Week of world chaos
The week of world chaos. Head spinning events including the lack of confidence vote and resignation of the prime minister of France, the fall of the Assad regime in Syria, martial law declared in South Korea for six hours, rumblings in Eastern Europe in Georgia and Romania of Russian influence in elections and that is just in one week. What is going on and how does this affect the United States. For a very good explanation and true understanding of the common themes among these events I recommend listening to Fareed Zakaria’s Global Public Square CNN show from 12/8. I am not sure it has been posted yet since it was broadcast on the day I am writing this but here is the link: Fareed Zakaria GPS | CNN. The common connection he discusses in that across the world, citizens have lost faith in institutions, especially young people. This is certainly true in America as well. It is complicated and has been developing for a couple of decades but current government's ability to adapt the policies and messages has been ineffective in halting this decline in faith and trust in government. On the other hand, Fareed notes that countries that have moved from autocracies and dictatorships to democracies have resulted in unprecedented economic and personal freedom growth. When countries put their faith in one person at the cost of ignoring or weakening the institutions, inevitably policy decisions are made based on those individuals self-interest and their attempts to stay in power as opposed to the better welfare of the people.
Interestingly, this week, US markets were pretty sanguine about the world chaos. Market averages set new records, including bitcoin which breached $100,000/coin. Bitcoin’s surge is partly related to the decreasing faith in institutions because currency values-US dollar-are based on the good faith and credit of the US government. The rage about crypto reminds me of the Tulip mania of the 1700’s in Amsterdam as documented by Peter Bernstein in his book Against all Gods: The Remarkable Story of Risk. During the dot.com bomb the taxi drivers all talked about their stock picks. Conventional wisdom said this stock will never go down. FOMO-Fear of Missing Out-was everywhere. Stocks went higher and higher to levels becoming historically more overvalued than ever. Also contributing to some concern about stock markets is the historically high, even extreme valuation of stock market averages. The Schiller 10-year PE ratio, a ration expressing the valuation of market and expected returns over 10 years, is at 38.8 with a high during dot.com of 42.18. Timing the market is problematic and overvaluations can persist for many years but with US Treasury rates over 4% it is a good time to be conservative.
Scams galore. Today in the SF Chronicle 2 stories about scams. The first involves Jury Duty. You receive a call from a representative from an officer at the courthouse telling you missed a jury duty notice and you need to pay a fine or you can be arrested. The courthouse will not call you and demand a fine or threaten to arrest you. The other scam is a call from police saying your grandson has been arrested and he needs you to pay bail. There is a 7-part series in the Washington Post detailing a blow by blow of an older individual who was scammed out of $500,000, her entire retirement savings. Every time I log onto Bank of America or Chase I see a warning about scams.
No one is exempt or safe from being scammed. It is not about education or income of the target victim. Schemes are becoming more sophisticated with artificial intelligence providing the ability to mimic voices of loved ones as well as identity theft providing private information such as social security numbers, bio information only someone close to you would know.
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In the News
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Parents missing work more often due to childcare than before the pandemic - The Washington Post
How a con man scammed a woman’s life’s savings - Washington Post
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