Apropos of nothing…
Many people, once they have tied their entire identity to some thing, can't tolerate any questioning of that thing, whether it's gold, bitcoin, Nvidia, a political candidate or ideology, an NFL team - whatever. Their insecurity is painful to see.
Sentiment Check:
Not many short-sellers left…
Some interesting charts and commentary from The Fourth Rate Turning, by friend of the show Mr. Awsumb.
From friend of the show Jim Walker:
“We must look at the scale on the respective y-axes to understand the enormity of the problem. Federal government spending prior to Covid never reached the heights seen since on a quarterly basis.”
The above figures are post-Covid, a period Biden, Yellen and the media described as “the best economy ever.”
Walker:
“No matter how hard we look at it, Mr. Trump looks boxed in and his key policy, the imposition of tariffs, looks set to deliver his worst outcome – higher inflation and reduced US growth at a point when interest rates are being forced higher and the dollar is rising. Full-blown recession could be staring him in the face within six months. If that were to come to pass, all the dollar’s recent strength would evaporate.”
“It was always the Fed's job to make the Treasury look solvent. That was their job, but now you can't do it.”
Scrooge McDuck Explains (1967)
Insurers’ Rule Change Puts ALL California Homeowners on the Hook for L.A. Fire
“A little-noticed rule change last year by California’s insurance regulator will likely shift a large chunk of the cost of the Los Angeles wildfires to homeowners across the state.
Pushed by insurers, the change puts California homeowners on the hook to pay directly toward the cost of rebuilding from very large disasters through even fatter insurance bills—whether they were exposed to the L.A. fire or not.
“That would be a huge wake up call for Californians because they have no idea that the rules have changed,” said Dave Jones, a former California insurance commissioner.
The new policy affects the backstop for California’s Fair Plan, the state’s insurer of last resort, which sells fire-damage policies to homeowners who can’t get coverage elsewhere.
The worry is that the Fair Plan lacks the resources to pay for the quickly escalating cost of the fires, which have destroyed tens of thousands of structures.
The rules change means insurance companies can bill their customers if they are forced to bail out the plan, which has an estimated $200 million in cash and $2.5 billion in reinsurance, according to data it reported last year.
That is likely not enough to cover the Fair Plan’s share of the losses from the fires, forecast at up to $6 billion by analysts at Evercore ISI.
The Fair Plan’s business ballooned after private insurers pulled back from the state, gearing up for a disaster by not renewing policies as their risk models warned of likely conflagrations.
“Most people thought the time would come, but no man prepar'd for it, no man consider'd it would come like a Thief in the night, exactly as it happens in the case of our death. Methinks God has punish'd the Avaritious as he often punishes sinners, in their own way, in the very sin itself: the thirst of gain was their crime, that thirst continued, became their punishment and ruin.”
Alexander Pope, on the South Sea Bubble
“Ordinary people are struggling, but ordinary people are never interviewed on CNBC, or on your program, or on Fox News. They have no voice, so the elite can tell the public, ‘Oh, the economy is doing well.’”
Below the Fold: David Dredge, housing, Greg Weldon, Brent Johnson, Dan Rasmussen, high-yield spreads, Michael Howell, Rick Rule, Simon Mikhailovich, Chuck E. Cheese, random music and more.
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