Elon Musk takes over Twitter

Lots of idiots out there, I guess.

Everything you need to know about tech layoffs and hiring slowdowns

In a half year from now, I won't be surprised if people realize that we have been in recession for the last 5, 6 months already.

Here's the thing about Tesla. It has sold a lot of $75,000 cars to stock market millionaires who wanted a status symbol.

That was all the product of an artificial interest rate environment that distorted the cost of money, creating a chain reaction. On the business side, Tesla was able to borrow endlessly and dilute its stock price and ride a bubble to an insane valuation, even as it was selling cars at a loss. The same thing that was driving up Tesla's stock price was making a lot of genius speculators rich, most of it on paper, but those people had the money to buy $75,000 cars. If they didn't have the money liquid (but still felt rich because everyone was making money hand over fist on paper), they could borrow at a negative real interest rate -- you were getting paid to take on debt in real terms -- and live a fabulous lifestyle. Because what could possibly go wrong with that down the line?

Then add in the fiscal distortions state and Federal governments threw into the mix, for example, making other car companies pay Tesla in effect so they could operate. And of course, all of the money they threw into people's pockets during the pandemic in the name of "stimulus."

Now because of all of the demand for goods and services (including Teslas that people would never have been able to afford) they pulled from the future, they stoked runaway inflation. And that means that the idiots who had destroyed the debt markets in the first place to monetize all of the debt that got us to where we are, are now at threatening to end the party because the president is under fire for inflation. ... which means higher interest rates (even though we have barely gotten that yet).

With those higher interest rates, and a stock market that is now floundering because of fear of the party ending, Tesla is not going to be able to keep selling $75,000 cars. And I am sure they are starting to see it in their sales numbers already (and is why layoffs are coming).

We ain't seen nothing yet. The Fed is at a place right now where they are diddling in fear of bringing the economy down to deal with inflation, so they are doing too little, too late and giving more bullshit than actions. With all the malinvestment and drunken-sailor consumption they have enabled since the financial crisis on the back of negative real interest rates, the world can't even afford the small tick up in rates their diddling has already brought about without the economy buckling. If they really try to deal with inflation, Tesla (and a lot of other companies) have real problems. If they don't deal with it, inflation is going to just keep getting worse. Most likely? We are seeing stagflation right now, a slowly sinking economy AND runaway inflation; they are giving us a slow, torturous death rather than a quick one. You can thank your monetary mandarins who monetized trillions of dollars of debt that created a lot of malinvestment that now is a weight on our economy, with the cherry on top of politicians being able to do incredibly short-sighted things in the name of an emergency that got cheered on by a public that loves promises of free shit from the people they elect.

This has all been the source of the trillions upon trillions of dollars Elon Musk is worth (rather than hundreds of millions). He's been along for the ride, he was not the cause, so I'd say that people aren't actually losing their jobs because he's an idiot; they are losing them because the world has been living a fantasy that he benefited from.

 

Yeah, I knew that.

But trust me, him buying Twitter was a symptom, not a cause of anything.

He was using an inflated currency (Tesla stock) to make an insane, inflated bid for an asset (Twitter). The same way a lot of insane things were being done for a decade and a half because the cost of money was being stupidly distorted.

Almost as if to signal the peak of insanity and that the bubble was about to pop, the Twitter thing came just as the house of cards was about to fall. Which makes sense, because to me Elon Musk has been the poster child (but not the cause) of the bubble.

It was a confluence of things. ... Most of the monetary inflation in the wake of the financial crisis, blew up asset prices. The phony wealth effect that created, helped give an illusion of a booming economy. That was always going to end in a debt crisis and huge problems for the economy. The cracks were showing prior to Covid, with the short-term lending markets cracking and the Fed furiously trying to prop them up. Then Covid hit. ... and to deal with the looming defaults, they went all in. Nobody could fail, so they bought up trillions upon trillions of dollars of debt, creating money out of thin air to pay for that worthless debt. With all the free money they injected into the economy, our politicians acted like they had a blank check, essentially helicopter dropping money right into people's pockets. That in turn created so much demand at a time that Covid was creating supply disruptions, that prices have now gone haywire. Once that genie gets out of the bottle, it is very difficult to get it back in even if you remove all of the liquidity. The thing is, the Fed hasn't removed it yet, and are just making halting steps to do it, because they are petrified of the consequences we now face.