November 13, 2024 | Premium Service | With the victory of President Donald Trump on November 5th, a number of our friends and neighbors who supported Vice President Kamala Harris have gone into seclusion. A period of morning has been declared among many people who placed the blue Harris-Waltz signs on their front lawns. Placing the signage on the lawn allowed them to think, for a while, that they were somehow superior to Trump supporters. After all, it was obvious, right? But it was not to be.
The pro-Harris crowd expected to win because they felt entitled to win. Many of our friends in the Democratic Party would tell us that conservatives should not even be allowed to hold public office. The pro-Trump folks, however, did not need signs on the lawn. They already knew the outcome of the election as we noted in The IRA. We wanted to show compassion. This Friday, when we celebrate at Trump National, we will keep those disappointed Harris-Waltz folks in our prayers.
Moving from the absurd to the merely ridiculous, we note that the list of aspirational stocks and crypto tokens that are rising at double-digit annual rates is growing. What does it say when ETFs based loosely upon a moveable fraud called bitcoin, a notional asset that is convertible into nothing at all, rises to near $100,000 fiat legal tender dollars? It says inflation is still the problem.
Fact is, Americans have grown entitled to capital appreciation, that is inflation, in all manner of assets and tokens. Thus the question: Could President elect Donald Trump be facing a maxi market correction before Inauguration Day? We note in the new edition of “Inflated: Money, Debt & the American Dream” to be released by Wiley Global in 2025 that President Trump and the Republicans face the same dire peril as did President Grover Cleveland 120 year ago:
“President Grover Cleveland led the Democrats to an electoral triumph in the fall of 1892, winning control over both houses of the Congress and the White House for the first time in more than a third of a century. The conservative Cleveland took power just as the U.S. economy was collapsing. Foreign creditors and the country’s citizens were fleeing paper assets and demanding payment in gold. Even as the Democrats savored their victory in the five-month interregnum between the election and the inauguration of the new president in March 1893, the global financial markets began to unravel.”
The financial crisis of 1893 was caused by inflation. Specifically, when the Treasury made purchases of silver, which were being paid for in then convertible greenbacks, Americans promptly exchanged paper for gold. In 1893, money was gold and greenbacks were debt convertible into gold. Today the paper dollar is convertible into nothing, but at least you can pay your rent or buy groceries. Crypto currencies are speculative tokens that must be converted back into fiat paper dollars to be useful. Does President Trump understand the difference?
Below we review the constituents of our mortgage finance surveillance group to update our readers on the GSEs and other residential mortgage issuers. Remember, Fannie Mae and Freddie Mac are no different than issuers like PennyMac (PFSI) -- except that they also insure the mortgages and mortgage-backed securities (MBS). Our first live discussion for subscribers to the Premium Service of The Institutional Risk Analyst will occur on Friday, November 15, 2024 at 10:00 ET. Subscribers look for further details via email!
