Fake Rights

Win-win deals.

Fake Rights, Bill Bonner
There are win-win rights… such as the rights to life, liberty, and property – things we can all enjoy.

And there are fake, win-lose rights, such as the right to a new Tesla. You may get a new car, but someone has to pay for it.

Likewise, somebody has to get up on the roof or you’re not going to have a house.

Readers may be curious, as we were. How come Ireland has a housing crisis? Have they no plumbers, no electricians, no carpenters? Have they no stone, no cement, no lumber? Have they no builders, eager to put up houses to meet consumer demand and make a buck?

Of course, they have all of those things – thousands of them. Why, then, don’t they build enough houses? Where’s the bottleneck?

Zoning? Planning? Building codes? Mortgage industry regulations? Why not bring in the likely culprits and ask them a few questions?

Instead, the shyster politicians swing into action with fake rights and win-lose deals.

But the win-win deal is only appropriate in a win-win, positive-sum world. The world of 4,000 years ago was mostly a win-lose, zero-sum world. You couldn’t invest, invent, or innovate to make the pie bigger. If you wanted more, you had to take a piece from someone else.

Today, if you can only get ahead by taking something from someone else, you are either 1) a crook, 2) the government, or 3) you’re in a zero-sum economy.

France has a lower income than 49 US states, which may shed some light on why protests continue all these weeks later.

Triple Top

But only the old-timers bother to worry about a stock collapse.

Three times, the Dow has tried to beat its October 2018 high of 2,680. And three times, it has failed. This “triple top” formation is a bad sign. It foretells a bear market, they say.

But nobody pays any attention to old-timers… or to warning signs… anymore. That’s what financialization is all about – separating the real world from the financial world… and allowing fantasy and fake money to replace facts and real earnings.

This week, we’ve been exploring the real causes of America’s trade wars… and its turn toward uncivilized win-lose deals. American democracy was once a “light unto the world” – with its emphasis on personal freedom, free markets, and live-and-let-live foreign policy.

It’s hard to say when, exactly, the lights went out. But now, the U.S. has the highest tariffs in the developed world, the tightest border controls (along with Israel), and the biggest military budget. Now, nobody – not Iran, not Russia, not China – throws its weight around like the U.S. 

But today, we’re going back only 30 years. That was when financialization really got going.

Greenspan Put

When Alan Greenspan announced his famous Greenspan Put in 1987 – in essence, promising investors that the Fed would step in if stocks fell too far – U.S. GDP was $4.8 trillion. Now, it’s $21 trillion – up four times. The Dow was only around 2,000 in 1987. Now, it’s 25,000 – up 12 times.

In other words, the financial world – measured by stock prices – has grown about 3 times faster than the real Main Street economy.

We know why that happened; the feds rigged the game, providing Wall Street with trillions in fake money lent at fake, artificially low rates.

The fix has been in for years. And investors believe it will stay that way. Stocks may go down. But in a selloff, Trump will cave in to the Chinese… the Fed will cave in to Trump… and stock prices will recover.

Or not. 

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