I read two articles yesterday on stock markets and their detachment from reality. The first was in the Financial Times, and was by Gillian Tett, who I increasingly see as an establishment shill these days. Her piece of puff, because there appeared to be remarkably little of substance to it, began like this:
Welcome to the paradox of 2026. War in the Gulf has created “the biggest energy crisis in history”, according to the International Energy Agency. Violence has consumed other parts of the Middle East, as well as Sudan and Ukraine; populism, nationalism and angry polarisation are rising in the west; debt burdens are sky-high; climate change is accelerating; and the AI revolution that so thrills Silicon Valley titans is also threatening to destroy jobs. Meanwhile, American consumer confidence has slumped to its lowest level on record.
But that is only one side of the story. We live in a golden age of science, which is not only unleashing a widely discussed revolution in AI but less-noticed miracles in life sciences and green tech. The global economy is still growing by more than 3 per cent a year. And perhaps most surprisingly, America's stock market has recently been hitting record highs.
This is, of course, a trend I have also been noting.
As she then noted, although 62% of all Americans supposedly own shares, the impression that this gives of a share-owning society is deeply misleading, because only 10 per cent of Americans control 88 per cent of the total value of US shareholdings, and it then has to be understood that at least one third of the value of those holdings is represented by shares in just seven tech companies.
Tett then tried to explain why, despite the world around us steadily falling apart, stock markets are not reflecting this.
She came up with several reasons, including belief in the hype around AI; the belief that, despite everything, stock markets are actually delivering strong returns; and possibly the belief that they have always, ultimately, shrugged off systemic risk.
She then acknowledged that, as one fund manager told her, there is in reality nowhere else for institutional savers to put their money, and so it just keeps flowing into stock markets, come what may, confirming in the process my belief that what we are seeing is unthinking, and, I think, uncaring, institutional saving that indicates utter indifference on the part of fund managers to the interests of those people whom they are meant to serve.
Getting a slight nod along the way was a reference to the possibility that this bubble might burst, as evidence for which Gillian Tett quoted the remarks from Sarah Breeden of the Bank of England, which underpinned my video on this issue a little over a week ago.
But, all being said, and this being commentary in the Financial Times, the conclusion could be summarised as “things are going well because they are, and that's the way they should be, and always will be”. That was not analysis. It was hype intended to perpetuate the belief that those with what they consider to be wealth, based on quite extraordinary share valuations, will be able to maintain it, come what may.
The alternative viewpoint came from a newsletter that was forwarded to me. I had not heard of the publication before. It's called Prof G Media. Some of the analysis of continuing high US stock markets sounds a bit like Tett:
There are a couple potential explanations. First, historically, wars aren't that bad for U.S. markets. The U.S. is isolated geographically and insulated by having the largest and most liquid financial markets in the world. During times of uncertainty, the American equity and credit markets are seen as safe havens.
The average U.S. stock market decline during 30 major geopolitical events since 1939 was just 4%, and stocks typically bounced back within six weeks.
And then there was this, which is miucy nore relecenat, because unlike Kett it gets to the core of the issue:
Consumer spending now hinges more on the wealthy than the middle class, and high-income consumers are less affected by energy costs.
The top 10% of earners account for half of consumer spending, or a third of GDP, and the highest-income quintile spends only 2% of their budget on gasoline. That's compared with low income households that spend nearly 20% of their budgets on gas.
I've been calling this the ketamine economy. Ketamine is dissociative. You leave your body and watch your life from the outside. That's exactly what the Dow and the Nasdaq do. They give the illusion that society is doing well, but they're not a measure of prosperity. They're a proxy for earnings and the wealth of the top 10%.
Think about what's actually driving this market. Fifty percent of consumer spending comes from the top 10%. Do they care that gas is $6 a gallon? It doesn't register. Tech dominates the market indexes. What does chaos in the Strait of Hormuz do to Nvidia's margins? Nothing.
This, I suggest, is what analysis does look like. What is being suggested is that those with wealth are living in a bubble, supported by their already disproportionate earnings, which are then artificially inflated by high share prices. These are pumped by mindless institutional saving of the sort I noted above. The consuenqce is that those whio beenfit opersonally from this are so removed from the reality of life that the potential shock heading our way, including to fuel, energy, and food prices, is something they have become quite unable to identify, even if they wanted to, which is not their inclination because they are all too happy with the pretence that Gillian Tett wishes to perpetuate, that all is well in the world.
The consequence is, as Prof G Media put it, that these people are living in what looks like a drug-crazed bubble where, so long as the money keeps flowing and the valuations keep rising, reality can be so easily ignored, and this is precisely what they do.
The problem for the rest of us is twofold.
The first is that these are the people who also tend to have the most power in the world, and they are the people who are at present most shaping our politics.
The second is that I am told you can come down from ketamine. Bubbles burst, in other words. Reality can invade. And that will happen here.
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Thank you and well said, Richard.
Yesterday, Gerard Araud, one of France’s former top diplomats and a tv pundit, wondered the same and added he felt like standing on a beach before a tsunami.
I will write to Mike and you privately to explain Tett’s shilling. It goes back two decades.
Thanks
And then there was this, which is much more relevant, because unlike Tett it gets to the core of the issue:
So true about the ‘top tier’ living in an entirely different reality from those who notice any increase in the price of things
If you get a high from something, you will continue to want to do it. This is what is behind me wanting to play the guitar or getting new affordable homes built for example.
The question is, how can these ‘highs’ be socially useful?
It stands to good sense that the less you have to worry about, the less you are impeded by fear. Excessive and easy to come by wealth turns off the the human need to interact with and recognise the needs of other people in order to achieve personal safety. Thus the reciprocity of human relationships are broken. You do not need anyone for you have loads of money
We know what this malady is called. It is called Pleonexia.
Pleonexia destroys the natural propensity in human beings which is inter-dependence. In fact, too much money as it were, makes some of us less human.
It is about time that the so called highs of wealth were more critically examined, and mitigated.
Agreed
I had never heard the word Pleonexia, thank you for introducing me to it.
I think you have highlighted a word to me which sums up much of how I feel about the world and the messages I see.
The age of hyper-individualism, greed is good, to never ask for help as it’s a sign of weakness.
I feel my generation was bought up on the idea that the world is your oyster, you can be what ever you want to be and do whatever you want to do. And here’s the down side, but if you fail, it’s all YOUR fault, because there are no barriers to success in today’s world! So the only weakness is you and you as a person.
And we wonder why mental health is deteriorating rapidly.
Rising prices kill the poor but don’t affect the wealthy.
Up to a point, “shortages” work the same way.
At this point as things in the real world escalate the “middle class/formerly comfortable”, begin to squeal, and the press start to notice (because that’s where the MSM editors are).
But eventually, the shelves start to empty, the forecourts close, and the LPG isnt delivered to the off-grid rural retreats and even the wealthy can’t locate the jet fuel, and are affected by power cuts and food shortages, like everyone else. As they can’t fix anything themseves, and the middle class and the poor are no longer available to do the planning, thinking, managing and labouring or delivering, cooking, caring and cleaning, it becomes very difficult for a country/planet to recover.
The wealthy and the articulate middle have been warned about this for a LONG time, and for whatever reason, have failed to pay attention or take action.
They seem to feel that the answer lies in proscribing protest and cutting civil liberties.
Somewhere in all this there should be a “government”, but its so long since we had one, I’ve forgotten what they look like. Recently, our rulers just seem to function as the top enabling layer of an increasingly militarised authoritarian enforcement machine to keep the population in check without actualy making anything better.
On Friday morning, as they peruse the voters’ verdict, they have a choice. They can repent (from the koine Greek, metanoia, meaning turn around or change direction). It was, after all, what they promised us in July 2024.
And we will have lost the right to gather and protest about any of this.
Meanwhile our government is gearing up to join the EU in its intent to take us all to war with Russia on behalf of the USA…
I do not think that is what the EU is about. And we are already in NATO.
The FT, Wall Street Journal, etc spout the accepted mantra “all is well with the world because we are making serious money”.
Stock markets are gambling dens.
The AI boom is beginning to look like a pack of cards. There is so much inter company funding through corporate bonds with mental interest rates and so far no money being made to repay borrowing obligations.
What is the UK government doing to get ready for the potential economic downturn? Making regulations for airlines to cancel flights because of the rising aviation fuel costs and ensuring that airlines do not lose their airport slots.
The New York State Common Retirement Fund one of the nation’s largest public pension funds, was valued at $297.8 billion as of December 31, 2025. It has been investing heavily in the notoriously sketchy area of private equity, more than $1.4 billion toward the asset class in March 2025 alone, according to its monthly transaction report. The spree comes after the New York State Common Retirement Fund committed about $500 million during the previous three months combined.
CalPERS, the California Public Employment Retirees System, the largest in the US, has $556.3 billion in portfolio, for ~ 2 million people. $10.5 billion, or 10.2%, is in private equity.
So we common people, public employees and retirees, are unable to get out of the way of the oncoming train.
Also, the American Farm Bureau Federation reports that ~ 70% of 5,700 respondents to a survey report being unable to afford all the fertilizer they need.
Farm diesel prices have increased 46% since the end of February, raising costs for fieldwork, fertilizer transport and irrigation during both planting and growing seasons.
Nearly six in 10 farmers report worsening finances, reflecting rising fertilizer and fuel costs during spring planting and underscoring the urgent need for immediate economic assistance to keep farms gates open.
These data tell us that absent Congressional and White House bailouts, we are expecting failing crops, failing bank loans, failing farms, unemployed farm workers, and pension funds that support public employees losing significant investments.
Thank you