“We Are In The Golden Age Of Fraud”

“Elon Musk has personified the hopes and dreams of this bull market; Tesla burnishes its results through aggressive accounting; it’s a culture of deception because it is selling self-driving, which doesn’t yet exist.” – Jim Chanos from “We Are In The Golden Age Of Fraud” (Financial Times)

Jim Chanos is perhaps the most well-known remaining short-seller in this market.  Don’t be fooled by his demure characterization of Elon Musk and Tesla.  It’s calculated diplomacy. The numbers are far more than just polished up to look good  – the accounting is not just “aggressive,” it’s fraudulent, and Chanos knows that as well as anyone.

Chanos describes the current environment as “a really fertile field for people to play fast and loose with the truth, and for corporate wrongdoers to get away with it for a long time”. He reels off why: a 10-year bull market driven by central bank intervention; a level of retail participation in the markets reminiscent of the end of the dotcom boom; Trumpian “post-truth in politics, where my facts are your fake news”; and Silicon Valley’s “fake it until you make it” culture, which is compounded by Fomo — the fear of missing out. All of this is exacerbated by lax oversight. Financial regulators and law enforcement, he says, “are the financial archaeologists — they will tell you after the company has collapsed what the problem was.” (Financial Times)

I have said many times that Tesla and Elon Musk embody and reflect the extreme degree to which the U.S. system has defined deviance downward into what is now a complete Banana Republic controlled by crony-capitalist elitists who are putting the screws to the middle class. The money printed by the Fed is nothing more than the thinly veiled bailout of the biggest banks – nothing more – effecting the greatest wealth transfer in history.

The fraud and corruption is blatant. And there’s nothing the masses can do about it at this point. The U.S. economic, financial, political and legal system is now amalgam of “1984” and “Atlas Shrugged.”  Eventual collapse is fait accompli.

Chanos himself burnishes the adjectives he uses to convey the degree to which the U.S. system has been engulfed in fraud, corruption and open theft.  In my opinion, Francisco D’Anconia in “Atlas Shrugged” describes the U.S. perfectly in this excerpt from the famous “Money Speech:”

Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.

2 thoughts on ““We Are In The Golden Age Of Fraud”

  1. Well done Dave while a bit ponderous at times the Atlas Shrugged should be on the reading lists with 1984 amongst others. To use the Tesla foil as another indicator of the corruption and audacity of the markets seems in line with the parallels in Atlas. Muskgie is beyond fishy and his ability to carry on like Howard Hughes is a bit strange but then he has the big persona. The fraud is off the scales but the fraud company is systemic. I drive thru Spirit in Wichita 5-10x a week and after another round of layoffs announced this week and seeing the fuselages for Boeing jets stacking up like cordwood I too wonder how Boeing is so over valued. Obviously as you suggest the fraud charade must continue until it doesn’t.

    Thinking its time to re-up on the Mining stock Journal. I have a few of the stocks recco’d in there but got the tips after they had a run and at levels higher than you first covered. Well done on several picks. Working on a triple in K-92 think it still has lots of room to grow. No debt and a projected mine extension with a $2 billion NPV at 5% @$1900 AU. Two million Oz. AU/EQ.

  2. A tinpot outfit like Wirecard AG suddenly can’t find $2 billion. Result: a wave of phony outrage in politics, the media and regulatory authorities.
    Then companies like Tesla, GM and others practice accounting fraud an order of magnitude greater and nobody gives a d***.

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