Glad that's over!
A Carnival of Buncombe
Friday morning:
“The Strait of Hormuz is “completely open” for all commercial ships after the agreement of a cease-fire in Lebanon, Iran’s foreign minister said on Friday.”
Glad that’s over.
Please disregard everything in this missive that I wrote below before today.
Or don’t: “As it stands currently, the in-effect ceasefire will last until April 22”
The last time there was a “deal”, the U.S. and Iran thought Lebanon was included, and Israel did not.
Be aware that they are bringing back 80-year-old financial war criminals from prior heists to warn about new ones:
Former Treasury Secretary Henry Paulson suggested US authorities prepare a back-up plan to avert a potential future collapse in demand for Treasuries resulting from concerns over the federal debt load.
Paulson warned that a breakdown in the US government debt market would pose a different case from the financial crisis he dealt with, and would be a “dangerous thing” with “vicious” effects.
He said addressing the fiscal deficit would require increased revenues, taxes, and dealing with expenses, including overhauling Social Security and health care programs, but noted that marshaling lawmakers behind such an effort would be a challenge.
Never forget:
Now for this week’s edition of War and Peace:
Tweet of the Week:
"Can you blame the voice of youth, for asking what is truth?"
“There is nothing more deflationary than creating a phony asset bubble, having a bunch of investors plow into it and then having it pop. That is deflationary.”
- Stanley Druckenmiller, Lost Tree Club, January 18, 2015 PDF
Religious Leader Donald J. Trump
Pope Leo is WEAK on Crime, and terrible for Foreign Policy. He talks about “fear” of the Trump Administration, but doesn’t mention the FEAR that the Catholic Church, and all other Christian Organizations, had during COVID when they were arresting priests, ministers, and everybody else, for holding Church Services, even when going outside, and being ten and even twenty feet apart. I like his brother Louis much better than I like him, because Louis is all MAGA. He gets it, and Leo doesn’t! I don’t want a Pope who thinks it’s OK for Iran to have a Nuclear Weapon. I don’t want a Pope who thinks it’s terrible that America attacked Venezuela, a Country that was sending massive amounts of Drugs into the United States and, even worse, emptying their prisons, including murderers, drug dealers, and killers, into our Country. And I don’t want a Pope who criticizes the President of the United States because I’m doing exactly what I was elected, IN A LANDSLIDE, to do, setting Record Low Numbers in Crime, and creating the Greatest Stock Market in History. Leo should be thankful because, as everyone knows, he was a shocking surprise. He wasn’t on any list to be Pope, and was only put there by the Church because he was an American, and they thought that would be the best way to deal with President Donald J. Trump. If I wasn’t in the White House, Leo wouldn’t be in the Vatican. Unfortunately, Leo’s Weak on Crime, Weak on Nuclear Weapons, does not sit well with me, nor does the fact that he meets with Obama Sympathizers like David Axelrod, a LOSER from the Left, who is one of those who wanted churchgoers and clerics to be arrested. Leo should get his act together as Pope, use Common Sense, stop catering to the Radical Left, and focus on being a Great Pope, not a Politician. It’s hurting him very badly and, more importantly, it’s hurting the Catholic Church! President DONALD J. TRUMP
And, posted Thursday, this really ticked me off:
Joe Kent's wife, who was in the US Navy, was killed in a suicide bombing on Jan. 16, 2019. Joe Kent remarried on Aug. 31, 2023, over 4 1/2 years later.
(As an aside, 1.7 million-follower KimDotCom literally stole my tweet.)
“Things that were previously held to be sort of unassailable truths are now coming into question.”
- a16z partner David Ulevitch
War
Huh
Yeah
What is it good for?
Apparently the vote to stop the Iran war lost 213-214.
A "yes" vote would've ended our armed forces' "hostilities," making the next step an actual debate on a Constitutional Declaration of War, which we haven't done since 1942.
ONE Republican voted yes: Tom Massie
April 14:
Not only that, but fresh record highs!1
Candidate Trump warned against a lot of things he ended up doing himself.
Candidate Trump cares about Lebanon…
“During my Administration, we had peace in the Middle East, and we will have peace again very soon! I will fix the problems caused by Kamala Harris and Joe Biden and stop the suffering and destruction in Lebanon. I want to see the Middle East return to real peace, a lasting peace, and we will get it done properly so it doesn’t repeat itself every 5 or 10 years! I will preserve the equal partnership among all Lebanese communities. Your friends and family in Lebanon deserve to live in peace, prosperity, and harmony with their neighbors, and that can only happen with peace and stability in the Middle East. I look forward to working with the Lebanese community living in the United States of America to ensure the safety and security of the great people of Lebanon. Vote Trump for Peace!”
Stay the Course
“We absolutely do not have a supply chain problem until somebody that works at JP Morgan can't fill up their Beamer.”
Via Grant’s:
A Monday bulletin from the Organization of the Petroleum Exporting Countries brings the war-related energy shock into sharp relief, as the cartel’s oil production tumbled to 20.79 million barrels per day (mbpd) in March. That’s down 7.88 mbpd from the prior month, surpassing the 6.3mbpd decline during the Covid lockdowns to mark the largest drop on record in a data series stretching to the 1980s.
Then last Sunday we learned that the U.S. was going to close the Strait of Hormuz…
“It can and still could get so much worse if you see those similar types of kinetic physical attacks not just on Qatari LNG, but on Saudi’s oil processing facility Abqaiq, or Iraqi oil fields in Basra, or any of these other upstream assets. That’s when this goes from a weeks to months recovery to kind of months to years.” - Rory Johnston
Rory Johnston with Tom Bodrovics: “No new oil is being created by these tankers going to the United States. It’s the same amount of oil. It’s just shuffling around to other areas of the world that are willing to pay more for those same barrels…almost surely some of the of the SPR releases are going to end up exported.”
This is from Georges Elhedery, CEO of HSBC:
What worries me is not the headlines. I mean, oil headline is above $100, $110. Realistically, if you are now trying to get oil from the Middle East, you may be paying $140, $150.
Realistically, if you try to get oil from the Red Sea, you are paying more than $30, $40 for shipping. Insurance costs, which used to be 25 basis points, is more like 5%, and war insurance has been scrapped — you’re paying 5% without even the war insurance component.
So the barrel of oil door to door or the barrel of refined oil door to door is way above the headline price of oil. The highest I’ve seen, and I’m hoping we don’t see more of that, but the highest I’ve seen is $286 for a barrel of oil that reached Sri Lanka. This is not a country and an economy that can easily afford these kind of prices sustainably.
This was pretty good, but from before we were blocking the Strait…:
“Israel has a very special relationship with the United States that is unparalleled in history. It’s very important to understand this. The United States supports Israel unconditionally. The United States and Israel obviously have different national interests at particular points in time, because no countries, no two countries have the same national interest all the time. But in cases where Israel’s national interest and America’s national interest diverge, the United States pursues what is in Israel’s national interest. And the reason, of course, is because of the power of the Israel lobby, which is just enormous. I think most people realize that today.”
"The fear and anxiety about AI is justified."
Sam Altman
H.L. Mencken, “Bayard vs. Lionheart”, The Evening Sun, July 26, 1920
Link (via the book, “A Carnival of Buncombe3”)
As Grok summarized, in politics “first-rate minds get shouldered aside; the field belongs to blanks like Harding or cunning chameleons like Cox.”
As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.
Another good one:
“Herein, indeed, lies the chief merit of democracy, when all is said and done: it may be clumsy, it may be swinish, it may be unutterably incompetent and dishonest, but it is never dismal—its processes, even when they irritate, never actually bore.”
"I became a journalist because I didn't want to have to rely on the press for information"
Christopher Hitchens, 2006 (about 1h5m in)
Kevin Muir
“Remember, the People’s Bank of China doesn’t want gold to go up today. They don’t want it to go up tomorrow. They want to buy as much gold as they can for the next decade. So, they’re trying to buy it in size without sending the price up too much.”
“How many economies have you known that have gone bankrupt because of deflation? Like nobody. There’s almost none, but the reality is: how many have gotten crushed from inflation? There’s a long list that way. So I think that the human tendency is to overdo it on the inflation side.”
Muir: “If you went and told people that the U.S. had a 7% deficit to GDP, and then you say, “Okay, well what is Europe’s?” They go, “Oh, those guys are a bunch of socialist bums. You know, it must be 10%.” Yeah. What about Japan? Japan like, “Oh, geez, they have like the most debt out there. That must be 15%. What about Canada? Oh, those guys are socialist too. They must be super high. And they don’t realize that the U..S was running seven, and we were all kind of two to three, and some people were under two. “
Gave: “And by the way, everybody’s running around saying the U.S. is exceptional because it has a GDP growth 1% higher than everybody else’s, but it has two or three times the budget deficits.”
"The longest-lived companies did not survive by excelling at the prevailing game of their time. They survived by operating according to a different logic, one that placed continuity above expansion and stewardship above extraction."
Tony Deden, Shareholder Letter
Jim Grant
“I think there are troubles in the land, and one of them is a state of war…One thing that is forever invariably true is that war is inflationary.”
“We tend to overlook this, but it is a fact that, in Orwellian fashion, the Federal Reserve has defined price stability as a 2% debasement of the currency, like a tax that the Fed has unilaterally imposed. All right everybody chip in two cents out of every dollar every year. Do we vote for that? Nope. No, it’s what Janet Yellen said, and everybody said, “Yeah, yeah, good idea.” The central bank of New Zealand said that was a good idea, and the Aussies agreed, and everyone said okay, 2% a year. So inflation is steady state, and the only thing that’s debatable is the extent it might rise above that and get people’s attention, and I think that is in fact in progress right now.”
“Inflation, until this generation or two, was always and everywhere a wartime phenomenon. Well, what happened to make that a secular problem? What happened was the paper dollar and the PhD standard of improvisational monetary policy…Warfare is just the rancid whipped cream on top of this, an appetizing sundae of monetary mismanagement”
“Here’s a quote from William McChesney Martin, the aforementioned. He was chairman of the Fed from 1951 to ‘69 or ‘70. Martin said the following in August 1955 — the date is important. What he said was: “We can never recapture the purchasing power we have lost.” And the reason the date’s important is that in August ‘55, something striking happened. The CPI registered a 0.4% decline. Deflation, right in the middle of the Dodgers’ Championship World Series season of 1955. But what didn’t happen was the central bank falling apart and declaring a deflation emergency and laying on the QE. On the contrary, everyone was focused — mostly everyone was focused on the risk of the decline in purchasing power, because the country had been through World War II, a big inflationary event, and had been through Korea, another inflationary event.
And you think that now, this generation, having been exposed to Ben Bernanke’s kind of obsessive harking back to the Great Depression and to the Fed’s mistake in allowing the money supply to contract — we as a generation have been preoccupied with the 1930s. Whereas the people only 20 years removed from the ‘30s were preoccupied by something else, by the risk of the debasement of the currency, and by the stripping of purchasing power from working people.
So inflation is in fact — we never do recapture the purchasing power. Which explains a lot of the social unrest. I think only Wall Street worries about the adjusted super core reading of the PCE upcoming for May. That is not the mainstream concern. The main concern is the purchasing power that people have lost since 2020.
It’s a ratchet. It never goes back. Always goes up. And here is the Fed, tsking about inflation, while it engineers a 2% rise in inflation — that is a decline in the purchasing power of your hard-earned money every year.”
“Jerome Powell was at Harvard a couple of weeks ago. He was giving a talk to the economics undergraduates — oddly enough, by coincidence, they were all straight-A students, 600 of them, they all got only A’s. And Powell said, yeah, we have to be worried about inflation. And he also said that quantitative easing has no unintended side effects, it’s all upside.
So the whole approach to monetary affairs, the Fed’s approach, has undergone a radical revision — gradually, to be sure, which rather strips the radical shock from it. But if you compare Martin’s preoccupation in 1955 with the Fed’s complacency in 2026, it’s quite a journey.”
“When there was no too-big-to-fail, when there was no expectation that the Fed would implement another round of QE to smooth over every cyclical bump in the road, trust was ever so much more important because you were dealing with individuals who had no recourse, really, to the public purse to make things better during a market problem.”
“Many years ago, Adam Smith was in correspondence with some young person who was American during the American Revolution. The young person was fretting about the state of the British Exchequer, and Adam Smith said, ah, there’s a great deal of ruin in a nation. What he was telling his young correspondent was, if you worry now, you’re early, because the King’s resources are vast, this is a great mighty empire — the British Empire — and don’t worry, it’s going to be fine. So that was that.”
“You should be careful about financing, especially debt financing, with marginally profitable businesses. And data centers4 look as if they’re not very profitable enterprises.”
“With respect to the Fed’s independence, it’s kind of mythical, because the Fed is deeply in debt to the Treasury….The Fed is, by any standard except its own DIY accounting, broke. And the Treasury is the holder of the insolvent party’s debt. That’s the story of the independence of the Fed as seen through the GAAP lens. There ain’t no independence. It is a supplicant. Okay, that doesn’t really matter to Scott Bessent or to Jerome Powell. They think the Fed is not broken, or if it were, it wouldn’t matter. Nor does it seem to matter to the world.
So how do they operate independently? Well, I think no matter how you look at it, they are hand in glove. The Fed has taken more than $6 trillion worth of securities off of the market, thereby allowing the Treasury to continue to borrow at rates that the nation can tolerate and pay. That’s the way to look at the Fed’s portfolio — look at this great big clump of interest-paying obligations and realize that they’re not out there in the market having to compete with other borrowers. They are nestled into the warm, welcoming arms of the Fed, thereby disguising the true fiscal condition of the Treasury.If the Fed suddenly had to liquidate $6 trillion of securities, of course it would be a problem for the Treasury market and indeed for the solvency of the government. But we do have a Treasury, we do have a Fed, and they operate as they do. And we have suspended judgment. Most of us have suspended criticism of the way things are managed. The Treasury gets through the day and it borrows, and rates are certainly not yet at a catastrophically high level, although you read the Congressional Budget Office and it says watch out: when coupon yields are higher than the rate of growth in the economy, that is the road to a terminal fiscal crisis. But we’ve heard that and the world wags on.”
“Gold occupies — it seems that a little bit of that position in a portfolio is like your monetary base. A friend of ours calls the gold in his portfolio his monetary base. What purpose does it serve? It serves not so much as a hedge against monetary disruption, but as an investment in monetary disruption. And we know that monetary disruption is ongoing because the central bankers tell us they’re in the business of disrupting. What are they disrupting? They’re in the business of creating sufficient credit such that the value of money diminishes. That’s what they do for a living, and they make no bones about it. They call it their congressional mandate, although Congress never told them to debase the currency by 2% a year. That’s their original idea.
And every once in a while, gold will sit there for 15 or 20 years and disappoint its fans and nearly bankrupt the miners who had expanded too much during the last prior bull gold market. Then gold will catch a bid, and the world will think, wow, these dollars — there certainly are a lot of them. The Fed certainly creates them with the greatest of ease. There’s hardly any expense in creating these dollars. And the United States is seemingly over its skis fiscally. We should perhaps lay in some gold. We central bankers ought to diversify outside of the dollar.
And that’s what happened in 2024 and ‘25, and less so this year because Turkey’s Treasury was actually selling the gold it had laid in to fund its own domestic needs. But this is one of these eruptions that can be put down to a loss of faith or trust or confidence in the fiscal and monetary regime of the United States. Or it might just be one of these mysterious preference cascades — you know, where it comes from, but every once in a while people say, oh yes, this is the idea. And that’s what happened with gold.
I’m inclined to see it as a more continuous thing. We have been on record as saying that the debasement trade is in fact about a hundred years old. And for many of those decades, for some of the decades, it was scarcely visible. The so-called great moderation of the 1990s — you had to be a terrifically contentious hard money guy to pick a fight with the trend in monetary affairs when the measured rate of inflation was all kind of perfect.
But it actually wasn’t perfect.”
“A question to put to any secular, grizzled, hardened dollar bear is, would you stop and pick up a $5 bill on the sidewalk? Yeah, sure I would. How about a dollar? Well, it partly depends on how old you are — a sidewalk is a long way down. But the dollar, to give it its credit, is an extraordinary creation. It’s America’s greatest export. Costs nothing to produce. The world still wants it. Since August 15th, 1971, or at the latest since 1973, it has been without collateral, uncollateralized. It’s a faith-based currency, purely. And yet it has come to dominate the world. American securities denominated in dollars have come to dominate world portfolios.
So I am as hardened and as grizzled and as set in my ways as a dollar bear as anyone. But I do respect what the world’s embrace of this faith-based piece of paper means for the dollar’s standing, and for respect for the United States. The Declaration of Independence and the Bill of Rights and the Constitution are mighty documents. I think they are perhaps as much responsible for the ascendancy of the dollar and the dominance of the dollar as anything the Fed has ever done, or anything the virtuous American military has accomplished in its extraordinary feats of arms — in Iran especially, and its plucking away of all that. So what do we attribute the dominance of America in both geopolitical terms and in financial terms to? Well, I think it’s the idea of America. And I hope it never goes away.
As for the solvency of the Treasury, that is a slightly different thing. But it is still armored by the idea of America. That is the armor plate of the dollar and the securities denominated in it and the sovereign credit of the United States — split-rated as it is. It’s the credit of a nation that can claim the ideals that this country can claim.”
Matt: Survey question: lowest denomination of American currency you would bend over to pick up.
Jim: It has to be age-adjusted.
Matt: Okay. Where do you want to put this curve?
Jim: A five. Five spot.
“It’s always hard. And knowledge of history is helpful — unless it isn’t. Historical analogies can be so facile. And you can pridefully realize that you may be the only person in the world who has read certain arcane books on the financial history of the thing, and kind of parade that knowledge as if it were the key to the future. Which I’m here to tell you it sometimes is not.”
“So it’s all about judgment. And did I mention luck? That’s something too. And it’s what makes it all so fascinating, and such an adventure to get out of bed in the morning and see how wrong you were. It’s an interesting way to make a living. A friend of mine used to say, when we get up from lunch, let’s return to what we laughingly call work. He was on Wall Street too.”
Paul Volcker, January 14, 1971:
the “momentum of inflation has clearly been checked”
“Unlike the ideological critics of capitalism, [Felix] Somary wrote as a banker who had lived through monetary collapse, hyperinflation, and regime failure. His concern was not theoretical injustice but capital dissipation—the slow conversion of savings into consumption through inflation, debt, and fiscal illusion.
Democracy, he observed, rewards politicians who promise immediate benefits while ignoring and deferring costs. Inflation replaces taxation, borrowing replaces saving, and monetary manipulation replaces honest scarcity.”
Anthony Deden (unpublished letter)
Urea!
For over a decade, every mainstream Western economist was saying we "needed" higher inflation. This is typical econ junk pseudo-science, in the interest of the wealthy.
Most people HATE inflation. They should direct their anger at the economists and pundits who advocate for it.
When I see a headline that says “CPI came in cooler than expected”:
Consumer Sentiment Plunges to Lowest Level on Record
“My view is that the governments are understating the cost of living increases everywhere, and as a result of it, most people are actually struggling”
A lot of people live very close to the edge
Flying private to the Masters: a tradition unlike any other. “The swarm of Gulfstreams, Phenoms and Challengers is straining Augusta Regional Airport,” CNBC relays today, with industry mainstay NetJets anticipating upwards of 775 forays in and out of the facility this weekend.
That would represent a 35% to 40% increase from 2025, which was not exactly an economic annus horribilis. Indeed, total private jet flights reached a record 3.9 million departures last year, up 34% from the pre-Covid baseline. In response to the deluge, Augusta airport hiked its “special event fee” by 25% while expanding its parking area to better handle the incoming volume.
As conspicuous consumption reigns among the upper crust, a broader updraft in high-end outlays is on display. Thus, domestic luxury spending turned positive on a year-over-year basis in the fourth quarter of last year, analysts at Bank of America wrote Tuesday, snapping a 13-quarter streak of contraction in the wake of the stimmy-soaked, 2021-era bacchanal.
Over the first three months of 2026, luxury spending grew at a robust 10%, including an approximate 12% annual increase in March despite the war-induced energy shock (see the brand-new edition of Grant’s Interest Rate Observer dated April 10 for a bullish look at one beneficiary of that bourgeoning recovery).
Suffice it to say, such ebullient conditions are not in evidence for those removed from the wealth-effect. Friday brought word that the University of Michigan’s consumer sentiment survey conducted from March 24 through April 7 dropped to 47.6 from 53.3 a month prior, marking the lowest reading on record for a data series stretching to 1952.
Bloomberg, meanwhile, reports that pawn shop operators across the country have seen a pickup in credit demand since the start of March. “We’re making a lot more loans,” relays Tim Cassidy, fourth-generation operator of Cassidy’s Jewelry & Loan in Stockton, Calif. “[Consumers] have to have that gas, they have to get to work…a lot of people live very close to the edge.”
MAGA!
Tony Deden on Why GDP Misleads
“The illusion of progress gained its most enduring disguise in the language of measurement. Numbers replaced judgment, and the gross domestic product became the supreme idol of economic life. Conceived in the 1930s to estimate wartime output and industrial capacity, GDP was never meant to represent human welfare or civilizational advancement. It counted production for the sake of mobilization, not prosperity.
Yet over time, this emergency metric came to define progress itself. GDP measures the speed of activity, not the value or purpose of what is done. It tallies every transaction as growth, whether it builds a bridge or bombs one, whether it cultivates soil or strips it bare. The cutting of a forest, the repair of its flood damage, and the lawsuits that follow each adds to the total. Destruction and recovery register as twin booms. As stupid as it sounds, in this arithmetic, a society may spend itself into apparent wealth.
As sober economists have noted, GDP’s blindness extends beyond moral and qualitative dimensions to structural ones. It measures the economy’s endpoints while ignoring the intricate chains of production that sustain them. As Mark Skousen observed, Gross Output—what he called “the top line” of national accounting—captures this hidden architecture, whereas GDP records only the “bottom line.” The result is a statistical mirage: activity looks healthy even as the capital structure deforms. Under easy credit, GDP swells not through productive depth but through monetary distortion, mistaking inflation and malinvestment for prosperity.
This illusion deepens because GDP cannot distinguish between creation and consumption, between genuine capital formation and the liquidation of the past. It registers motion, not meaning. When a company borrows to buy back its shares, GDP rises. When financial speculation multiplies without adding a single good or service, GDP rises again. In this way, the volume of transactions is mistaken for the creation of wealth. Such aggregates seduce policymakers into believing the economy can be managed as a single machine. Friedrich Hayek called this the fatal conceit—the belief that dispersed human action can be guided through statistical dials. To raise GDP is easy: borrow, spend, inflate, and count. But what such policies expand in figures, they often destroy in substance. Bridges decay, real wages stagnate, and the living fabric of society is consumed to sustain the illusion of growth.
Where progress once measured improvement in the quality of life and institutions, it now measures only quantity and velocity. It is only an illusion sustained by policy and finance. Under these false measures, even decline appears as progress. Disasters, bailouts, and wars can all lift the totals. A nation that borrows and spends beyond its means looks more “dynamic” than one that saves and repairs. The more financialized an economy becomes, the larger its reported growth—because it counts turnover and speculation as production itself.”
The above is an excerpt from an Edelweiss shareholder letter. Check out my post That permanency of value for more on the topic from Deden.
Some more podcasts:
“You’ve got to get government out of housing. It’s making it so much worse.”
Greg Weldon’s latest: The Six Day War; Stagflation Reigns! 33 minutes. I think Greg does about the best macro economic analysis you can get for free.
“"Delusion has been normalized.": Kevork Almassian
Here’s Kevork Almassian with some great comments on why we should fear centralized digital currency:
“The industry could not stomach that perhaps home prices had reached a level that did not make sense."
Mike Krein,President of National REO Brokers Association, with Bill Bymel (The Debt Doctor)
Bill: “You’re the man that’s willing to give bold predictions. What do you think the next 12 months looks like?
Mike: “Um, slow steady burn cycle just beginning. Foreclosure filings jumped up. We’re running about 40,000 a month. That’s filings of NOD’s (Notices of Default). Actual foreclosures haven’t caught up yet because there’s always about an 18 to 24-month lag. So that’s about 5,000, but that’ll increase back up to that other number probably within 12 months. I know my people are getting busy as hell already. They already started.”
“The people who bought in 2022, 2023, 2024, and 2025 - I don’t know how to put this other than they’re screwed. They don’t have enough equity.”
“The distress is getting ridiculous when you have one out of eight FHA loans delinquent right now, and you’re going to tell me there’s no problem? Sure, let’s go with that. Fair numbers. FHA’s reserve fund is up around 11%. The highest I’ve ever seen it. Okay. Why do you need an 11% reserve fund? Okay. If there’s no problem coming, somebody explain that one to me.”
Mike: “We have a joke in our industry, like how many jet skis were at the house after the crash. No, you have no idea how many houses we foreclosed on that there were jet skis sitting in the driveway. It became a joke, right? “
Bill: “Or brand new cars. I mean, I saw that all the time. I would pull up to a little townhouse that was a 100,000 underwater in Boca, and there’d be an Escalade, a boat, uh you know, a Mercedes and it they can’t they’re not making their their house payments. They’re living for free.”
Mike: “That was the problem. Jet skis became the joke, because then people were using their equity. They had equity, but they used it like an ATM to finance a lifestyle. Very different reasons for what’s happening now as to what happened then. You know, there’s certainly parallels, but…”
Bill: “Now it’s it’s more even just life necessities.”
Mike: “That’s what I’m saying. When you see people in the grocery store paying for groceries with credit cards, they’re financing their daily needs. When you’ve got that kind of housing payment, yeah. that’s what gets really scary. And the numbers aren’t lying. They’re there now. This it’s happening.”
More Bill Bymel. This guy’s always interesting.
“The phrase of the last decade really is extend and pretend.”
“0.54% is the GSC’s serious delinquency rate according to this year’s recent numbers. So less than 1%. It’s the cleanest number in the mortgage market, but it’s also the most misleading. If you count every borrower who touched forbearance, got a deferral, took a partial claim, a modification, exited without a plan - The shadow non-performance rate is closer to 5% to 6%. That’s a 10x gap between the GSE’s less than 1% serious delinquency rate and what really happened in the last 5 or 6 years since covid.”
“Servicers now have provided 8.6 million forbearances since March of 2020, the start of covid. That’s one out of every six American mortgages has had a forbearance.”
“There’s been such an explosion of private credit, private equity that has come in to do private lending. And there’s no stats on it as an industry. Most private investors do not allow their servicers to report their default rates.”
“Up until September 30th of 2025, you could still call your bank or your servicer, say you had COVID, and they had to give you a modification or a deferral.”
Major Carl’s Jr franchisee in California files for bankruptcy “A 65-unit operator filed for Chapter 11 protections under various subsidiaries after owning the sites for more than two decades.”
Carlyle private credit fund bleeds out amid industry-wide investor exodus
Carlyle's flagship private-credit interval fund has been hit by a wave of redemptions…The Carlyle Tactical Private Credit Fund, or CTAC, received repurchase requests amounting to roughly 15.7% of outstanding shares…The company said the fund has 950 positions and no single credit is more than 1.5% of the portfolio…According to the CTAC's website, direct lending was the fund's primary focus as of January 30, with software accounting for the largest share of the portfolio at 12.7%, followed by financial services at 8.4% and healthcare at 7.9%.
Jeff Gundlach
“A bottom tier sponsor just marked down its Red Lobster equity position 98% OVERNIGHT. Oddly, that equity position was in a “private credit” fund. Disturbingly, that fund’s large Red Lobster debt holding is marked at par, even though the equity was basically wiped out OVERNIGHT.
RUN!!!”
Here’s another one to watch: The fastest-growing type of bank lending over the past decade has been loans to private-credit firms, secured by the value of those firms’ own loans. That $1.3 trillion pot is, as Advent’s managing partner neatly told me a while back, “leverage on leverage.”
The portfolios are diversified, and banks lend 40 or 50 cents on the dollar, which leaves some room for things to go badly before they lose money. But that’s what lenders said about mortgage bonds in the run-up to 2008. They built creaky securities to withstand losses of 10% or so, then watched prices fall by twice that or more.
CMBS Special Servicing Rates
“The Trepp CMBS Special Servicing overall rate increased by 27 basis points in March to 11.00%, driven mainly by six large office loans. Those office loans outweighed several sizable cures, pushing the overall rate higher month over month. March saw mixed movements across property types. Office rose 44 basis points and multifamily increased 45 basis points, while industrial ticked up 18 basis points…In March, new transfers to special servicing totaled approximately $2.87 billion across 42 loans.”
Pivoting from Shoes to GPU’s
Anthony Deden on Democracy (unpublished essay)
“…Hoppe’s most provocative claim, that democracy lacks custodianship, captures this outcome succinctly. If Hoppe gives us the diagnosis, Hülsmann gives us the anatomy. A contemporary elaboration of this logic appears in the work of Jörg Guido Hülsmann, who introduces an economic mechanism through which democratic systems exhaust their capacity for self-correction. Hülsmann applies capital theory to the political realm and observes that democratic states gradually build what he calls “roundabout political production”: taxpayer-funded parties, expanding bureaucracies, centrally managed school systems, media-licensing and subsidy regimes, regulatory exclusion of competitors, and electoral law that defines who may even enter the contest. These institutions function as capital assets—not metaphorically, but in the strict economic sense that they are accumulated, require maintenance, and render exit costly. By the time reform becomes thinkable, the structure that would permit it may already be gone.
Their existence creates switching costs that fall first upon voters: to dismantle a bureaucracy is to disrupt livelihoods; to unwind state education is to upend families; to abolish a central bank is to destabilize balance sheets. Thus, even voters who intellectually desire reform often rationally choose continuity. In this view, democracy’s paralysis is not primarily psychological or moral; it is structural. Hülsmann concludes that democracy preserves peace only while living off earlier accumulations, and that once the political capital structure matures, peaceful change becomes increasingly improbable. In such a system, crises risk being resolved not by ballots, but by convulsions.
Unlike systems in which rulers treat territory and institutions as assets to be preserved, democratic officials tend to treat them as sources of revenue to be drawn down. Whether or not one accepts Hoppe’s proposed alternatives, this diagnosis helps explain present conditions. Modern democratic states run chronic deficits in the name of stimulus, expand money in the name of necessity, grow bureaucracies in the name of complexity, and destabilize law in the name of progress. Each justification conceals a transfer from the future to the present.
Somary foresaw this outcome without formalizing it. He warned that democracy, once freed from constitutional and monetary discipline, would hollow itself out. Political forms would remain, but the substance would decay. Elections would persist; governance would degrade. Freedom would erode not through overt tyranny but through gradual degeneration.
What finally undermines faith in democracy is not moral disappointment but structural reality. Democracy fails not because it misses its ideals, but because it follows its incentives. Once democratic legitimacy is treated as self-justifying, constitutional limits, fiscal discipline, and monetary restraint are no longer seen as safeguards but as obstacles.
The illusion, then, is not that democracy sometimes misallocates resources, but that it can expand without weakening its own foundations. Inflation, rising debt, bureaucratic growth, and institutional decay are not temporary policy mistakes; they are the expected results of a system that trades future obligations for present approval. The present crisis is not democracy falling short of its promise, but democracy responding to the incentives embedded within it. If that is correct, appeals to better intentions will not be enough…
The lesson is not that democracy inevitably ends in tyranny, but that when restraint is exhausted, freedom is not repaired—it is displaced. What follows is rule by administrators, generals, or crises; legitimacy shifts from law to order, from consent to survival. The real question for our Western world is not whether democracy will survive unchanged, but what will take its place once its capital is spent.”
“I am willing to risk the giving up of my Rights and Privileges as a Citizen…”
Someone replied to me: “A leader who is willing to discard their own rights is a leader who is more than willing to discard yours.”
I’ve always thought Trump was too authoritarian. e.g.,
Here’s Trump in 2015: “Somebody will say, 'Oh freedom of speech, freedom of speech.' These are foolish people.""
Just for posterity, I had Grok transcribe the 1991 article, “All of the People, All of the Time: How Donald Trump Fooled the Media, Used the Banks to Fool the Bondholders and Used the Bondholders to Pay for the Yachts and Mansions and Mistresses” by John Connoly.
James Lacatski: “If everything was revealed to you right now [about non-human intelligence], it would be so incomplete it would be useless.”
George Knapp: “Meaning because nobody really knows the ultimate answer?”
Lacatski: “Correct.”
Jeremy Corbell: “Not even our government?”
Lacatski: “There are people that might think they do, but they don’t.”
Peter Levenda on the UAP Phenomenon
“If you can’t defend us against it, what are you good for? Because this looks like a bigger existential threat than any of these countries that we’re constantly screwing with, right? So, shouldn’t you be defending us against that?
Well, we don’t know what it is. We don’t know where they live. We don’t know what they are. We don’t know what they want. We can’t go and bomb their cities because we have no idea where they are or if they have cities or if that even makes any sense, or if we could bomb them - which means they don’t have legitimacy as government.
If you’re wondering why there’s no disclosure, that’s why there’s no disclosure…
This may be the revelation, that people that we have in charge don’t know what the hell’s going on up there. That may be the disclosure. And that’s what they’re afraid to to to to unleash.”
For fun, here’s the lost CNBC Longfin CEO Venkat Meenavalli interview!
As I mentioned previously, this is one of the greatest interviews ever, and by greatest I mean worst, and by worst I mean absurd.
December 2017.
"Everything we've kept at bay for decades, it's all being discussed openly, as an actual option." - Saul Berenson
From Mises’ Human Action: “The course of a progressing inflation is this: At the beginning the inflow of additional money makes the prices of some commodities and services rise; other prices rise later. The price rise affects the various commodities and services, as has been shown, at different dates and to a different extent.
This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.
But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against “real” goods, no matter whether he needs them or not, no matter how The course of a progressing inflation is this: At the beginning the inflow of additional money makes the prices of some commodities and services rise; other prices rise later. The price rise affects the various commodities and services, as has been shown, at different dates and to a different extent.
It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German Mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last forever.”
I am aware that some people don’t like Mearsheimer. That’s fine with me.
Buncombe: “a synonym for meaningless political claptrap and later for any kind of nonsense”
Via Trepp: “Spending for the construction of data centers was $41.1 billion last year, up 31.7% from 2024 and 344% from 2020, according to the U.S. Census Bureau.
That’s a big leap and a substantial chunk of change. However, it woefully underestimates the true cost of all the data center building that’s going on. Last year, properties with a 35-gigawatt capacity were under construction, up half again as much as the 22.9-GW capacity that was under construction in 2024. In 2020, properties with only 1 GW of capacity were in the works.
The Census Bureau’s spending data only looks at the cost to build a data center. In other words, material and labor. It excludes the cost of land, electrical infrastructure, cooling systems, computer equipment, or maintenance work—the costliest components of a data center project.
Land prices vary depending on location, but Alpha Matica, a London tech consultant, noted that land for data centers was being priced at roughly $244,000/acre nationwide. A data center typically needs more than 50 acres, which would mean a rough cost of $12.2 million.
Meanwhile, electrical infrastructure, which includes backup generators and other power distribution supplies, can account for about 50% of a project’s total cost, Alpha Matica found. A 100-megawatt property might face a cost of $450 million to $750 million for its required electric infrastructure. And cooling systems can account for 15% to 20% of a project’s total costs, or $135 million to $300 million.
That’s not all. The computer equipment, racks, and networking gear aren’t even factored into a property’s costs as they’re often unique to their tenant or operator. Still, a 100-MW facility might need up to $4 billion of equipment—that’s not a typo. And that doesn’t take into account potential upgrades, which are typically done every few years.
Colliers estimates that roughly $500 billion would be spent this year on data centers across the country.
So, who finances all that? Well, last year, roughly $13 billion of debt was raised through the CMBS market. That’s a drop in the bucket and is due to capacity issues. So, developers are turning to the asset-backed and private-credit markets. The latter is where the risk might lie given its relative lack of transparency.”
Great stuff! As far as how GDP misrepresents the performance of an economy look no further than health care. Its percentage of GDP rose from around 5% in 1960 to 18% in 2024. At the same time ultraprocessed food went from 5% to 55% of the American diet. So my eating the average American junk diet you increase your need for health care spending and thus are counted as positive GDP growth.
I love Mearsheimer. 15 years ago, a book of his on "realist" geopolitics was, imo, definitive.
Jeebus said that the root of all evil is the love of money. It's like perpetually lusting after other people's stuff. No one seems content to live with what they've got. Like a Rothschild said, when asked how much money is enough: "Just a little bit more."