted no inspection and no improvements if something needed fix. I could not agree on buying something without an inspection. The place could have been purchased in 2016 for $225k so I was already wondering if I was paying a little to much .

    I just checked this week. A unit next to this one that is not as big just sold for $600k. Way beyond my budget now. I am pretty much priced out of that condo facility I had been interested in. Not sure if I should be cursing at myself for not buying the condo for $400k and missing out on a 33% appreciation in just 9 months. But what really makes me disappointed as I had been waiting about 15 years to be an empty nester and make a purchase in this area. Now I am priced out.

    • ru82 says:

      What is ironic, is the person who had listed the condo I tried to purchase pulled the listing off and did not try to sell it. He is probably glad he kept the condo.

      Dang….I just found another identical unit in the same complex that is listed for $700k but has not sold yet. Maybe that owner is just fishing for for a buyer.

      • Tony says:

        There are lots of people in the same boat!
        I guess the moral here is if you could have afforded the $400K and it was likely your “final forever home” (short of a 24-hour care facility), what difference would it have really made if you overpaid a bit? You weren’t looking to flip it for a quick profit. You were too focused on making sure you got a good or at least fair deal. You will likely get another opportunity there or somewhere close by again though.

        • Seen it all before, Bob says:

          My belief, based on history, is that if you purchase a home for 10-15 years, you will always make some profit or break even.

          Houses are not investments, they are homes to live in, but historically they do have a return after 10-15 years.

          The other belief I have is that long-term renting for 10-15 years is financial suicide. (Quote from another blog that I frequent.) Historically, rent has always trended up because landlords have to make a profit after covering their mortgage (higher for an investment rental), insurance, and property taxes. A 30 year fixed rate primary home mortgage has a lower rate than an investment mortgage, and a person can hold their house forever if they desire, so over time, buying is the best choice.

          Every time an investment rental is sold, the new landlord likely starts a new mortgage with a higher price and/or a higher interest rate and passes it on to the tenant with a higher rent.

  38. DR DOOM says:

    Tech,Housing,Stock and eventually even bloated art and our living standard will all be thrown under the bus to preserve the ability to sell the Empire’s Fiat Debt. STFU serfs and repeat the latest chant from the numerous Tom Parsons of the MOT.

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