Easy come, goeasy

/ Alex Good / 15 Comments

Actual screenshot of goeasy’s stock price taken at the end of last week.

Last week shares in the Canadian subprime lender goeasy (they don’t capitalize the “g”) crashed 70% and it’s an open question whether the company, which at the start of the week had a market cap of over $5 billion, will survive. For the last several years goeasy has been a champion dividend stock, paying investors big returns. But one of their divisions specializing in loans for autos and “powersports” (ATVs and snowmobiles) recently had to report a much higher than expected amount of charge-offs (loans that were not going to be collected). All dividends have been cancelled. The bloom is off the rose.

Suspicion has now been raised that management knew about the trouble the company was in and was concealing this information from investors. Comparisons have been made to the kind of thing that happened in the mortgage meltdown in 2008, and what is happening with private credit markets now (I should point out that goeasy is not a mortgage lender, nor is it a private credit company, being publicly-traded.) Some class action suits are in preparation, and as of this writing it’s still unclear how this will all play out.

I have some goeasy stock, but not a lot, and at this point I’m assuming it’s a write-off. Easy come, goeasy. Overall I’ve done well as an amateur investor the last thirty years so I’m not jumping out of any windows. You win some, you lose some. Still, the news did make me want to “think in ink” a bit here about what’s going on. What other shoes are waiting to drop?

I think you should always assume the worst in life, as it means you’ll have fewer bad surprises. So where are markets at and where are they heading?

If you listen to voices on the Internet, and there are a lot to listen to, you might have picked up on the increasing note of panic. Does this reflect something real, or is it just that these are the sort of voices that get magnified by the algorithm? I’d be inclined to attribute most of it to clickbait, but there are some prominent voices joining the chorus of doom, with much talk of a “reckoning” that’s on its way. Which leads me to a preliminary observation: if there is some kind of collapse coming it will be, if not the biggest, the most widely predicted in history.

I think there are some real grounds for concern, and I’ll arrange them under four headings. The four horsemen, if you want to pump things up, of the market apocalypse. And just to underline a point in advance: these are all interconnected. Each one affects all the others.

(1) Credit crisis:

In his book MegaThreats the economist Nouriel Roubini uses the concept of debt as a master metaphor for the various faces of the polycrisis the modern world faces, from economics to politics to environmental collapse. He has a point, especially when looking at the big picture. A bill is coming due for the way we’ve been living beyond our means, both as states and as households and individuals. Since 2008 the national debt in the U.S. has gone from $7 trillion to $38 trillion. And it’s set to explode even further, given the massive tax cuts handed out by Trump. The “debt death spiral,” where a government must borrow just to pay interest on the debt, is in sight.

More specifically, however, what we seem to be entering into now is the tight-money part of the credit cycle. This is partly what happened in 2008 with the financial crisis. A lot of bad debt had to be written off, leaving lenders feeling gun-shy. This is the same signal being sent up by what happened to goeasy. And, on a much larger scale, it seems to be what’s behind the headlines regarding the private credit market, whose full exposure to bad loans we can’t determine as it’s not publicly reported. But for sure some lenders are now going to have to take a haircut or go under (again, as in 2008). This will of course have knock-on effects throughout the rest of the economy. Someone is lending lenders that money, after all.

(2) Economic stagnation:

Unemployment numbers in both Canada and the United States have slipped into the red, with Canada losing a remarkable 84,000 jobs just last month (the U.S. lost 92,000). The only sectors that can still be seen as holding their own are health care and some government work. Last year was also a record year for corporate bankruptcies in the U.S. And even the stock market (“the DOW is at 50,000!”) has been kept afloat by questionable means. As I understand it, take away the investment in building A.I. infrastructure and the U.S. economy shrank this past year.

(3) Incoming inflation shock:

In the tight-money phase of the credit cycle prices usually go down. This is what we see already happening in many housing markets, and it comes with its own set of problems. But that doesn’t mean inflation isn’t a bigger threat, and what Trump has done with his scattershot imposition of tariffs and beginning a war in Iran makes it hard not to see prices on essentials (food, energy) going up. Also, given Trump’s resistance to raising interest rates, it isn’t clear to me what his plan would be to address that situation. This may lead to quite a whipsaw effect, and if consumers choose (or are forced) to cut back on their spending that could lead to a greater slowdown in the economy, more unemployment, and market collapse.

(4) AI bubble:

Is all the investment going into AI the sign of a bubble? The current valuations don’t make sense to many analysts. Still, maybe it isn’t a bubble, at least to the extent that crypto is (though I don’t know if I’d characterize crypto as a bubble so much as call it gambling app, which makes it the perfect investment vehicle for our casino/betting economy). As with crypto, or a casino, there may be winners in AI. But there will be more losers, and they now stand to lose a lot, with (again) major knock-on effects throughout the rest of the economy. We’ve already been getting reports of this in connection with rising energy costs due to how much power AI data centers use and predictions of massive job losses. And that’s just the start.

So these are the four big areas of concern I have moving forward. To be honest, the only reason I’m not more full of doom and gloom is that nobody knows anything. We could ride this long bull market for another ten years. But it’s good to keep the potential downside in mind. You’ll often hear it stated how the market, in the long run, always goes up and that all you have to do is invest in index funds and you’ll be fine. Timing the market never beats time in the market, as the conventional wisdom has it. And this is good advice. But I’d want to register two caveats.

In the first place, when the market goes down it can stay down or be flat for ten years or more. It’s done that twice in my lifetime, in the 1970s and the 2000s. You could easily see the last 125 years as consisting of just two or three big booms. So the wealth elevator may be out of order for a while, and the “long run” might need to be longer than most people will want or be able to manage.

The second point is that while it’s true the history of the market is one of growth, there’s no reason to believe in that as some kind of natural law. The market doesn’t have to go up, even in the long run. Because Canada and the U.S. have never suffered a total collapse of their monetary system, with money becoming worthless and “blood in the streets,” doesn’t mean it’s impossible. Just something to keep in mind.

Holmes: The Darkwater Hall Mystery

/ Alex Good / 10 Comments

This is called a “mystery” in the title, but I think it would have made more sense to have called it, as Watson dubbed most of Holmes’s early cases, an “adventure.” Holmes himself isn’t involved, having been sent away by Watson for some much needed rest and recuperation, and the story has our narrator heading off alone to Wiltshire and the usual pile of a country estate, apparently to act as a sort of bodyguard for Sir Harry Fairfax, the sixth baronet of Darkwater Hall. Sir Harry had sent one of the local peasants, a degenerate churl by the name of Black Ralph, to jail (or gaol, as they say in the old country), and now that Ralph is out he is apparently gunning for revenge.

Watson, using skills picked up from assisting Holmes, is able to figure out some elementary things and in the end he stops Ralph from killing Harry, though not without a bit of luck. There’s no mystery to any of this though. The only mysterious business going on is the S&M playacting that the lord and lady are up to, and Watson just blunders his way into finding out what that’s all about. Otherwise, this seemed a pointless sort of a story, interesting mainly for being written by Kingsley Amis and for the sexy subtext (it was first published in Playboy). This latter point shouldn’t be held against it though because Playboy really was a magazine worth reading, back in the day. When you were done looking at the pictures.

Holmes index

Archer: The Barbarous Coast

/ Alex Good / 8 Comments

At the end of my review of The Drowning Pool I drew attention to the scene where Lew Archer goes for a swim in the “cool clear Pacific.” The ocean is an oasis of purity despite the foul run-off dumped into it from the city, which in an earlier novel he had likened to a river of shit. “They poured their sewage into it,” he says of the ocean, “but it couldn’t be tainted.”

Only a few years later in The Barbarous Coast things have gotten worse. At the end of this novel the mentally shattered Isobel Graff sits on the beach and shakes her fist at the “muttering water” of the Pacific, calling it a “dirty old cesspool.” So much for not being tainted. Things have taken a grim turn, even in Malibu.

Or maybe I should say especially in Malibu. And Hollywood. Archer casts a very cold, dyspeptic eye on L.A.’s la dolce vita as he once again takes on a missing person case that ends tragically. The beautiful people of Malibu and Hollywood are all somehow on the make, not to mention in bed with gangsters. They disgust Archer. At the Channel Club’s upscale (and naturally decadent) pool party he grumps how “I felt like slugging somebody. There wasn’t anybody big enough around.” The men are “faeries” (which always means a wimp, going back to Chandler) or phonies. Simon Graff has “lived too long among actors. He was a citizen of the unreal city, a false front leaning on scantlings.” That “unreal city” is I think an allusion to The Waste Land, and when Archer overhears a conversation about arranging an abortion at a party it also made me think of that poem.

Macdonald, who had a Ph.D. in English and was, according to his biographer, “one of the most brilliant graduate students in the history of the University of Michigan,” knew what he was doing. And as I’ve mentioned before, Archer is a learned man as well when it comes to literary matters. When his screenwriter friend asks him if he’s read Flaubert’s Salammbô he responds “A long time ago, in translation. I don’t remember the story.” It’s hard to imagine another private detective of this or any other age apologizing for this. (For the record, I haven’t read Salammbô, even in translation, and don’t know the story either.) In a later conversation at the same party a drunk woman explains how her words don’t always come out like she wants them to. “Like in James Joyce,” she says. Then she goes on to ask if Archer knows that Joyce’s “daughter was schizzy?” Now this is something I was aware of, but it’s not a factlet I would expect to hear at a Malibu party, even in 1956.

Given this highbrow showboating, I enjoyed it all the more when Archer tells the screenwriter that detective work keeps him in beer and skittles, then immediately asks “By the way, what are skittles?” The writer says he lets the studio’s research department look things like that up. In case you are wondering, skittles weren’t a candy back then but a pub game where you try to knock down wooden pins.

The story plays out in a similar fashion to the earlier novels. As noted, it’s another missing person case, though that’s not how it starts out. Archer is feeling his age, which is pushing 40 (the same as Macdonald when he wrote the book). And nearing 40 was middle-aged in the 1950s. Archer’s even giving some thought to dating, as “A man got lonely in the stucco wilderness, pushing forty with no chick, no child.” As it is, his sidekick is a poor romantic sap from Toronto who ends up getting the living crap beaten out of him on several occasions. It’s not a good idea to hang out with these hard-boiled types. “Call me trouble looking for a place to happen,” is how Archer describes himself and his job. No wonder he’s got no chick.

Again the plot is set in motion by a hot girl. Or a couple of them actually. You could blame the older men who chase after them, but the one girl is referred to as “a loco mare in heat” (that’s from her father) and the other a “sexburger.” Archer himself is chaste, though as always his male gaze lingers on every breast in his area code. And one can understand why when they overflow the front of a strapless dress “like whipped cream.” But when we get a description of a breast rising when a girl raises her arm to brush her hair we may wonder at why this part of the female anatomy so fixes his attention. That is what breasts do. Why is Archer always staring?

The plot is bonkers. Macdonald tosses us a kind of explanation at the end and you’ll really have to focus to keep it straight. There’s blackmailing and double crosses and a lot of what seemed to me to be pretty indiscriminate murder. Not to mention some dodgy pop psychology that the head shrink at a sanatorium walks us through. I thought it was all a load of hooey, and the ending really felt rushed, but by this point I think an Archer novel was pretty much set and readers knew what to expect. And they wanted more.

Archer index

Swamp Thing: Protector of the Green

/ Alex Good / 16 Comments

Swamp Thing: Protector of the Green

Swamp Thing joins DC’s New 52.

And . . . I was impressed with the results. Scott Snyder had a template he had to work with, re-introducing us to a lot of the basic Swamp Thing mythology and recurring characters while hitting the reboot button on Swampy himself. As things kick off here Dr. Alec Holland has retired from being Swamp Thing and, fully human again, just wants to go back to living a normal life.

As if!

It’s not long before that wise forest council the Parliament of Trees is getting in touch and telling him that he has to become the Knight of the Green and defend the world from an invasive force of death known as the Rot. Apparently there are three primordial powers in the universe: the Green (plants and such), the Red (animals), and the Rot (death). We don’t hear anything about the Red in this book until the end, where it turns out that Animal Man may be its avatar or knight. The main conflict is between the Greens and the Rot.

The one problem Snyder can’t overcome is the fact that you know damn well from the start that Cross is going to take on the mantle of the “Protector of the Green” and become Swamp Thing again so he can once again become “the most powerful Green Knight on the planet” and fight the Rot. The story arc, which is tried and true, was set. All that had to happen was for his girlfriend Abigail to be threatened, which doesn’t take long.

The rest of the story, though, is quite good. Abbie, it turns out, is compromised. Something to do with her Arcane blood means she is turning into an avatar of the Rot. Indeed she’s going to turn into a Rot Queen who will rule “on her throne of bent flesh” alongside her king, Sethe. And hats off to Yanick Paquette for coming up with an original look for these two baddies. A monster with a fresh appearance is hard to do when it comes to horror movies and comics, and I thought he hit a home run here with Sethe being a sort of feathered rooster skeleton with a Venus flytrap head and Abby turning into something that mainly looks like a giant mantis, though with more of an ant’s head. Also worth noting in the art department is the homage to the psychedelic page layouts of John Totleben’s work on Saga of the Swamp Thing (there are other glances to the history of Swamp Thing in the Wrightson Diner and Totleben Motel, but those are more like Easter eggs). This is a good-looking comic throughout.

I also liked how various characters and elements are brought back in rejuvenated form. The Parliament of Trees are a grumpy bunch, but after being burned down in their rain forest home Swampy manages to regrow them in his own swamp. The zombies with backwards heads from Alan Moore’s turn at the helm of the franchise are here again, and a lot of fun to see stumbling around. And of course Anton Arcane and his Un-men are back as well, being allied with the forces of the Rot. In fact, Snyder goes a step further in retelling Swampy’s origin story by making Arcane responsible for that too in an unexpected way.

In sum, I thought this was a great comic: true to the spirit of the character and history of the comic, dialing up some truly grotesque horror and solid action, and opening a tap into cosmic terrors without ever going the full Alan Moore. The New 52 was a mixed bag in a lot of ways, but they didn’t put a foot wrong here.

Graphicalex