The Leyendecker View: PE Grabs the Cash«Back


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The Leyendecker View: January 15, 2021


A lie doesn’t become the truth, wrong doesn’t become right,
and evil doesn’t become good just because it’s accepted by a majority.

Booker T. Washington

 
SOMETHING NEW…FOR YOUR MEMORY
 
According to my calculation from the Bureau of Labor Statistics data, in January of 1980 we had 2.64 service-providing jobs for every goods-producing job. In 1990, we had 3.61 service-providing jobs for every goods-producing job. And just prior to the pandemic lockdowns, we had 6.16 service-providing jobs for every goods-producing job. According to the Federal Reserve Bank of St. Louis, in 1980 total public debt as a percent of GDP equaled about 31%. Today, total public debt as a percent of GDP is about 125% and growing rapidly. The US now has a debt level that rivals that of Italy’s. 
 
So, how is the transition from a goods-producing to a service-providing economy working out in this country? Goodie good? Whatcha think?

WHY STIMULUS DOESN’T WORK…LIKE IT USED TO
 
Keynesian stimulus is the standard by which our federal government reacts to economic contractions. The theory goes that when economy slows, we should increase government expenditures and lower taxes to stimulate demand. This action would pull economy up from its malaise. But Keynes developed this theory in the 1930s, when most countries produced their own products internally. In that context, the stimulus created a multiplier effect, boosting domestic economy as it was recycled internally. 
 
Because of globalization, that’s not what happens today. Citizens who spend their $2,000 stimulus on all manner of goods produced in other countries are now actually stimulating those other country’s economies. In today’s world, instead of stimulus benefiting the domestic economy, a lot of it leaks out to stimulate foreign economies and their workers. And then in the end…we need more stimulus.  
 
THE ECONOMIC VIEW
 
US trade deficit at 14-year high
There we are, supporting foreign workers.
 
Small business optimism at seven-month low
Bring on more stimulus!
 
The World Bank says
Economic output will be low for “a prolonged” period.
Here’s the chart
 
REBUILDING AMERCIA
 
US labor market losing speed fast
Bring on more stimulus!
 
Fed Chair puts a lid on dollar rise
Interest rates aren’t going up any time soon.
 
US murder rates in 2020
Not looking good, Billy Ray.
 
MEANWHILE IN EUROPE
 
DB to pay $130MM fine
Commerzbank to write off $1.8B
Credit Suisse to set aside $850MM
Zombies could stunt bank recoveries
What’s up with European banks?
 
Eurozone headed for double dip recession
Lockdowns and more lockdowns not helping.
 
Swedish court dismisses Huawei appeal
They aren’t letting the Chinese in to their 5G.
 
GLOBAL
         
Shadow hangs over Japan Olympics
Will it be postponed again?
 
China exports surge to record high
They send us their goods; we send them our money.
 
Israel carpet bombs Syrian sites
With large Iranian presence.
 
THE FINANCE WORLD
 
PE grabs the cash
Lots of recaps boosting company debt.
 
Why ESG funds fail to scale
Institutional Investor has suggestions.
 
While hedge funds grab the free lunch
SPAC mania—making money the easy way.
 
CORONANEWS
 
China blocking WHO
From researching virus origins.
 
CDC vaccination tracker
For those who want to know.
 
Vaccine requirements are discriminatory
Suggests World Travel and Tourism Council.
 
TECHNOLOGY
 
Man versus robot in ping pong (video)
John Deere’s autonomous electric tractor (video)
Outside a few design and robotics engineers, do humans have a chance?
 
Musk supports Signal over Facebook
Because Signal supports privacy.
 
More digital services taxes coming
Add India, Italy and Turkey to the list.
 
THE WAR ON CARBON
 
United Airlines has a plan
To suck carbon out of the sky.
 
GM going big
With electric vehicles.
 
Apple teaming up with Hyundai
Here comes the iCar.
But don’t count Sony out
 
THE CHINA SYNDROME
 
China gets third aircraft carrier
Beefing up for…
 
Potential blocking of maritime vessels
With challenges to other nation’s waters.
 
China tells its companies
To ignore US rules.
 
THE NEXT NORMAL
 
We need a new media system
The current one is full of poison.
 
Travel is never going back to last normal
Predicts Airbnb CEO.
 
Merkel: Trumps Twitter eviction “problematic”
European commissioner suggests the same
Do governments or tech companies regulate free speech?
 
MAKING A BETTER YOU
 
Learning is not just for the young
Be a beginner for life.
 
Retain more of what you read
With these seven tips.
 
“Jootsing”
Breaking down the creative process.
 
HOW ABOUT A BREAK
 
The sperm kings have a problem
Too much demand.
 
64 reasons
To celebrate Paul McCartney.
 
Who was the Buddha?
Homelessness constructed mindfulness.
 
MINDCATION VIDEOS OF THE WEEK
 
The peace of wild things
A one-minute mindcation from the world.
 
Made in the Mitten
How the snowboard came about.
 
Bill Gates’ best job interview answers
State of Inspiration with Stephen Curry.
 
FROM THE HEADHUNTER’S KITCHEN
 
It’s cold…more comfort food please!
 
Beef stroganoff
Makes you feel all warm and cozy inside.
 
Yammy French onion soup
Easier than you think.
 
THOUGHTS FROM DOUG
 
Today’s news, and a lot of modern media, feels like junk food for the mind. And like real junk food, it’s probably not healthy to consume in large quantities.  
 
Democrats are good for oil prices.
 
The e-vehicle market seems on the cusp of exploding. Look here for the next goldrush and then the next gold rush bust. Richest man in the world, Elon Musk, has lots of competition coming.
 
We should pray COVID-19 does NOT mutate measurably. Really, we should pray.
 
Impeachment: if you happen upon a hornet’s nest full of angry hornets, the last thing you want to do is smack it with a baseball bat.  
 
Couple days ago, I saw two bald eagles not far from my Smithville, TX house. Wowsville!  Seeing nature like that, real nature not something on an electronic screen, felt pretty darn good. I was in the real world for a bit.
 
How is it that COVID hit the US and Europe so much harder than the rest of the world? 
 
With technology at the crossroads of today’s dysfunctional society, maybe AT&T’s old advertising slogan—“reach out and touch someone”—was the canary in the coal mine. Who do you “touch” on the phone? And with a lot less eyeball-to-eyeball, in-person communication, with so much being done via email, text, social media and an ever-decreasing amount of voice interaction, could we be losing our sense of relationship, our sense of community and even our souls? Humanity is not a digital machine. The more we depend on the digital world, the less we may have of humanity.  
 
China has now taken over Hong Kong. So, how is the US…and the world…going to act when China tries to take over Taiwan? And what will China want after Taiwan?
 
IN CASE YOU MISSED IT
 
The Leyendecker View: China Has a $15T Problem
January 8, 2021
 
The Leyendecker View: Buffett Speaks, Will People Listen?
December 18, 2020


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