The Economy

Yup. The economic data has been weak almost across the board for about a month and a half. It's not surprising. When borrowing costs rise, there is always a lag -- it can actually take quite a while -- before things slow as a result. The question is how slow and how much stress is it actually leading to.

The flip side is that despite what looks like the slowing you are pointing out. ... the "inflation" data is still showing. ... "inflation." PCE last week held steady.

It's not like things are completely falling apart, because they are keeping financial conditions really loose, offsetting the higher overnight rate with things like reverse repos that continue to pump money into the banking system.

But we are certainly seeing low-level stagflation. It's much preferable to play that game for them, because people who are struggling financially won't be able to put their finger on exactly what is making things so tough for them.

FWIW, the GDP numbers would have already been showing recession for the last year+ without all of the continued fiscal spending. ... they have been adding a trillion dollars of new government debt every 100 days. The actual economy (as people understand it) has gone nowhere.

 

That is Fatih Birol. Before him, the IEA mostly focused on analysis and data collection with regard to global energy.

He's an evangelist for clean energy and it clouds everything that organization does now, not just in terms of the clean energy policy initiatives he constantly pushes and advocates for, but in terms of the data collection and analysis, which used to be authoritative and now gets treated like its suspect. It's entirely him and what he has done to the organization over the last few years.

I suspect what he is predicting can't be separated from what he would like to see. There is very little right now that anyone else sees that would suggest that oil demand is permanently peaking right now. That will only possibly be the case if one of two things happens: 1) we go into a severe global depression that is long lasting, which is certainly a possibility, but he's not predicting that, or 2) Something else replaces oil for the world's growing energy needs, and nothing that actually exists is anywhere near cost competitive.

I'd take anything coming from Birol with two grains of salt. He's more evangelist for something specific than disinterested observer.

 

Dunno about Bret Stephens. But the guy he quotes in that piece, Ruchir Sharma, has a book out called "What Went Wrong with Capitalism." It details how what we have in America. .... is not capitalism. In addition to the cheap money distortions that piece writes about that have left more than half the country behind, he details how we've become a bailout nation. The idea of our government bailing out a business up until the 1980s, was heretical, but since then the bailouts have become bigger and bigger and occur at the first sign of any trouble. We privatize the gains and socialize all costs, which is not capitalism. He points out that 100 years ago, our government was 3 percent of GDP, today it is 36 percent. The results include only 30 percent of people today feeling better off than their parents were, when that was never the case in America before.

He points out that we now introduce 3,000 new government regulations a year. In the last 20 years, we have gotten rid of 20 regulations in total. It has created a corrupt system, in which big players buy legislators via lobbying to give them regulations that create barriers to entry and keep competitors out. Small businesses can't operate, as a result. It's too expensive to get going and navigate the government corruption.

It's basically a suite of out of control fiscal and monetary interference in people's economic lives, and it has screwed us up (and it's even worse in other Western countries where socialism has taken an even bigger foothold).

It comes up all the time on here, when people blame whatever they are complaining about on "capitalism," and then I am like, "We don't have capitalism. And what you are arguing for as the 'fix' is more of what caused it!" It's insane to me, and we are on a path where we are destroying ourselves. It's why I always use the "arsonist riding in on the fire truck to put out the fire" analogy.

Yet somehow "capitalism" becomes the thing that's blamed, when it's not allowing capitalism that is the actual problem. People have no understanding of what capitalism actually is, because a generation has grown up with something completely different, yet calls it capitalism. It is the reason there is so much economic discontent today, though. We have created a two-tier society with haves and have nots, and it's all the result of insane fiscal and monetary action that has taken a bigger and bigger chunk of people's economic automony.

In any case, I read Sharma's book. It's not great, and I don't entirely agree with him (won't get into it), but the basic point that we have moved away from allowing capitalism and we're paying for it, makes sense.