At Crooked Timber, June 15, 2026.
The SpaceX IPO, valuing a motley collection of dubious business at over a trillion dollars, marks the abandonment of the Efficient (financial) Markets Hypothesis, one of the zombie ideas I criticised in the wake of the Global Financial Crisis. Not only do financial markets fail in the task of valuing assets accurately, but the institutional structures that are supposed to make them work have given up trying.
This was prefigured by the rise of Bitcoin and other forms of crypto. Revealingly, no one any longer uses the term “cryptocurrency” – these assets are never used as currency in ordinary transactions, and even their illicit uses seem to have faded. Rather, Bitcoin is valuable solely because it is valued. As I pointed out back in 2018, (free from paywall here) once this logic is accepted, it can be applied to financial assets more generally, and particularly to stock markets. [...]
It’s only with SpaceX that we can see the complete abandonment of any pretence at rationality. In the case of SpaceX, I was struck by Dave Karpf’s observation that Musk’s wealth in 2020 was “only” $24 billion. Everything of value in his career (Tesla cars, batteries, Starlink) had been achieved by then, and everything he has touched since then has been a disaster (Xitter, Cybertruck, robotaxis, Starship). Yet his wealth has multiplied 50 times over).
In support of the IPO, Goldman Sachs has put its name to the claim that the company will grow 100 times over by 2030. This is patently absurd. Nothing in Musk’s ragbag of assets has this kind of potential. [...]
The comprehensive corruption of the financial system confirms me in the view that the USA is one big grift. Not just the financial system, but politically and militarily as well. But that’s a topic for another day.
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