patrick.net

Has Mish drifted this way lately? I've noticed it more lately, and I've stopped paying as much attention to what he says. I think he really believes this stuff. If I were to play the devils advocate, and attribute these rants to some nefarious plot, it would be along the lines of pandering politically to get readers. If he were hoping for another crash, it would probably be because his type of site would likely get more traffic in that environment.

Mish is an extreme libertarian, not republican. All his posts come from that. I do follow him just because he gets some pretty good emails and articles. His opinions are just so far out I don't to bother to read that part.

Yep, it looks like Mish is throwing a tantrum and in need of an audience.

I need to throw a tantrum too. But I forgot how to do it online.

I read Mish articles a lot, and I don't think he is overly partisan.
He identifies as a Libertarian and In fact he is usually quite critical of Republicans.

Lately he has been slamming the Republicans for caving and waving the white flag by agreeing to so much new debt and spending that is demanded from the White house.

I don't know if you've noticed that we are currently over 16,000,000,000,000 in debt, not including the Federal Reserve debts and nobody especially the Democrats seems to have the guts to do anything about it.

At the rate we are on at the end of Obama's second term our country will conservatively be $20,000,000,000,000 in debt.

I don't see how this record gives the Democrat party the mantle of fiscal responsibility.
I also don't see how the Democrat party is going to escape the anger and blame when the debt crisis hits us.

propitup1 says

He identifies as a Libertarian and In fact he is usually quite critical of Republicans.

In the 20+ years I was a Libertarian, it was just Coincidence I nearly always voted republican. Oh yes I was VERY critical and cynical of them but it was because they were impure.

Bah. He's an angry zealot married to every opinion, little different than teabaggers or Peter Schiff. I'll give mish this, at least he isn't a pottymouth doomer nut like Karl denninger.

Tea baggers?

Oh, I see you hate them also.

Let me guess, because they're scared to death of what the coming 20 trillion dollar debt collapse is going to do to our collective futures, you think smearing the opposition as "teabaggers" is productive.

Vicente, What you're really saying is that any opposition to the liberal Democrat party needs to be crushed.

Do you really think Obama and the Democrats really have a way out of this mess?

Do you really think a national debt collapse at 200x GDP. is avoidable?

Vicente I think you need to look harder at the national crisis than to just smear the opposition of the almighty Democrat party.

I like Mish's posts, Iearn a lot from them.

I think Mish is great too!

I believe that no knowledge is useful unless it can be applied to the market.

Unless one puts his money where his mouth is, most purported "facts" are likely to be bullshit.

Respect hedge funds!

I get where you're coming from, but I've been reading Mish for a long time and I don't think you understand him.

Mish is a big advocate of fiscal sanity, but does not believe we will get it from either party (or perhaps more importantly, from the Fed). He is positioned accordingly (long on gold, etc) but that doesn't mean he prefers this route:

I actually advocate government and Fed policies that are contrary to my recommendations.

My reasons are easily explained:

- Neither the Fed nor the government gives a damn about what is fiscally prudent.
- Both the Fed and Congress are highly likely to debase currency, causing gold to rise, even if I think that is bad economic and fiscal policy, which of course I do.

http://globaleconomicanalysis.blogspot.com/2012/12/poison-pill-and-gold-debate.html

His dismissal of the fiscal cliff is not a partisan position; it's a macro call. I think you're misinterpreting his general frustration as some sort of political agenda.

I gave up reading him when he was on a continuous rant about unions, as if they were inherently evil. Wealth disparity in this country is a huge problem, unions have traditionally been an equalizer. They are far from perfect but we are on the road to a plutocracy and the weakening of unions has greased the skids as we slide in that direction

Hmm...lets see here.

The CBO is projecting $6.971T in new debt 2012-2021. That is an average of $697B per year for ten years.

Federal Debt was $15.5T at the end of 2011. Adding the $7T from 2012-2021 to that, leaves us with 22.5T in debt at the end of 2021.

For debt to remain the same at 110% of GDP, GDP would need to be 22.5/1.1 = $20.5T. Geometric growth for 9 years at 3.38% would get us from where we are ($15.2T) to where we need to be ($20.5T).

This, of course, is in nominal GDP, as the debt grows in nominal, not inflation adjusted, dollars.

GDP was 11T in 2003. That means nominal GDP has grown 3.66% per year for the previous nine years, and most would consider the economy over that timeframe to be extremely sluggish.

Nominal GDP grew 5.4% annually in the 90s.
Nominal GDP grew 7.6% annually in the 80s.
Nominal GDP grew 10.4% annually in the 70s.

Rumors of our demise due to debt/GDP are grossly overstated for political reasons.

As long as we have modest GDP growth and no deficit increases from current law (READ: unfunded wars or tax cuts), Debt to GDP ratio will fall over the next decade.

Mish has some good points, but face it: if being a serial poster boy on patrick.net is the best that a Hedge Fund Manager can do for getting attention, it looks an awful lot like the death throes of his relative importance.

JustInTime says

His dismissal of the fiscal cliff is not a partisan position; it's a macro call. I think you're misinterpreting his general frustration as some sort of political agenda.

In recent posts he predicts republicans waving the white flag on the debt ceiling.

This alone shows him to be hyper partisan and probably a watcher of Fox news.

More likely, perhaps some of his clients are this way and he wishes to assure them that he sees things through the same distorted prism.

Everyone is worried about appealing to the crazy Tea Baggers for some reason, when that is the path that only guarantees no real negotiation (just ultimatums from the lunatics).

I think it's intellectual laziness. Mish doesn't even take the time to comprehend the deal that was passed, understanding that the sequester still looms as a motivator for both sides to negotiate spending cuts in good faith.

(instead he laments that there won't be any tea bagger tantrums destroying the chance for such negotiations and leading to market chaos, further credit downgrades and so on...)

And, keep in mind that Obama has specifically and clearly said that he won't play that game.

(no - he wasn't saying he won't negotiate spending cuts - he was saying that not raising the debt ceiling can not be part of any negotiation that he will be a party to)

So what does it say when Mish implies that he wishes they would use it - or that not using it is surrendering,...waving a white flag ?

Maybe surrendering is when you have to make some cuts in military defense ?

Maybe surrendering is when you have to actually have big political discussions about "entitlements" rather than just jam an age increase for social security though, based on a threat that we default on our debt ?

marcus says

surrendering is when you have to make some cuts in military defense

like surrendering to sanity?

With enough nuclear weapons to wipe out the planet, do we really need to spend more than the combined next 17 largest defense spenders? (And don't forget, some of those next 17 are to defend their regimes against their own people).

bob2356 says

57 trillion which is over 3x gdp

I can almost guarentee this is not true, unless you are using some funny calculation for "unfunded" liabilities. State Debt is about 4 Trillion. Local debt is less than 1 Trillion and nearly all of those two are backed by assets like land, buildings, and equipment. On municipal bankruptcy these things can be liquidated to pay the bond holder.

marcus says

In recent posts he predicts republicans waving the white flag on the debt ceiling.

This alone shows him to be hyper partisan and probably a watcher of Fox news.

Again, I can see how you might get that impression based on only his recent posts. I can only offer my interpretation as a long-time reader. I see the "white flag" stuff as mostly rhetoric expressing his disapproval.

He is dismissive of the fiscal cliff because he sees it as a meaningless charade compared to larger macro trends; you think it may be effectual. OK. The partisan angle just confuses the issue, if you ask me.

bob2356 says

The national debt which is federal, state, and local combined is at 57 trillion which is over 3x gdp or about $185,000 per citizen. Name any country in history that has paid down that level of debt instead of debasing or defaulting.

An interesting angle, lumping in state and local debts. Convince us that's valid, as that seems a local decision and problem.

We also have credit derivatives floating around uncounted because they live in the dark, but estimated to be a bit shy of 300 trillion. Why isn't THAT the nuclear device ready to kill us all?

Relevant chart of deficit vs unemployment:

From here:

http://www.huffingtonpost.com/2013/01/04/washington-deficit-obsession_n_2409978.html

sigh

Peter P says

I think Mish is great too!

I believe that no knowledge is useful unless it can be applied to the market.

Unless one puts his money where his mouth is, most purported "facts" are likely to be bullshit.

Respect hedge funds!

As for me ,I refuse to let facts get in the way of my bullshit.

So has anyone ever seen Mish admit "I'm wrong"? On anything that mattered? Ever seen him backtrack and explain why his past predictions don't pan out?

When I pointed out key FACTUAL errors in one of his articles, he didn't revise his article to reflect his mistake, instead he attacked me personally. At the time I was a regular reader and Believer in his deflationist cult, big turning point in my opinion of him.

He sometimes hauls out boogeyman of "bond vigilantes" evoked also by cranks like Denninger.

I used to like Mish, but the more time passes, the more he reminds me of Peter Schiff. Both just get crankier and whackier the longer their "Doomer" schtick goes on. Has Peter ever eaten crow on that decoupling hypothesis?

Vicente says

So has anyone ever seen Mish admit "I'm wrong"? On anything that mattered? Ever seen him backtrack and explain why his past predictions don't pan out?

Never happened. Many people have pointed out serious factual errors, no response or correction ever. I like the parts where he rants and raves about Social Security and the debt/deficit. Hello, look at the federal budget much? Mish is worth an occasional skim but certainly not worth taking seriously.

Does Mish come on after Blue Bloods?

Mish is alright. He does present some interesting viewpoints. You don't have to believe them.

And SS is self-funding. In times of cash flow negativity, it can cash in the special Treasuries in its account. That does cause the USG to borrow the incremental money to pay. It has a $2.7 trillion surplus. But even with the recent payroll tax cut, it was very mildly cash flow negative.

Vicente says

We also have credit derivatives floating around uncounted because they live in the dark, but estimated to be a bit shy of 300 trillion. Why isn't THAT the nuclear device ready to kill us all?

or why isn't the derivatives market taxed?

I stopped reading Mish long time ago. Here is my diagnosis of Mish.

GOOD:

1. He is good at calling out both private and public unions
2. He is honest about the nature of all politicians.
3. He, unlike many financial bloggers, knows the distinction between capital requirements and reserve requirements.
4. He subscribes to some diluted version of endogenous money. That's where he quotes Steve Keen.
5. His policy of zero business taxes is good as long as private citizens don't move their private income to business income.
6. His disdain for housing markets
7. He favors automation, robots.

BAD:

1. He does not really understand the nature of fiat monetary regimes. Here, he sells Austrian nonsense. His views are all how the financial world should be. He shows ignorance of how the world is.

2. His understanding of macro economics is heavily Austrian.

3. He does not understand the impact of QE version n. All QE does is swapping one kind of assets with another kind of assets.

4. His Austrian understanding prevents him understanding from key issues like aggregate (effective) demand, unemployment, etc. Here unions help generate aggregate demand to some extent.

5. He believes that taxes finance spending. So, he does not understand fiat monetary regimes. And he does NOT want to understand either.

6. He thinks 'free' markets are solutions for everything. Again, it is his fantasy. Unless he becomes a dictator of the states, his calls don't make any policy sense, as no one gonna implement the vision.

The financial world is a good approximation of the real world.

Life is quite like speculation.

Peter P says

The financial world is a good approximation of the real world.

Life is quite like speculation.

Well, the world of 1% is not a good approximation of the world of 99 percent:)

It should.

Anyone can be in that 1%. Just not everyone all the time.