Mmmm, that's not what I read. This is kinda like Goldman saying "we could be wrong... and monkeys could fly out of our butt."Goldman wrote: "We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism."
Yes, I think you are right. It is unlikely that GS is sharing an existential crisis. It seems that GS is saying that earnings are going to be coming down, and if they don't, then look out for flying butt monkeys. On a related note, I just read a FT article talking about what high yield spreads mean, and there is some discussion about the last 5 times that spreads hit these levels: 90', 98', 01', 08', and 11'. In 98' and 11' they tightened and everything was swell, and the other three times they spiked, and everything was bad. The article says this time looks like the bad three, because 98' and 11' were due to environmental factors leading to overpricing (in 98' it was Asian FX crisis and Russian default, and in 11' it was Greece threat to the Euro). In the GS margins graph, the three bad times are all followed by margin drops. Due to the reality of "ongoing consolidation in industries, cost deflation, and tighter purse strings", I think this makes an even stronger case that 16' is one of those bad spread times.
Naaaah. My father-in-law, who is a clever but conservative and economically and politically disinterested man, made the connection between tanking oil prices and the tanking stock market unprompted. Yeah - everyone's retirement fund is being trashed at the moment. But gas prices are low and this looks a lot like Wall Street being punished. Anybody trying to craft this into a "thanks, Obama" moment has their work cut out for them.
I don't disagree, I just think that sometimes the stupidity of the masses can be a bottomless pit of despair. It's a long odds situation, but also maybe non-zero. They may have their work cut out for them, but there's an entire media empire dedicated to it, so if anyone's up to the challenge...
Stupidity is one thing. Cruz or any other Republican opportunist turning this into a "big government/Obamacare/New World Order" argument requires black-helicopter crazy. Fact of the matter is, the financial system is effectively untouched from where it was in 2007 which means they'd need to argue that the Democrats didn't do enough to regulate the financial industry. That's a Bernie Sanders argument, not a Ted Cruz. It is 180 degrees ideologically from the brand of economic talking points that have belonged to the Republicans for generations. You have to go so deep into Rand Paul territory on this one to turn it into a right-wing argument that the only people likely to vote for it are the ones that don't vote because they don't want to end up a list because internment camps and chemtrails. I know you're worried about Ted Cruz. Don't. Not only is he evangelically batshit, he's uncharismatic and fervently disliked by everyone. That he won Iowa doesn't speak to his strength, it speaks to the general weakness of the field. At this point in Election 2012, Newt Gingrich's moon base was less than a week old. In my opinion, that was high-water crazy for the Republican field. As Craig Mazin put it, Ted Cruz just won "the Santorum-Huckabee prize." Talk to me when he's on the ballot and facing a non-hypothetical opponent.
Rand Paul once argued in an NPR interview that Solyndra was basically responsible for income inequality. And he was considered a serious presidential candidate at one point. I think that blows Newt's moon base out of the water. FWIW, I don't actively worry about Cruz; I just think that it's a worthy exercise to imagine him winning so that you can imagine stopping him from winning. I'm familiar with Iowa's history of voting for the biggest moron of the bunch. (I didn't worry about W for the same reason, it should be stated. It took me a long time to comprehend him as president.) But presidential politics are weird right now. You basically run for president of Florida and Ohio instead of USA. Cruz could conceivably win FL, but probably not OH. There's also a strong possibility that Cruz could inspire a Walter Mondale level ass whipping, because, well, all the reasons you cite. I don't think he'll be the nominee, and I think by early April we'll have heard the last of him until the next government shutdown (aka when he starts his Cruz 2020 bid). Best case scenario is that he exposes himself to the country, and Texans are so embarrassed that they kick his ass out of the Senate in 2014. A man can dream.You have to go so deep into Rand Paul territory on this one to turn it into a right-wing argument that the only people likely to vote for it are the ones that don't vote because they don't want to end up a list because internment camps and chemtrails.
In my opinion, the mechanism we're watching is the irrelevancy of the early race becoming more and more transparent. We're discovering that the early vetting is actually counter-productive as it allows unviable candidates to consume a lot of resources without any real chance of winning a general election. We're discovering that the lunatic fringe, which cares a whole fuckload about politics, has no effect on that muddly middle of undecideds who will generally vote for the most charismatic, least crazy individual. Bush was a legacy; he was also the establishment favorite of a large apparatus of party politics. We haven't had a favorite son like that since; I mean, yeah, Jeb, but that only shows that they managed to grind the Bush name down to nothing. You look at the field now and none of them make as much sense as Gingrich or Huckabee or Santorum and none of them made much sense. In the end it came down to Romney because he looked kind of like a president and walked kind of like a president and people could see it, just not quite clearly enough to want it. That's where Clinton is - most anyone over 30 remembers her husband doing kind of a pretty good job, and that's probably enough. That's what's gonna get Sanders in the end - he's LaRouche Lite. That my own personal politics align clearly with him does not temper my pessimism about his chances. Maybe if OWS were active and in the news right now he'd have a chance. But in the end, it comes down to "not crazy, likeable, credentials for the job." Rand Paul on Solyndra doesn't f'n touch Gingrich and his moon bases, by the way. "Obama's crony capitalism is wasting your tax dollars on hopeless liberal fantasies" comes from the same place as Reagan taking down Carter's solar panels just to prove a point. "I'm gonna pretend we're at the height of the Cold War and blow trillions on symbolism in the name of pork" is a gonzo move, particularly from the king of congressional shutdowns. Although... Space.com put the cost of a moon base at $35 billion. The ISS cost us $100 billion. For the price of the F-35, we could have eleven of each.