I read this piece by Slope of Hope's Tim Knight twice looking for errors of fact and didn't see any. And on matters of opinion I tend, to varying degrees, to agree with most of those he expresses.
A reckoning is overdue.
Via ZeroHedge (I didn't find it with a quick search of Slope):
Scheduled to be Slayed
We have not had an honest-to-God bear market in ninety years. But what about 2008? Or 2001? Or 1987? Yeah, yeah, the market went down, it's true, but in every single down-market since the 1930s, the federal government has intervened to stop the bleeding. The natural, organic, and marvelously healthy process of a sweeping financial cleaning hasn't been permitted since the days of FDR, since the nanny state government feels duty-bound to spare its citizens anything that might hurt even a little bit.
The last big cleaning - - which spanned 1929 to 1933 - - spawned laws and cultural changes that benefited the United States for nearly seventy years before they were dismantled. The most egregious "help" the government has offered came, of course, during the last little downturn, during a few weeks in late February and early March of 2020, which was met with trillions and trillions of dollars of stimulus, forgiveness, and all-around federal fellatio.
My view is that this latest bear market, which started in November of 2021 and has been building momentum ever since, has the following path in the months ahead.......
To be clear, I do not think the conjecture above represents the entire amount of plunging prices, but it's an excellent start.
What I wanted to do is consider what segments of our society will be purged when the dust settles from this latest financial cataclysm. I came up with a baker's dozen of them without even thinking hard about it, and I'm sure there are dozens more. But let's take a look at what I imagined off the top of my bearish head:
Inept Fund ManagersThere's an old saying: don't confuse brains with a bull market. Over the past dozen years, there have been plenty of people with utterly average brains that appeared to be geniuses, simply because they rode the Fed-driven equity market higher. They were in the right place at the right time, and I have every confidence that they're going to keep buying all the way down.The poster child - - and it's not even a close contest!! - - for this is Ms. Cathie Wood, the ceaselessly-needy narcissistic television personality who never missed an opportunity to talk on the tee-vee about how disruptive her "innovative" portfolio companies would be.
Well, her fabled funds have lost 70% in a matter of months, and she is still endlessly crowing about how great things are going to be. I would gently remind my readers that this is the same person who, in December, pledged a 40% annual return for the next five years since the stock market was in "deep value territory". Well, lady, it's a lot deeper now, and you can down on some Marianas Trench levels in coming days.
FraudsNow, at the risk of taking a second bite from the Cathie apple, I'll mention that she is loud and proud about her evangelical Christian beliefs, and she's got a close buddy who is the same way: one Mr. Bill Hwang.Perhaps you've heard of the Jesus-following Mr. Hwang. He was carried off in handcuffs by federal authorities last week for a gargantuan fraud measured in the tens of billions (sort of like one Mr. Bernie Madoff, whom I don't believe was quite as big a Jesus freak as Cathie and Billy). He hasn't been convicted yet, but let's just say the evidence is compelling.
As the old saying goes (and, yes, I'm fond of old sayings) - - you don't know who isn't wearing a bathing suit until the tide goes out. Well, the tide has only started to go out, and as disturbing as witnessing a trunkless Ms. Hwang must surely be, I think there are a lot of other moistened folds and stiffened giblets that will meet our gaze as the bear market grinds on.
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Crypto-DorksYes, I know they are smart. Very, very smart. Guys like Samuel Bankman-Fried and Vitalik Buterin (the handsome devil pictured below) are the kinds of guys who probably got a "5" on the Calculus BC AP test in the 8th grade and have off-the-scale IQs.However, this sort of raw intelligence doesn't translate into real-world value. These fellows have been pushing their crypto-will-solve-everything agenda for years, and the public just ain't biting. Crypto is a king-sized Ponzi scheme that has generated an entire economic ecosystem of charlatans, hustlers, and come-on artists.
One of the weary pledges they trot out is how crypto will be a salvation to the "unbanked" who, God bless 'em, don't even have checking accounts. Ummm, listen fellas. I'm in the 99.9th percentile when it comes to computer knowledge and experience, and even I found the whole crypto experience to be challenging. I seriously doubt the dazed and half-drunk homeless guy, unbanked though he may be, is going to gain salvation by way of Metamask. Get real. This is a solution in search of a problem.
Youthful ArroganceThis is already well on its way to be beaten out of a generation, but the entire "stonks only go up" crowd is in for some serious, serious humiliation and account-destruction. If you wander over to /wsb these days, you can already see them shrieking about how much they miss the year 2020 when it was easy to be an idiot and yet make money. These boys are getting absolutely zeroed out lately, but I know they'll keep trying until they simply have no funds left to trade. Wendy's is going to have no shortage of applicants.
