It really is this awful, Tim. Drumpf realizes that he is going to die, so as far as he’s concerned, the world dies with him. It’s the family destroyer syndrome writ large. The muskrat wants to blow things up because…why not? And note how he keeps bringing his sons to the party, too. They are extensions of him but otherwise, he is incapable of caring much about anything anymore. So that’s also a virulent form of family destruction. Nobody asks the sacrifice if they want to go along into the tomb. They just make them drink something to put them to sleep or knock them in the head. So long as Daddy gets his way, it’s all peace from here on out.
Yeah, and I didn't even really get into part of your point and should have--there's a thanatotic urge that drives some men like Trump which is exactly as you say: as I go, so goes everything, bury everybody with me.
Two things. First, I think the disconnect between markets and the economy exists in the short term, but not really in the long term. Yes, there are assets priced at fantasy levels disconnected from any reality. But that’s always been the case, for as long as the notion of investment assets has existed. It was the case for Dutch tulips and stock in the South Sea Company and real estate (a number of times) and anything with “.com” in its name and a bunch of other stuff. Today it’s crypto and stock in failing video game retailers and movie theater chains. But by and large, in the long run, companies that create huge wealth for their founders actually do stuff that’s new.
Second, and unrelatedly, I don’t think the techlash has anything to do with money. My sense is this generation of tech billionaires are angry that they’ve lost control of their employees— rank and file employees at these companies largely are pretty standard issue liberals who believe in things like diversity, good governance, etc. But the founders aren’t that. They’re true believers in their own genius who want the world to bend over backward to kiss their asses, and also don’t like that their employees have been empowered to tell them that they can’t call people “ret@rds” or “f@ggots” anymore.
I think the last is an immediate trigger but not a deep one.
I think honestly that the financialized global economy is in a more profound way than in previous bubbles able to ignore material reality, even to the point of investing in the collapse of speculative bubbles. Here Marx may have had a point: this is not merely cyclical but actually leads to a linear point of final collapse.
I dunno, the fantasy bubbles just aren’t that big. Like crypto is deeply and profoundly stupid. But it’s also not all that big. Financial institutions recognize that and really don’t have much exposure, despite the right and tech bros’ best efforts to force them to. Housing in the run up to 2008!was a much much much bigger bubble, but was also a bubble in a real asset class.
And the vast majority of stock market value is in real companies. Tesla may be priced to fantasy, but they have real products. The big tech companies create real products. There are profound questions around AI, social media, and such, but the issue isn’t short termism— it’s what long term impact the products might have on society.
Nor do I think financialization is uniformly to blame for brick and mortar dying. Sure, there are private equity shops whose MO is to buy (usually dying) companies, saddle them up with debt, extract management fees, and sell the carcasses for scraps. But there are also financial shops that see mismanagement and buy and turn around ailing companies. A very visible recent example is Barnes & Noble. It’s come back from the brink of death under ownership of a hedge fund that made a number of astute changes.
It’s trendy to blame finance for the decline of the middle class (which itself is greatly exaggerated) and manufacturing (which is also quite misunderstood), but the correct story as it relates to the decline of the dignified manufacturing job isn’t financialization or trade— it’s the decline of unions. Which Biden did his best to start to reverse. Unfortunately, the problem with unions is union members. What this election showed is that unions’ rank and file is… quite racist. Even more than it is pro worker.
The point about Barnes & Noble is relevant though: a lot of brick and mortar never got that chance because of ownership changes--the people who ended up in charge of Sears, K-Mart, etc. were palpably unserious about trying to rethink and resubmit because they didn't have to be. I am not sure that the B&N rethink will last under the ownership of a hedge, since most of them are capriciously uninterested in long-termism. What do you think out there is a great example of someone building or sustaining something like a Lloyd's of London? I don't see much; I don't see a lot of rethinking after 2007-08 about exposure to risk, prudence, etc. as a hard-coded way of negotiating the world.
I think ownership changes are what spur those kinds of turnarounds. Financial investors generally don’t buy great businesses and torpedo them; they buy businesses they think they can get positive returns on. There are lots of ways to do that— one is stripping them for parts and laying themselves dividends and management fees in the interim, but probably a better one is replacing underperforming managers. Who can forget the hedge fund presentation a decade or so ago skewering Olive Garden for its terrible bread sticks? Sometimes they fail. But sometimes they succeed. And studies generally don’t show that PE-owned companies lead to lower employment or wages.
And while hedge funds to have short time horizons, that’s not necessarily a bad or unique thing. If a hedge fund can make changes to Barnes & Noble that make it a much better business and then sell out in 7 years at a big profit, that’s a good thing all around. There isn’t a good reason for them to hold it for 50 years. And in fact 50 years is a shorter horizon than your typical public company investors, who are giant pension funds that buy and sell their holdings all the time, but almost never because of company performance. And in fact the worst category of ownership studies find is family owned companies, where performance tends to reliably fly off the rails under the third generation of family owners.
2008 is a different question— there were a lot of issues that caused it, primarily poor regulation, but financialized ownership isn’t one. Bear Stearns and Lehman Brothers were both heavily employee owned. The chief executives of both saw their net worth collapse when they did. They made a lot of mistakes, but knowingly eschewing long term risk planning for short term gain wasn’t one; they weren’t betting the company on red, so to speak; they were assuming that housing prices couldn’t possibly move in the way that they did. And the financial system is undoubtedly safer and more stable than it was in 2007. That’s partially down to institutional memory; bankers touched the oven in 2008, and it’ll probably take another couple of decades until the bankers forget the lessons of 2008 and reach for the oven again. But even that isn’t super likely because the government also tightened regulation in response. Dodd-Frank wasn’t a perfect bill, but it was pretty good— it will eventually erode or become obsolete, like Glass-Steagall did, but the New Deal regulatory edifice did a solid job keeping the financial system from catching fire for well over a half century. That’s nothing to sneeze at.
It really is this awful, Tim. Drumpf realizes that he is going to die, so as far as he’s concerned, the world dies with him. It’s the family destroyer syndrome writ large. The muskrat wants to blow things up because…why not? And note how he keeps bringing his sons to the party, too. They are extensions of him but otherwise, he is incapable of caring much about anything anymore. So that’s also a virulent form of family destruction. Nobody asks the sacrifice if they want to go along into the tomb. They just make them drink something to put them to sleep or knock them in the head. So long as Daddy gets his way, it’s all peace from here on out.
Yeah, and I didn't even really get into part of your point and should have--there's a thanatotic urge that drives some men like Trump which is exactly as you say: as I go, so goes everything, bury everybody with me.
Two things. First, I think the disconnect between markets and the economy exists in the short term, but not really in the long term. Yes, there are assets priced at fantasy levels disconnected from any reality. But that’s always been the case, for as long as the notion of investment assets has existed. It was the case for Dutch tulips and stock in the South Sea Company and real estate (a number of times) and anything with “.com” in its name and a bunch of other stuff. Today it’s crypto and stock in failing video game retailers and movie theater chains. But by and large, in the long run, companies that create huge wealth for their founders actually do stuff that’s new.
Second, and unrelatedly, I don’t think the techlash has anything to do with money. My sense is this generation of tech billionaires are angry that they’ve lost control of their employees— rank and file employees at these companies largely are pretty standard issue liberals who believe in things like diversity, good governance, etc. But the founders aren’t that. They’re true believers in their own genius who want the world to bend over backward to kiss their asses, and also don’t like that their employees have been empowered to tell them that they can’t call people “ret@rds” or “f@ggots” anymore.
I think the last is an immediate trigger but not a deep one.
I think honestly that the financialized global economy is in a more profound way than in previous bubbles able to ignore material reality, even to the point of investing in the collapse of speculative bubbles. Here Marx may have had a point: this is not merely cyclical but actually leads to a linear point of final collapse.
I dunno, the fantasy bubbles just aren’t that big. Like crypto is deeply and profoundly stupid. But it’s also not all that big. Financial institutions recognize that and really don’t have much exposure, despite the right and tech bros’ best efforts to force them to. Housing in the run up to 2008!was a much much much bigger bubble, but was also a bubble in a real asset class.
And the vast majority of stock market value is in real companies. Tesla may be priced to fantasy, but they have real products. The big tech companies create real products. There are profound questions around AI, social media, and such, but the issue isn’t short termism— it’s what long term impact the products might have on society.
Nor do I think financialization is uniformly to blame for brick and mortar dying. Sure, there are private equity shops whose MO is to buy (usually dying) companies, saddle them up with debt, extract management fees, and sell the carcasses for scraps. But there are also financial shops that see mismanagement and buy and turn around ailing companies. A very visible recent example is Barnes & Noble. It’s come back from the brink of death under ownership of a hedge fund that made a number of astute changes.
It’s trendy to blame finance for the decline of the middle class (which itself is greatly exaggerated) and manufacturing (which is also quite misunderstood), but the correct story as it relates to the decline of the dignified manufacturing job isn’t financialization or trade— it’s the decline of unions. Which Biden did his best to start to reverse. Unfortunately, the problem with unions is union members. What this election showed is that unions’ rank and file is… quite racist. Even more than it is pro worker.
The point about Barnes & Noble is relevant though: a lot of brick and mortar never got that chance because of ownership changes--the people who ended up in charge of Sears, K-Mart, etc. were palpably unserious about trying to rethink and resubmit because they didn't have to be. I am not sure that the B&N rethink will last under the ownership of a hedge, since most of them are capriciously uninterested in long-termism. What do you think out there is a great example of someone building or sustaining something like a Lloyd's of London? I don't see much; I don't see a lot of rethinking after 2007-08 about exposure to risk, prudence, etc. as a hard-coded way of negotiating the world.
I think ownership changes are what spur those kinds of turnarounds. Financial investors generally don’t buy great businesses and torpedo them; they buy businesses they think they can get positive returns on. There are lots of ways to do that— one is stripping them for parts and laying themselves dividends and management fees in the interim, but probably a better one is replacing underperforming managers. Who can forget the hedge fund presentation a decade or so ago skewering Olive Garden for its terrible bread sticks? Sometimes they fail. But sometimes they succeed. And studies generally don’t show that PE-owned companies lead to lower employment or wages.
And while hedge funds to have short time horizons, that’s not necessarily a bad or unique thing. If a hedge fund can make changes to Barnes & Noble that make it a much better business and then sell out in 7 years at a big profit, that’s a good thing all around. There isn’t a good reason for them to hold it for 50 years. And in fact 50 years is a shorter horizon than your typical public company investors, who are giant pension funds that buy and sell their holdings all the time, but almost never because of company performance. And in fact the worst category of ownership studies find is family owned companies, where performance tends to reliably fly off the rails under the third generation of family owners.
2008 is a different question— there were a lot of issues that caused it, primarily poor regulation, but financialized ownership isn’t one. Bear Stearns and Lehman Brothers were both heavily employee owned. The chief executives of both saw their net worth collapse when they did. They made a lot of mistakes, but knowingly eschewing long term risk planning for short term gain wasn’t one; they weren’t betting the company on red, so to speak; they were assuming that housing prices couldn’t possibly move in the way that they did. And the financial system is undoubtedly safer and more stable than it was in 2007. That’s partially down to institutional memory; bankers touched the oven in 2008, and it’ll probably take another couple of decades until the bankers forget the lessons of 2008 and reach for the oven again. But even that isn’t super likely because the government also tightened regulation in response. Dodd-Frank wasn’t a perfect bill, but it was pretty good— it will eventually erode or become obsolete, like Glass-Steagall did, but the New Deal regulatory edifice did a solid job keeping the financial system from catching fire for well over a half century. That’s nothing to sneeze at.