GUALFIN, ARGENTINA – Yesterday, stocks fell.
And volatility shot up.
When too many people have too many knives out at once, accidental cubism may result
The Dow Jones Industrial Average tumbled more than 370 points, Treasuries rallied the most since July and volatility spiked higher as the turmoil surrounding the Trump administration roiled financial markets around the globe.
Major U.S. stock indexes tumbled the most in eight months, while the CBOE Volatility Index [which measures investors’ expectations of price swings on the S&P 500] jumped the most since the U.K. voted to leave the European Union last June, shattering the calm that gripped markets in the past month as the crisis threatened to derail the policy agenda that helped push equities to records as recently as Monday.
Speculators who bought the VIX in timely fashion – a bet that volatility would go up – should have done well.
After falling to the lowest level since 1993, the VIX delivers a 50% up day. Don’t worry though – “experts” are telling us that “nothing can derail the market”. This is just a flesh wound – click to enlarge.
Yesterday, news broke that President Trump’s deputy attorney general, Rod Rosenstein, has appointed former FBI chief Robert Mueller to lead an investigation into possible ties between the Trump campaign and the Russians.
And with it, the risk of internecine warfare within the Deep State has increased. Some factions – the ones that wear Armani suits from Manhattan or gold braid from Northern Virginia – back the commander in chief.
Other insiders – notably the fake-news media, the universities, and the D.C. establishment – have left the reservation and are on the warpath against the Great White Father in Washington. How will it turn out?
It’s too bad Mr. Trump does not read history. He might get some good ideas. Or some bad ones. About what to expect at this stage of the empire’s decline. At least, he might brighten up his conversation with historical references and wink when he pulls our leg, just to let us in on the joke.
The president is charged with chatting with the former FBI director about ongoing investigations. Maybe he even suggested, sotto voce, that it might be good for Mr. Comey’s career if he eased up on the investigation of Trump’s former national security adviser, Mike Flynn.
These things hardly seem newsworthy, let alone impeachment worthy. Most people yawn and turn the channel to WWE wrasslin’. It’s more entertaining. And more authentic.
At this late, degenerate period of an empire’s development, we need more pizzazz… more lunacy… and more sex. The president might better turn the Capitol into a brothel, for example. He might declare his horse a priest.
Or our favorite: He might put on that mischievous smile of his and tell us he is to be worshiped – not kicked around like an empty can.
“Neos Helios” (the new sun), he should call himself; at least Latin scholars and Roman-era history buffs would get a good laugh. Roman Emperor Caligula was accused of all these things.
And as his story shows, as an empire matures and degrades, you need more colorful, and more grotesque crimes and misdemeanors to keep up with it. The old rules and virtues that made it so successful are forgotten.
Elbows come out, then knives. More and more power ends up in the hands of the chief executive, who often ends up with a knife in his back.
The most famous animal in politics: Caligula’s favorite horse Incitatus, which he appointed to the post of consul on a whim.
Poor Caligula. Rome had been a republic with democratic traditions that stretched back hundreds of years. But after Julius Caesar and a 20-year civil war, the old system was gone. Caligula rose to the purple after his granduncle Tiberius died – and after most of his own family had been murdered.
At first, he seemed like a good man for the job. Young, attractive, with an easy familiarity with the army. But then, the young emperor fell ill. He recovered. But he started acting funny. Erratic. Strange. Unreliable. Dangerous.
He began having members of his own family exiled or executed. He spent lavishly, running through the fortune left to him by Tiberius in just a few years. Then he took vanity to a whole new level by appearing in public dressed as Hercules or Apollo.
Roman historian Suetonius tells us that Caligula quarreled with the senate, started wars that made no sense, and slept with his sisters. Finally, the insiders had had enough.
Emperor Caligula, played by Malcolm McDowell in the late 1970s
After he announced he intended to move to Egypt and be worshiped as a living god, members of the Praetorian Guard – an elite unit of the Imperial Roman Army – stabbed Caligula to death.
They killed the First Lady and the First Daughter, too, for good measure. Then they found their Mike Pence – Caligula’s uncle Claudius – hiding behind a curtain. And they made him emperor.
The end: Caligula and bystanders, post assassination
Chart by: StockCharts
Chart and image captions by PT
The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.