Stock-Market Optimism

Breathtaking news, Wall Street investors are breathless

with optimism. The world is going to hell in a breathlessly accelerated

hand-basket, but, according to Bloomberg, U.S. equities climbed to new highs

after “China said it agreed with America to roll back tariffs on each

other’s goods in phases as they work toward a trade deal.”

Rolling back, are they?

Renegotiating who gets summers with the kids, before the divorce becomes final?

And what does it mean that China agreed with America? Have they checked

Donald’s Twitter stream? And not to put to sharp a point on it, but what’s the Prez’s

batting-average on keeping agreements?

There is a saying that “a 2nd marriage is the

victory of optimism over experience.” One can make the case that current

market optimism mirrors Wall Street’s 2007 marital disaster.

Then we had home mortgage derivatives.

Now, that bubble’s burst—taking a major portion of American home ownership down

the tubes with it. The new game in town is shady business-loan derivatives and

only the names have been changed, to protect the innocent—if anyone these days

is truly innocent.

The other numbers mirroring the last time Wall Street fell

out of the marital bed are truly frightening.

Auto loans, student loans and

credit-card debt totaling multiple trillions of dollars, all poised to default.

Meanwhile, we suffer a loose cannon in the White House, playing chicken with

our largest trading partner and, at the same time, the threat of impeachment sucked

all the oxygen out of the legislative process.

Everyone is frightened—and it’s not a good time for everyone

to be frightened.

A frightened general population

does what anyone under threat does—they run for cover. They lay low, keep their

heads down, stop talking to one another and find comfort in conspiracy.

As Americans, we haven’t lost faith.

We’re up to our arm-pits in faith—faith in Elizabeth Warren on the left and

Donald Trump on the right. What we’ve lost is trust.

We don’t trust Amazon or Facebook, the schools with

our kids or the police with our safety. We’ve lost our trust in job-security at

work or fairness in government. We don’t trust our kids with the car keys and

they don’t trust us with the planet.

But the stock market is having a hell of a good time.

Wealth has reached the stage where

it doesn’t much matter what happens in the world, it just accumulates all by

itself.

Under those worldwide circumstances,

the wealthy are frantic for safe places to stash their monetary snowball so it

doesn’t melt. (spoiler alert) The United States, as fucked up as it is, has the

coldest monetary climate in the world. That means a finite stock market (there

are only so many listed stocks) is awash in money.

So the rules are out the window---companies

once valued at ten times earnings are now selling for 300 times earnings. Supply

and demand has been turned on its head. The supply of money is now nearly

endless, while the supply of places to put it is limited.

That’s how we got the WeWork

craziness. It was a solid premise—buy office space at wholesale and rent it at

retail. Complicated story, but essentially what happened is that it got so much

money thrown at it as a startup that it lost all reality  (and probably billions for its investors).

But it’s okay. No one (probably) will go to jail and

Softbank (it’s primary investor) may even be able to pull the rabbit out of the

hat and make WeWork profitable.

Those who lost billions will merely

brush themselves off, take a tax write-down (if they are so stupid to pay

taxes) and throw additional billions on the crap-table for another bet.

You and I do not know that

world. We never will. It’s probably best for our mental health and the

love of our friends that we never do.

But it’s out there. It exists. And it may re-define optimism

as utterly and completely as the Republican party has re-defined conservative.

And on a quiet night, if the

windows are open and you listen very carefully, you can hear it chewing.

It chews and chews and chews.

Every once in a while, it

swallows.