PS. Burry infamously made several more bets after the "big short", bets that misfired. That is, his record is far from being 100% right.
By close though the market they may well all end higher. We seem to live in a meme economy.
General handwavy statements like "there's a bubble" aren't worth paying attention to. Ones with specific timelines attached to it (like the one above, or the article we're commenting on), are worth listening to a bit more, but unless they have the funds to back it up (like Michael Burry has put down here), it's still hot air.
I’m not sure what timeline to place on that but there has to be a floor for how bad it can get for the regular man.
Shit is just expensive. Young people can’t buy houses, good jobs are drying up, and inflation isn’t stopping.
I don't know what the disconnect is with that chart and people's observations. Is that chart controlling for number of incomes and hours worked? If a household income increases by 20% because the members are working a combined 80% more hours that's not great. Category differences in inflation might be another factor. Sure TVs and other niceties are a lot cheaper, but essentials like housing and medical care eat up a huge portion of most budgets.
https://en.wikipedia.org/wiki/Personal_consumption_expenditu...
The disconnect is that CPI consistently significantly underestimates inflation as experienced by real people.
You may be thinking of Shadowstats, which is run by a crank who just takes the official numbers and adds a number he made up to them.
I don't know why cranks always think inflation is secretly higher. Deflation is a lot worse than inflation, so if you're a doomer, believing in deflation would be more effective.
The problem is that the error integrates over time, which IMHO is why graphs like that seem to suggest our standard of living is higher than ever... when a conversation with anyone at a local bus stop will tell you the exact opposite.
I don't think a guy at a bus stop represents the median household well. I'd rather have https://www.census.gov/programs-surveys/cps.html.
Also, most US households are homeowners, which means housing prices going up increases their (imputed) income.
> Is that chart controlling for number of incomes and hours worked?
Why should it? It's bad practice to control for random things - that gets you collider bias.
But see:
(Edit-misspelled Fed)
In practice, household sizes have gone down over time as more people live on their own, which means the income graph is lower than it otherwise would be.
https://fred.stlouisfed.org/graph/?g=cWvT
As for dual income families, they're mostly a good thing that happens when women can afford to pay for childcare. That is, that book The Two-Income Trap was mostly false. This is part of the topic of Claudia Goldin's economics Nobel, the other part being that the gender wage gap is caused by motherhood interrupting women's careers.
https://www.nobelprize.org/uploads/2023/12/goldin-lecture-sl...
Is there someone with a better record then?
It actually appears that the alternative harms aren't as bad; that is, recessions aren't caused by prior expansions and we don't get one by "deserving" them.
https://eml.berkeley.edu/~enakamura/papers/plucking.pdf
Hyperinflation is of course still not good, and it's hard to avoid a recession caused by a natural disaster or something.
Point is, for a 100% positive case rate, I have to tolerate a 22% false positive rate. What exactly is the complaint here? Was this line of logic meant to make people who make these predictions look stupid or foolish somehow? To me, it mostly fails to.
Historically I think the reality has been the opposite of that, economists have been extremely reluctant to make predictions of an oncoming recession. This was certainly true during the great recession when economists were denying that a recession was coming even after one had actually started. That is to say, economists could not even predict the present.
There are a few economists who are predictably gloomy ("permabears", I suppose Nouriel Roubini would qualify) and I guess now there is political pressure to predict a recession anytime the other political party is in power, but from my perspective, if mainstream economists are predicting a recession, that likely means the recession is almost over.
To put another way, there's a lot of "potential energy" being built up in the markets right now. That doesn't necessarily mean they'll pop like a bubble - but there's really no precedent for them to continue rising.
If you've flipped heads three times in a row, you're right that I would look foolish saying the next one can't be heads. But at the same time you cannot keep flipping heads forever.
With that said, Burry is often credited for "Calling 18 of the past 2 recessions". Even a broken clock....
The powers that be have too much invested in the market continuing to move up, you are basically betting that Trump, a bunch of billionaires and the FED are going to let the market crash to curb inflation and income inequality. That feels like a bad bet to me.
By their very nature the markets can overwhelm any desire to "[not] let the market crash]"
Especially when the person in the White House is scared about losing the midterms.
By now is not the AI market beyond any sensible definition of "first order"?
What can overwhelm them is if those effects cascade and compound into second-order effects, typically multiplied in magnitude.
That's essentially what the fuck-up in 2008 was. The government let Bear Stearns fail because it could handle the effects. What it couldn't handle (or at least, was barely able to) were the second order effects of credit tightening, mortgage derivative repricing, counterparty trust loss, etc. etc.
The government could absolutely prop up the AI bubble, possibly indefinitely. What it can't do is cover second order fallout, if it turns out a lot of risky money was somehow tied into the bubble.
The stock market isn't that important (though Trump does care about it). It's the bond market that everyone pays attention to when it stops working.
In a sense, stock market crashes are good for young people because you can buy stocks cheaper. In practice this isn't true because too many people are in debt and you get a balance sheet recession.