Post 340: The Reckoning Begins: Capital Misallocation Comes Home To Roost

• All of a sudden a lot more companies are announcing layoffs.
  • Things have significantly changed from when companies used to hoard employees just in case.
• A look back at Porsche.
  • And sales are falling as their customers are feeling poorish.
• US inflation ticks up to its highest level in eight months with core inflation remaining well above the Fed’s 2% target.
  • Which itself is a joke.
• Core inflation measures in Canada remain elevated.
  • One of the biggest increases is in property taxes.
    • As new development tax revenue plummets what for property taxes to rise even higher.
      • Heaven forefend that instead municipalities would become more efficient and cut taxes.
• New rental prices in Canada are moving down: twelve months in a row.
  • Existing rents still moving higher.
• In Financial Ructions
  • I have a go at a couple of pieces that attempt to rationalise today’s expensive stock markets.
    • And no, valuation is not a timing tool.
  • Martin Wolf says that the UK economy needs more investment.
    • And higher taxation.
      • I have a few comments.
  • Some notes from a Grant Williams podcast which looks at the Wicksell spread.
    • It was driven down to record negative territory post-COVID and has resulted in monumental misallocation of capital.
• Book Review
  • We start looking at a number of things Keynes said about interest rates and the author’s response.
    • And how Keynes wanted to do away with the economic truth that interest rates disclose.
    • And Hazlitt’s refutation of Keynes’s liquidity preference used to explain interest rates.