Sunday, April 24, 2022

Risks of a Hard Landing in One Chart

20 comments:

  1. I'm going off the rails on a crazy train
    I'm going off the rails on a crazy train

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  2. https://www.news4jax.com/news/politics/2022/04/12/freight-railroads-work-to-resolve-service-problems-delays/

    Federal regulators are holding hearings later this month to look into the causes of the dearth of rail capacity, which the railroads largely attribute to factors outside their control, like the broader supply-chain issues and widespread labor shortages.

    Emphasis added.

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  3. You’d have to be quite the optimist to think we’ve reached a permanently high plateau of nearly 2 jobs open for every 1 person unemployed. This cannot end well.

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  4. It's almost like paying people not to work with money printed out of nothingness is a bad economic plan or something.

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  5. It’s almost as good as the everyone can get rich owning real estate and stocks so everyone can retire early and nobody ever needs to work again economic plan. Thankfully, we tried both plans at the same time. You know, for added prosperity. *cringe*

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  6. But we didn't go full Chinese real estate. Maybe we should try full Chinese real estate!

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  7. The stimmy money is gone, and extended UE benefits are mostly gone.

    What do you think is the driving force for the labor shortage?

    Wages too low?

    Everyone on a crypto retirement plan?

    Not enough qualified workers?

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  8. https://fred.stlouisfed.org/graph/fredgraph.png?g=OC3u

    If I had to guess, it’s a combination of factors.

    1. Low labor force participation rate. Early retirements made possible by a “sure thing” stock market that only goes up. It’s not just the easy money that’s been made, but the potentially false assumption that easy money will continue to be made. Combine this with a pandemic that has targeted older workers and given them extra reasons to attempt to retire early.

    2. Years of ZIRP both enhancing point #1 and leading to increased leverage of any and all sure thing investments (even the ones that hindsight will show weren’t really sure things).

    If the Fed is serious about fighting inflation, which I definitely think they are lest an inflationary death spiral appears, they will need to raise rates enough to offset the wealth effect ZIRP has created. Everyone clearly can’t retire early for this economy to function, at least until most jobs are automated. That puts me in the very hard landing camp. I could be wrong, of course. The future is certainly very hard to predict.

    If I am wrong, TLT may crush me. Interestingly, if I am crushed then I will also be partially right. The Fed will have forced me out of early retirement and back into the labor force. Might be hard to find a job during a greater depression though. Sigh.

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  9. This seems to partially explain the labor shortage too.

    https://www.uschamber.com/workforce/understanding-americas-labor-shortage-why-one-million-women-are-missing-from-the-workforce

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  10. Made this chart:

    https://fred.stlouisfed.org/graph/?g=ODh5

    and things came into focus more. Same flow in nominal dollars from refi that we got during the previous "IoP".

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  11. So, we've got:
    1. People who left work during the pandemic and never came back
    2. People forced into early retirement, or decided to retire early
    3. An increase in borrowing to fund the not-working lifestyle

    There is definitely a growing wave of people in the FIRE movement. Classic fat fire, lean fire, coast fire. Those all have dedicated and active subreddits...

    https://old.reddit.com/r/leanfire/

    And of course, van life.

    I am thinking of starting an FDRE reddit (financially dependent, retire early).

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  12. The FIRE first and asks questions later economy:

    https://www.theblaze.com/amp/chicago-homeless-murder-tent-heater-2657158659

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  13. FIRE first and let the Fed sort them out.

    It was another ugly day in the market. Starting to feel 2008-ish. Starting.

    It's almost as if we are on the brink of a nuclear war or something.

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  14. https://twitter.com/jimcramer/status/1485620160027320323?s=20&t=pqYcs4AM3YzPdtoztHZegg

    Panic first and let Cramer sort it out.

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  15. with the stonks on sale now I dug through my old boxes from the 1990s for ye olde MTG cards to sell . . .

    Haven't seen them in 26 years, I was in Japan then so got in late w/ Revised and ducked out w/ Ice Age.

    Alas what survived was rather random; I'd spent ~$1000 in total then but I think I mistakenly chucked out the wrong box or something. Priciest card is Gwendolyn whats-her-face from Legends, $300 or so.

    If I had a time machine I'd go back to the 80s & invent Tetris and then go back to the 90s and invent MtG.

    Or make it easy and go back 2 years and invent that stupid Wordle game.

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  16. If I had a time machine, it would be tempting to go back and double down on a few investments. I wouldn’t do it though. I most definitely do not want to relive the late 1990s. I mistakenly married a Gwendolyn and at the same time my job also turned from dream to nightmare.

    No, sir. The grass is looking plenty green on this side of the fence. Wake up each day feeling very lucky and thankful, lol. :)

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  17. yeah I would certainly not want to drop back to 1990 with a clean slate and try this again.

    Contingency is a b----

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  18. If you had a time machine, you would go back and make completely different mistakes.

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  19. Much like those being offered a free wish and wishing for immortality.

    Once our sun has met its final fate and our planet is no more, there will be an eternity of floating in the vacuum of space alone to ponder the horrible mistake of being granted what you wished for.

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