Power plays by big financial power players point to a looming reality in the economy–the collapse has already been televised.
A few weeks ago, someone asked me if there were any films or documentaries that could explain in layman’s terms what is going on in the markets. Then the Michael J. Burry move happened. There is cause for concern.
Burry, the renowned investor famous for his accurate prediction of the 2008 housing market collapse, has once again made headlines with a bold financial strategy. This year, he placed a staggering $1.6 billion bet on a pending stock market crash, reminiscent of his previous successful prediction. In a cinematic twist, “The Big Short,” a movie dramatizing the events of the 2008 financial crisis, recently returned to the spotlight on Netflix.
Now, the maneuver by the “Big Short” investor has garnered significant attention in the investment world. What is making more people murmur is that he is not the lone oracle. Business magnate Warren Buffett, just sold $8 billion worth of stocks, signaling that a recession is on the horizon.
With a sluggish residential housing market and plummeting commercial real estate prices, economic conditions today bear striking similarities to those of 2008. Mortgage rates have surged above 7%, their highest point in over two decades, leading to an 18.9% drop in existing home sales during the first half of the year. More of a damper, the commercial real estate market is already declining, putting pressure on financial institutions.
While Fannie Mae economists are predicting a prolonged freeze in the housing market, the Federal Reserve contemplates interest rate hikes to combat inflation, potentially pushing mortgage rates to 8%. Adding more concern, Fitch warns of potential rating downgrades for U.S. banks.
Housing plays a crucial role in the economy because it’s one of the last materials of substance that is actually manufactured here. Mish Shedlock’s observation highlights the ripple effects of a weakened housing market on various industries. From home decor to backyard redesigns and beyond, he states, “If people are not buying houses, they are not buying as much furniture, landscaping, paint, appliances, cabinets, and lawn mowers, etc., to the same extent if housing was strong.”
In turn, the dominoes begin to fall at the first sign of disruption in its supply chain. Currently, the shipping industry is beginning to see the contractions in the economy. Companies like FedEx and UPS report cargo flights are becoming weak.
Plus, you have U.S. staple corporations like Rite Aid that are on the verge of bankruptcy with lawsuits stemming from pharmacies over prescribing opiates. Earlier this year, the Justice Department filed a civil lawsuit claiming that they violated the control substance act for filling prescriptions that did not meet legal requirements.
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To wrap your head at how things are changing rapidly, I suggest you look at “The Big Short,” or revisit this film to draw parallels with the current financial landscape, almost 16 years later. Additionally, other movies like “Margin Call,” “The Wolf of Wall Street,” and “Boiler Room” shed light on the corrupt nature of financial institutions in society.
To add salt to the growing wound in the U.S. economy, the Netflix series “Painkiller” further exemplifies the culpability of corporations, investors, and governments in financial misconduct, leaving the public in a state of turmoil. All together, these movies are more than a Saturday night screening with red wine and popcorn. Actually, they tell a sordid truth that as long as pockets are lined and stock options gained, politicians will let the swindle band play.
Just as “PainKillers” highlighted corporate greed, some key players in the pharmaceutical industry consciously doped up Americans, all for profit. To worsen matters, the “profit-over-everything” business practices have cascading consequences, including layoffs and business difficulties. Like the Bank of Montreal, Wells Fargo and United Services Automobile Association (USAA) Federal Savings Bank are reporting additional layoffs as the banking industry continues to downsize.
Included in the waning economy, we are witnessing tech demand on the decline. A short time ago, T-Mobile announced that they are laying off 7% of its workforce and Best Buy CEO, Corie Barry drew attention to persistent inflation as curbing the company’s spending. “We continue to expect that this year will be the low point in tech demand after two years of sales declines,” he said. However, this was after a tech boom during the pandemic when many companies soared in profits since much of the world was forced to go online.
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The current financial landscape hints at a deeper transformation—the restructuring of currency itself. As the world moves towards digital assets, cryptocurrencies are gaining prominence. When you have legislation like Executive Order 14067 outlining the framework for responsible development of digital assets, one has to conclude that the Greenbacks or rather The Benjamins will soon be a relic in the not too distant future.
Large investment firms like BlackRock and Fidelity are keenly interested in Bitcoin ETF applications. Once regulatory measures are in place, cryptocurrencies may become a standard means of transaction. The regulatory stamp will remove the stigma around Bitcoin and allow investors to pour money in from 401k’s and pension funds.
In the coming times, we will see more projects like World Coin. Championed by Sam Altman, creator of OpenAI and ChatGPT, envisions financial networks connected to human identity. That means your money transactions will be directly connected to identifying who you are through biometric verification like hand swipes, eye scans, fingerprints and embedded chips.
If the cards play out in Altman’s favor, World Coin aims to solve identity verification issues and financial inclusivity by giving everyone a world ID. As such, the world ID will be marketed as citizens located anywhere will be able to have accessibility to global economic opportunities. In turn, the financial world and subsequent human population will be fully digitized,
Gone are the years where $5 from your grandfather’s fat roll of Dead Presidents afforded you a handful of candy from the corner store or a treasured frozen treat from the ice cream truck. The current faith based, privileged, fiat economy is crumbling before our eyes. We are transitioning to a universal economy that will be based on your eyes, literally. Welcome to a Brave New World. Check out that television series too.
