Michael Lewis, Where Are You?
The month of January is behind us and it should be smooth sailing for the rest of the year. Uh, not really. As you may or may not know there is an old adage that is only partially true and that adage states, “How January goes, so goes the rest of the year” If that holds true, this is going to be a rough year.
Honestly, I don’t pay any mind to those old adages, mainly because they are old and they are adages so while the statistical facts behind the adages are somewhat fact based, the reality is they occur a touch more frequently and thus gives some credence to the adage. Confusing? Certainly, but I like fundamentals and facts and the fundamentals for the year are mixed and the facts, of course, will play out over the year.
By now, we all know the fundamentals. We have a less accommodative Fed. We have an inflation model that will take a good part of the year to play out. We have corporate earnings that reached stratospheric levels last year but probably will disappoint this year. We have a pandemic that just keeps getting in the way. Each day things become just a touch more difficult to understand and yet we look for answers.
The answers lie with Michael Lewis. Yes, that’s right, Michael Lewis has the answers and we just have to wait for him to explain it all so we can actually understand what is going on here.
You laugh but just think about this: We had a complete financial meltdown in 2008. Banks were crumbling, people were getting tossed out of their homes, unemployment was about to skyrocket and 99.9% of the population really had no clue as to how it got so bad.
I had worked in finance for the better part of 27 years at the time and thought I had a fairly solid grasp on how the economy worked. How equity markets reflected expectations. How the bond market was essential in the overall functioning of the economy. Then the financial crisis happened and my opinion was like that of many Americans; If you are making 65K combined salary, what makes you think you will be able to afford an $800,000 house in Rumson, NJ? The math never made sense and yes, that was part of it but, again, like most Americans, I didn’t fully understand the complexities of what happened until after I saw “The Big Short”. It prompted me to actually read the book and what Mr. Lewis did in that book was lay out what had precipitated the biggest financial crisis since the Depression.
I really don’t care if you love or hate his politics. His research and the actual telling of that story is an incredible accomplishment. He made arcane, deep in the weeds stuff, accessible for everyone and while he judges the guilty, it’s obvious, everyone was an idiot or greedy and eventually got what they deserved.
That is why we need him now. We are in such an unusual place in our history and I have to say, only about a third of it actually makes sense.
If you are a fan of this column you know I believe that a lot of people have failed us. The politicians, The Fed, big corporations and science to start with. The confusion from the Trump Administration right through to the present administration. The fact that the medical community has changed course more times than I care to think about. We have had this period politicized beyond anything we have experienced. We have had corporations take full advantage of an economy that is in turmoil. Every structural block of this country has been shaken and they still remain quite shaky with only limited hope in sight.
What we need is for Michael Lewis to explain it to us. To help us grasp what happened and what is happening. He did it once (actually multiple times), he can do it again.
There is one problem though. It will take months to research and write such a book and by that time, only finance nerds like myself will want to read it and understand it.