Britain’s 1820s debt “coupon recuts” reduced government bond yields after war-driven debt surged, pushing investors into speculative bubbles before a banking panic followed. Today, Fed monetization, distorted inflation metrics, and weakening credit markets are seen as a modern parallel, fueling excess speculation in AI, crypto, fintech, and space stocks. As private credit deteriorates and losses emerge, the risk of a broader liquidation cycle continues to rise.
Markets reward truly extraordinary businesses with premiums far above book value — but today, everybody seems “extraordinary.” Humans struggle to accept absurdity and instead rationalize contradictions. Increasingly, LLMs do the same: rather than confronting irrational valuations, they manufacture coherence. If you refuse to “fudge the absurd,” you eventually end up living mentally on the other side of the mirror. Laugh or cry, your choice.
War embargoes trigger a recurring cycle: supply shocks drive price spikes, speculation surges, trade routes shift, and liquidity tightens. The Civil War cotton crisis mirrors the 1970s oil shocks and today’s energy markets—featuring demand destruction, falling real incomes, and cost-push inflation. These booms end in crashes, as capital misallocation and banking stress unwind the speculative excess.
Solid-state batteries may disrupt lithium-ion more than markets price in. They use lithium-metal anodes and solid electrolytes, boosting energy density, safety, range, and charging speed. But success depends less on chemistry than new manufacturing: continuous ceramic or roll-press processes, not legacy liquid-electrolyte lines. The thesis argues incumbents like CATL face retrofit and scale hurdles, while Honda and QuantumScape may hold undervalued final-size production advantages.
The text challenges three beliefs: rising gas prices, renewables increasing costs, and higher renewable penetration raising German prices. Data from Spain and Germany shows renewables lower prices via the merit-order effect. Germany is moving toward similar outcomes, aided by rapid storage expansion (batteries, sand, molten salt). Seasonal storage and low marginal costs reduce gas dependence, stabilize prices, and improve energy sovereignty, with full decoupling expected by 2027–2030.
In the 1820s, post-Napoleonic UK cut gilt coupons. Investors, denied real yield, chased returns in speculative ventures, funding dubious projects. Gilt demand collapsed, causing banking instability; the Bank of England injected liquidity. Today's parallel: US yield repression fuels risk-taking, lower-quality credit, Fed monetization. Gundlach warns a Treasury coupon cut could repeat this: yield-seeking bubble, credit deterioration, contraction. Lesson: cheat on debt, get a bubble, then a bust.
The Minsky clean-up is not unique to today or the US. A similar dynamic occurred in the UK in 1825 after post-war debt led to changes in gilt coupons. Today’s SPAC boom echoes past speculative excesses. As always, the cycle turns when credit tightens. Cutting gilt coupons has two key effects: it shifts relative yields and disrupts credit markets.
AST SpaceMobile aims to deliver space-based cellular broadband directly to standard smartphones via large BlueBird satellites and proprietary software. It partners with major telecoms, using their spectrum in a B2B model. However, high CapEx, short satellite lifespan, and strong buyer power pressure margins. Competition from SpaceX, Amazon, and Apple threatens its moat. Despite a compelling vision, its valuation appears overly optimistic given risks and capital intensity.
Private credit and banking rules increasingly distort risk signals. Mark-to-model (ASC 820) enables wide valuation discretion. New delinquency rules erase long-term stress after 12 months, improving NPLs mechanically while weakening analysis and delaying warning signals (NIM impact). CDS lacks coverage in private credit. LIBOR’s narrative is contested, yet SOFR replaces a forward-looking rate with a backward-looking one, removing embedded market expectations and degrading visibility of risk.