All Aboard! Trump's Express Train To The Future

Tyler Durden's picture

Authored by Bonner & Partners' Bill Bonner, annotated by Acting-Man's Pater Tenebrarum,

Free Money!

Last week, the Dow punched up above 19,000 – a new all-time record. And on Monday, the Dow, the S&P 500, the Nasdaq, and the small-cap Russell 2000 each hit new all-time highs. The last time that happened was on the last day of December 1999.

 

1-djia-daily-ann

Ironically, two events that were almost universally expected to trigger large stock market declines were followed by quite rapid and strong gains. Would the market have fallen if Hillary Clinton had won the presidential election? That would have confounded expectations as well. Also, the S&P 500 declined for nine days in a row (even if not by much) just before the election – at the time Clinton was still widely expected to win. it remains to be seen whether and for how long the recent discounting of Nirvana will last – click to enlarge.

Just a few months later, the dot-com bubble burst and the tech-heavy Nasdaq lost 80% of its value. And the U.S. stock market, overall, lost about 50%. But investors are bullish. They believe President-elect Trump will be good for stocks.

He is supposed to arrive in Washington for his inauguration and march directly over to the Capitol to demand a tax cut. This will return over $6 trillion to the private sector over the next 10 years… not to mention a proposed $1 trillion splurge on “infrastructure.”

As Trump’s chief adviser (and former Goldman alum), Stephen Bannon, explained to Michael Wolff of The Hollywood Reporter last week:

“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” he says. “It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Shipyards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks.”

Whew!

Everybody’s talking about the feds’ opportunity to “invest” free money.   It makes us nervous; we know how hard it is to get a good return on investment – especially when you don’t know what you’re doing.

The government pays just over 2% on 10-year loans. If inflation over the next decade is anywhere near its long-term average, the real cost of funds is roughly zero.  The money, say the Big Spenders in Washington, will be free.

 

biggovernment

And henceforth it will be getting fed for free!

 

All Aboard!

In the pages of the Financial Times is another voice for investing money that doesn’t exist. Here’s Fed Vice Chairman Stanley Fischer speaking to the Council on Foreign Relations think tank:

“Macroeconomic policy does not have to be confined to monetary policy,” said Mr. Fischer…

 

“Certain fiscal policies, particularly those that increase productivity, can increase the potential of the economy,” he said.

This is a train that’s going to sell out fast. Everyone is going to want to board. Free money. Jobs. Inflation. Infrastructure. What’s not to like? Who will not want to be a passenger on this express train to Fantasyland?

Already on board, near the head of the train, is our friend Richard Duncan at Macro Watch. Richard, a specialist in credit analysis who has worked with the World Bank, shares our view: The world economy is a giant bubble waiting to pop.

But his prescription is different. We would happily get out a pin and give the bubble a prick. Not that we like to see innocent people suffer. But we hate to see guilty people not suffer.

Richard, on the other hand, is a kind-hearted soul, an optimist with a warm and uplifting view of human nature. He can’t bear thinking about the widows and orphans stuck in “another Great Depression,” which he believes would result if the credit bubble bursts.

All it would take is a big enough increase in interest rates. With so much debt in the world, he says, higher rates would be catastrophic. How to avoid it? Richard:

“Very large-scale government investment in the industries and technologies of the future will lift America’s poor out of poverty. It will save the middle class. And it will make the most prosperous segments of our society wealthy – and healthy – beyond their wildest dreams.”

In an open video-letter to Donald Trump, he proposes that the feds should identify 10,000 of America’s “most promising entrepreneurs.” They should all have good ideas for the future – biotech, nanotech, green tech, whatever – but it should have a “tech” at the end. Then the feds should invest in their businesses, forming public-private partnerships.

 

big-govt

Allocation of scarce resources by government bureaucrats – what could possibly go wrong?

 

Hell Train

Our cynical heart stops for a second. All that money up for grabs. All those cost-plus contracts! Architects’ phones must be ringing already; insiders are planning new wings for their Aspen vacation pads. These are government “investments” – no need to ever satisfy a customer or ever show a profit.

And we’re talking 10 times more money than the $100 billion in Corn Belt giveaways… or the penny-candy subsidies to sugar tycoons, the Fanjul brothers (who, taking no chances, put on Miami campaign fundraisers for both Clinton and Trump). But Richard is already in the observation car, enjoying the sun on his face, dreaming.

Imagine what that would do,” he suggests, adding helpfully, “It would really Make America Great Again.

Our imagination is not up to the challenge. We close our eyes. We scrunch up our face. We just can’t do it. We can’t imagine a group of hacks, has-beens, and bureaucratic chair warmers capable of identifying the “industries of the future.”

 

miracle_cartoon

Richard Duncan probably figures that they will be helped by experts… and miracles will occur as well! It’s almost fool-proof…

 

No one else has been able to foresee the future. How could they? Venture capitalists, even when their own money is at stake, are notoriously bad at backing successful futuristic enterprises. The feds, “investing” other people’s money, are bound to bet on the wrong ones.

But wait –  our imagination has finally rebooted. And what’s this?  No train to the future? What we see is a runaway locomotive. Incompetence at the throttle, flimflam stoking the engine, and impossible, pie-in-the-sky hocus-pocus putting on a show for the passengers.

A hellish train, in other words – loaded with trillions of dollars of looted resources – misallocated, stolen, and frittered away.

 

train-to-hell

The express train to hell. It is possible that tickets for the train to the future were sold out. Better luck next time.

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bania's picture

Fahrschein bitte.

letsit's picture
letsit (not verified) bania Nov 30, 2016 12:15 AM

According to ZH, Goldman "wolf" Sachs has just been put in charge of the money "hen" house. DEBT until America is destroyed. That's what it means.
https://biblicisminstitute.wordpress.com/views-of-news/#trumpmeans

techies-r-us's picture
techies-r-us (not verified) letsit Nov 30, 2016 12:16 AM

I'd hate to be in the poor souls' shoes who voted and pushed for that man.

manofthenorth's picture

Fucking idiot.

Edit: Fuck you in the neck till you choke and die !

Double edit : You are a coprophagic lickspittle.

Creative_Destruct's picture

"...shares our view: The world economy is a giant bubble waiting to pop."

How could anyone see anything else?

 

"coprophagic lickspittle" ...aka " shit-eating slimy groveler"... very good.... +1 ;-) 

dr_doom's picture

shut up moron, behave or get out of the way.

philipat's picture

Dear mofio, santafe, Aristotle of Greece, Gargoyle, bleu, oops, lance-a-lot, Loftie, toro, Yippee Kiyay, lonnng, letsit, Mano-A-Mano, techies-r-us, beauticelli, stizazz, Nekoti, SumTing Wong, King Tut, Adullam, espirit, rp2016, Holy hand grenade of Antioch, lock-stock and tazs, amongst others.I wonder why you continue to talk to yourself? When you use honest disclosure of your Biblical site (Even though the site has no connection whatsoever to your comments) I will  not respond with a SPAM alert. So there is no need to talk to yourself to prevent my SPAM alert appearing right below your fake links. Unfortunately, that can only mean you are seriously mentally ill. Talking to yourself is not good; you MUST remember to take your meds.

post turtle saver's picture

"the only reason it didn't work before is because you didn't spend _enough_ ..."

Clowns on Acid's picture

An oversimplification of one side of the coin.....

Nobodys Home's picture

I've listened to preachers
I've listened to fools
I've watched all the dropouts
Who make their own rules
One person conditioned to rule and control
The media sells it and you live the role

Mental wounds still screaming
Driving me insane
I'm going off the rails on a crazy train
I'm going off the rails on a crazy train

wisehiney's picture

where in hell do i know this from?

ACES FULL's picture

Ozzy Osbourne's "Crazy Train"...er,"Mentally Challenged Train" in PC America.

Nobodys Home's picture

Ozzie...Crazy Train.

edit..oops already answered")

jmack's picture

    Lets force feed capital to the Theranos' and Solyndra's  of the world, yea, thats the ticket.

mccvilb's picture

Looted resources. Wow. Great meme. This wouldn't be the fourteen trillion Obama spent on pizza with extra cheese, would it?

Jayda1850's picture

I've seen this movie before. The Bush stimulus is gonna save us. TARP is to prevent the economic apocalypse. A trillion dollars of shovel ready projects will put everyone back to work. A trillion dollars on infrastructure and a giant, beautiful wall is what we need. And every year we're deeper in debt with less money in american paychecks, but don't feel down, there will be another hope and change candidate to come along in 4 years who will fix everything.

Offthebeach's picture

When the 6 of 10 richest counties in Amerika that surround Versailles on the Potomac become the 8 of ten counties, then you'll see the proof.

AE911Truth's picture

 

Re: “every year we are deeper in debt”
It’s ok, we owe it to ourselves. That debt is your pension, and it will never be paid.

 

Dr. Engali's picture

Soooo...,BTFD got it.

wisehiney's picture

Have you  jackasses even asked you granny her mother and fathers family name is?

Or her grandmother or grandfathers?

What you do not know can immediately change your whole concept of your life.

This wonderful/horrible technology is at least good for that.

The many wars and depression have changed the trajectory of your life.

It is a really Beautiful story.

All the shades of our story are undeniablebly magnificient.

Be fair my brothers, and understand the pride and truth that they could not bury.

I love the best of us all, and I have and will continue.

Never, never, never let anyone tell you what you have seen with you own eyes.

The hardest thing ever to understand.

Nobodys Home's picture

All my grandparents were dead before I was born.

wisehiney's picture

I am just to the right of Atilla The Hun.

Very efficient person.

But you  can sit up at night and search.

And go to the places that you are led to.

Your home will make you change your handle.

ThanksChump's picture

That guy rushing to the field at Savannah to grab the flag... There are statues of him everywhere. Will Jasper, my 12th grandfather's brother. He was drunk. It was a bet. His CO was granted Pulaski Co KY by Gen Marion, but that was just a publicity stunt.

The movie, "Patriot", is very loosely based on the Jaspers, Marion, and Pulaski. I have uncle Will's musket next to a SCAR.

Then, on dad's side...

gregga777's picture

It doesn't matter what anyone does. The thermodynamic oil collapse is going to end civilization as we know it. Petroleum provides its own extraction energy. When extracting petroleum uses as much energy as each barrel of oil yields it will be worthless to the end consumer. It's all basic to the 1st and 2nd laws of thermodynamics whose rules are inviolate.

The year 2012 marked the point where on average 1/2 of every barrel of oil was required for the production, refining & processing, transportation, etc., of each barrel of crude oil. By 2035 any crude oil production will be a net energy sink providing no energy for Non-Energy Goods producing sector of the economy. That is, it won't provide a net energy gain to the economy. At that point remaining oil in the ground will be irrelevant because it will require more energy to extract than it yields. In other words crude oil will be worthless to the consumer.

An overview of the above are at:

http://www.thehillsgroup.org

http://www.zerohedge.com/news/2016-10-22/thermodynamic-oil-collapse-why-...

A 65-page detailed paper describing thermodynamic oil collapse.

Depletion: A determination for the world's petroleum reserve
An exergy analysis employing the ETP model

http://www.thehillsgroup.org/petrohgv2.pdf

Nobodys Home's picture

Electrolysis of water using solar. Use the hydrogen to power the wells.

 

Wait! ..I know.....Robots! Yah we'll use robots! Robots can do ANYTHING!

A. Boaty's picture

That will never happen. It makes too much sense.

As an alternative hydrogen source, one can get more value from hydrocarbons from extracting the hydrogen.

wisehiney's picture

Naw, it will be that lil ol debt.

That bitch leaves a trail of destruction with every single step.

The Japs will finally admit that Godzilla is debt.

But yes,  oil is debts siamese twin..

 

the.ghost.of.22wmr's picture
the.ghost.of.22wmr (not verified) gregga777 Nov 30, 2016 12:21 AM

I agree. Every day one barrel of oil is spent extracting and refining a rapidly shrinking number of barrels.

 

Unless solar panels and nuclear plants start crapping out the millions of tons of plastics and petrochemicals that make modern life possible, the horse and buggy is going to make a roaring comeback.

Nick Jihad's picture

it turns out that nuclear plants do allow you to create plastics and petrochemicals. And a new generation of safe, efficient, low-waste reactors is on the way

MASTER OF UNIVERSE's picture

I fully agree with you on the implosion, but not the date. Costs vs. profits is slated to below $20.00 per barrel sooner than you might think. The BIG Oil Glut has already decisively destroyed every country in the matrix. Every country is already backing out along with every university in the matrix, and every bank in the matrix. Bottom line is that we ain't talking 2035 at these short term vs long terms forcasts, or expectations.

Animal Spirits are such that the only push on investment from these institutional investors is towards electric utilities & electromotive energy. Programmable automotive transportation is what they are looking at for the future. Oil investment is a known shit sandwich now so I cannot see a reasonable estimate of 2035 for the cost efficiency to tank. It has already tanked IMHO. The brain-dead investors got caught with a commodity that has no way out of the loss on Capital investment. One is either all in with the infrastructure and stuck long term to get out because there are no new investors that want the investment anymore. Blue Chip they ain't anymore.

AE911Truth's picture

We do not need oil as an energy source. Check out BrilliantLight Power.

Dassey4FedChair's picture

An indebted society is an enslaved society. End the Fed, Fuck it dude let's go bowling 

the.ghost.of.22wmr's picture
the.ghost.of.22wmr (not verified) Dassey4FedChair Nov 30, 2016 12:13 AM

The gun range costs about the same as bowling and you sharpen a useful skill.

HardAssets's picture

Unless there is a Jubilee on the made-up-outta-Nothing 'debt' Humanity will continue to allow themselves to be enslaved by the banksters.

No leading politician has said this. Not Trump. Not even Ron Paul.

Trumps appointing a GS guy to Treasury does not bode well.

Can Trump think outside the conventional box ? Does he even want to ?

Guess we'll see.

juujuuuujj's picture

Getting people excited after repeated disappointment is something only elections can achieve.

amor terra's picture

As far as I've been able to tell with REAL flesh and blood people, no one has been "excited" about any election outcome this time since Bernie Sanders lost the primaries.  After that, everyone switched to catastrophizing about and terriified of the other side.

Youri Carma's picture

Their hubris prevent them of seeing anything because there are a few categories of people who can see the future but they're not in it.

EndOfDayExit's picture

Let's face it - if they want to print and spend a hella lot of money, they can absolutely do it, and it will indeed create a few jobs here and there while the money lasts. It will boost corporate profits, again, while the money lasts. It may or may not create inflation depending on the prevailing levels of deflationary pressure. This will not create any self-sustaining recovery, but the show can go on for as long as one is willing to print and spend without causing a run-away inflation. Corporate profits will increase for the duration of the show, and this will be sold as a proof of recovery and the reason for stock prices to go even higher. And it is in anticipation of this show that stocks are rising right now.

Gnostech's picture

Bubble's going to burst anyway. Might as well build a bunch of shit that might last a while.

OneOfUs's picture

Brightest day only comes after the darkest night. Maybe this hellish train is the catalyst required to motivate the public enough to wise up and throw the whole system out and draft a new one that hopefully returns to our roots of individual rights.

Grandad Grumps's picture

Keep your money. The more money people have, the more they are slaves to it.

matagorda's picture

After the donald leaves office, LaGuardia will still suck.  You read it here first.

East Indian's picture

Fiat dreams are addcitive. 

Faeriedust's picture

I suggest you read up on the efforts AND SUCCESS of Huey Long in Louisiana.  Infrastructure investment can produce HUUUGE rewards for both the public and the greedy contractors (and of course the corrupt politicians).  Point of fact, it's pretty obvious that Long was assassinated because he scared the Powers That Be (or were) shitless.

There are a number of technologies on the board today that, if invested in RIGHT NOW in massive amounts, could possibly stem the otherwise inevitable decline of the American Empire and give us another 200-300 years of bliss.  Polywell Fusion.  Wind turbines.  Electric vehicles (we have the vehicles, but we need the universal network of charging stations or they're going precisely nowhere).  High speed Mag-lev tunnel trains to replace air freight at 1/6 the operational costs once the investment is made.  Selectively antibiotic bacteria to replace our quickly obsolescing chemical weapons against infection.  Upgraded SEWER SYSTEMS, gods help us, to replace the equipment in most major cities that dates back to about 1900.

Huey Long also faced massive resistance: from a wealthy class that didn't want to pay the costs of living in a civilization, only reap the profits while living high on the hill away from the misery their predatory behavior created.  So you know what?  EAT THE RICH.  Those are some nice, juicy carcasses.  And a good infrastructure investment program will produce plenty of nouveau-riche to replace them.