Robot Markets Giving Me The Heebie Jeebies. No (Human Readable) Information in the Price… Mostly Brownian Motion

Everyone is searching for the “ghost in the machine” and just won’t admit that the “machine” is what drives price action.

A friend sent me that comment recently.  It crystallized what’s been giving me the heebie-jeebies about today’s markets.  Its not really the price level or valuation.  Its how those prices are getting set every day.  How things are trading.

Back in the good old days (say 2010) you could pull up a chart and “read the tape.” There was useful and valid insight in how the price moved.  That isn’t some old market saw.  Price information is the core of all Economics models.  That is all a price “is” – information summarized.

These days?  There is no freaking information in the price!  To be more specific, there’s less and less human readable information.  Why?  On most days, most trading is by algorithms (“robots”) not humans.

So the thing setting the price is, well, a thing.

So a lot of the information/logic reflected in that price is non-human.  A lot of people shrug at this.  They assume the programmers are still programming to mimic humans.  Their mental model has robots as speedy but still human-style investors.  Like a Mr. Spock in Star Trek – wider-ranging, faster, breadth of inquiry unclouded by emotions.  But still comfortingly human-like.  Which is also how a lot of humanity-ambivalent investor types see themselves at work and too often at home too, but I digress…

A lot of people assume that is still how robots trade. They don’t.  And haven’t for a long time.

Now?  Its robots programmed to prey on last-generation robots that were built to prey on even older robots that have long since become lunch.  Imagine a spiral of snakes eating each other’s tails down down down into the obscuring mists of long-past time.  (“Turtles all the way down” but with cannibal snakes! How was that for a mixed metaphor!).

More fundamentally, the robots aren’t understandable by humans.  Most people really really don’t understand this.

“Unlike some other sciences, you can’t verify if an ML [robot] is correct using a logical theory. To judge if an ML it is correct or not, you can only test its results (errors) on unseen new data. The ML is not a black box: you can see the “if this then that” list it produces and runs, but it’s often too big and complex for any human to follow…  It gives the too big to understand linear algebra producing the results. It’s like when you have an idea which works, but you can’t explain exactly how you came up with the idea: for the brain that’s called inspiration, intuition, subconscious, while in computers it’s called ML. If you could get the complete list of neuron signals that caused a decision in a human brain, could you understand why and how really the brain took that decision? Maybe, but it’s complex.”

I’m NOT actually too worried about sharing the pool with a bunch of hyper-predatory neural networks.  Maybe I should be.  But I stick to things humans do better – anything but fancy math.  Especially avoiding math on well-bounded, machine-readable data sets.  An army of robots have already chewed that data six ways to Sunday from cross-correlation angles you or I would never even dream of.  Oh and we’re magnitudes slower at it to boot.

What’s giving me the Heebie Jeebies is that “too big and complex for any human to follow” traders inject nonsensical (to humans) information into the price.  Making an already faint narrative thread even harder to tease out and follow.  As the quarters age, the narrative thread fades behind a rising tide of Brownian Motion.  The ghosts in the machine bumping into other ghosts for reasons beyond our ken.

Brownian motion or pedesis (from Ancient Greek: πήδησις /pέːdεːsis/ “leaping”) is the random motion of particles suspended in a fluid (a liquid or a gas) resulting from their collision with the fast-moving atoms or molecules in the gas or liquid.[1]

More in a following post.

FYI the best “how to read the tape” guide I’ve seen is a book published back when prices were literally tick-tick-printed out on ticker tapes….  Get past the first @50 pages to adjust to the language and its a great read as well =>  Edwin Lefèvre’s  Reminiscences of a Stock Market Operator.

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Why Plutocrats Hate Obamacare – It’s Not Just the Taxes…..

Its worth considering why Republican donors powers-that-be have such a deep, implacable opposition to Obamacare.  Sure it meant higher wealth taxes and the risk the government might actual do something right with a broken (ahem “free”) market.  But those alone don’t account for the visceral, violent, vituperative, vigor of their vexation.

They hate Obamacare for loosening of the bonds of wage slavery…

Obamacare’s foundation is a (reasonably) functional & fair individual healthcare market.  It un-picked the (totally arbitrary and stupid) link between healthcare and employment.  Did it ever make sense to tie a universal, social need to the vagaries of education, business cycles, and luck?  It didn’t and still doesn’t.

What’s wrong with breaking that link?  People became a little less afraid.  Losing or quitting that job at BigCo becomes a little easier.  To become self-employed ( like your truly).  To start up a company.  Or whatever.  Obamacare took away a fear that helped keep many chained to their desks.

Consider the hidden coercion in the viral tweets of this Google Ventures partner who relied on Google’s healthcare plan to care for his desperately sick son until he dies at age 11.

We focused on giving him a happy life instead of bankruptcy, GoFundMes, or taking second or third jobs that would take us away from him.  Even then, our lives were upended. I wanted to start a company, or join a very early stage startup. I could not risk losing coverage.  Nor could I purchase it myself due to his preexisting condition. Even the 18 months of COBRA scared the hell out of me.  When a family member is this severely sick, even the tiniest chance of going without health coverage is terrifying and means bankruptcy

This situation is particularly awful and heartbreaking, but we have all been stalked by that “tiniest chance of going without health coverage.”  That gnawing fear kept a lot of people at their desks.  Rowing away below-decks and not causing a fuss.

In this case, Google Ventures hung onto his services and the American economy never got to see whatever company he might have started.  He was a well-paid wage slave and Google is hardly an ogre, but that still leaves the score at “BigCo – 1, Free market Individual – Zero.”

BigCo likes their workers afraid.  Beholden to a BigCo benefits department that’s negotiated a better deal (from another BigCO).  A deal some puny SmallCo or individual can’t get.  Because BigCo doesn’t have to try so hard if it stacks the deck in its own favor….

No wonder the plutocrats are trying so hard to roll back Obamacare.  It empowered the individual, the entrepreneur, the little guy.  Those people have their place – in front a flag & amber waves of grain in the the Koch’s Republican’s TV ads.  But they don’t actually have a place in the Koch’s Republican party.  BigCo plutocracy is a cozier, safer place without them.   And thus without a functioning individual market for a universal need on fair and socially beneficial terms.

And yes, I’m a little annoyed they are working so hard to take away my healthcare.  I wish more of my (mostly employed) friends would figure out Obamacare isn’t just for poor people…  Its for them too.

Its worth thinking about what happens if you decide to step out on your own.  Or if that next jobless stint goes past 18 months…  Sort’ve like this former Republican congressman figured out…  Call your congresscritter.

This could be you too. Unless you really are a 1%-er and not a mere 2%-er.

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Midterms Will Be Hijacked By A Shadow Power. And it ain’t Putin.

I ran into this bit from the Washington Post’s Daily 202 piece on the Koch Brothers recent confab.

Emily Seidel, who directs political strategy for Freedom Partners… about how tough the midterms might be for Republicans.  Seidel stressed the need for the [Koch Brothers] network to spend early. “Early engagement with paid media is how we set the narrative,”  

She is wrong.

Hillary’s team said the same thing in 2016.  Didn’t work out so well, did it?  Millions in paid ads buried by billions of re-Tweets.

More generally, it got me to thinking how the Republicans traditional advantage – a wall of money – will struggle vs social media in 2018.

Social media will hijack this election (see prior post).  A shadowy power beyond party control (otherwise knows as “Democracy”).   I expect a “nationalized” election centering around Trump, healthcare, immigration, and the general disaster that is Washington.  That nationalization will happen via social media.  Consider the hows and whys…

Social media works best with an engaged population.  Democrats are pissed off and Republicans are demoralized-to-just-plain-embarrassed.

  • Vote! Impeach Trump!  Stop the Madness!  Revenge!” are nice, simple, and (in context) reasonable messages.
  • Corporate Tax reform!  Higher barriers to healthcare!”  Not really barn burners.
  • The other obvious Republican social media tack (and policy plank no matter how hard socially liberal suburban whites pretend otherwise) – “Keep those brown people in their place!” But too-explicit racial attacks risk backfiring.  If just one tweet’s dog-whistle racism crosses over a little too audibly, its re-tweeting will just drive up Democratic turn out.  Remember that rash of ill-advised Republican “rape” comments a few years ago?   On the other hand,  too-quiet dog-whistling won’t get out the vote.

Social media also works well with a simple message that appeals across the broadest possible population.  That takes away the usual defensive playbook for mid-terms – to localize/personalize the election.  “Washington may be a mess, but you can trust our guy.”  That’s not going to work in 2018.  Especially with full Republican control of what’s been chaos so far.

  • Angry, energized voters will turn this into a national referendum centered around “Turn over enough seats to impeach Trump.”  The parties will have to deal with this.  They certainly won’t be driving it.
  • The GOP’s counter-message?  Not so catchy.  “To the barricades to defend our ineffective chaos!  We promise we’ll get to abortion, protectionism, and all that other stuff in 2018-2020.  Really!  Right after we wrap up these last few give-aways to billionaires!
  • The one powerful GOP counter-message could be on immigration – expect headline-grabbing legislative moves going into 2018.   The risk is this does more to wake the sleeping Hispanic voter giant than turn out the GOP’s racist nativist wing…  And a “real” immigration bill risks more incoherent Congressional chaos.  A huge wing of the GOP desperately wants to keep illegals right where they are.  Frightened workers with uncertain legal rights are great for profits.  (As are legal workers without access to a functioning individual healthcare market.  But I digress…)
  • More nuanced, local messaging?  Buried in ads people don’t watch and the howl of a (national) social media struggle.

Social media reaches younger people best.  Also low-information voters (love that euphemism) whose media diet is otherwise TMZ and cat videos.  Everyone currently living a life lesson in not-showing-up-to-vote-sort’ve-sucks-dude.

Social media doesn’t do much for the GOP’s elderly voter stalwarts.  And it blunts the usual GOP strategy of suppressing turnout.

Social media rewards the fresh and new.  Old warhorses? Not so much.  Incumbent Republicans aren’t generally social media geniuses.  There are a lot of JEB! look-a-likes out there.

The one wild card is a major terror attack.  Impossible to handicap, but worryingly likely.  More certain is that Republicans best “national” issue will be national security and fear of terror.  Watch for a ramping up on those issues (plus immigration) as we get into 2018.  On the other hand, Trump’s overseas bumbling might just as easily serve up a military disaster in the next 12-18 months.  Just a (very) wild card.

My final thought reading this quote?  She’s just trying to get paid.  Consultants take a percentage.  No wonder she wants “early engagement with paid media.”  A percentage of free media is… zero.

The Clinton team followed the same, self-dealing advice from the campaign industrial complex down the drain in 2016.  Expect a lot of less-imaginative GOP’ers to do the same in 2018.

Politics is still in early stages of technology disruption and the incumbents still don’t get it.  Go ask JEB!

From Daily 202

Seidel stressed the need for the [Koch Brothers] network to spend early. “Early engagement with paid media is how we set the narrative,”

Emily Seidel, who directs political strategy for Freedom Partners, which is part of the network, delivered a presentation Sunday afternoon about how tough the midterms might be for Republicans. “We’re facing a reinvigorated progressive left,” she warned.

While there are 10 Democratic senators up for reelection next year in states Trump carried, Seidel said: “None of these will be an easy lift.” She noted that Democrats need to flip 24 House seats, and Republicans must defend 23 seats in districts Hillary Clinton won. The GOP also needs to defend 27 of the 38 governorships that are up in this cycle. “In midterms since 1982, the president’s party has lost an average of four seats in the Senate and 20 in the House,” she said. “If that happened next year, Chuck Schumer would be the majority leader and Nancy Pelosi would be four votes away from being Speaker. … These governors’ races could very well determine control of the U.S. House for the decade following the Census in 2020.”

Seidel stressed the need for the network to spend early. “Early engagement with paid media is how we set the narrative,” she explained. She cited the successful effort in Ohio last year to negatively define Republican Sen. Rob Portman’s challenger, Ted Strickland, before he could raise enough money to go up with his own television commercials. Once the airwaves become saturated, she explained, the network’s grassroots programs will then drive voter engagement.

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Blockchains! Wow! Totally Missing the Point of a Currency! But No-One Cares! Blockchains!! Wow!!

Finally crystallized what bothers me about all the Blockchains/Bitcoin/Ethereum hoo-hah.  Its not the really the pump-and-dump dynamic (everyone will all of course dump right before the last second so that precisely no-one will be left holding the bag).  But under that is a dream  And idea.  A hope.  A belief.  Totally wrong.  But cherished nonetheless….

The dream?  That currency is a store of value….

It isn’t.  It never will be.  Get used to it.  Hammer that into your head.  Never let that go.

Currency is a “means of exchange.”  A socially convenient common denominator for enabling transactions.  You work.  Receive dollars/gold/silver/cowrie shells/huge round stone discs for it.  Turn around and spend it one someone else’s work.  Etc etc.

We really really really could substitute cowrie shells or huge round stone thingies for dollars.  They sound ridiculous, but no less ridiculous than magical green pieces of special paper.**   I can walk into a store with a green piece of paper and walk out with milk.  In an alternate universe, I’d walk in with string of cowrie shells.  Nothing else need change.

That collective delusion is a feature of the system, not a bug.  Your visceral response to “primitive” cowrie shells and un-questioning acceptance of dollars is evidence of how powerful and important that delusion is.  We have to believe to make the whole thing work.  And that belief must be un-examined to stay valid.

But that belief bleeds over to the illusion that money is a “store of value.”   A person with a million cowrie shells isn’t rich.  A person with a million green papers is?  Both are equally silly.  Except one is invested with the holy magic of a powerful collective delusion.  A necessary delusion to sustain currency as a unit of exchange.

But no currency functions as a “real” store of value.  Never has.  Never will.  Piling up dollars will lead to homelessness and starvation just as fast as piling up cowrie shells.  Until/unless you “means of exchange” them into food and housing.  Dollars don’t digest.

But real-world blockchain activity is almost entirely around this magical “store of value” idea.  No-one really uses Bitcoin to transact (except for drugs and PC ransomware I guess?).  The belief behind this mining and storing up a “coin” as a thing with value in itself.

Piling up Bitcoin is no different than piling up cowrie shells and declaring yourself a millionare.  That works as long as other delusional people will convert your cowrie shells to dollars and thus to food/shelter/cocaine.***  But its still founded on that collective delusion.  The cowrie shells, or dollars, or bitcoins stubbornly remain means of exchange for things that actually have value – like food and housing.

That’s where gold investors fall down the rabbit hole.  They want to believe that a shiny metal is somehow more “real” than a piece of paper.  Although that shiny metal depends on the same “someone else will accept this as a means of exchange” mechanism as a cowrie shell.

And if things break down to the point currency’s “means of exchange” function fails?  You won’t need gold.  You’ll need a shotgun and a Mad Max tribe of buddies.  Because society will have atomized backwards to a more primitive, less functional collective delusion (tribalism).  Its just delusions all the way down (or really turtles all the way down).

Gold bugs and Bitcoiners desperately don’t want to accept that they are just part of a really useful but artificial collective delusion.  Because that leads back to a whole lot of uncomfortable introspection about their own human-ness and impermanence and perception and all the rest of that stuff.

That nesting box of socially useful delusions is a scary thing to contemplate.  Its not easy to think about how we are all just watery bags of chemicals participating in a self-sustaining-and-functional-but-still-totally-artificial collective delusion.  Unless you drop a lot of acid I guess.

But some people are more scared by this than others.  It’s too much of a threat to their sense of self, order in the universe, and the value of a really well organized sock drawer.  Or it reveals a collective dependency and mutual obligation they really don’t want to acknowledge (see “Libertarian Techno-Geeks”).  People who had Mr. Spock as a teen bedroom poster.

They desperately want/need to believe in some deeper grounding and truth in the universe.  There is some Ur-Turtle at the bottom that is “real” and not standing on the back of another turtle!  REALLY!  YES! [voice rising to an angry shriek]!!!!!

Of course, this is just another self-delusional belief in the whole stack of turtles holding up our self-delusionally-defined universe.  But try telling that to an libertarian-leaning Bitcoin enthusiast….  Probably that hit of acid is the only real way to shift them.  We could add it to the water at a Bitcoin conference?!?  🙂

Absent psychedlic intervention, Blockchain has enticed that gold-bug crowd.  Plus a whole lot of techno-futurist types who are always trying to somehow escape our/their human frailties.  Engineers of a certain stripe.  Self-regarding meritocrats.  The professional investor class (looking for stock prices in “the numbers” vs the stories behind those numbers).  Etc….

Piling up the cowrie shells.

It won’t end well.  Better to ground your hopes and dreams on something a few turtles further down the stack.  Follow Bugs Bunny, not Daffy Duck.

A great cartoon in its entirety BTW.  Especially in the Age of Trump.

**  At least blockchain “mining” just burns server cycles and electric power.  Massive scale cowrie-farming and/or rock quarrying to “print money”would be an environmental disaster.  Although we could have the Fed laser engrave serial numbers on specific shells/rocks.  Heck, we could use Bitcoin or some other blockchain to generate those serial numbers!  Get some benefits of fractional reserve banking and avoid the (proven) toxic side effects of the old fixed money supply approach to currency.  So blockchains could be useful after all I guess?

*** Even when Bitcoin is used for a transaction, its pretty rapidly converted to dollars or Euros somewhere.  At least by the smarter folks out there.

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What if Trump Vetoes a Health Care Bill?

He might prefer to keep railing against Obamacare instead of owning Trumpcare…

Mostly just a thought exercise here.  I’m hoping a bill never gets to his desk.

But if it does, it will likely be deeply unpopular.  It will definitely be “mean” as Trump himself described it.  And Trump doesn’t want his brand associated with unpopular and mean.  Well, maybe just unpopular.

It would actually be a smart tactical move too.  He gets to blame Congress for a bad bill vs owning it.  He revives his “drain the swap” credentials – rejecting a Swamp Thing bill that has yet to even emerge from the muck.  And he gets to sound compassionate without committing to anything substantial.  Just an impossible demand for “something better” within fiscal/political constraints that preclude anything but a mean and nasty.

Heck.  There’s even the teeny tiny chance it actually forces a more thoughtful “repair” vs this weird Kabuki “replace” process.

It would be a fitting end to a what can only be called a reality-TV legislative process.  Just like we sort’ve know that “The Bachelor” really isn’t going to marry any of those girls.

Except, of course, that 20+ million people’s real-life health care does actually hang in the balance here.  But the whole process has been run as more symbolic than literal.  All for show.  Or for “a” show we’re all unwittingly cast members of?  Maybe its all just a brilliant exercise in post-modern, conceptual art?  Who knew the Republicans were such sophisticates?

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2018: A National Referendum on Impeachment & (Another) “CHANGE!” Election…

The 2018 mid-terms are a few more revelations away from turning into a national referendum on impeachment.  The Democratic party may not want to go there, but Facebook will take us there regardless.  Put simply, 2018 will be another “CHANGE!” election like 2016 and 2008/2012.  The full focus will be on Congress with probably Brexit/Trump/Macron/Corbyn-like impacts/uncertainty/effects.

  • A vote for the Democratic candidate will be understood as a vote to impeach Trump.  Any and every Democratic candidate will HAVE to take a position on impeachment.  It will be on the 2019 calendar if they gain control.
  • Interesting, a no-show vote for the Republicans will also be understood as a vote “for” impeachment.  And a covert path to President Mike Pence.  This opens up the cowards way out for the (I think huge) base of Suburban affluent “business” Republicans who are still(!?!) unwilling to admit their party left them (and rationality) behind years ago.

The real unknown is how much oxygen will it suck out of the room on local or “real policy” issues.  I’m guessing a lot.  But that depends on how spectacular the blunders-to-come are out of Washington.

So far the blunders have been on par with that 2012 fireworks show in San Diego where everything got sent up at once…  Republican disarray has been my biggest surprise/confusion in 2017.  Much more so than Trump.  I knew he’d be a disaster.  But the incoherence in Congress has been stunning.   That likely continues.  We’ll see spasms of activity out of Congress, but not much gets done.

  • Healthcare reform will be Obamacare lite or (more likely) nothing at all.
  • Tax reform is dead.
  • A gimmicky tax cut could be rushed out as a sop to the Republican base.  But getting that passed will cast an even harsher light on Republican policy incoherence.  Alternative facts beget policy that only works in an alternative reality…
  • The sorry, soggy circular firing squad spectacle will further dishearten the Republican base.   Especially those forced to live in (non-alternative) reality.  Suburban women (see “healthcare”) and Obama/Trump “change” voters (see “opiods, hopelessness, no good jobs, etc…”).

The Democratic playbook is simpler.  Obstruct until 2018.  Anyone who breaks ranks can expect huge liberal push-back and a primary challenge.  Sound familiar?

  • If the Republicans hang on to control, it will be with a slimmer, more conservative majority.  The circular firing squad gets more intimate and switches to fully automatic fire.
  • If the Democrats win, we’ll see a 2 year inquisition.  Trump has already given us plenty to feed the scandal machine through to 2020.  An impeachment is certain, but the Dems probably run out the clock with “open investigations” until well into the 2020 Presidential election.  No reason to give a President Pence time to look presidential.  And there’s enough ugliness scuttling around under Trump’s various business/personal/political rocks to keep investigating until well after 2020.


I’ve been on a long hiatus.  The Trump victory and post-Trump uncertainty left me uncharacteristically (ahem) uncertain.  No strong views lightly or not.  I’ve been waiting to regain some sense of equilibrium.

OK.  I HAVE had one strong view but its just the collective “AIEEEEEEE!” over Trump.  I figured no-one needed more commentary on that.  But the fog is clearing and this particular thought sparked got me back on the horse.

More to follow.  🙂

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Its a vast, Multi-Generational Real Estate Ploy! Trump’s Victory Finally Makes Sense…!

A new study today finally reveals the brilliant, devious, multi-generational plan behind Trump.  Those Trump voters aren’t reactionaries.  They (and Trump) are Real Estate geniuses playing the long game….

The findings in the journal Science show that ocean surface temperatures during the Earth’s last warm period, some 125,000 years ago, were remarkably similar to today.  But what concerns scientists is that sea level back then was 20-30 feet (six to nine meters) above what it is today.”

A 20-30 foot increase would put huge swathes of the US coast underwater.  An epic disaster?  Sure for those coastal elites.  But is a “yuge” opportunity for Trump and his inland voters. Thousands of miles of soon-to-be beachfront property!  Right in the heart of Trump country!  Just vote to halt every climate change initiative and wait for the waves (and money) to come rolling in…

In a generation or two, the Atlantic ocean will be lapping up on the newly created shores and newly enriched inhabitants of Appalachian Coal country.  The poorer, Western half of Connecticut will be the new Hamptons.  The newly impoverished coastal snobs will be bidding up house prices deep inland.  The Trump voter’s descendants will just laugh all the way to the bank.

The Western half of the country is more problematic.  Those coastal mountains will get in the way.  California’s “Trump country” Central Valley could revert back to an inland sea.  But everyone can’t be a winner.   And most Trump voters just want California to slide into the sea anyway…

The 1% will just roll ahead of the problem.  Probably arranging a spectacular, early bailout for their former beachfront mansions (smoke-screened by heart-tugging anecdotes of struggling Maine lobstermen and the African American Gullahs of the Carolinas).  Having abandoned the beaches, they’ll leave the rest of coastal America to its fate.  Abandonment seems to be what the 1% does best these days.  A perverted inverse of Churchill’s famous quote…

“We shall defend our island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender.”

So for the rest of us (the top 10%-20% minus that all-important 1%)?  Start scouting Real Estate inland.  Contrary to the popular saying, they are making more beachfront property.  Although its going to be tricky to figure out that shoreline.  Especially if we de-fund the climate modeling efforts that might help delineate it.  Maybe just settle for someplace nice in the mountains…  🙂

Been a long radio silence here.  Party just driven by life – great honeymoon to Nepal and Sri Lanka followed by (gasp) actually moving in together.  Also driven re-calibrating, re-thinking my outlook post-Trump.  If you don’t have something intelligent to say, don’t say anything at all etc. etc.  I’ll be back to posting though.  Its going to be an interesting year!

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2 Ironies. Greens Just Gutted Environment & Climate Progess. And…

Green Party candidate Jill Stein’s votes don’t quite tip Hillary to victory in key states (like Florida).  But they were the nails in the coffin.

  • Irony 1:  The Green Party will have contributed mightily to an across-the-board rollback and repeal of pretty much everything they care about.
  • Irony 2:  The Green Party and its individual voters will find some complicated way to avoid facing this uncomfortable truth.  What a piece of work is man, how noble in his reason….
  • Bonus Irony 3:  This is all good news for professional “environmentalists” trying to put kids through college.  Lots of disappointment, anger, and quiet guilt to convert into funding.  Re-fighting old ground.  The DC log-rolling machine goes on….

The non-irony is, well, the environment.  Just don’t buy property in Miami Beach.

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I Just Don’t Understand (Suburban Republican) Women. But the Mandate is STILL for “CHANGE.”

I spent the last two days at a conference trying to wrap my brain around the emerging infrastructure of cloud computing.  Actually a welcome distraction from trying to comprehend the election.  But I woke up at 5:40 AM with brain buzzing so starting the catharsis here.

Mandate?  There is a mandate here, but its the SAME mandate for “change” that got Obama elected.   Seriously.  It is clearly NOT a mandate FOR Trump or FOR the Republican party (as much as they are trying to claim one).  Trump had 60% unfavorable ratings.  So a lot of Trump voters were holding their noses to vote against Hillary and the “establishment” she represents. An un-published post of mine from September 22 (full text below).   In 2008, Americans voted for CHANGE = Obama.

  • They didn’t get CHANGE.  At best, they got “change.. ish?”  Obama himself is a cautious centrist.  Calling him a socialist doesn’t change the fact that, policy-wise, he’s a late 80’s Republican.  Hint – ObamaCare is just Massachusetts’ RomneyCare re-warmed.
  • Moreover, the Republican Congress held CHANGE hostage.  Obama would get no victories large or small.  The threat was clear.  No CHANGE unless you elect a Republican President.  The assumption was that would be Jeb Bush, Rubio or some other guardian of the status quo.

8 years later, Americans are voting louder and angrier for CHANGE.

  • They are calling the Republican’s hostage bluff.  Backing a (nominally Republican) change agent (and total wacko).  Same goes for Sanders.  The obvious common thread is CHANGE.

Worryingly, that message already seems to be slipping away in the post-election chatter.  I guess the chattering classes can’t handle the self-scrutiny.  Although that self-scrutiny is the key first step in real CHANGE.  So it could be a tough few years in that regard.

One thing that will help Trump is a stronger economy.  We will finally get the fiscal stimulus we’ve so desperately needed. That will take the form of un-paid-for tax cuts under Trump, but stimulus is still stimulus so I’ll take it.

Will that be enough to paper over the cracks in the Republican coalition?  It’s a certainty we’ll get an orgy of small-ball corporate special interest legislation (why the market is up).  But that’s not the CHANGE Trumps voters are looking for.  A question for later…

For the market, the interesting question now is the inter-play between equities and fixed income as money flees bonds as yields go up (pricing in inflation not real rate rises). Equities are a better inflation hedge, so they should benefit. Plus we have a recovering economy so we could be off to the races for actual fundamental reasons.

What did I get wrong?  

What did I get right?

  • I did get the “angry populists vs elites” dynamic right.  I didn’t under-estimate rural, white working class despair.  I did under-estimate the white upper class’s loyalty to “Team Republican” even with Trump at the helm.  I think that’ll be a bad bet for them long-term (see below) but they made it.
  • I did expect actual voters to differ wildly from the “likely voter” models of the polls.  I just thought it would skew the other way (disheartened women not showing up, Hispanics showing up).
  • I did get that Hillary was the wrong candidate for the time.  My pre-election joke was “I wish Hillary had won in 2008 (grinding it out through the financial crisis) and Obama was running on “CHANGE” in 2016.”  Its not a joke anymore.  I just misunderstood how deeply that would prove to be true.

Kiss the Gig Economy Goodbye?  Repealing ObamaCare is going to be the first major “but can you govern?” challenge for those Republican majorities…  I’ve just married a wonderful woman with a steady job so I still have access to healthcare.  But how many other self-employed people are waking up to that worry right now?  All those Uber drivers…  Repealing ObamaCare is going to be the first major “but can you govern?” challenge for those Republican majorities.  I’d guess they make an even bigger mess of it than Obama….

I’m including below a piece I wrote Sept 22 but never got around to publishing.  Its embarrassingly “right” in its analysis and “wrong” in actually reaching the (now obvious) conclusion.  I guess I just don’t understand women (or at least Suburban Republican ones…).  But I still think this is best seen as part of a leftward swing although “establishment” Republicans already seem to be ignoring that at their (eventual) peril.


This is NOT a Democrats vs Republicans election.  This is a Plutocrats vs Plebes election.  A majority of American voters are clearly voting to re-balance a system they see as tilted in favor of the powerful.  The powerful are trying to keep things as they are.  Masses of people vs. masses of money…

A useful way to re-narrate the last decade is to cast the dynamic in power/class terms.  This is deeply uncomfortable for many in the national dialogue, but that’s sort’ve the point….  Anything to void acknowledging “everyone” isn’t middle class.

In 2008, Americans voted for CHANGE = Obama.

  • They didn’t get CHANGE.  At best, they got “change.. ish?
  • Obama himself is a cautious centrist.  Calling him a socialist doesn’t change the fact that, policy-wise, he’s a late 80’s Republican.  Hint – ObamaCare is just Massachusetts’ RomneyCare re-warmed.
  • Moreover, the Republican Congress held CHANGE hostage.  Obama would get no victories large or small.  The threat was clear.  No CHANGE unless you elect a Republican President.  The assumption was that would be Jeb Bush, Rubio or some other guardian of the status quo.

Standing behind that stasis was a numerically small number of people wielding a collectively HUGE pool of money.  They liked things just the way they are.  I call them Le Pouvoir.  But “Plutocrats” or “Davos Man” or “the 1%” (really the 1% and their 9-15% enablers) will do….  No need for a vast conspiracy.  A lot of elbow rubbing and group-think is all that needed to cohere them into a school-of-fish-like collective (non) action.  Extend and pretend….  Hope the bread and circuses are enough to keep the status quo rolling under a new set of slogans.

8 years later, Americans are voting louder and angrier for CHANGE.

  • They are calling the Republican’s hostage bluff.  Backing a (nominally Republican) change agent (and total wacko).  Same goes for Sanders.  The obvious common thread is CHANGE.
  • Le Pouvoir is in a bind.  Trying to thread the needle between avoiding Trump while sustaining gridlock in Congress.  And keeping Elizabeth Warren at bay at ALL costs (see below).  Funding Republican Senatorial candidates alongside a whole lot of foxhole conversions to the Clinton camp.

What is surprising is that anyone is surprised at voter’s deep disenchantment with Clinton.  She is nakedly the candidate of Le Pouvoir.  Sure I’ll vote for her.  Anything over Trump and the wack-a-doodle wing of the Republican party.  But I don’t think she’s going to satisfy “them.” And “they” are saying that loud and clear…

So the battle will continue on past November.  Who wins?  I’d bet on the side of the Plebes (spluttered out as “mob rule/the 47%/those people” over in the trenches of the status quotidians).

  • The Plebes have little to lose (see “Trump”) and the prod of sheer awfulness across huge swathes of the American experience (on-demand flexible scheduling of part time jobs, Epi-Pen’s price increases, WalMart’s neutron bomb effect on small downtowns, Meth, etc… etc….).
  • Le Pouvoir’s coalition will break down out of naked self-interest.  The plebes are a mass, but Le Pouvoir is small enough for individual action to matter.  And those individuals will defect.  Putting personal gain over collective self interest.  Discreetly starting to fund the “winning team.”
  • Of course those change agents are just seeking power for their own ends (see Elizabeth Warren).  But that pursuit of power will still drive change.

Looked at another way, it is really hard to thread that needle of populism vs Pouvoirism.  I think there will be too much money that leaks into funding CHANGE.  They’re in that metaphorical sled pursued by wolves.  They’ve already thrown out a whole passel of the weaker, less important passengers to those snapping jaws.  Why stop now?

So what to do?  Don’t plan for the status quo to remain.  I would position your portfolios and plans for a long swing left.  How long?  The same 20-30 year cycle as the post-Reagan swing to the right.

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Who Allowed Stumpf to Be Liz Warren’s Pinata? Epic Elite Collective-Self-Interest Fail…

I just watched Elizabeth Warrren chew up Wells Fargo CEO Stumpf.  Its good theater.  But who allowed this guy up there?  Why give her a pinata?  She’s only going to beat it!  Brilliantly too (see below).

This is the elite failure that’s crept in over the 2000’s.  Bringing us all a lot of trouble.

Collective self-interest mandates that Well Fargo’s CEO Stumpf resigns loudly and bloodily after a scandal.  A Bugs Bunny opera death all over the TV news.  That would serve his own class’s interests, but not his own pride (and notably absent sense of shame).

In the good old days, the collective self-interest would have prevailed.  The boys down at the Metropolitan Club would have sat Stumpf down and delivered the hard truth.  He would have been given a moment to collect himself, left in a locked room with a loaded revolver, and immolated in an appropriately cinematic funeral pyre.  He NEVER would have gotten in front of her committee except as a “broken man deeply remorseful for his shameful actions.

Of course,  3-6 months later, he’d be back from the dead.  Serving on a few boards.  Enjoying his riches-minus-a-token-show-of -monetary-remorse.  Golfing with the guy who handed him his resignation letter.  Good sports one and all.

This is the elite breakdown that will, eventually, break down the current elites.

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