Friday, April 16, 2021

Review of Ault Global's 2021 Investor Call

If I didn't know any better, I'd guess Ault Global Holdings (DPW) was a money laundering operation hiding in plain sight. With a portfolio of businesses tied partly to Bitcoin mining; the military industrial complex; and assets in the United Kingdom, USA, and Israel, the set-up appears ripe for accounting shenanigans. 

On an April 15, 2021 investor call, executives sounded upbeat and aboveboard, focusing on the company's strong balance sheet and Bitcoin mining operations. At one point, a speaker compared Ault Global to Riot Blockchain (RIOT), indicating Ault's aspirations. Though Ault had issues when it first began mining Bitcoin, it has since bought a datacenter space where it owns a 17,000 square foot facility on 34.5 acres. Ault is not selling Bitcoin mined in Michigan, a different strategy than its Indiana operations. (No explanation was given for the different approaches.) In addition to the businesses already mentioned, Ault is also involved in electric vehicle chargers and New Zealand's Naked Brands Group Ltd.  (Interestingly, NAKD also touts its financial strength: "Naked currently is in a very strong financial position due to capital raised from shareholders in readiness to deploy its new strategy of developing a world class e-commerce lingerie and intimates retail platform.") 

During the Q&A session, the company provided mostly generalities. For example, it would not comment on EV charger sales or its pipeline. It did not answer a question regarding how its EV chargers differed from competitors. It had no comment on questions relating to its NAKD investment, saying it was a "passive investor." 

As a value investor, I know Amazon and Bezos changed everything by showing profits matter less than attaining a dominant technological standard. It appears the Bitcoin, Coinbase (COIN), and blockchain aficionados believe they are on the verge of attaining a new dominant technological standard. I have my doubts. Then again, as a value investor, I have been on the outside looking in for at least a decade. 

© Matthew Rafat (April 2021) 

Disclosure: I own insignificant amounts of DPW and NAKD but my positions may change at any time. 

Update, June 2021: from Ault's "definitive proxy statement," page 8: 

"Coolisys' innovative charging solution can produce a full charge for an EV with a 150-mile range battery in just 30 minutes... Coolisys EVSE series can charge virtually any type of electrical vehicles..." 

From page 63: "On December 31, 2020, we had cash and cash equivalents of $18,679,848." 

Sunday, March 14, 2021

Sweden Sverige: World's Biggest Snow Job?

In terms of audacity, Sweden is the world's greatest propaganda artist. News organizations praised the country last year because it avoided full lockdown in response to coronavirus. Prior to these laudatory stories, readers were treated to loads of pro-female, pro-equality Scandinavian slop, including ones where Sweden's foreign minister pledged to put feminism at the heart of its foreign affairs. (Maybe focusing on human rights issues would interfere with its arms exports?) Leading the transformation from "Old Milwaukee" beer's Swedish Bikini Team to the New Enlightenment is teenager Greta Thunburg, whose strategy against climate change appears to involve speaking sternly to adults in a voice so annoying, the non-deaf will be forced to agree to her demands, including, if necessary, hostages. (Whether her existence is an updated form of Stockholm Syndrome, now available as counter-strike, I do not know.) 

If there is one country in the world that ought to be more careful, it is Sweden. Home to people who look suspiciously German, with a language openly borrowing from Germany, the Swedish media machine has somehow managed to erase its WWII ties to Nazi Germany.  
Does that say Valkommen or Willkommen?
As Espen Eidum's Blodsporet (aka The Blood Track) explains, Sweden's so-called "neutrality" during WWII meant it facilitated everyone's wartime efforts, including Nazi Germany's, profiting from both sides. As such, like "neutrality," the seemingly innocuous term "Scandinavian" improperly places Norway's attempted resistance, especially at the Battle of Narvik, on par with Finland's support of Nazi Germany and Sweden's lack of ethics. (Tellingly, Sweden was never directly attacked in WWII.)

Unfortunately, Sweden's moral compass continues to waver as we march into 2021, in no small part because of economic links with its former WWII "expertise." We mentioned Sweden's arms exports, but its private security businesses are no less accomplished. Securitas AB, one of the world's largest employers, is based in Stockholm. Securitas owns Protectas AG in Switzerland, another country claiming neutrality in WWII. (Protecting Nazi loot is big business, apparently.) When you combine weapons manufacturing and global private security, you start to realize if the dystopia featured in Logan (2017) ever approaches reality, all the non-X-Men characters will speak Swedish. 

Think I'm exaggerating? The founder of Ikea, Ingvar Kamprad, once belonged to the Nazi movement. Even considering the strong possibility Kamprad was an infiltrator, the fact that Germany's Nazi movement seeped into 1943's rural Sweden speaks to the Swedes' feeble resistance. Infiltration, of course, works both ways, and Nazis and white supremacists sometimes hide out in police departments, military barracks, and intelligence agencies. In 1986, anti-war Prime Minister 
Olof Palme was assassinated, and his case has never been solved. Palme had once protested the Vietnam War (aka the American War of Aggression), and one gets the sense if the military-industrial complex could be personified, that person is sitting comfortably in a plush leather chair smoking an expensive cigar somewhere neutral. 

To its credit, Sweden knows it has problems. Stieg Larsson's The Man Who Played wiith Fire (2019) warned us of Sweden's neo-Nazi movements and intimidation against journalists. Subjected to the weight of history, both past and present, is it any wonder Sweden is desperate to make a teenager the face of its country?

In any case, Sweden's propaganda didn't fool Dr. Alfred Nobel, perhaps its most distinguished citizen. Stockholm may host a Nobel Prize Museum, but the museum's eponym intentionally designated Norway to administer the Nobel Peace Prize. I suppose in the end, there's a limit to how much sh*t a Swedish male will eat

© Matthew Rafat (March 2021) 

Bonus: confidential email from January 11, 2008. 

Tuesday, March 2, 2021

Hiking into the Wilderness

Recently, I hiked with a friend. After losing over 100 pounds, she enjoys walking an hour a day and can get along with anyone, which explains her willingness to spend time with me. I'd call her a "Southern belle," except she's Midwestern and from Minnesota. 

Speaking to any native-born American in 2021 involves some degree of post-traumatic political disorder. They are beginning to realize the same tools that elevate deserving and undeserving elites also shield just about anyone capable of generating marketing dollars. Consequently, once multi-million dollar advertising campaigns are bought, a domestic violence incident becomes insignificant to local police departments as well as private security and PR firms receiving assignments from those same marketing firms. Though a symbiotic relationship between the entertainment industry and government--which issues permits and provides consultants--encourages positive portrayals of government employees, once upon a time, Americans recognized the difference between protecting talent to promote leadership versus advancing people to mislead the public. (Neither General Eisenhower nor General Marshall saw combat but were justifiably recognized as military experts, and their values shaped the entire world after WWII.) 

Obviously, government's corruptibility when receiving non-transparent, private funds is nonnovel. Mobster Al Capone wasn't convicted of federal tax evasion rather than murder because local governments were more honest in the 1930s. Moreover, even if local governments manage honesty, they are often outgunned technologically. (Someday, Americans will realize expertise allowing an intelligence agency to "spoof" surveillance video of a competing country's nuclear reactor may also be used to replace domestic surveillance footage, complicating police work.) Though marketing departments have never been bastions of integrity, a sharp eye isn't required to see USA's content machine degrading as it produces flimsier copies of the same celebrities, with Kanye West replacing Puff Daddy, Kim Kardashian replacing Dolly Parton, and several more attempted clones I'm glad not to know. (We don't immediately recognize clones because their color or ethnicity has changed, diversity used to sweeten superficiality.) Meanwhile, as America's upper echelons also enable the trend of marketing dollars overwhelming substance, politics has mutated into a jobs program for content curators and other persons intent on occupying space otherwise open to competitors hostile to the status quo. 

Against this backdrop, my friend and I walked and talked for two hours at a local park, having enough of a pleasant time to schedule another hike in two days. On the day of the hike, however, my friend texted me, saying she needed to change plans. She was going to the beach by herself to "listen to some music and not talk about governments or politicians or politics." "I need to recenter my vibe," she said, and in that moment I fully realized the precariousness of the American experiment. That my friend and I were able to converse at all was a small miracle. Our time occurred only because the American marketing machine convinced my father and mother, whose second language was English, to leave Scotland for Texas. From these two ESL learners came a son who earned an English degree and whose linguistic ability you are now seeing because of the risks they took. Had my parents been inundated with media reports of school shootings, police brutality, and other American events, it is possible they would not have taken the transatlantic journey. Risk-reward ratio is a concept everyone understands, regardless of mother tongue. The marketer's or propagandist's job is to render the equation in their client's favor and leave the rest to fate.

Such a paradigm might not be inherently immoral, except fate isn't the correct term. What we deem fate--including an empire's decline--is the direct result of whether institutions uphold their principles in ways balancing the status quo with changing demographics. If native-born citizens (aka the majority) no longer have the patience or willingness to adjust their institutions as circumstances change, the result is failure fated by reason of indifference

Can one possibly view indifference as a virtue? Is it necessary at times to practice it simply to keep one's sanity, live normally, enjoy a fine meal and a glass of wine, as the world around us experiences harrowing upheavals? -- Elie Weisel (1999)  

Thus far, I have approached the situation from the perspective of a political minority, but indifference is contagious and does not spare the majority. It is only that the majority takes notice of failing institutions much later than the minority unable to use government connections or political savvy. For example, last week, I needed a response from the county to complete some work. An automated reply indicated a three-week wait, an unacceptably long time for a process requiring 10 minutes per individual application. No database exists showing the number of outstanding applications--they are handled as soon they reach the appropriate department--and the public has no choice but to trust government workers are not dallying. 

In a one-party state like California, my immediate reaction was to assume a lack of accountability based on non-transparency, but I realized a more connected, more trusting, more faithful person might take a different approach. He might, while accessing the application, notice translations incorporating our city's sizable Vietnamese and Spanish speaking population and conclude resources were being diverted that would otherwise accelerate the process. A tale of two cities emerges: whereas I blame the majority for using government to boost their influence under unaccountable terms, the majority can counter by blaming the costs of greater inclusivity. Just like that, two residents reach vastly different yet reasonable conclusions using the same data, but with one distinction: as a political minority disdaining the state's political Establishment, I cannot vote in ways that impose my interpretation on the majority, and without millions of dollars allowing me to advertise my opinion, I cannot convince dispersed voters to change their minds, nor can I nudge government lawyers to investigate themselves. In contrast, my fellow resident can more easily access established channels of communication used by the majority to carry out his proposed solution(s). Put simply, he is not bound by the weight of historical vested interests and their present-day progeny. 

Of course I do not mean to suggest a native-born American can flip a switch and inspire a mob. The journey from an open society to isolationism, from curiosity to scapegoat, requires sustained effort from government and the private sector, particularly when eluding self-blame. Somehow, whatever the time period, as services degrade, a minority is always there to deflect attention from 
the majority's own mismanagement or to assist powerful interests eager to associate with a vulnerable group. Given humanity's wont to project faults onto dissimilar groups or to create institutions whitewashing weaknesses (e.g., regularly including bars and pubs in Christian media makes alcoholism more acceptable), true diversity always denotes cultural powderkegs.

A small part of an aisle selling alcohol in an American grocery store

What happens to a dream deferred? ... Maybe it just sags like a heavy load. Or does it explode? -- Langston Hughes, "Harlem" 

Another example: to some native-born citizens, a police officer is helpful and to be trusted, but to many others, the same person represents danger. Yet, neither the minority nor the majority know which uniformed officer will come calling when needed, and since many honest officers exist, any gap in perception results from one side having faith in their institutions' willingness to impose accountability while the other is skeptical of equal treatment. 

From where does the majority's faith arise? Is it segregation, a feature of post-WWII planning that divided groups by religion and race in order to better manage them through targeted investments and tax spending? (Not all international law experts realize segregation and partition, often with United Nations support, go hand-in-hand: Israel was partitioned into three states based on religion: West Bank (Christian), Gaza Strip (Muslim), Israel (Jewish); Czechoslovakia became Czechia (non-Catholic) and Slovakia (Catholic); Pakistan (Muslim) split from India (Hindu); South Sudan (Catholic) seceded from Sudan (Muslim); etc.) If Western city planning includes segregation, which may have resulted from Western dependence on slave labor and an unwillingness to see black/Negro slaves as fully human, then gerrymandering and other legal maneuvers ("separate but equal") are features, not bugs, of American culture. As such, while American progressives are taught their country is continually striving for "a more perfect union," in reality, perfect divisions have succeeded. Yet, so long as any group is skeptical of equal government treatment, even well-meaning government employees become viewed as non-individuals--a matter not helped by government unions--which in turn leads to contempt of public institutions by violating the principle of the sanctity of the individual.

"My mom and dad may have been segregationists, but we were taught fairness and decency, and what we were seeing [in the South with Bull Connor and KKK bombings] was not fair and not decent... It was a turning point [in our critical consciousness]." -- progressive Judge William Alsup, who grew up in Mississippi and attended MS State in the 1960s (February 25, 2021)

If a diverse society requires effective checks and balances to maintain trust between residents and government, can a segregated society function without legal safeguards by using tribal affinity as a cost-effective replacement? Our political betters certainly seemed to think so. 

Where does this leave my kindhearted friend and I, her cynical compatriot? Nowhere new. Conflict portends opportunity, giving citizens, politicians, and business leaders a chance to mediate, gather information, and achieve a balance between vested and new interests. Absent open conflict, information gathering requires cloak-and-dagger operations ill-suited for local governments. Conflict, however, is a two-edged sword: at the same time it improves the signal (and hopefully the fidelity) of noise, it stress-tests political structures, often finding them wanting, especially as voter-targeting technology encourages soft deceit. (I've seen photos of my Catholic-educated mayor kneeling in support of the Black Lives Matter movement and also standing next to a Catholic-educated police chief encouraging cooperation with federal deportation authorities. To see the hypocrisy, watch Immigration Nation (2020).) 

Sadly, it has never been easier for public leaders to dissemble and in doing so, bamboozle their communities. When confronted with conflict, some attempt solutions, and some get better at public relations. The United States, like my friend, probably prefers a bit of both, but also finds it easier to avoid the matter altogether. Unfortunately, avoidance or better PR masks indifference while allowing authorities to temporarily solve issues using unoriginal ideas like debt and deportation. Somewhere along that path, diversity's long-term benefits are put in danger of being subsumed by short-term negatives, with the mob always waiting for its cue.     

I wish my friend would reflect on the following: "Why do we not remember most native-born Germans fondly from 1932-1938, if at all? And why, given Germany's past and present ethnic and religious diversity, do we not lionize anyone but anti-Germans from that time?" One clue involves German emigration; after all, if Germany's Albert Einstein left in 1932, other talented individuals must have also departed, shifting attention away from monolingual Germans. Be that as it may, given Germany's economic success after 1936, which includes movie-making, why are we, the recipient of so many German immigrants, mostly indifferent to Germany's individuals based on the accident of time? Though Americans may be in denial, we know the answer: indifference spreads quickly and spares no one in its wake. In murdering millions of minorities, Germany obliterated its citizens' place in humanity's remembrance, even though most Germans were not directly culpable. A people indifferent to brewing conflict or skilled at avoiding genuine inclusion tend to be as forgotten as the minorities they neglect or deport, whether knowingly or unknowingly.

A leading voice in the chorus of social transition belongs to the white liberal... Over the last few years many Negroes have felt that their most troublesome adversary was not the obvious bigot of the Ku Klux Klan or the John Birch Society, but the white liberal who is more devoted to “order” than to justice, who prefers tranquility to equality... The White liberal must see that the Negro needs not only love, but justice. It is not enough to say, “We love Negroes, we have many Negro friends.” They must demand justice for Negroes. Love that does not satisfy justice is no love at all. It is merely a sentimental affection, little more than what one would love for a pet. -- Martin Luther King, Jr., from Where Do We Go from Here: Chaos or Community? (1967) 

I forgot to mention my friend enjoys trance music, a form of electronica. There's a metaphor in there somewhere, but I won't belabor it. It's too easy. Almost as easy as going to the beach.   

© Matthew Rafat (March 2021)

Bonus I: My friend and I discussed cruise ship workers, who are often non-citizens because of low wages. Cruise ships are not subject to labor laws because their operations mostly take place in non-territorial or extrajudicial waters. I said 
given currency arbitrage, the hourly wage was not as important as working conditions and the likelihood of citizenship. Additionally, an empire's ability to underpay, in relative terms, foreign workers improves its willingness to accept immigrants. My proposed solution? Mandate one-year contracts with quitting for good cause or early termination immediately vesting all contractually unpaid wages; and require companies to put foreign workers on a path to citizenship after two years' tenure. Of course, companies may "game" such rules by terminating employees after two years, even good ones, and aggressively litigating the meaning of "good cause," but the law was never meant to replace integrity, and at some point, journalism must play a role in modifying unfair corporate behavior. (Note: upon hiring, one years' worth of wages could be put into an escrow account handled by an independent entity.)

Bonus II: Some people may see a conflict between my appreciation of Jehovah's Witnesses, Mennonites, and Amish and the ideas herein. There is no conflict. The aforementioned groups are apolitical as a matter of morality, not apathy, and have ample evidence supporting their intent. 

Friday, February 26, 2021

Most Political Debates, Summarized in Two Conversations

The majority of America's political debates can be summarized in just two short conversations:


A: "Look at this wide-ranging, comprehensive legislation that will change everything." 

B: "Have you actually read it? This legislation spans several volumes, much of it indecipherable. If it really replaces the existing paradigm, then you're seeing a bonanza for politically-connected players as they swoop in to provide what this legislation requires." 

A: "Under existing legislation, your side benefited because you passed it and your friends and lobbyists doled out contracts based on your understanding of the legislation. Why it is a problem if we do the same thing?"

B: "Well, if it works, we're going to catch hell because it'll look like we didn't know what we were doing before, so I'm going to try to stop it. Then we'll copy the parts we think we can incorporate into our existing framework, take the credit, and let the judges resolve any poorly-worded sections." 

A: "Sounds like you've got a lot of faith in lawyers and litigation, but go ahead and try to stop us. We'll blame you for harming the poor, handicapped, [insert vulnerable group], and the country by not passing this." 

B: "How are you going to fund the legislation? More taxes? Good luck with that." 

A: "We will do exactly what you do--borrow money. We're the federal government. We can borrow as much as we want." 

B: "What's next? Are you going to promise voters a unicorn in every backyard?"

A: "If it wins us the election, why not?" 


A: "We've been getting complaints about [INSERT GOVERNMENT AGENCY]. They are too slow." 

B: "We can centralize the work, but eventually we'll become a sprawling, intractable 
bureaucracy and lose all efficiency we gained pre-consolidation." 

A: "But right now, by spreading the work across different local and state agencies, we're creating unnecessary complexity." 

B: "Sure, but we're also reducing opportunities for centralized corruption and giving residents an easier time contacting local officials, who are more closely situated to the issues." 

A: "That may be true, but decentralization also potentially creates entrenched political fiefdoms because multiple agencies can slow down the work deliberately or claim they are not getting enough credit or recognition. Can't one entrenched city council hold up the entire process if it rejects accountability or if it tacks on additional requirements purely to justify its existence or expansion?" 

B: "Sort of. The more decentralized a government process, the more lawyers are required to navigate the system. In other words, more government complexity reduces personal agency, but also potentially improves the system as it adapts over time while keeping lawyers, judges, and legal associations in the loop." 

A: "So decentralization oftentimes means more lawyers, which either improves efficiency or reduces it based on finding the right lawyer; on the other hand, centralization might makes everything easier by creating a 'one-stop shop' but in doing so, eventually increases the risk of corruption." 

B: "In theory, the smaller the country and the smaller the population, the better centralization works, whereas the larger the country and the more diverse the population, the better decentralization works. This, however, is only a theory. Many other factors are in play, such as inflation, social cohesion, etc." 


© Matthew Mehdi Rafat (February 2021)

Bonus: In the spirit of political cartoonist Tom Toles, I'll add the following sidebar to the first scene: "It's almost as if an independent third party could somehow help." 

Saturday, February 13, 2021

Jocko Willink and the Fog of War

I've copied a Twitter thread below. With so many technological standards, a simple copy-and-paste across different platforms is no longer possible, but I've done my best to clean up the content. 

Original interview is here: 


One day, when Americans are paying war crime reparations to Iraq, I want you to remember this 2018 @tferriss interview with John Gretton Willink aka @jockowillink, former @USNavy officer. 

[The photo below appears to be from Iraq and USA's 173rd Airborne Brigade, NOT #JockoWillink.]
ImageThe issue of mentioning prisons in the interview will soon become obvious... ImageWillink continues defending the military industrial complex. Does he realize General Eisenhower popularized the term as a warning? ImageYou don't have true freedom if your country and its citizens require debt to survive. From @nntaleb: "To the ancients, someone in debt was not free, he was in bondage." ImageAlso, re: freedom in USA, "As of July 2019, the United States had the highest number of incarcerated individuals worldwide, with about 2.12 million people in prison." ImageWars are often fought not only to capture another country's resources or to prevent a rival's territorial conquests, but to place the defeated country in debt. The debt is usually demarcated in the victor's own currency, thus strengthening liquidity of victor's currency and victor's ability to impose economic as well as legal terms. Image"What difference does it make to the dead, the orphans and the homeless, whether the mad destruction is wrought under the name of totalitarianism or in the holy name of liberty or democracy?" -- Mahatma Gandhi ImageCal Fussman: "I turned to the editorial page of a British newspaper. A cartoon depicted a giant Statue of Liberty wearing sunglasses & clutching a bayoneted machine gun towering over tiny Iraqis, who were throwing back stones. There were a lot of ways to feel about that cartoon." Harold Pinter: "The crimes of USA have been systematic, constant, vicious, remorseless, but very few people have actually talked about them. You have to hand it to America. It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good." Almost forgot about Afghanistan: There was "'a reasonable basis to believe' that members of the Afghan National Security Forces, the US armed forces and the CIA had committed 'war crimes,' including torture and rape." I’ll end with a cautionary quote from Vietnam War veteran Paul Coates: “When you’re in the military, the only thing coming at you is military information. It’s just like being in America: You are totally brainwashed. Everything around me supported the war in Vietnam, so I bought into it.” And so it goes.

Wednesday, February 10, 2021

The Democratic National Convention Was a Farce -- and so is the Impeachment

Hunter S. Thompson once said Democrats don't learn. Today, Congress apparently finished Day 2 of an impeachment trial against a president no longer in office. I say "apparently," because no one sane is voluntarily watching the trial, nor does anyone believe enough votes exist to convict. Democrats seem unable to comprehend Republicans voting for a trial did so the same way an apiarist pretends to befriend bees in order to take their honey. (The analogy isn't perfect, because unlike the Democratic Party, professional apiarists understand danger and wear protection before walking into a hive.) In any case, the Democrats, having won Congress by less than a 1% margin and the presidency only because too many people voted for the Libertarian Party, are approaching a second impeachment as if Donald Trump is Richard Nixon reincarnated. An American history lesson is warranted, and we'll start from last year.

Not until after the 2020 Democratic Convention did I realize uninvited Representative Tulsi Gabbard was, like VP pick Kamala Harris, a mixed Desi. The popular media had hit us so many times with stories of Harris's ethnic background--visions of Obama and sugar plums dancing in their heads--they ignored the fact that the Democrats' messages of unity and diversity were contradicted by a single absent person. 

As an immigrant with an American passport--I no longer call myself American, preferring a more distended designation--everything indicates I stand to reach the upper echelons of political power only if I conform and agree with one of two sides. In elevating a mismatched duo of prosecutor and public defender to the top of the Democratic Party while literally shutting out anti-war dissenters, the only difference between the Democrats and the Republicans is now on the issue of abortion. Decades of unchecked military spending since Archbishop Ngô Đình Thục and Catholic Joseph McCarthy dragged Americans into Vietnam have given the military-industrial complex a holy victory: total control of America's political structure with an obedient Catholic leading the way. 

Conventions were not always this way in America, that alleged land of the free. At the 1968 Democratic Convention, reporter Dan Rather was attacked by security personnel as he attempted to question a delegate being removed, and Senator Andrew Ribicoff dared go off-script, criticizing Mayor Daley's Gestapo-like tactics. (Catholic Richard Daley responded by insulting Ribicoff's Jewish background.)

Each generation doubtless feels called upon to reform the world. Mine knows that it will not reform it, but its task is perhaps even greater. It consists in preventing the world from destroying itself. Heir to a corrupt history, in which are mingled fallen revolutions, technology gone mad, dead gods, and worn-out ideologies, where mediocre powers can destroy all yet no longer know how to convince, where intelligence has debased itself to become the servant of hatred and oppression, this generation starting from its own negations has had to re-establish, both within and without, a little of that which constitutes the dignity of life and death. -- Albert Camus (1957)

The conflict's genesis? The Vietnam War aka the American War of Aggression. One faction of the Democratic Party, led by George McGovern and Eugene McCarthy (not to be confused with pro-war Joseph McCarthy), was anti-war, and another, led by Hubert Humphrey, favored continued military action with the objective of forcing a negotiated settlement. The unpopularity--and infeasibility--of the war was underscored by VP Humphrey in 1965, who wrote, "American wars have to be politically understandable by the American public."

American wars have to be politically understandable by the American public. There has to be a cogent, convincing case if we are to have sustained public support. In World Wars I and II we had this. In Korea we were moving under UN auspices to defend South Korea against dramatic, across-the-border conventional aggression. Yet even with those advantages, we could not sustain American political support for fighting the Chinese in Korea in 1952. Today in Vietnam we lack the very advantages we had in Korea. The public is worried and confused. -- VP Hubert Humphrey, in 1965, ten years before the last USA serviceman left Vietnam

As part of the generation that grew up under multiple Iraq invasions--not just for oil, but natural gas--Humphrey's words sound quaint. It was against this conflicted backdrop and a mandatory military draft that the 1968 Democratic National Convention occurred, ensuring a volatile event. Policemen beat anti-war protesters using batons, knowing they had the full support of Chicago's leadership. Consequently, for at least one day, Americans couldn't tell the difference between the Chicago mob and their own government. How did the Democratic Party go from being so concerned about anti-war sentiment that it was willing to beat protesters in broad daylight to barring anti-war politicians from their own Convention? The answer is gerrymandering, aka political segregation. Put simply, if you divide enough factions into their own districts, you can easily govern any group not already in power by ensuring conflicting opinions never meet in a public forum, thus sputtering and stalling out. Post-WWII, though the prevailing framework internationally
and domestically has been more "divide and govern" than "divide and conquer," American students are taught Western democracies promote optimal communication between conflicting groups.

[G]errymanders will only get worse (or depending on your perspective, better) as time goes on—as data becomes ever more fine-grained and data analysis techniques continue to improve. What was possible with paper and pen—or even with Windows 95—doesn’t hold a candle (or an LED bulb?) to what will become possible with developments like machine learning. And someplace along this road, “we the people” become sovereign no longer. -- Justice Kagan, dissenting, Rucho v. Common Cause (2019) 

In 1992, when Americans lacked conflicting viewpoints about the supremacy of their political system, Francis Fukuyama talked about the end of history. A mere decade later, General Colin Powell would cheerlead America into Iraq, another Vietnam, proving history was very much alive and continued to repeat itself. From that debacle arose Abu Ghraib and the destruction of America's credibility, which included the Democratic Obama/Biden administration assassinating an American citizen without due process. "The dumb are never with us for long, and there is a lot of evidence to suggest that Republicans learn faster than Democrats..." 

We now arrive at 2021, when the Democratic Party is impeaching a president already out of office, repeating the same highfalutin bullying that made Trump so popular in the first place. I've heard of security theater, in which the government takes actions that "make people feel more secure without doing anything to actually improve their security," so perhaps this impeachment falls under the category of "political theater." Why, then, does it seem so much more pernicious than any Shakespearean tragedy? 

© Matthew Mehdi Rafat (February 2021)

If it weren't for this constant struggle on the part of the few creative types to expand the sense of reality in man, the world would literally die out. We are not kept alive by legislators and militarists, that's fairly obvious. We are kept alive by men of faith, men of vision. They are like vital germs in the endless process of becoming. -- Arthur Miller (USA)

Tuesday, February 9, 2021

2021 Wall Street Quotations

In February 2021, I decided to start a collection of quotes from Wall Street executives and pundits. 

February 9, 2021: "Now there are, with very few exceptions, no sectors that are cheap. [Yet] I think the market will gradually grind up during the year. I don’t see a correction anytime soon, unless the situation changes dramatically." -- 
JP Morgan's co-president Daniel Pinto (source: CNBC) [Shiller P/E Ratio 35.62]

February 10, 2021: "If there is a bubble anywhere, it is not in the equity market, it is in the fixed-income market." -- Cathie Wood, chief executive of ARK Invest (source: CNBC) [Shiller P/E Ratio: 35.59]   

February 17, 2021: from Eddy Elfenbein's blog:

Mark Hulbert has an interesting column at MarketWatch. It’s about a trio of academics who have devised a bubble-spotting formula. 

"Applying the formula the researchers derive, I calculate there is an 80% chance that the Technology Hardware, Storage & Peripherals index will be 40% lower than today at some point in the next two years... Though no other industries satisfy the researchers’ definition of a bubble, two others come close. They are also in the technology arena: Semiconductors and Semiconductor Equipment, and Software. Why focus on an industry that may be in a bubble, rather than the market as a whole? Prof. Greenwood told Barron’s that he and his fellow researchers learned from their study of the history of bubbles that they 'rarely are marketwide' events. Far more common, he said, is for a bubble to manifest in certain pockets of the market even as other sectors remain undervalued."

March 26, 2021: from Barron's, by Andrew Bary, headline: "Higher Taxes? Deficit Spending? Why the Stock Market Isn't Worried." [Shiller P/E Ratio: 35.75] 

March 27, 2021: from Bloomberg, by Ishika Mookerjee, Albertina Torsoli, and Lisa Pham, headline: "Funds Bet on a Consumer Boom to Rival 'Roaring Twenties.'" [Shiller P/E Ratio: 35.75] 

[Note: The Great Depression--and stock market crash in 1929--occurred after the excesses of the Roaring Twenties, as well as indications Germany would not honor WWI reparations.] 

April 8, 2021: from CNBC, by Kevin Stankiewicz, quoting Wharton School finance professor Jeremy Siegel: "It isn’t until the Fed leans really hard then you have to worry. I mean, we could have the market go up 30% or 40% before it goes down that 20%... We’re not in the ninth inning here. We’re more like in the third inning of the boom." [Shiller P/E Ratio: 36.81] 

April 11, 2021: "The path of least resistance for US equities remains higher." -- Bill Miller, CFA (S&P 500 4128.60)

April 15, 2021: "From a traditional perspective, the market is fractured and possibly in the process of breaking completely." -- David Einhorn 

May 23, 2021: "In real terms, the home prices have never been so high. My data goes back over 100 years... I don’t think that the whole thing is explained by central bank policy. There is something about the sociology of markets that’s happening." -- Robert Shiller, [Shiller P/E Ratio: 36.86]