Not friends

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Not friends

That got ugly quickly. 

Elon actually believed he could cut government spending. He was given carte blanche by his former bestie to do so. He failed.  That is the thing about Elon Musk, he is actually prepared to fail. One of his rockets fell out of the sky too this week, because that failed as well.

It is a huge tell on the momentum that government spending has. The tentacles of the people on the take run very deep. It’s Bob’s auntie’s sister’s cousin’s dog - better not cut that spending. Elon has realised it.

The man with the greatest leverage capability of the last 100 years. Unarguably capable, given every tool at the President's disposal. He couldn't do it. I rest my case about the trajectory of government spending everywhere, it is a runaway train.  

In better news. What the public sector can no longer do, the private sector might. SpaceX Revenue is about to exceed NASA’s budget. At some point this year they will cross. It’s a sad story for NASA but their place in the archives of history is secure. 

Elon’s time is better spent trying to get to Mars than wrestling with corrupt politicians who want to build underground solar panels for vegetarian goldfish. 

Meme of the Week

This fits my continual refrain; house prices are falling. It’s the collapse of the returns to labour that make us think otherwise. That collapse is now accelerating. Two years ago if you could write code that could connect to APIs and create data tables and generally process computer data in an organised way, you could have a job paying $75k a year, probably more. Now the value of that role is zero. I’m surprised nobody talks about it. Everywhere I go and everyone I know “how can I do this with fewer, or better yet, no staff”.

The nominal economy is pretend, like this week's holiday. 

Even the Australian government knows it's true. They no longer deliver pay rises, they deliver “real” pay rises. An interesting semantic twist. 3.5% for everyone. 

Pressed for Time

It’s the King’s birthday! King Charles was born on 14th November 1948 (in Buckingham Palace, perhaps the last Monarch who will be) and we rightfully celebrate it in June. 

For those who want a longer read over the weekend Bitfinex Alpha might suit. As I have mentioned before, it has the appearance of being put together by a nine year old but is surprisingly good. Note the article on page 23 about the slight modification to the rules around digital assets in 401k plans. That pool of money still sits outside our sector for the large part although progress is clearly being made. 

Euro-Trash

There were rules. To join the Euro, no country could have more than 60% Debt-GDP and the government deficit had to be less than 3% of GDP. That was the deal in 1999. It seems crazy to think about now. Hardly any country is under 60% and half of European countries exceed the annual deficit “threshold”.

It was with delight then that I read about Bulgaria’s impending membership of the Euro club. They will adopt the currency on 1 January 2026. The ECB, presumably thrilled people still want to join, issued a ‘Convergence Report’. 

In that report the ECB lays out the rules on ‘fiscal discipline’.

Bulgaria then is being held to quite a high standard in order to join this exclusive club. Meanwhile all the current members completely ignore the rules, safe in the knowledge that there is no enforcement mechanism other than “a fine”.

Austria joined the list this week, with 2 years in excess of 3%. A third of members now exceed the rule. 

None of it really matters though. The whole purpose of the Euro project was that the Euro would be a strong currency like the Deutsche mark that would attract both investment and industry over time. Far easier to invest in a currency where you know the value will remain in ten years time. The whole project failed. It failed when Greece wasn’t kicked out. Greece, it turned out had cheated to join. It lied about its deficit figures and then by 2009, had a deficit of 15% and debt/GDP of 120%. It met no criteria, and had followed no rule.

Why should anyone else follow the rules then? The whole horse and pony show is a joke, the Bulgarian convergence report is so long it has 199 footnotes. It must have taken an army of people to prepare it. 

The fact is, there are no rules. There were never any rules. The whole thing is an administrative bloat on the rest of the population, eroding their value at enormous cost with reports that everyone knows mean absolutely nothing. Christine will send out a tweet on 1 January 2026. Another victory.

Further information

Our May 2025 report to investors can be found here.