The Pickpocket Economy
All fueled by the Golden Age of Grift in a faux gilded age of greed.
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▶I totally missed this while otherwise preoccupied with The Move…
Kudos to Bloomberg Businessweek in its latest issue for saying the (thankfully) not-so-quiet part out loud...
I’m not just referring to the headline blaring “The Golden Age of Grift,” which is also the cover of the magazine’s latest issue…
But it’s the subhed…
Why it feels like everybody is trying to pull one over on you.
That sentence nails what has been increasingly palpable for well over a year, which is when the phrase “the Golden Age of Grift” first started showing up in this space. It felt like the natural reverse-evolution of “the golden age of fraud,” famously coined more than a few years ago by short-seller Jim Chanos… as all corporate chicanery and sins were excused and ignored by this relentless bull market.
The trend shifted into high gear under the administration of a president who ran a casino that went bankrupt... and who has since extolled the virtues of bankruptcy laws. As I wrote in January 2025…
A grift here, a grift there, seems to suddenly be a grift everywhere:
The only thing missing, I mused, was an ETF with the symbol: GRFT. I added…
With this latest rollout of the government’s new Stargate AI program, front-and-center is Softbank CEO, Masayoshi Son. Riddle me this: How is it that his company is always right there with kajillions of dollars to commit, as if he has access to more money than God? (Asking for a friend…)
Since then, take your pick, whether it’s Strategy’s Michael Saylor claiming that his offering of a 12% yield on one of his preferred stocks is “safe” for retirees, or the rise of the “can’t lose buy on the dip” mentality of retail speculators, or the rapid mainstreaming of prediction markets, or the push to less transparency by public companies…
Or so many other things we’ve discussed here previously, only to be topped off by the most audaciously “out there” debt-fueled, circular flow of money any of us has ever seen… as the hyperscalers teeter on being the tipping point for the next credit crisis, while they build what feels like, smells like, looks like a Jenga tower like no other…
All while the regulators, or what’s left of them, look the other way. Not that what they’re doing involves anything more than aggressive accounting – and in plain sight, no less. But still, as one friend puts it…
Buying your own revenue should have consequences for the P&L, but since it doesn’t, the grossly irresponsible behavior continues. GAAP is meant to exist for a reason. This industry is exploiting every loophole in GAAP with these deals, off-balance-sheet structures, and depreciation schedules that do not reflect reality.
He’s right, but cheating on GAAP is no different than cheating on taxes – push as hard as you can until you’re caught. And, given the current environment: there has NEVER been a better time to do it… and not get caught. GAAP, after all, gives you enough rope to hang yourself, if you so please.
And this is, after all, the Golden Age of Grift. But beware, especially when it seems as though fraud and fakery are great again. As Peter Atwater explained when all of this was just getting started in his Financial Incytes newsletter, which focuses on contrarian signals…
When that happens, I would brace yourself for a capitalism backlash. After the dot.com bubble burst and the housing bubble burst, the third time will be anything but the charm.
More punch, anyone?
▶Oh, and before we go… here’s a fun one from my friend Harold Bradley, who once ran billions of dollars as CIO of a large foundation…
Quant Friend: I don’t know how you can be bullish on gold. We’ve gone through all our models, our correlations and our training. When rates go up, gold goes down.”
Me: “Well, when I was starting my career, rates were going up A LOT and so was gold.”
Quant Friend: “That’s ancient history. Won’t happen again. And anyway, I couldn’t buy good data to model that period, so our engineers just tweaked a few assumptions.”
On that note, it’s great to be back. New Red Flag Alerts in progress.
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DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) I have no position in any stock mentioned here.
I can be reached at herb@herbgreenberg.com.