Stable Genius ‘Splains Economics!

The Dow shed 800 points yesterday — its biggest drop of the year — and the S&P 500 is off nearly 3% as the market erased all of its gains from the previous session’s rally.

What spooked investors was a bond-market move that’s historically predicted a recession: an inverted yield curve (more on that in a moment).

Axios morning email thingie tells us  (with their usual enigmatic use of bullets and weird emboldening. Also new eyeballs glyph!):

Signs of a looming U.S. recession abound, Dion tells me:

👀 These inversions have preceded every U.S. recession of the last 70 years.

So, what is an inverted yield curve, you ask?

An inverted yield curve is when the 2-year treasury notes have a greater return than the 10-year notes, which indicates that investors see the long-term US economy as being a LOSER! SAD!

Other warning signs:

U.S. manufacturing is in recession, as is transportation across all sectors — air, rail, freight and passenger.

  • Airlines are expecting their worst year since 2014, and the auto industry has laid off more people than it has in a decade.
  • A growing number of businesses are citing “greater risk aversion,” largely because of tariffs, as a reason for not making more purchases or investments.
  • Economists say Trump’s policies have introduced a real risk of stoking inflation — absent for more than a decade — as retailers large and small say the tariffs will force them to raise prices.

Rational people understand that this sell-off is because of persistent fears about Tariffman’s trade war with China. But when has anyone ever accused Prznint Stupid of being rational? Cracking his knuckles, our Stable Genius took to Twitter like a beagle in a vacuum factory (and how’s THAT for a mixed metaphor!):

Well, THAT was reassuring!

And that was a lie!

And that is pointing fingers at someone else!

And that is settling blame elsewhere!

So is a recession coming? Well, a recession is always coming, it’s just that no one knows when (just like no one knows when the markets are gonna go up!) and so gambler-investors make bets on it! It’s all bullshit, but it’s bullshit that leads to layoffs.

There is a reason that economics is called the grim dismal science: it is because there is no science to it. There are no laws of physics at play, it is just a lot of people gambling (usually with other people’s money) and making bets based on hunches. There is a certain herd mentality, with some gamblers seeing what other gamblers are betting and going long with it.

Markets are not rational. 


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10 Responses to Stable Genius ‘Splains Economics!

  1. roket says:

    Quick question. Is he concerned about the nations economy or his own personal bank account?

    Liked by 2 people

  2. YellowDog says:

    The stable genius gave the con away by delaying the tariffs so as not to impact the Christmas shopping season.

    What these analyses never state is whether the inversion of the yield curve, for example, is a necessary and sufficient condition for a recession, let alone the timing for that recession. Let the stable genius wrap his tiny fingers around that.


    • one of the links above is a good explainer:

      And note people accepting lower yields on a 10 year bond versus a 2 or 3 year means they’re looking for places to put their money where it’s protected from losses. “I’ll loan you a bunch of money at only 1.3% for ten years” (which is what buying a bond entails) means people don’t think they can get better yield elsewhere.

      This is what had real economists like Krgthulu tearing their damned hair out during the Great Recession, when the yield on T-Bills went negative, meaning people were willing to loan the US money AT A LOSS because they would lose less money that way.

      We could have literally spent our way out of the recession by using essentially free money to hire laid-off construction workers, for example and paid materials companies and heavy equipment manufacturers to do trillions of dollars in, for example, infrastructure improvements, and financed it with money people were willing to PAY US TO BORROW.

      Liked by 3 people

      • Dennis Cole says:

        They could have paid off nearly everyone’s mortgage that was “underwater,” and the bank bailout would never have been needed, and it would have jump-started the economy like no one had ever seen before. And I had a wish during the Great Recession that every returning vet would be handed a caulking gun, and told, “There’s a new war on, and this will be your weapon during your “tour of duty.” I can almost guaran-godamned-tee that we would have experienced WAY fewer deaths by suicide in that group, along with their chronic homelessness.

        You want the economy booming? Forgive student debt, and watch what happens. Putting that much money in the hands of people who will most likely spend it wisely would cause the GDP to soar to astronomical levels. But we can’t afford that.

        Liked by 2 people

  3. Dennis Cole says:

    Gee, I can hardly wait until Powell gets “You’re Fired’ed – tough to do, but not impossible – along with the rest of the “non-loyalists,” so that King Trump can appoint himself Chairman of the Fed, specifying that no congressional approval is needed. Then he can consolidate all the regional Feds into one Single Fed, with him as Supreme Leader.
    As long as we’re going to hell in a bucket, we might as well get it over with.

    Liked by 1 person

    • I honestly cannot imagine the kind of economic chaos he’d cause as Lord High Fed. He’d probably drop the rate to 0 instantly and start printing money like we were Weimar Germany…or maybe ZImbabwe.

      Hell I’ll vote to put Trump’s face on the $100Trillion note…

      Liked by 1 person

  4. purplehead says:

    It’s the Dismal “Science.” But oh hey, it really should be called the Gay Science!

    “The dismal science” is a derogatory alternative name for economics coined by the Victorian historian Thomas Carlyle in the 19th century. The term drew a contrast with the then-familiar use of the phrase “gay science” to refer to song and verse writing.

    Liked by 2 people

  5. Prices on everything, especially food, have been going up since the orange monster was elected. I know people working two or three jobs just to get by. & in no way is the economy “booming”. Certainly not here in Buffalo, NY. But don’t tell that to trumpsters. They believe every word that he says & will never see the truth until the very bitter end.


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