This is long, even for Ed. But you have to admire the legwork.
One time, a good friend of mine told me that the more I learned about finance, the more pissed off I’d get.
He was right.
There is an echoing melancholy to this era, as we watch the end of Silicon Valley’s hypergrowth era, the horrifying result of 15+ years of steering the tech industry away from solving actual problems in pursuit of eternal growth. Everything is more expensive, and every tech product has gotten worse, all so that every company can “do AI,” whatever the fuck that means.
We are watching one of the greatest wastes of money in history, all as people are told that there “just isn’t the money” to build things like housing, or provide Americans with universal healthcare, or better schools, or create the means for the average person to accumulate wealth. The money does exist, it just exists for those who want to gamble — private equity firms, “business development companies” that exist to give money to other companies, venture capitalists, and banks that are getting desperate and need an overnight shot of capital from the Federal Reserve’s Overnight Repurchase Facility or Discount Window, two worrying indicators of bank stress I’ll get into later.
Enshittishitti bang bang! Enshittishitti bang bang! We love you!
Capitalism gonna Capitalism.
We are watching one of the greatest wastes of money in history, all as people are told that there “just isn’t the money” to build things like housing, or provide Americans with universal healthcare, or better schools, or create the means for the average person to accumulate wealth.
This could have been written about the War on Terror.
I can find no analyst commentary on Meta making sixteen billion dollars on fraud, because it doesn’t matter to them, because this is the Rot Economy, and all that matters is number go up.
I’m not sure why he thinks morality is a factor in market movement. You’ll not find the stock market negatively reacting to money being spent on genocide in the Middle East or murders in the Caribbean, or to Palantir expanding into a mass-surveillance apparatus either.
Analysts that do not sing the same tune as everybody else are marginalized, mocked and aggressively policed… By not being skeptical or critical you are going to lead regular people into the jaws of another collapse.
Yes, market collapses are actually loved by large wealth holders, because unless the entire currency itself collapses, the people with the most currency are the ones best-positioned to benefit from the collapse. Investors will ride the economy off a cliff so they can salvage the scrap at the bottom. Sam Altman literally opined about ‘redefining’ the social contract when AI collapses the economy in his White House presser.
Analysts have, on some level, become the fractional marketing team for the stocks they’re investing in.
Because major news, analysis firms, and banks are all owned by the oligarchy, and no one is being punished for using that power to manipulate the market. They know that if they’re a big firm and they say, “this stock is amazing!” it will go up, and since they own that stock, they get richer.
When it happens, I promise I won’t be too insufferable, but I will be calling for accountability for anybody who boosted AI 2027, who sat in front of Sam Altman or Dario Amodei and refused to ask real questions, and for anyone who collected anything resembling “detailed notes” about me or any other AI skeptic.
It’s sad to me that Ed lived through 2008 and still thinks there will be accountability in this system. At some point you have to accept that the purpose of a system is what the system does. Our system cyclically collapses, economically, in order to enrich billionaires. It happened during the DotCom bubble, it happened in 2008, and it happened during COVID, and that’s just in my short lifespan.
I realize I’m pearl-clutching over the amoral status of capitalism and the stock market
I really don’t think you are. You haven’t even begun to reach the bare minimum level of disdain and disgust-inducing realism one should have about capitalism, nevermind anything being remotely close to pearl-clutching.
We are watching one of the greatest wastes of money in history
This could have been written about the War on Terror.
Or possibly the “war on drugs” in the 80s, or the war on communism before that.
History doesn’t repeat but it rhymes.
One thing Ed does is use my cadence, so it comes across as very natural. It’s kinda like how dogs sniff each other and feel comfortable.
He was right.
Yeah, a good writer will reduce things to this size of a sentence. Now, this requires skill … three random monosyllabic words and a period gets you nowhere. It’s a bit like comedy in that the setup is required for the punchline.
Yeah, it’s very well written and ‘easy to read’. I’ve seen his posts a couple of times on HackerNews, but I don’t think I ever read a long form blog post of his before. This was really good (even if I think a little naive).
Look: I’m not going to claim I agree with him on everything. Though there are a satisfying number of "fuck"s.
But he does research so I don’t have to, and I enjoy that.
Ed frequently comes off like a guy ranting outside the gas station but goddamn is it hard to find an issue with with his conclusions.
I mean, yeah, he sounds like he’s yelling at clouds, but he brings the receipts.
That’s better put than I did 😂
Oh PLEASE let them completely enshittify the entire financial system. If anything will ever completely free the world from money’s tyrannical yoke, it will be tech billionaires’ incompetent attempts to “disrupt” and “improve” it.
That thing about the more you know about economics. We have to “invest” in our own retirements and its all just leves of scam. Without regulation investment is a dart throw. I mean companies can borrow money to buy their own stock. common!
A company buying money to buy it’s own stock makes sense though, doesn’t it? A share buyback reduces the number of shares, so remaining shareholders are holding more equity (as a percentage) than prior to the buyback. It’s just the reverse of issuing new shares. If the company has no productive use of the capital, then a share buyback is a way to make the company more “lean”, shedding unneeded cash to increase (relative) value.
Borrowing money to do so just means that they are deemed credit worthy by enough bond investors that they can borrow at low enough rates that the debt repayment costs are less than the value shareholders would expect from a dividend payment and/or that they don’t want to issue dividend payments for some other reason (like the idea that dividends should be consistent and only ever increase or they’re valuation gets slaughtered.)
The whole stock market is a bubble now, anyway, so this is the heart of our problems. About 2 decades ago, financial reporting allowed companies to shift their PE ratio away from Price-to-Earnings ratio and instead report on Price-to-Forward-Earnings ratio. This is the company’s projection of their future earnings potential, but investors just seen to accept that a “PE” ratio means the same thing it did for the preceding, like, century. A PtFE ratio of 25 is insane, on historical contexts, yet that’s completely normal now.
Insanity. And yet the market keeps going up. Even the '08 crash was just a small blip, compared to what it should have been.
I’ll just put my tinfoil hat back on over here.
