What Hardcore Pornography Can Teach Us About Asset Bubbles

Tyler Durden's picture

Submitted by Omid Malekan via Visual Stories blog,

Last week, the stock of an otherwise unknown company named Cynk Technology went parabolic, even though per its own filings the company had only 1 employee, no income or revenues and a poor looking website as its only asset. Although this sort of shenanigan is common in the shadowy world of micro-cap penny stocks, what caught everyone’s attention was the fact that at one point the company reached a value of over $5 billion, reminding some of similar moves in worthless stocks at the peak of the last stock market bubble.

A few weeks before that, the cost of borrowing money for the Spanish government collapsed to an all-time low. The biggest determinant of what interest a borrower has to pay is its perceived ability to repay the loan, and it was only a few years ago that Spanish rates spiked to almost triple what they are today on account of an economic crisis born out of too much debt and not enough growth. So what changed for Spain that led the market to suddenly believe its now safer than ever? It certainly wasn’t the amount of debt the country still carries:

 

Nor was it a rebound in economic growth, or a significant drop in unemployment:

 

The only explanation that remains is a sharp appetite for risk.

Turning to something less pedantic, the contemporary art market has gone parabolic as well, and whispers of a bubble abound. What is unusual about the current art boom is the fact that buyers are tripping over themselves to bid up the works of living and active artists, where theoretically there is endless supply.

Some may argue that contemporary art is the playground of stuffy society types and has nothing to do with the rest of society, and they would mostly be right. So what’s the furthest place we can go from the confines of a fancy auction house? How about a mechanic’s garage. The classic car market is also on fire, and the gains are not limited to just fancy German sports cars:

 

It wasn’t that long ago that everyone – including the hardcore car guys – understood a car to be a “depreciating asset” – something that almost always lost value over time and should only be purchased as a toy by those with cash to burn.  Now any old Porche is an investment in your kids future.

If real estate is more your speed, then there is the booming New York City luxury apartment market. Current stories of people entering complex contracts to buy expensive housing a few days after only seeing a floor plan are unheard of, except for right at the peak of the last property bubble. One57, the building made famous by its crane collapsing during Hurricane Sandy, will be the tallest residential building in New York when its finished this year, and it reportedly has multiple units in contract to be sold for over $90 Million. Rumors have it that some brokers are pitching the units to be as safe as Treasury Bonds. Not to be outdone, a few blocks away is 432 Park Ave, which when completed in 2015 will not only be the tallest residential building in New York, but its tallest building period. Since no real estate bubble is complete without plans in the works for something even more outlandish, enter the proposed Nordstrom Tower, also on 57th street. This one will not only top all other buildings in New York, but all residential buildings anywhere on the planet.

Its hard to have an asset bubble without a concurrent debt binge, so here we areDon’t worry if you don’t understand the technical details of the latter article. The main takeaway is that what is happening now is one of the few things that most people agreed was a major cause of the last financial crisis, so much so that the wildly popular This American Life radio program dedicated a full episode to it.

Exactly 50 years ago last month the US Supreme Court ruled on the now famous case of Jacobellis v. OhioAt stake was whether a French movie with graphic sexual content could be outlawed by the state via its obscenity laws. The court ruled that it could not because the film wasn’t hardcore pornography. How could they tell? In an explanation that has now turned into one of the most famous quotes in court history, Justice Potter Stewart explained that although he could not define exactly what hardcore porn was, “I know it when I see it”

Like porn, asset bubbles are also hard to define, but given our economic history, and especially our recent economic history, we know it when we see it, and now we see it everywhere. There is a good reason why this was one of the most emailed stories in the New York Times recently. We all see it. Apparently the only people that don’t see the bubbles are the people creating them.

The one common diagnosis by experts in the worlds of stocks, art, cars, real estate and debt is the the role central bank money printing is playing in their industry. Since the start of the financial crisis 6 years ago banks like the Federal Reserve, the European Central Bank and the Bank of Japan have printed trillions of dollars. We know that money has not gone towards much of the real economy because growth remains weak, jobs remain scarce and wages remain low. But the money had to go somewhere, and the asset bubbles listed above show us where. Although we’ve all seen the destruction that bubbles cause when they burst first hand, the Central Banks go on pumping.

When the last bubble burst, only 8 years after the previous one, many asked why the Fed and other Central Banks didn’t see the problem coming. Then Fed Chairman Ben Bernanke, the godfather and primary architect of the current money printing regime, had this to say on the subject:  “Although the house price bubble appears obvious in retrospect – all bubbles appear obvious in retrospect.” In other words, you can’t see the bubble when its happening. Bernanke’s professional and philosophical heir Janet Yellen has recently said its too hard to see if Federal Reserve policies are leading to bubbles, so they’ll just keep printing as if everything is fine. 

When our current asset bubbles finally burst and cause the usual havoc, the central bankers and economists that helped create them will yet again claim they could not have seen this coming. This time around we will know they are lying, and would be wise to ask what drove their willful ignorance.

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Satan's picture

Ask the SEC...

hedgeless_horseman's picture

 

 

Not only are the tits in porn fake, but according to The Atlantic, so are claims that the recovery is mostly part-time jobs...

The Spectacular Myth of Obama's Part-Time America—in 5 Graphs

 

But what about part-time employment for non-economic reasons? The story here is short and sweet: There is no story here.
The share of Americans working part-time for personal reasons—they're
in school; they're raising kids; they're ill—is flat and trending down,
according to the San Francisco Fed.

According to The Fed, everything is totally fine with this recovery that was engineered by The Fed

TBT or not TBT's picture

Did you use the search term "natural"?   Don't be so hard on pornography.  

hedgeless_horseman's picture

 

 

The best way to be sure is to go back to a time before they manipulated the numbers...

TBT or not TBT's picture

I posit a theory, that people manipulate numbers, subconsciously or unconsciously, in order to have permission to manipulate....those.  

SoilMyselfRotten's picture

And here i thought Paul Wolfowitz made up that line, the douche

CheapBastard's picture

HH, I was surprised to see that Atlantic aticle myself.

teslaberry's picture

HEDGLESS---you old fart. those picture are manipulated. the makeup clothing and photoshopped or other methods of photo-manipulation. 

 

i know the classic beauties are lovely to look at, but it's all from the marketing age of magazines. and manipuation is as par for the course in the 50's as now. 

you old farty fart.

HardAssets's picture

I didn't bother reading the article - just charts, no pics.

Thankfully, the comments section makes up for that (and will hopefully offer more of the same).

sleigher's picture

They really don't make 'em like that anymore do they...

HardAssets's picture

Its nice to see women who are beautiful and who don't have faddish tatoos from head to foot. Nowadays they seem to be copying Army sargeants, outlaw bikers, or cons in prison.

IronForge's picture

Copying?

With all due respect, those women are probably dating them - or - "are" among them.

It would appear to be part of the couterculture in most Modern Societies.

Whalley World's picture

Boy, do I miss Robo Traders commentary, never a shortage of skin.

Eirik Magnus Larssen's picture

I think I prefer living in our modern times for obvious reasons, but thanks.

TBT or not TBT's picture

I posit a theory, that people manipulate numbers, subconsciously or unconsciously, in order to have permission to manipulate....those.  

Wild Theories's picture

I've been told by a female friend, on no uncertain terms, that's exactly why those dresses cost such an exhorbitant amount, they have hydraulics built-in.

 

I am also replying just for the sake of replying to pics of hot chick with tits.

SmackDaddy's picture

i hate being critical of women's' bodies (they do enough of that).  but look at the legs on that first picture.  that's from a lifestyle of fad diets and sitting down a lot.  or just bad genetics.  in either case, not good breedin' stock.  I need a bitch a little sturdier than that....

r00t61's picture

If you want to be depressed, read the comments on the Atlantic article linked by HH, and see in its full glory how many people still believe in "This is all Bush / Obama's fault" ideology.

I am more equal than others's picture

 

 

The valuations are like erections and growing larger with anticipation only to find that it is Pee Wee Herman waiting breathlessly under the covers.

The secret word for today is....

     wasted wad

slaughterer's picture

BREAKING
ECB's Draghi says the ECB is "Positive" on NFLX, TSLA, PCLN, AMZN, and CYNK.

Now that is porn. 

New_Meat's picture

where are the pictures???

tarsubil's picture

In my neocon days, I watched O'Reilly and was always bemused by his using of boobs to string along his audience. He'd start off with what are your kids doing at spring break? story showing girls in bikinis, then would talk about other stuff until the last 30 seconds and have some worthless story with bikinis in it.

Well played zerohedge.

Muppet's picture

Pornography is more interesting than bubbles as this article makes abundantly clear.  

pods's picture

Unless her name is Bubbles.

pods

StychoKiller's picture

Dixie Bubbles (NSFW), her boobs aren't real, but her legs most certainly are!

newdoobie's picture

all it takes is a little prick

Agent P's picture

So she says to me, "Who do you expect to please with that little thing?" so I told her, "Just me, baby, just me."

Otto Zitte's picture

Enjoy your STDs. Your children will.

Shizzmoney's picture

Who pays for porn anymore?

TBT or not TBT's picture

Someone is subsidizing it.   My bet is on George Soros more so than the Kochs, given their propensities, but the latter would make for better headlines.  

Make_Mine_A_Double's picture

Wait..what???

Spanish bank porn??

 

TheFourthStooge-ing's picture

Go ahead, take a peek under that Spiderman® beach towel.

You know you want to.

SillySalesmanQuestion's picture

I see porn all the time, tv, commercials, etc. If someone asks if I've seen it, I just say "I don't know..." kinda like the SEC & DOJ.

TBT or not TBT's picture

In European shampoo ads, the women in their shower have nice young lathered up tits on display, in primetime, since decades now.   Beaches are topless or clothing optional, mostly, on the continent.   You should see them playing frisbee.   

BobTheSlob's picture

That all sounds good in theory, then some fat slob shows up wearing a pair of speedos.

CheapBastard's picture

TBT, I'm kinda glad the beaches in merika are not topless. Might turn me off to sex forever seeing those Walmart Whales stuffed into tiny neon bikinis.

q99x2's picture

Then  and now roadshow items have decreased in value.

Make_Mine_A_Double's picture

I happened to be in a large mall for the first time in years last week and seems like the only growth industry is whore wear for pre teen girls, hard core whore wear for teenage girls and over the hill aging porn star look for young adult females.

Would have to say the porn industry has enough raw material here in the USSA to keep their impute costs down for a generation.

p00k1e's picture

The only thing left to monetize is booty? 

BobTheSlob's picture

Well everyone is going to need gainful employment once the bubble does pop! Nothing like preparation.

Thomas Aquinas's picture

"The straight line rules both itself and the crooked line"- Aristotle (De Anima 1;5)

alexcojones's picture

"Let he who has never Porned, cast the first Prude Stone."

What Jesus might have said, had He been bored in Porn Valley

TBT or not TBT's picture

Boredom is quite the motivator.