Month: October 2018

The Senate will vote this week on Brett Kavanaugh’s Supreme Court nomination, Majority Leader Mitch McConnell said Monday.

“Let me make it very clear. The time for endless delay and obstruction has come to a close. Judge Kavanaugh’s nomination is out of committee. We’re considering it here on the floor,” McConnell said. “We’ll be voting this week.”

The Senate will first need to vote to cut off debate on the nomination before reaching a final confirmation vote. According to The Hill, if McConnell waited until Friday to file cloture on Kavanaugh’s nomination that would set up an initial vote on ending debate as early as Sunday. If McConnell filed cloture before that, he could bring up the vote as soon as the Friday deadline passed or when the FBI wrapped up its investigation.

McConnell said Kavanaugh was “rightfully angry” after Thursday’s raucous Judiciary Committee hearing. The nominee forcefully and tearfully denied the assault allegation by Christine Blasey Ford, who testified earlier in the day, and separate claims by two other women who weren’t called to testify.

The Senator’s comments, made during a Senate floor speech, come as the FBI is rushing to wrap up its investigation into multiple sexual misconduct allegations against Kavanaugh by Friday. GOP senators and aides have been careful not to pin down a specific timeline on Kavanaugh’s nomination, arguing that the FBI could wrap up its work before the Friday deadline.

McConnell’s pledge that the Senate will vote on Kavanaugh’s nomination comes as Trump’s nominee remains short of the simple majority needed to be confirmed. Republicans hold a narrow 51-49 majority meaning they can lose one GOP senator before they need help from Democrats to confirm Kavanaugh. No Democrats have said, yet, that they will support him.

GOP senators Susan Collins and Lisa Murkowski remain undecided on Kavanaugh’s nomination. Sen. Jeff Flake said last week that he would support Kavanaugh, but he was key to getting the one-week investigation into the allegations against Kavanaugh.

Over the weekend, Flake said that he expected to support Kavanaugh unless the FBI finds something in its investigation.

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As we slip deeper into the euphoria of what is now the longest bull market on record, resulting in a deluge of corporate “zombies” , the initial public offering market is similarly slipping into a noxious trance of its own, welcoming to U.S. exchanges record numbers of companies that lose money. According to a new report by the Wall Street Journal, a record number, or 83% of US listed IPOs over the first three quarters of 2018, were companies that lost money in the 12 month prior to their going public.

According to the WSJ, this is the highest proportion on record dating back to 1980.

Not only that, but investors who have been buying these money-losing companies have been rewarded. Stocks of companies that lose money and list in the United States this year are up an average of 36% from their IPO price. This actually outperformed the return for IPO stocks that are posting positive earnings, which came in at 32%. Both beat the S&P 500, which has returned 9% over the same course of time.

And because it’s this easy to conjure money out of thin air, new listings have surged. During the first three quarters of 2018, $50 billion in IPO money has been raised by more than 180 companies. This puts this year on track to be the busiest year for IPOs since 2014.

A great example is the SurveyMonkey IPO, which was up more than 40% last week, despite the fact that it hasn’t ever posted a profitable year and lost $24 million in 2017. The often discussed pot stock Tilray is another such example: after listing in the United States over the summer, shares are up more than 740% in the midst of a larger boom around marijuana stocks.

Or, take for example Solid Biosciences, which not only has never generated earnings – but has never generated revenue – and disclosed to the market that one of its clinical trials was put on hold before its IPO in January. This was rewarded by the company raising $144 million and its stock almost tripling.

Part of the demand for IPOs likely comes from the fact that bigger name private companies, like Uber, have decided to stay private longer than companies at their stage have traditionally done (we reported on Uber’s most recent $312 million quarterly loss in May). 

Such levels of non-profitable IPOs were only been one time before: during the peak of the dot com bubble. Back in 2000, 81% of companies going public were unprofitable. This number is now 83%. In addition to technology companies, many biotech companies – often money losing entities while they prepare for, and execute, clinical trials – have helped push this number higher.

But this hasn’t stopped investors from comparing the current environment to the dot com bubble. In 2000, 14% of tech companies that listed were profitable. This compares to 19% so far this year. Of course, the dot com bubble watched many of its once-darling companies go bust and file for bankruptcy. During the next recession, history will once again repeat itself. 

Kevin Landis, chief investment officer of technology-focused Firsthand Capital Management, had one message for the Wall Street Journal:

“The lesson from 2000 is don’t chase what everyone else is chasing.” 

And yet that’s precisely what everyone is doing.

Of course, not every single IPO has done exceptionally well this year. ADT fell 12% on its first day of trading and shares in the company are down more than 30% since its IPO, which priced at the low-end of its initial target range earlier this year. Snapchat is also a great example. The stock is down almost 50% from its IPO price.

For the most part, however, companies can get away with the narrative that they will eventually be profitable and that investors’ patience may be rewarded for investing at these early stages. However, if the broader market slips into recession, or if the panic buying slows just a little – or god forbid, turns into panic selling – a stark reality check could be in the cards for those believing there’s money to be made from companies where there is actually no money being made.

The biggest risk was summarized by University of Florida finance professor Jay Ritter: “The problem with young growth companies where investors have built in really optimistic assumptions is if the company doesn’t deliver, it can get revalued in a heartbeat.”

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Drone footage and shocking photos have emerged in the aftermath of the devastating 7.5 magnitude earthquake which struck the Indonesian island of Sulawesi, unleashing a 20-foot tsunami that has resulted in 1200 deaths and a brewing humanitarian crisis. 

The tsunami was triggered by a 7.5 magnitude earthquake that struck along the coastal district of Donggala on Friday. Most of the dead were found in nearby Palu, a city of nearly 300,000 where an onlooker took a video of the seawater raging ashore just after 5 p.m., local time. –NPR

Local authorities, overwhelmed by the sheer number of bodies, have arranged for a mass burial site for he victims, according to Indonesian disaster agency spokesman Sutopo Purwo Nugroho. 

President Joko Widodo visited Palu on Sunday, inspecting the large-scale damage and consoling survivors. He also acknowledged problems with getting aid to the region and urged people to be patient.

Thousands of people began camping at the airport over the weekend, hoping to leave. But the airport has been operating at partial capacity since it reopened. And as they wait for a chance to fly out, people are also enduring heat of more the 90 degrees, with little to sustain them. –NPR

Releif agencies say that in addition to travel and communication issues, the response is limited by the fact that many staff members are currently deployed to Lombok – an island hundreds of miles to the south, where a 6.9 magnitude earthquake struck last month. 

Widespread damage caused by #PaluTsunami and captured by @planetlabs satellites. Imagery is very fresh, less than 5 hours old when I downloaded it. #Palu #Tsunami pic.twitter.com/Ju4gLr53qN

— Murray Ford (@mfordNZ) September 29, 2018

“Food and clean water are in extremely low supply, and many people continue to loot the markets and other places in search of food,” said Radika Pinto, area manager for World Vision. “Access and security are making it challenging to start distributing relief supplies.”

Photos from the New York Times and others show extensive damage and desperate conditions; 

Detik-detik saat rumah-rumah bergerak dan roboh disebabkan proses likuifaksi dan amblesan akibat gempa 7,4 SR di Kota Palu. Permukaan tanah bergerak dan ambles sehingga semua bangunan hancur. Proses geologi yang sangat mengerikan. Diperkirakan korban terjebak di daerah ini. pic.twitter.com/Vf5McUaaSG

— Sutopo Purwo Nugroho (@Sutopo_PN) September 30, 2018

 

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Authored by Tom Luongo,

“You know General, sometimes the men don’t know when you’re acting. It’s not important for them to know. It’s only important for me to know.”
— Patton

The more I observe Donald Trump the more I’m convinced he’s more bark than bite, that his instincts on foreign policy are correct but his method is mad.

I was on Radio Sputnik Moscow recently discussing Russian Foreign Minister Sergei Lavrov’s speech at the United Nations General Assembly.  They did a very nice write up of the interview which you can read/listen to here. 

And in that interview I touched on a number of things I’ve been writing about currently that I think are very important to remember as events spiral out of control.

President Trump’s and his top administration officials’ behavior in foreign circles have created a lot of chaos.  That’s not news.

And we know that chaos is part of Trump’s method.  He likes to stir the pot and get people, “on tilt.”

It helps him cut through the barriers people put up and get right to the heart of a matter.  It’s a style that is very unnerving and, I think, creates a lot of confusion not only on the part of who he’s negotiating with but also observers of his negotiations.

We never quite know where we stand with Trump.  And that’s exactly the way he likes it.

And the more he ratchets up pressure on those he’s negotiating with the harder it is for people with a conscience and a desire to see the violence in this world drop to watch it and not throw up our hands in disgust.

There is a tendency among libertarians to simply fall back on first principles and take the moral high ground when confronted with this type of situation.  I get it.  It’s easy.

I spent a few years being that guy.

Every once in a while I regress to that guy, especially when Trump does something monumentally stupid, which he has a few times so far as President.

But, that doesn’t mean that what has been is what will necessarily be.  One of the fallacies of modern political discourse is linear thinking.  Extrapolating short-term trends over the long-term holding all variables constant and coming to some inane and equally catastrophic conclusion.

If you want to know where global warming hysteria comes from, here’s your sign.

There is a willful ignorance in politics to view anything cyclically.  Cooler heads prevailing doesn’t get people angry enough to hit the ‘donate’ button on a candidate’s website.

And once you have people in a heightened state of fear it’s easy to keep them there.

The same thing goes in analyzing Trump’s behavior.  Just because he’s been full-throated in his support of Israel, for example, is not incontrovertible proof he’s simply another stooge for the evil Zionists in Tel Aviv.

Just because he’s ratcheting up Cold War tensions with Russia as part of his energy dominance policy does not mean he’s worse than Hillary Clinton would have been, since she was the architect of the current policy on Syria and would have never let Assad and Putin run the table like they have to this point, even if Trump has put up some opposition to it.

Trump is learning on the job. He will contradict himself.  He will change course without ever admitting a mistake.  That’s who he is.

He’s surrounded by people actively sabotaging him and who fundamentally disagree with his instincts for peace.

He’s got a hostile Congress, disobedient underlings, bureaucracies in full revolt, an open insurrection, and a media trying to portray all of it as so chaotic that we would all be better off if we just got rid of him.

That may sound like excuses to the overly-woke on the Right but it’s reality.

Trump isn’t Orange Jesus.

He’s a man with all of the faults, strengths and biases of any man.

That was the picture I was trying to paint to a Russia-sympathetic audience to help cut through the noise Trump creates.  I wanted to help them look at what who we are actually dealing with, not the public persona he puts on to confuse and infuriate people.

As I told Sputnik yesterday:

Donald Trump is a very interesting and mercurial figure, and I’m both happy and sad that he’s my president, because he’s like half good and half bad. I do believe that he feels that the current geopolitical world order that the US has been paying for since the end of World War 2, the post-WW2 institutional order, doesn’t work for the United States anymore.

But I also feel that at a certain level, he doesn’t quite understand that we also don’t have a manifest destiny to tell the world how it’s going to run, and how it’s going to operate, either. That’s a conflict between the practicalities of the real world, and I hate to use the term, but Donald Trump is the quintessential baby boomer in that respect. He really has that kind of messianic American exceptionalism burned into his psyche. And while it’s laudable at a certain level, it can also be really toxic if taken to an extreme.

So I really think that with his personality being the way it is, and his negotiating style, that some of what he’s being doing is real bluster, and some of it is real – his real honest anger.

Trump is angry that the America he adores is in the position that it’s in.  He’s furious at how poorly Washington operates.  He’s despises the globalists for having done this.

I don’t think he quite understands that Russia is his ally in this because, to him, America comes first and that means geostrategically opposing the growing alliance between Russia and China.

His frustration with the Obama administration et. al. creating that alliance in their incompetent implementation of the Brzezinski Doctrine to keep Central Asia weak and divided is immense.

But, as Baby Boomer he sees Israel as an indispensable part of the American empire, but up to a point.  And his proposal to Netanyahu this week of a ‘two-state solution’ was his way of reminding Bibi who wears the pants in this relationship.

Notice how Trump hasn’t said one word about the major provocation of Russia implementing a de facto ‘No-fly zone’ over Western Syria, Lebanon, Israel and the western Mediterranean.

That is yuuuge tell.  It tells me we are closer to a deal in the Middle East than things look.  Just like with North Korea.

But don’t think for a second Trump will blink on Iranian sanctions until the rest of the pieces fall into place.  It’s not his style.

He also has certain members of his cabinet to placate while he deals with his domestic troubles.

I believe the hardest part of analyzing the situation in the U.S. right now is grasping at the order of operations.  What problem needs to be solved first before the next one gets solved, etc. etc.

Trump is taking on everyone all at once.  It’s ambitious and bold, interesting and frustrating, for everyone. His foreign counterparts know the score by now.  I don’t worry for a second Putin and Xi Jinping right through Trump.  He doesn’t scare them.  But, he scares his domestic opposition to death because they can’t control him and that’s why they won’t stop until either the U.S. has been destroyed for all intents and purposes or he wins.

Those are not, unfortunately, mutually exclusive outcomes.

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In the age of e-commerce — particularly the Amazon effect — shopping malls across the nation are experiencing challenging times 

The Detroit Free Press toured shopping malls across Metro Detroit to gauge their health. What it found was that an epidemic of shuttered storefronts, and liquidating department stores continues to plague much of the city’s economic zones. “We are definitely over-malled, and the malls are too big,” said retail analyst and consultant Ken Dalto, who is based in Bingham Farms, Michigan.

The collapse of shopping malls is the result of explosive growth in internet shopping and more closures of traditional mall anchor stores such as Macy’s, JC Penney, Sears and Carson’s. Some retail analysts have forecasted that 25% of malls nationwide could shut their doors by 2022.

As for Detroit, many malls have lost their department store anchors that have not been replaced, including Eastland Center in Harper Woods, Westland Shopping Center, Laurel Park Place in Livonia, Lakeside Mall in Sterling Heights and Fairlane Town Center in Dearborn. That list would expand dramatically if Sears, still an anchor at several large malls, closes more Michigan stores…. or files for bankruptcy.

Retail experts indicate that at least a dozen of Detroit’s enclosed malls will be forced to redevelop the land. That does not include two large malls that have been dead for years: Summit Place Mall in Waterford and Northland Center mall in Southfield.

“Not every mall is going to survive,” Dalto said.

The Detroit Free Press warned that every mall in Detriot is experiencing pain to some degree, even Somerset Collection in Troy that is situated in a high-income area, which has storefront vacancies in its north and south wings. Nate Forbes, the managing partner for The Forbes Co., which owns Somerset Collection, said in a statement that vacant storefronts in the mall often are for store remodels or expansions.

“When these remodels and reinvestments occur, or when we prepare for major announcements such as when we introduced a two-story Zara to Michigan last year, it causes barricades to be placed in front of retail facades,” Forbes last week. “For Somerset Collection, barricades represent progress and growth, not vacancy.”

“The worst-off mall is Eastland mall, which lost the last of its large-footprint anchor stores this year after Target and Burlington closed. It is mostly down to small local stores and lower-end national chains. Plagued through the years by gang violence and parking lot muggings, Eastland defaulted on its mortgage three years ago and will be offered to the highest bidder in a two-day public auction that begins Oct. 9,” said The Detroit Free Press.

Most of the struggling malls in Metro Detroit are being supported by sportswear and sneaker stores.

“Mall owners in many instances lowered rents as foot traffic fell and key tenants left. Leasing rates in the region’s so-called “Class B” and “Class C” malls have dropped about 20 to 25% since 2009,” according to Dalto. Detroit’s “Class A” enclosed malls have been stable, which are generally considered to be Somerset, Twelve Oaks Mall in Novi and Great Lakes Crossing Outlets in Auburn Hills.

Local governments have unveiled transformative plans for redeveloping distressed malls in their economic zones. Some plans call for demolishing indoor malls and transforming the properties into a millennial playground, with new office or light industrial complexes, apartment buildings, civic spaces, and entertainment attractions.

One thing is certain: the 20th Century-style mall is dead. The economy is shifting. Millennials – and their online shopping habits – will be a majority of the labor force in the next 6 to 8 years, and are currently reshaping the real economy.

 

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Authored by James Howard Kunstler via Kunstler.com,

The Kavanaugh hearing underscored another eerie condition in contemporary USA life that offers clues about the combined social, economic, and political collapse that I call the long emergency: the destruction of all remaining categorical boundaries for understanding behavior: truth and untruth, innocent and guilty, childhood and adulthood, public and private.

The destination of all this confusion is a society that can’t process any quarrel coherently, leaving everyone unsatisfied and adrift, and no actual problems resolved.

One element of the story is clear, though. The Democratic party, in the absence of real monsters to slay, has become the party devoted to sowing chaos, mainly by inventing new, imaginary monsters using the machinery of politics, the way the Catholic Church manufactured monsters of heresy during the Spanish Inquisition in its attempt to regulate “belief.”

“I believe her” is the new totalitarian rallying cry, conveniently disposing of any obligation to establish the facts of any ambiguous matter. It was stealthily inserted in our national life during the Obama years, when Title IX “guidelines” originally written to correct imbalances in college sports funding for men and women were extended to adjudicate sexual encounters on campus.

The result was the setting up of officially sanctioned kangaroo courts where due process was thrown out the window — by people who have should have known better: college presidents, deans, and faculty. That experiment produced not a few spectacular injustices, such as the Duke Lacrosse team fake rape fiasco, the University of Virginia fake rape fraternity incident (provoked by a mis-reported storey in Rolling Stone Magazine), and the Columbia University “Mattress Girl” saga — all cases eventuating in punishing lawsuits against the institutions that allowed them to spin out of control.

The spirit of the kangaroo court has since graduated into business and politics where it has proven especially useful for settling scores and advancing careers and agendas dishonestly. Coercion has replaced persuasion. Coercion is at the heart of totalitarian politics. Do what your told, or else. Believe what we say, or else. (Or else lose your reputation, your livelihood, your friends….) This plays neatly into the dynamics of human mob psychology. When the totalitarians set up for business, few individuals dare to depart from the party line. It’s the perfect medium for cultivating mendacious ideologies.

And so many Americans may be wondering these days whether the ideas and principles that have held this country together, even through a disastrous civil war, can endure through a long emergency of exogenous events so overwhelming that we dare not even debate them publicly. These are climate change, the crack-up of a debt-based money system, the winding–down of techno-industrial economy, and the ecological destruction of the only planet that human beings call home.

Of course, the lives of societies, like everything else in a living universe, unfold emergently. Which is to say that circumstances are in the driver’s seat taking us where they will whether we like it or not. What humans can do is decide how to ride these events. For the moment, America has opted for a grand circus of sexual hysteria. It’s really an easy, lazy choice because sex is full of easily manipulated tensions and ambiguities prone to melodramatic misrepresentation.

Next on tap for this beleaguered nation will be a constitutional crisis and a financial crisis. It’s difficult to predict the order of their unfolding, except to say that these will open up a maelstrom of losses which will then be hard to either adjudicate or correct, once our system of law is compromised. As this occurs, all the raging hysteria over sex will be overshadowed by real existential issues as the people lose their homes, incomes, and futures and desperately search for a way out of more chaos than they bargained for.

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In the rational world of textbook investing, investors should pay up for safety and be compensated for risk, but for the past 20 years, the opposite has been the case in US equity markets.

As BofA’s Savita Subramanian notes, the market has tried to get rational, but, as the chart below shows, each time it was thwarted by some plunge-protection-driven fiscal or monetary stimulus.

But that ‘irrational’ gap has finally closed…

High quality trades in line with low quality for the first time since ’99.

Now what?

Despite the fact that high quality stocks have outperformed low quality stocks in recent years, fund managers are still more overweight low quality stocks (B or Worse) than high quality stocks (B+ or Better) although their hedge may be a slight overweight  in A+ ranked companies.

So there is plenty of ammo for this to run with a push towards ‘high quality’, and further, as BofA notes…

Assuming upward pressure on the cost of capital as the Fed and other central banks shift from quantitative easing (QE) to quantitative tightening (QT), cash-rich self-funded companies are likely to re-rate and trade at premia to their levered,super-cyclical counterparts.

As we noted above, investors should pay up for safety and be compensated for risk, and as the chart at top shows, in the decades before the Tech Bubble, high quality stocks traded at fairly consistent premia to the market (and low quality traded at a discount) for the majority of that time.

And in times of volatility, high quality stocks have outperformed…

And judging by the yield curve – which has historically predicted cyclical volatility – it would appear quality is the best hedge.

Volatility is driven by factors that the yield curve forecasts, like growth and risk. A steepening yield curve typically reflects increasing growth expectations and risk appetite, which have a dampening effect on volatility; a flattening yield curve typically reflects decreasing growth expectations and building risk aversion, which tend to have an amplifying effect on volatility.

So – simply put – the ‘dash for trash’ lottery ticket-style investing of the past two decades has perhaps run its course and with vol set to reappear, safety in safe-haven quality may be the right move – of course – as we have also seen for the last two decades, if things go a little pear-shaped, The Fed will likely step and whiplash back to QE, driving another manic bid for the weakest, worst quality stocks in the market…

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Submitted by Omid Malekan, author of “The Story of the Blockchain, a Beginner’s Guide to the Technology Nobody Understands.”

In November 2010, as the Federal Reserve embarked on its second round of bond buying, Omid Malekan uploaded to YouTube a cartoon called “Quantitative Easing Explained,” which was critical of the central bank’s response to the financial crisis. Within weeks, millions of people had viewed it. Here, nearly eight years later, he says that he got it largely wrong.

It has been 10 years since the collapse of Lehman Brothers marked the unofficial start of the financial crisis. For those of us in finance who lived through that period, and the countless others affected by it, it remains hard to think of it as just a moment in history. A decade removed, the experience feels more like a mass injury that — grateful as we are to have survived — still lingers, and often manifests itself in the ongoing controversy over the government’s response.

I am a small part of that controversy, thanks to a YouTube cartoon I published in 2010 criticizing the Federal Reserve’s bond-buying program, known as quantitative easing. The popularity of that cartoon surprised me. Like most things that go viral, it was more a testament to what was on people’s minds than the quality of the work. Nevertheless, terms used in the cartoon like “The Bernank” entered the economic zeitgeist, resonating with people who knew that they didn’t like what was happening but lacked the technical vocabulary to express why.

Most of the targets of my cartoon, including Ben Bernanke, the former chairman of the Federal Reserve, have defended their actions and maintained that their work was effective in keeping the economic harm from worsening. I’m inclined to agree. Quantitative easing worked, just not in the way it was intended. Before I explain why, I need to admit what I got wrong.

Contrary to what one of my cartoon characters predicted, Q.E. didn’t “blow up the global economy.” Instead, both economic growth and the financial markets have been remarkably steady. If anything, the expansion of central bank balance sheets has dampened volatility. It’s still possible that the reversal of those policies will have a destabilizing effect, but even if that does happen — and I hope it doesn’t — I was still way off the mark.

The current economic expansion is one of the longest in history, and that too has surprised me. If you had asked me to predict the odds of another major recession eight years ago, not only would I have called it likely, I probably would have added that the very policies used to deal with the 2008 financial crisis would cause it. I was wrong about that, too.

So what did I get right? There’s a false belief in some circles that my cartoon was among the chorus of critics that predicted an inevitable debasement of the dollar — a belief possibly spurred by Mr. Bernanke’s reference to my work in his memoir. But my focus, as can still be seen in the cartoon, was on the mechanics of Q.E.

Ironically, those mechanics are something that Mr. Bernanke and I have always agreed on. He has often defended his actions by arguing that Q.E. is not the same as printing money because it only affects reserves in the banking system. Leaving aside the obvious overlap between the two concepts, I believe he’s right. Q.E. was, first and foremost, a policy designed to enrich banks. In that sense, it worked remarkably, and tragically, well.

Thanks to the one-two punch of the bailouts (some of which were also financed by the Fed) and Q.E., our banking system came back from the brink of collapse in just a few years. In 2010, Wall Street managed near-record profitability and paid near-record bonuses. This was no accident. As Mr. Bernanke argued in a Washington Post op-ed in late 2010 (and exactly one week before the publication of my cartoon), the two primary outcomes of Q.E. are lower interest rates and higher asset prices. Nobody benefits from either of those more than Wall Street does.

Left unmentioned in the op-ed were those guaranteed to not benefit, like the substantial portion of the population that doesn’t own any assets, or the countless people that could never get a loan. Lower rates are viewed as desirable in a downturn because they spur borrowing. But that belief — held by the vast majority of economists — leaves out the inconvenient truth of who it is that gets to borrow in the first place, especially in the aftermath of a crisis. The millions of people who lost their homes in foreclosures, for example, don’t. Nor do the millions more who lost their jobs.

Who does benefit? All the parties that have done disproportionately well in the past decade, like investment funds, large corporations and the wealthy. Debt levels have exploded among those groups, as have the valuations of the assets they tend to own: private companies, premium real estate and stocks. For this, I give Mr. Bernanke credit. History turned out almost as he predicted in his op-ed:

“Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

“Almost” because the only thing missing from his prediction were the words “for some people.” One of the great ironies of monetary debates over the past decade is the consensus that you should not just print money and hand it out to ordinary citizens. That, as Mr. Bernanke argued in a series of essays published by the Brookings Institution a few years ago, should only be considered as a last resort. It is better, he argues, to send money to the banks.

According to government data, almost a fifth of the United States population is either “underbanked” or entirely disconnected from the financial system — a percentage that grew after the 2008 crisis. These are the people who have suffered the most in the past decade. Their existence outside the banking system almost guaranteed that they would not benefit from policies like lower interest rates.

Quantitative easing worked, but not for those who needed it most.

There was one other thing that I got wrong about the government’s response to the financial crisis. I assumed that the effects, and side-effects, would be felt in the economic realm. But today, it’s the political, social and even technological consequences that stand out.

The growing wealth gap, which we now understand to be at least partially caused by such policies, has fueled many political and social movements. In this era of political polarization, the one belief that the far left and the far right increasingly share is that our economic system is somehow rigged. That perception has played a part in everything from the insurgent campaign of Bernie Sanders to Donald Trump’s presidential victory.

Most surprising of all, though, is that there is now a new kind of money — one borne out of the chaos of the financial crisis and the controversial policies enacted thereafter.

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