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Kurt Cobb: The financialization of the end of the world

Business

For those who are fans of cartoons from The New Yorker magazine and consistent readers of this blog, you might be able to guess my two favorite cartoons. In the first one, a man in a coat and tie stands at a podium and tells his unseen audience the following: “And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit.”

In the second, a man in a tattered suit sits cross-legged near a campfire with three children listening to him intently as he says this: “Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.”

Now, in the you-can’t-make-this-stuff-up category, financial writer Paul Farrell used the caption from the first cartoon in a 2015 piece for MarketWatch entitled: “Your No. 1 end-of-the-world investing strategy.” The subheading is: “How to pick stocks for the near term when long-term trends say collapse is near.” The subhead actually seems like it might be another caption from a New Yorker cartoon (or possibly one from The Onion). Why exactly would you invest in stocks—as opposed to seeds of food crops and sturdy garden implements—”when long-term trends say collapse is near”? But I’ll put that down to bad headline writing.

In Farrell’s defense, he frequently used his column in MarketWatch to warn his readers of the coming collapse of modern civilization if we don’t change our ways. He was obliged to give investment advice, of course, because that’s what the column was for.

Few other investment gurus are as intellectually honest as Farrell. Among prominent investment managers, only Jeremy Grantham comes close to understanding the scope of the challenges we face. Grantham wrote a piece in 2013 called “The Race of Our Lives” that outlines the myriad challenges humans face. He starts with a discussion of the fall of civilizations. (He updated his views in 2018.)

One would think that the coronavirus pandemic would allow for some sober reflection among those in the financial community as the pandemic-induced crash of the economy and the markets has called into question the stability of practically all the arrangements of modern civilization. Instead, the focus is on how stock markets could be back at or near all-times highs at the beginning of what is arguably the next Great Depression.

The New Yorker cartoons linked above appropriately characterize the madness that grips late-stage civilizations as their pillars begin to fall. Instead of attempting to adapt to new realities, every attempt is made to maintain the current fragile system. The trillions of dollars pumped into the world financial system by central banks and governments in the wake of the pandemic have done little except stoke renewed financial bubbles in practically all financial markets (and thereby bailed out the mostly wealthy owners of financial assets).

The disconnect is hard to miss. The latest reading of the U.S. Federal Reserve Bank of Atlanta’s GDPNow indicator, which is frequently updated as new data becomes available, now predicts that U.S. GDP will contract by 45.5 percent in the current quarter. (The number is annualized and seasonally adjusted.)

Even so the NASDAQ Composite Index hit a new all-time high earlier this month just three months after the recent trough reached during the crash. The S&P 500 is now very close to a new all-time high. Neither development makes sense in the middle of the worst economic downturn since the Great Depression. For comparison, it took more than two years for the NASDAQ Composite from the bottom in 2009 during the Great Financial Crisis to regain its 2007 highs. It took the S&P 500 more than four years.

Of course, the financialization of everything continues. Vaccine makers are in line for government funds. Naturally, it takes money to develop a vaccine. But drug makers aren’t in the business of keeping people healthy. They are in the business of making money. In the United States at least they are helped by the fact that they aren’t liable if their vaccine kills or injuries someone. And, executives in one money-losing pharmaceutical firm cashed in stock right after their company goosed the shares significantly higher with a very preliminary announcement about the company’s coronavirus vaccine research.

When it comes to real estate, it used to be that people bought it for income and as a store of value. Now firms buy real estate mostly with borrowed money and try to make gains mostly through property price appreciation. Often the real estate loans are packaged into securities that are sold and resold as part of the giant Wall Street and worldwide financial casino.

One of the surest signs of the financialization of everything and the growing disconnect of finance from reality is the credit default swap (CDS). The CDS is essentially insurance for loans and bonds. The buyer pays the seller a premium every month. If the instrument insured defaults, the seller provides a predetermined payment to reimburse the CDS buyer. Now here’s the weird thing: An investor doesn’t even have to own the loan or bond to insure it. It’s like me taking out an insurance policy on your home against fire when I have no ownership or interest in the home. In fact, I have every incentive to make sure your house burns down. Do you see any problem with that?

For normal insurance, the buyer must have an insurable interest. Typically, this means the buyer must actually own the thing he or she is insuring. The CDS, on the other hand, is an ideal instrument for those who want to bring on a financial end-of-the-world scenario. The buyers have every reason to want the economy to go down the drain as their payments may be 10 or even 20 times their initial investment.

Many wealthy people fear and even believe an end-of-the-world scenario is possible or probable. Some think they can hold up in luxury bunkers until the dust clears. But what if, when the dust clears, their wealth is gone and the financial world they used to inhabit has vanished.

Perhaps they will sit around campfires telling their grandchildren about the old days when finance was king and the real economy of goods and services was just a place where rubes got their daily bread—while, of course, simultaneously providing an outsized portion to the rich.

Resource Insights by Kurt Cobb



37 Comments on "Kurt Cobb: The financialization of the end of the world"

  1. The Nationalist on Sun, 21st Jun 2020 11:14 am 

    This article is truthful, the yanks could sell ice to the eskimos.

  2. zero juan on Sun, 21st Jun 2020 1:05 pm 

    “The Nationalist on Sun, 21st Jun 2020 11:14 am”

    “This article is truthful, the yanks could sell ice to the eskimos”

    JuanPee ID theft. Nationalist is from Australia and never out at this time of day. Dumbfuck juanPee does not think about this when he does ID theft.

  3. ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes on Sun, 21st Jun 2020 1:10 pm 

    Muzz who once threatened to behead a rival with “the sword of Islam” launches petition to rename city of St. Louis

    Whitey supertard president saint Louis was a crusader who loved a lot of muzzies. that’s why muzzies hate and want to rename the city to Muzztanbul or something of such

    muzzie said koran has been altered many times. therefore all muzzies are apostates and must be amputated starting with muzzie imams

  4. Davy on Sun, 21st Jun 2020 4:10 pm 

    Nationalist is from Australia and never out at this time of day.

    How do I know this?

    I monitor when everyone is asleep. I call them at home on my iphone or I sent them an email(using JuanPs name of course), and I ask them if they made a post on PO.com just now.

    If they they say, fuck-off davy or, dont call here ever again davy, or we will report you to the authorities , then I know it was juanpee and then I can hop on one of my JuanP socks and do my neutering thing. Then I declare victory.

    Just a little tip I wanted to share with you all in case you decide to become a moderator and neuter-er like I am here.

  5. Duncan Idaho on Sun, 21st Jun 2020 4:16 pm 

    A sad little weasel slinks back into his hole.

    That rally was …kinda sad for the Fat Boy

  6. Outcast_Searcher on Mon, 22nd Jun 2020 10:06 am 

    Endlessly preaching doom for at least 16 years re Kurt’s blog.

    Like in the great recession, fun for these perma-doom clowns to crow that they’re right for a while.

    As per usual, however, the accuracy of such blogs is so poor as not to be actionable, over time. Just like investment advice by self-proclaimed experts, in general.

  7. Duncan Idaho on Mon, 22nd Jun 2020 10:11 am 

    1972 — US: From the Dick & Bob Watergate Party tapes:
    Haldeman: … the great thing about it is that the whole thing is so totally fucked up so badly done that nobody believes —

    Nixon: … that we could have done it.

    Haldeman: That’s right. It’s beyond comprehension …

  8. Abraham van Helsing on Mon, 22nd Jun 2020 10:33 am 

    “Endlessly preaching doom for at least 16 years re Kurt’s blog.”

    Yeah, but this time it could be for real. And not because of “peak oil” or “climate”, but purely “social/geopolitical”.

    Think:

    – end empire
    – end dollar and collapse financial system
    – CW2/WW3

    Perhaps you better get serious about that vegetable garden, a bit of precious metals in small units and working on local connections.

  9. DT on Mon, 22nd Jun 2020 12:21 pm 

    My personality has been determined elsewhere to be linked to the lunatic Miami Beach fuck. It is disturbing this bad behavior has drifted over to the moderated side. It has also been determined I have a low IQ.

  10. FamousDrScanlon on Mon, 22nd Jun 2020 1:09 pm 

    This model forecast the US’s current unrest a decade ago. It now says ‘civil war’

    – Wed 17 Jun 2020

    “The conditions for civil violence, they say, are the worst since the 19th century — in particular the years leading up to the start of the American Civil War in 1861.

    The reason for this are trends that began in the 1980s, “with regard to inequality, selfish elites, and polarisation that have crippled the ability of the US government to mount an effective response to the pandemic disease,” they write.

    This has also “hampered our ability to deliver an inclusive economic relief policy, and exacerbated the tensions over racial injustice.”

    “Is the US headed for another civil war? In a word, yes.”

    https://www.abc.net.au/triplej/programs/hack/model-predicting-united-states-disorder-now-points-to-civil-war/12365280

    Racial injustice, although real, is mostly being used as a cover by a bunch plebs to throw a temper tantrum over decades of being fucked over by a system & the people who own & manage it, going on decades. Left, right, black, white – The 80% have been fucked & will continue to take it in the biggest & most one sided class warfare in history.

    Trump&Co & all those, ‘take the knee’ Dems don’t believe in any of that cultural war bullshit the plebs are about ready to kill & die for. They believe in power which is pragmatic & will say or do anything to protect itself & preferably grow.

    The PTB pay attention to which way the tribe & subtribe social winds blow, then co-opt it & apply their huge propaganda industrial complex resources to spin it to their advantage.

    If the right wing PTB thought they could gain advantage by promoting sucking cock as a ‘family value’ Hannity, Limbaugh, etc, would be preaching the ‘family value’ of knob gobbling the very next day.

    It’s over for the US with others to follow in their cultural specific ways.

    The iconoclasm is the exclamation mark. It’s a contemptuous act & contempt is the pinnacle of hate. Tearing down culturally symbolic statues is symbolic of wanting to tear down everything the people who they hold positive meaning for believe in. It’s not the act of reformers.

    I’m not on any sub-tribes side. I could just as easily give plenty of examples of hate attacks (ideologically motivated murders) from members of the opposing sub-tribe. I don’t see the statues of long dead white men who behaved brutally in black or white terms – it’s gray like the entire history of humans. For example, there are plenty of US Southerners who want the statues to remain that are not zealous white supremacists longing for mass expulsion of blacks, or genocide. They don’t have identical values as the people from that era, many of whom are their ancestors. These people don’t jack ratings & ad revenue, so you almost never hear from them.

    Almost all humans are ‘believers’ – can’t live without their beliefs & stories, nor can any nation survive without widely shared core beliefs & a national mythology.

    Today the statues, tomorrow each other.

  11. FamousDrScanlon on Mon, 22nd Jun 2020 1:31 pm 

    Ironically, the biggest losers will be the dwindling band of investors whose algorithms, supported by central banks, have continued to propel stock markets to new highs even as Covid-19 tears apart the fabric of the economy. In no sane world does the biggest crisis in living memory correspond to record highs in stocks. But that is exactly what has been happening while the media has been distracting you. But for the most part, those shares have no buyers other than the central banks and the computer algorithms. And so, when the time comes and the central banks can no longer print currency and the algorithms head for the exits, those stocks too will be collapsing to a level more in line with the real economy.

    https://consciousnessofsheep.co.uk/2020/06/22/a-welcome-covid-19-casualty/

  12. joe on Mon, 22nd Jun 2020 1:39 pm 

    Would breaking up the USA be such a bad thing? Blacks could set up their own state and destroy it. Whites could segregate themselves live peacefully and develop themselves socially and technologically until they decide to open up to the poorer stupider races and repeat the same tired old mistakes. Mehicans can have California. Everyone wins.

  13. joe on Mon, 22nd Jun 2020 1:45 pm 

    Having any kind of rally was a good Idea. Stupid old Duncan will never understand. The only thing worse than the media berating you is them ignoring you. Duncan thinks the media is on his side, poor Duncon Idaho. Paul Atredies pet in fiction, the media pet in life. If they really didn’t want Trump to win they would boycott him idiot..

  14. Abraham van Helsing on Mon, 22nd Jun 2020 2:10 pm 

    “Would breaking up the USA be such a bad thing? Blacks could set up their own state and destroy it. Whites could segregate themselves live peacefully and develop themselves socially and technologically until they decide to open up to the poorer stupider races and repeat the same tired old mistakes. Mehicans can have California. Everyone wins.“

    Except of course Great-Britain, that needs to invent a new Grand Strategy, now that the unoutspoken Brexit goal, namely teaming up with the US rather than the EU, lies in tatters, for lack of a US to team up with in the first place.

    Free friendly advice: accept a Norway deal and play empire lite and acquire large parts of Canada, to compensate for the loss of Scotland, Ulster and London.

  15. FamousDrScanlon on Mon, 22nd Jun 2020 3:46 pm 

    van Helsing, look at a map. What would the high energy guzzling military fuel bill look like to acquire/invade large parts of Canada?
    Moreover, how would a broke ass, has been, basket case like GB afford it? Can their central bank print fuel?

    If/when Canada is invaded they’ll come from the south. Even if the US sends their military, the fleeing climate, economic & war refugees will come from all points south. It’ll probably be similar to the so called barbarian invasions/mass migrations in the later stages of the collapsing western Roman empire.

    Terrified, impoverished, raggedy assed humans looking for new homes.

    Tens of millions of defeated & downtrodden MAGA-tards & Proud Boys expelled from their lands by the victorious Neo Commie Red Army – USA.

  16. Abraham van Helsing on Mon, 22nd Jun 2020 5:16 pm 

    First day in the Netherlands with ZERO corona deaths. No 2nd wave in sight.

    “van Helsing, look at a map.”

    You don’t understand the coming identitarian world order. There is no country in the world Canada has deeper historic relations with as with Britain. I expect most of North-America to fall apart, to balkanize. It would only be natural that Britain comes to the aid of the Anglo-Canadians.

    “Tens of millions of defeated & downtrodden MAGA-tards & Proud Boys expelled from their lands by the victorious Neo Commie Red Army – USA.”

    Why would they be defeated other than in your wet dreams? They have weapons and 640 million potential allies in continental Europe. And you seem to assume that every GI is a commie, an adventurous assumption.

  17. Abraham van Helsing on Tue, 23rd Jun 2020 3:29 am 

    Death cult Christianity in all its sordid depravity and insane guilt complex:

    https://yggdrasil.social/media/0f11e8cc9c3dc71604495dbdb61938138d9404211fdd558b7c805b0d93382488.png

    Christianity is a religion for cowards and losers.

    https://yggdrasil.social/media/7386cb8192e7263f0d3b6d0e26cb4f7cb7b7d8ebc756ddb69214236fa43dc5c2.png

    The problem is solving itself as they make themselves impossible.

  18. FamousDrScanlon on Tue, 23rd Jun 2020 10:51 am 

    Christianity and colonialism

    “Christianity and colonialism are often closely associated with each other because Catholicism and Protestantism were the state religions of the European colonial powers[1] and in many ways they acted as the “religious arms” of those powers.[2] According to Edward Andrews, Christian missionaries were initially portrayed as “visible saints, exemplars of ideal piety in a sea of persistent savagery”. However, by the time the colonial era drew to a close in the last half of the twentieth century, missionaries became viewed as “ideological shock troops for colonial invasion whose zealotry blinded them”,[3] colonialism’s “agent, scribe and moral alibi.”[4]

    In some areas, almost all of the colony’s population were removed from their traditional belief systems and were turned into the Christian faith, which the colonizers used as a reason to destroy other faiths, enslave the natives, and exploit the lands and seas.”

    https://en.wikipedia.org/wiki/Christianity_and_colonialism

    The Christian Eastern Roman Empire (Byzantine) lasted over a thousand years until a new group of zealous Abrahamic Chimps (Muslim Ottomans) took Constantinople in 1453.

    A 1000 years hmmm. I seem to recall a rabble of German malcontents had a dream of a 1000 year realm, but all they could managed was 12 years and all it cost them was everything – country in ruins along with much of Europe (not Paris), 2 million of their women raped – many impregnated, war crimes trials resulting in jail time & executions. Oh & permanent Anglo allies baby sitters/occupiers who are still there to this day – who’s your Daddy! Now the Nazi’s weren’t atheists, but they did not like or want to share power with the church. They were deists, IMO. Plenty of references by the daddy mentioning god & doing god’s work.

    Perhaps they lost because, unlike the other European empires that came before them, they lacked faith in Jesus?

    I certainly would not call those empires weak or cowardly. Fantasists who believe in an invisible sky daddy who wants them to conquer, but not weak or cowardly. It’s their widely shared belief that cements them. It don’t matter if it’s real. As long as the majority of the disciple sheep believe in it, the overlords will never lack for cannon fodder & justifications to kill & conquer.

    The Nazis, WoW, 12 whole years in power & rationing & getting their ass kicked for the last few. What’s hilarious is all the weak minded & unoriginal Caucasians who wanna be Nazis. One leader (Hitler) committed suicide & the other (Jefferson Davis) dressed up like a girl to flee his opponent. Does it get anymore weak & cowardly than that?

    Hey I know, lets build a new society and model it on history’s biggest loser. Doubly so for that America hybrid, Nazism + Southern Confederacy. Losers x 2.

    The record speaks for itself. Christianity is one of the most mature & successful fictions ever. Capitalism too, but it’s just a teenager compared to Christianity. In fact, Capitalism is looking like a drug addicted teenager about to overdose for the very last time.

  19. ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway on Tue, 23rd Jun 2020 11:38 am 

    america is #10 ranking below many countries with #1 south korea

    we have lost our competitiveness and industrial pot has a lot to do with it.

    the only metric that increased exponentially during the timeframe is muzzz love. We’re #1 in muzz love and has been for a dozen years and will be.

    that’s our state of supertards today

  20. ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway on Tue, 23rd Jun 2020 12:00 pm 

    if i have more title i would give to supertard president saint FDS

    but i don’t.

    regret to say but i have to do better at granting new title.

  21. Duncan Idaho on Tue, 23rd Jun 2020 12:07 pm 

    “Unpopular ideas can be silenced & inconvenient facts kept dark, without the need of any official ban …

    — George Orwell, Animal Farm

  22. ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway on Tue, 23rd Jun 2020 1:24 pm 

    US soldier plots “jihadi attack” on his own Army unit, gives info to al-Qaeda and Nazi group that idolizes Osama

    Most media coverage of this portrays Ethan Melzer as a neo-Nazi, and the whole thing as a neo-Nazi, white supremacist plot. Reality is more complicated, and less convenient for the media narrative.

    One important aspect of this story is that it shows yet again that the neo-Nazis do not oppose jihad, as is often claimed, but support it and want to ally with jihadis.

    nothing new here, thanks supertard big muzzie beard president saint

    muzz, lib, nazi work together

  23. Duncan Idaho on Tue, 23rd Jun 2020 1:53 pm 

    Something the Fat Boy can claim:

    “He is responsible for more American deaths than any president in history. That’s one record he can legitimately claim.”

  24. JuanP on Tue, 23rd Jun 2020 2:10 pm 

    “He is responsible for more American deaths than any president in history. That’s one record he can legitimately claim.”

    Duncan, a statement like that needs back up. Do you have a reference or just the normal of lying for impact.

  25. Abraham van Helsing on Tue, 23rd Jun 2020 2:53 pm 

    Duncan is obsessed with Trump. He hates him with passion.

  26. More from the lunatic Davy on Tue, 23rd Jun 2020 3:21 pm 

    JuanP on Tue, 23rd Jun 2020 2:10 pm

    Abraham van Helsing on Tue, 23rd Jun 2020 2:53 pm

  27. My personality has been determined elsewhere to be linked to the lunatic Miami Beach fuck. It is disturbing this bad behavior has drifted over to the moderated side. It has also been determined I have a low IQ. on Tue, 23rd Jun 2020 3:40 pm 

    ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway

  28. Duncan Idaho on Tue, 23rd Jun 2020 3:52 pm 

    Why do police show up at peaceful protests early?
    To beat the crowds.

  29. My personality has been determined elsewhere to be linked to the lunatic Ozarks hillbilly fuck. It is disturbing this bad behavior has drifted over to the moderated side. on Tue, 23rd Jun 2020 4:30 pm 

    zero juan on Sun, 21st Jun 2020 1:05 pm

  30. makati1 on Tue, 23rd Jun 2020 5:41 pm 

    Stop it Juan, nobody likes you here. Please leave you brainwashed South American!

  31. JuanP on Tue, 23rd Jun 2020 5:47 pm 

    thank God for Bill Barr!

    DOJ Releases “Totally Exculpatory” Strzok Notes To Michael Flynn’s Lawyers
    Meanwhile, the FBI tried to close the Flynn investigation on January 4, when agent Peter Strzok insisted it continue. Handwritten notes from an FBI agent tasked with investigating Flynn reveal that they were targeting Flynn in early 2017 with the intent of prosecuting him or getting him fired. One document is a Jan. 4, 2017, memo from the FBI’s Washington Field Office recommending that the counterintelligence investigation against Flynn be shut down due to a lack of evidence that he was conspiring with Russia. Strzok intervened to keep the case open, writing to others at the FBI that the “7th floor” — the FBI’s leadership — wanted to continue its investigation of Flynn. -Daily Caller “What is especially terrifying is that without the integrity of Attorney General Bill Barr and U.S. Attorney Jensen, we still would not have this clear exculpatory information as Mr. Van Grack and the prosecutors have opposed every request we have made,” said Powell. It appears, based on the notes and emails that the Department of Justice was determined at the time to prosecute Flynn, regardless of what they found, Powell said.
    https://www.zerohedge.com/political/doj-releases-totally-exculpatory-strzok-notes-michael-flynns-lawyers

  32. More from Lunatic Davy on Tue, 23rd Jun 2020 6:30 pm 

    makati1 on Tue, 23rd Jun 2020 5:41 pm

    JuanP on Tue, 23rd Jun 2020 5:47 pm

  33. ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway on Tue, 23rd Jun 2020 7:28 pm 

    there too much hate for super goat supertard missouri president saint’
    there fore i declare

    SLM

    take that

  34. REAL Green Hypocrite on Tue, 23rd Jun 2020 8:32 pm 

    Dearest Davyself:

    Why do they all hate us?

  35. Davy on Tue, 23rd Jun 2020 8:35 pm 

    Dear REAL Green Hypocriteself:

    Look within for the answer. Clue: Everything about us is fraudulent.

  36. REAL Green on Tue, 23rd Jun 2020 8:40 pm 

    So true Davyscum. So true.

  37. REAL Green on Tue, 23rd Jun 2020 9:42 pm 

    Mommy made widdle get into his pyjammies and go beddy-bies. Y’all’ll have to wait until the mornin to keep neutering and moderation his dumbass.

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