Off The Cuff: The Deathtrap of Over-Financialization

In this week's Off the Cuff podcast, Chris and Brian Pretti discuss:

• The Over-Financialization Of The World
  • It's the cancer that's killing the global economy
• The Fed's Failure Is Becoming More Apparent
  • Deteriorating data and bubble-prices
• Chicago Blue
  • What it pension woes mean for the city, and the rest of America
• Trouble Brewing In The Bond Market
  • This is where the real carnage will happen

Another week, another market rally in the face of ugly underlying economic data.

In this week's discussion, Chris and Brian step back and discuss one of the key causes of the trap the global economy is now stuck in: over-financialization. Finance's role in the economy metastasized over the latter half of the 20th century, inserting friction and middle-skimming where none was needed. This has led to over-valuations, mal-investment, the hollowing out of productive capacity — and those in charge of the system are running out of ways to keep it from collapsing upon itself.

So, expect increasingly confiscative, desperate actions as they look for value — any value — to deploy in keeping the status quo stumbling along. Taxpayer-funded bailouts, depositor-financed bail-ins — all is fair game. And once there's not enough to go around, the losses will socialized. We just need to look to Chicago for an example of the future. Over-promises were made, funds were badly managed, now the taxpayer is on the hook for the pension funding gap, and sooner or later, the pensioners themselves will be told the hard truth that they're just not going to get what they were promised.