The Bear’s Lair: A re-focus on dividends

U.S. corporate earnings and the stock market in general have become divorced from reality, with corporations increasingly ignoring stockholders in favor of a politically correct “woke” agenda. This is dangerous for society and it is not capitalism. The solution is for stockholders, investment analysts and designers of tax codes to focus laser-like on dividends. Actual cash payments to shareholders, generated through earnings, are the best way to keep the system honest and functional. Continue reading

The Bear’s Lair: Brexit may re-kindle global innovation

1938 Lagonda V12

Peter Thiel is not alone in wondering where all the major technological innovations went. From the other end of the political spectrum Chicago professor Robert Gordon wrote a best-seller “The Rise and Fall of American Growth” speculating that U.S. productivity growth is slowing to zero. Yet if you look back, from the Industrial Revolution until at least the 1950s, Britain was the “skunk works” or prototype producer of a high proportion of major technological innovations. Then in 1973, Britain joined the European Union, which appears to have had the same deadening effect on British innovation as the Whig Supremacy of 1714-60. With Brexit, will we see a renewed innovation take-off? Continue reading

The Bear’s Lair: Economic ineptitude reaching 1690s levels

There is no question the quality of economic policymaking peaked under Robert Banks Jenkinson, 2nd Earl of Liverpool (1812-27) and has gone into sad decline ever since. But hills have two sides. So, the question is: how far back must you go to find economic policy as bad as that in today’s United States, to pick an example? I think the answer is: about 330 years, to the chaos of the doubtfully legitimate and suddenly war-torn Whig regime of the 1690s. Continue reading

The Bear’s Lair: Is Cold War optimal on a crowded planet?

Back in the days of sailing ships, when it took months to get to India, there was no question of a global government – communications were not good enough. Thus, countries preserved their freedom independently, worrying little about the ideology and governance of any but their near neighbors. The world is now much smaller, and co-existence more difficult. Since large wars are unimaginably horrible, and a single global government almost equally so, the optimal outcome may be a bipolar Cold War, as we enjoyed in 1945-91. Continue reading

The Bear’s Lair: Return of the Whig Economy

The Industrial Revolution was a Tory Story! It began with the scientific exuberance of the Tory-dominated Restoration period, then slowed as the Whigs diverted the country into war and financial excess from 1689 to 1720. Even though the key inventions of the steam engine and coke-fired ironworks came during that period, they were not developed further. Forty years of Whig financial capitalism and social repression followed, before a Patriot King and a series of Tory governments unleashed the greatest boost in living standards the world has ever seen. Alas, since 1991 we have returned to Whiggery and worse. Continue reading

The Bear’s Lair: Kleptocracy beats Communism

Recent reports suggest that the Venezuelan economy has enjoyed a modest uptick after its collapse due to its following Presidents Hugo Chavez and Nicolas Maduro’s Communist economic policies from 1998-2018. Russia and China also have benefited, not from a move to democracy, but from a move from Communism to Kleptocracy. The lesson is clear: a regime that allows some elements of the free market to operate and then steals the result is preferable to even an honest Communism. Continue reading

The Bear’s Lair: The revenge of the bond market

“I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a 0.400 baseball hitter. But now I want to come back as the bond market. You can intimidate anybody,” said James Carville at the start of Bill Clinton’s Presidency in 1993. Since that time, the bond market has been in the position of an abused spouse, suffering endless humiliations at the hands of an inept Fed and Treasury Department. In the last few weeks however there have been signs that it was about to reassert itself. Should it do so, it would be immensely salutary – and immensely painful. Continue reading

The Bear’s Lair: The lost Arcadia of 1938

What if the Munich Agreement of 1938 had worked? I was led to this speculation by watching a wonderful British movie “Q Planes” made in that year in which British technology reigned supreme and there was no sign of any Great Depression. (With Laurence Olivier and Ralph Richardson, it’s well worth catching up with!) But would a world without World War II really have been better for all of us, or only for Britain? Continue reading

The Bear’s Lair: We might as well be serfs!

The Federal government’s rental evictions moratorium has now been extended until March 31, and there is every prospect it will be extended further. This yet again weakens the property rights of landlords, eroded steadily since World War II. With shareholders also attacked by the ESG movement and interest rates going negative in many countries, no form of property is exempt from expropriation. We might as well be serfs! Continue reading

The Bear’s Lair: Back the bros against the hedgies

WSB and Dogecoin

“Bros” connecting through the social media forum “WallStreetBets” last week staged a massive rally in the shares of GameStop (NYSE:GME) causing huge losses to a hedge fund that had shorted the stock. Most commentary suggested this should be a rare occurrence, as the hedge fund was a professional investor performing a valuable market function, while the Bros were amateur retail investors. However, in today’s markets, I would bet on amateur investor Bros showing better investment performance than the hedge funds. Continue reading