The Economy

A SPAC is what it sounds like when you hear "blank check company." You are investing in a company that literally has nothing -- no commercial operations, no business, nothing. The whole purpose of the SPAC is to raise money and go out and acquire or merge with an existing business.

SPACS have existed for decades, but the popularity really took off about 4, 5 years ago when the Fed expanded its balance sheet by several trillion dollars in the early days of the pandemic. The central bank was out there buying debt securities with money they create out of thin air in the name of "stimulating" the economy, but the real effect it had was to pump a corresponding amount of liquidity into equity markets, which were already behaving like casinos. It was that much more money looking for things to gamble on. SPACs became an outlet for it, and people were speculating on these blank check companies at insane valuations based on nonsense, the name of the person behind it, hype about the companies they were going to buy or merge with (most of which were drowning in debt and didn't have real businesses).

You had venture capitalists like Chamath Palihapitiya basically starting SPAC after SPAC with this pitch to investors: "Give me your money and I'll find something that is going to make you rich. I can't tell you anything more. I don't have the business yet. But just trust me." And the money flowed into those blank check companies via IPOs to the tune of hundreds of billions of dollars in 2020, 2021, 2022.

Most of that money has been pissed away already.

Digital World Acquisition Corp., the SPAC you're talking about, was a scheme to capitalize on what was happening, except unlike some SPACs where investors literally were just trusting that someone behind it was super smart and would comb the world for the best merger or buyout opportunities available, DWAC never made any secret of the fact that the company was being formed in order to merge with Truth Social Media, and it was doing it this way to take Truth Social Media public in a way that would circumvent some of the IPO filing disclosures (although they haven't been able to hide the fact that Truth Social Media has virtually no revenue, and loses money). There is evidence that Trump and the guy behind DWAC, a guy named Patrick Orlando, talked about a SPAC and an IPO well before DWAC listed, which would technically be a violation of securities law if someone could prove it, and they would have liked to have gone public 2 years ago, to be honest, but the SEC held them up -- DWAC was charged with making material misrepresentations in filings, at one point.

The timing, as it turns out, is perfect, because financial conditions have loosened dramatically over the last 6 months as the Fed started to back off its inflation-fighting bullshit. Markets are awash with liquidity, as a result, and the casino is roaring again -- it's why you see the stock market, bitcoin, speculative nonsense running up in price again. That has included the insane trading in DWAC stock -- the company is merging with Truth Social Media, which has maybe $3 million in revenue and loses money. ... and will have something like a $5 billion valuation on it due to the speculative mania. It's pretty much a variation of what was happening with Game Stop and AMC stock a few years ago.

 

Monthly Nonfarm payrolls dropped a half hour ago. ... it beat expectations by a lot, unemployment rate dropped to 3.8 percent after the bump up last month.

I sit here watching markets digesting it and trying to figure out what it means for the Fed, which is absurdity at its worst, but just reality.

I'm also waiting for the "bad news for Biden" simp post on here.

Diving into the actual report (which nobody reads, they just read the headline numbers from Janet Yellen): The number of part-time jobs (being counted as jobs) is still exploding. This month, we actually lost 6,000 full-time jobs, gained 601K part-time jobs and the number of people who have multiple jobs increased by 217K. Does that really sound like prosperity to you?

When you read the headlines and then read pundits scratching their heads about why Biden's approval ratings and poll numbers are so poor, understand that. It's a good economy for a politician pointing at "the numbers," not for people on the lower end of the economic spectrum who are living in it, as their costs have skyrocketed and they find themselves working multiple McJobs to try to get by.

Full-time employment is lower today than it was 15 months ago. So when you hear some politician telling you about all of the jobs THEY have created (like they do anything productive that creates anything, or they run a factory or a store or something). ... understand that all of the jobs they are talking about over the last 15 months have been part-time jobs.

 

One other nugget (I posted something similar last month). If you're thinking about doing your "bad news for Biden" post. ... underlying those numbers (the low-wage, PT jobs that = our economy) is that over the last year, 651K native-born Americans have lost jobs, while 1.3 million foreign-born workers have gained jobs. It's precisely why we have attracted so many migrants. Those shitty jobs are opportunity for them compared to where they came from.

They actually are benefiting the country, even though so many people are too ignorant to realize it. The same people who harbor resentment about those foreign-born workers. ... hold up their noses at those kinds of jobs and will take a government handout before they will work for the wages those jobs pay.

But economically so many peoples' lives suck right now, and those foreign-born workers make a great scapegoat for everything and anything.

If you are thinking "bad news for Biden," maybe also think about his opponent who capitalizes on their resentment by pinning all of the world's woes on migrants, and consider which candidate's angry, hateful rhetoric those millions of people are buying into.