Irrational Exuberance 2.0

Irrational Exuberance 2.0 Has Arrived on Wall Street
https://finance.yahoo.com/markets/stocks/articles/irrational-exuberance-2-0-arrived-132600422.html 

AI Tackles an Erdos Problem

A Famous Math Problem Stumped Humans for 80 Years. AI Just Cracked It.
https://www.wsj.com/tech/ai/ai-math-solves-erdos-problem-openai-c4029e84
The math world is losing its mind over the new solution to an Erdős problem. This is what AI found, how we missed it—and why it matters. 

People/Politicians are Not Rational Actors

Jeremy Warner:
https://www.telegraph.co.uk/business/2026/05/30/a-year-from-now-nobody-will-be-talking-about-iran/
In the lead-up to the First World War, stock markets sailed blissfully on: not because investors were unaware of the ever-louder drum beat of impending conflict but because they collectively assumed none of the great powers would be stupid enough to stumble into the catastrophe of an all-out war.
That view was perfectly encapsulated in a highly influential book by Norman Angell, a British journalist, published a few years before the outbreak of hostilities. Angell’s The Great Illusion argued that the economic costs of war and the accompanying disruptions to trade were likely to be so devastating that nobody could possibly hope to gain by starting one.
Economic interdependence between industrial countries would be “the real guarantor of the good behavior of one state to another”, Angell argued. This had never stopped countries from going to war before but it was also true that the level of economic integration and interchange between elites in Europe at the time was without precedent. Sadly, it didn’t help. Yet markets refused to believe in bad outcomes right up to the point where troops were mobilized and borders closed. 

UK's 'Worklessness' Crisis

How Britain sank into the worst jobs crisis in two centuries
https://www.telegraph.co.uk/business/2026/05/29/britain-sank-worst-jobs-crisis-two-centuries/ 

One in seven university graduates are not in education, employment or training (NEETs), according to a flagship review that warned government policy was making it harder for young people to find work.
https://www.telegraph.co.uk/business/2026/05/28/one-in-seven-university-graduates-are-neets/ 

Japan's Demographics

How Japan Lost 3 Million People in 5 Years
https://www.nytimes.com/interactive/2026/05/29/world/asia/japan-census-population-decline.html
The staggering population drop underscores the depths of the country’s accelerating demographic crisis.  

Capital versus Labor Share of Income

The Record Divide Between Corporate Profits and Worker Pay
https://www.wsj.com/finance/stocks/the-record-divide-between-corporate-profits-and-worker-pay-ea4c75bc
Labor’s share of economic output just hit an all-time low, while the profit share neared a record. It helps explain why consumers feel so glum. 

The Big Money in Today’s Economy Is Going to Capital, Not Labor 

https://www.wsj.com/economy/jobs/capital-labor-wealth-economy-2fcf6c2f

Soaring profits and stocks funnel more of GDP toward companies, their top employees and shareholders. AI will intensify this trend.

Can productivity boom lift US workers' record low share of GDP? Unlikely
https://www.reuters.com/markets/us/can-productivity-boom-lift-us-workers-record-low-share-gdp-unlikely-2026-02-11/

‘We deserve more’: US workers’ share of the pie dwindles

https://www.theguardian.com/us-news/article/2024/may/06/workers-income-labor-

 

“Perspectives on the Labor Share,” by Loukas Karabarbounis

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.38.2.107

As of 2022, the share of US income accruing to labor is at its lowest level since the Great Depression. Updating previous studies with more recent observations, I document the continuing decline of the labor share for the United States, other countries, and various industries. I discuss how changes in technology and product, labor, and capital markets affect the trend of the labor share. I also examine its relationship with other macroeconomic trends, such as rising markups, higher concentration of economic activity, and globalization. I conclude by offering some perspectives on the economic and policy implications of the labor share decline.

The TACO Problem

The TACO Equilibrium
https://www.theatlantic.com/economy/2026/05/oil-prices-iran-trump/687344/
Oil markets expect Donald Trump to end the Iran war imminently. That might be why he doesn’t.