Friday, October 16, 2009
The bifurcation of America ... Benny bettin', Main Street gettin'
When year-end squaring ensues, secondary takedowns, and possible stock buy-backs at top o' da market, subside, the pain of the drain might and most probably will, in vengeance, resurface.
If reality again becomes the tail-risk in the mind of the MSM oscillations can occur at any time.
That view need be balanced by Mr. Dunham seemingly deferring to every 3% move down on the S&P with a whisper campaign of a new non-stimulus plan stimulation so the Nancy Capitalists can be assured of pudding forever.
Political and bankster interests align when green markets help midterm elections.
The market as measured by Main Street is posed to 'go down' more ,that seems assured, however having learned all the appropriate lessons from history the Federales seem determined to solve a crisis brought about not only by debt but also wealth inequality by exacerbating the same.
This time it is different we will just bypass the consumer balance sheet.
Famous last words.
The next balance sheet to go down is the last balance sheet ... the Federales unless the American consumer ultimately bails everyone out.
Yet, the system seems determined to trash the consumer .. animal spirits focused on driving the markets to the point where J6P becomes the greater fool.
Or perhaps as recently gasped by the WSJ and Bubblevision the markets, that are from a Euro perspective so debased that they are dirt cheap, will get the whole damn world to be the greater fool.
I had a dream. That a progressive intellectual liberal from Chicago would institute proper reform.
We had an opportunity. There was no need to insert the long finger of instability into the 'free' markets and exacerbate the status quo.
For insolvent banksters, we could have wiped out the commons and preferred and then gone up the capital structure and equitized until future equity participants either saw economies of scale or saw the need to break up the entity into smaller pieces. Perhaps the government could have taken a convertible debenture position, or equity participant notes , warrants etc.. as in previous bailouts so that there would in some situations be a return on the government's investments as the entity is put into some form of run-off. The process would be transparent in that taxpayers would know how their money was being spent, as in previous crises.
Instead we have no idea who got what for what and we have translated insolvent companies reimbursing a small part of our total largesse as proof they are vibrant concerns that can make tons of money in FICC when the money is easy and free.
And the new burgermeisters, just like the old...
The secret sauce of 'enhanced government productivity reporting mixed with overinflated GDP and underreported inflation' has spiced the witches brew of currency debacement that masquerades America's wealth exporting machine and is promulgated by our leaders as an exceptional example of America's resiliency.
It's not just that no country in the history of civilization has transformed its' way to greatness by debasing its' currency folks...
What you need to focus on is that when they destroy the currency THEY ARE DESTROYING YOUR STANDARD OF LIVING.
The reversal day in Sept on the Fed minutes was notable for the hawkish read ... the latest Fed minutes notable for dovishness.
In this humble bloggers' opinion would look to how easily it is for non Stimulus 2.0 stimulus to be deployed in the near term for clues on market direction.
When folks are trading based on the knowledge that it is just a confidence game and that the the fundamentals don't matter, any small crack in confidence can start de-risking, i.e., reducing the 'custodes premium' - that they will use the dollar carry trade to jack asset values into the skies.
The Federales are the well from which all confidence doth currently spring.
The models that they have built show no chance of fail when the money is easy and free. It is merely a matter of scale not design. These models rate the probability as 100% that they can manufacture the economic consent of consumers by getting them to add more debt because same consumer will believe that prices will be higher in the future.
These models and the besotted following are both trading without respect to fundamentals.
Inflation expectations were well anchored in the Great Depression.
You're not as miserable as you think you are. Doubt it? Rocky watch me pull some statistics out of this hat. Hey now, who are you going to believe? Me? .. or your lying eyes?
This time around it is only a Great Depression if they say it is.
The bifurcation of America.
They cut you in half while you're smiling ear-to-ear.