Guest Post: Pursuing Opportunities Of The Past

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Pursuing opportunities of the past only speeds the dissolution of any Status Quo that depends on spent models of growth.

If we had to summarize the global effort to reflate various debt and asset bubbles to "restart growth," we might say the Status Quo is pursuing opportunities of the past.
Let's start with investing in real estate. Retail space is in massive oversupply. Others have done an excellent job describing the overcapacity, high vacancy rates and cannibalizing of sales at existing stores by adding stores: Are you seeing what I'm seeing?
Suffice it to say that an era of deleveraging, declining household income and aging populace is not a good foundation for retail expansion.
The wave of creative destruction unleashed by the Internet has yet to envelop commercial office space--but it's already reached the front steps. Just as online retail has decimated retail sectors such as bookstores, the Web is busy revolutionizing white-collar work, the mainstay of office towers and business parks.
Real work can now be done offsite/remotely at a home office, café, or anywhere but a cubicle at headquarters, and the cost advantages of this flexibility will not be going away. Yes, there are still powerful reasons to meet in person, but there are equally powerful reasons to permanently downsize travel and office costs.
Structural changes in the economy are increasing self-employment and contract labor and shrinking the scale of new enterprises. Millions of well-educated American workers already work at home, and since the average U.S. house has grown in size over the past 50 years, free-lancers and self-employed professionals have plenty of space rent-free.
High-growth companies which once hired thousands of employees and rented entire buildings are increasingly offer highly automated products and services. New-tech juggernaut Twitter recently leased more space in San Francisco as it was expanding its staff by--gasp!--200 employees. Will Twitter be filling that empty office tower near you? No, because its "service" is largely automated software. It now requires less than 1,000 employees to operate a global tech juggernaut.
Many global companies no longer need a headquarters; their senior staff work just like junior employees, from home, hotel room, cafe, etc. Airbnb, Coursera and Uber: The rise of the disruption economy.
The "recovery" in housing is limited for structural reasons. Household formation is in a multi-decade downtrend, household income is also in a structural decline since 2000 and trillions of dollars in subsidies and giveaways have barely budged the needle of housing sales, starts, etc.
Buy and hold stocks: adjusted for inflation, returns on the "buy and hold stocks forever" strategy since 2000 registered a 14% loss, as we see in this chart, courtesy of master chartist Doug Short:

The "buy and hold bonds" strategy is also running out of air. Now that interest rates are zero or negative when adjusted for inflation, there are limits on how much bond yields can decline. This game may run for for awhile but the returns from here until the day rates rise in a "credit event" are modest. Not only have the low-hanging fruits been picked in the 31-year bond bull market, those buying now are stripping the last fruit from the top of the tree.
What happens to those who buy into opportunities of the past? As a guide, we can see what happened to household net worth since the 2007-8 global financial meltdown ended the financialization era: American Households Hit 43-Year Low In Net Worth.
Pursuing opportunities of the past only speeds the dissolution of any Status Quo that depends on spent models of growth.
My new book Why Things Are Falling Apart and What We Can Do About It is now available in print and Kindle editions--10% to 20% discounts.

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moriarty's picture

Thanks for the memory, haven't seen Reggie for years.

Darth Mul's picture

Krugman sez:  borrow more, tax more, and spend spend spend your way to economic growth!


Where's your Nobel, ya cunts?

SoundMoney45's picture

Krugman is correct, positive nominal growth will likely result.  Unfortunately, the real growth will be negative.   

Clark Bent's picture

The "positive nominal growth" you describe is defined by the media as a recovery, which is further reason to mute all financial discussion and get back to the real problems we have, like global warming-climate change. Sheeple aren't supposed to participate in real things, just do as told and bleat only to designated state therapists who will explain that the pain they feel is not real and shameful. Accept program, accept where fate has placed you. Don't raise eyes to superiors. 

old naughty's picture

Which is it?

Recover to spend, or spend to recover?

kevinearick's picture

Public, Private, & Non-Profit Welfare: Eunuchs & Their Queens
Labor, Capital, Elderly, & Children do not see me as homeless, but they do see that each event horizon in the middle class observes me as homeless, so you go right ahead and stop me from going to work, by herding me into a line, to get a ticket, to get into a line, to get a wrist band, to get a shelter night, to stand in line, to get more shelter nights, so I can stand in line to get laundry, clothing, and housing vouchers, so I can get the EDD hierarchy to grant me certified passage to a low wage job that will not pay the rent, so I have to go through the next circle of delays and, so on, while you throw teenage church girls at me in yoga pants, like I am the eunuch, so you can all justify your jobs, shorting out the real economy with make-work delays.
Funny, my job is to short the short, to restore the economy, which means you lose either way, unless you want to get a real job, and you are not going to like what comes next.

Zap Powerz's picture

Alright. Who is in charge of this economy? Morons?

When did the human race turn so stupid?

Think of the knowlege humans have lost in this age of pseudo enlightenment.  Who knows how to grow their own food and truly take care of themselves?  Not many. 

People have lost the ability to learn from their mistakes.  We keep repeating the same stupid mistakes over and over again and we expect different results!  Holy SHIT! We dont deserve to live!

AnAnonymous's picture

When did the human race turn so stupid?

Try 1776, July, 4th.

akak's picture

Alas, alas, alas, quadruple alas.

A date which will live in infamationalisiticalizationalism.

Clark Bent's picture

There are no mistakes, there are only competing narratives about what an event says about the moral superiority of certain superior groups. Fretting over mistakes might lead to unapproved considerations. Do your duty as told, superiors are counting on you to make world better place. Assume calm submissive demeanor. 

Incubus's picture

Incubus likes this comment.

AnAnonymous's picture

Self employment is one way to externalize costs.

It is been found out that 'american' economics would lead people to pay to work.

It has already been happening under different ways.

When working as an employee, the facilities are rented to the employee. And priced in. The use of facilities is included in the wage, one way or another.

With self employment, the contracted now offers the contracting side an opportunity to externalize the cost of building rent. In other words, the contracted now pays to get access to the job.

'American' propagandists like this author wont emphasize this point though.

Another point is that unsurprisingly, while pimping out competition, this 'american' forgets one dimension of competition: emulation.

That is one cause to mass people around: to get a competitive environment through sheer numbers.
Just ask an 'american' manager to explain how grey matter must be concentrated to get results.

More to tell about that. USeless as 'americans' are trapped in 'americanism' The jaws of 'americanism' are a steel trap.

TheFourthStooge-ing's picture

Selective perception, offuscation, and denial are the Chinese citizenism ways to externalize blame.

It is been founding out that Chinese citizenism economics will did leading of Tibetan people to self-immolate in honor of glorification of Chinese Communautist Party.

Chinese Communautist Ministry of Truth propagandists like this Chinese citizenism citizen wont emphasiscationizing this on the point though.

Another point is that unsurprisingly, while pimping out the propagandizedness of speeching means, this Chinese citizenism 'hypocritizen' forgets one dimension of defecation: mass excretion.

That is one cause to mass people along roadsides: to get an excretive environment through sheer numbers.
Just ask a Chinese citizenism 'citizen' manager to explain how brown matter must be concentrated to get results.

More to smell about that. Shameless as Chinese citizenism 'citizens' are highly avoidant of  'flush toiletism'. The holes of Chinese 'shitizenism' are a bamboo finger trap.

ncdirtdigger's picture

Can I get a bid on a Margaretta Machine? Anyone?

Downtoolong's picture

There are three empty strip malls within 20 miles of my home, and they are in the process of building three new ones.

That's a major WTF ?????????????? right there.

virgilcaine's picture

There's an empty strip mall near me, the last hold out tenant was a deli who recently  closed. The complex is now completely empty and for sale with a asking price of..... 3 Milion dollarsl!!!.. bwahaha.

bank guy in Brussels's picture

Funny that author Charles Hugh-Smith, in this article on 'Pursuing Opportunities of the Past' ...

An article about stupid, worn-out business models ...

At the end of his article he is trying to sell ...

A book! Ha! A friggin' book!

« My new book ... 10 % to 20 % discounts ... »

A book! A thing that almost nobody buys or reads anymore ... Talk about 'Pursuing Opportunities of the Past' ... !

Hugh-Smith needs to get together with another book-selling ZH contributor, Mr Testicle Pit ... and they can talk about their using ZeroHedge to try and sell friggin' BOOKS