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Confirming "Dumb Money's" Resilience To The Wall Street Siren Song
When Zero Hedge first admonished our readers in June of 2009 to stay away from markets in light of a general deterioration in market structure, which included a regulator-authorized form of structural frontrunning in the form Flash trading (not to be confused with the imminently following Flash crash), an unprecedented mismatch between stock valuations and economic reality, and Wall Street continued attempts to reflate the ponzi merely for the sake of proving that it can be done, we never expected that retail would take to our warning with the ensuing solemnity. Yet with 16 consecutive outflows from domestic equity mutual funds, shut downs by legendary hedge fund managers such as Druckenmiller and Pellegrini (and many more Tiger derivative blows up to be disclosed soon, once the full extent of the carnage of the flattening of the steepener bandwagon trade is fully appreciated), virtually everyone is asking themselves how did Wall Street not only get it all so wrong, but how on earth is the primary business of the post-facelift Wall Street, which is no longer investment banking, but merely trading (with or without flow-facilitated prop frontrunning) going to sustain the recent record headcount levels (hint: it won't, and many more banks will soon let go thousands of additional staffers as key revenue sources have now disappeared forever), and most importantly, why is this time different? Why did the "dumb money" for the first time ever, not bite on the Wall Street siren song lure of an economic "rebound", but instead has hunkered down, proving that not only is Wall Street nothing more than a pure-play enabler of the ponzi regime's status quo, but that all those who were warning that the economy is far more dire than Wall Street represents, were proven right. These same individuals (and bloggers), first validated in predicting the downward direction of the economy, will see their pessimistic forecasts about stocks validated next. Yet while that happens, all those who still somehow find this a surprising development, are now left proposing hypothesis as to what went wrong. Such as the following piece by the Financial Times.
Deep into the dog days of August, a rather unpleasant scenario is unfolding among the ranks of professional investors on Wall Street.
Against the backdrop of unusually low equity trading volumes, even for a typically sleepy August, continued strong flows out of equities into bonds, and high-profile hedge funds shutting down, a bitter truth is dawning for investment professionals.
Namely, that the ranks of retail investors, commonly derided as “dumb money” by the Street, have made the right call on US equity and bond markets in 2010.
As recently as July, much of Wall Street was awash with bullish research notes for the second half of 2010 calling for higher stocks and warning about low government bond yields.
Such bullish research is a staple of the industry and, flush with their bonuses from 2009, the Street simply thought the massive stimulus from the Federal Reserve and US government would translate into a sustainable recovery this year.
But since the eruption of the financial crisis in 2008, retail investors, like Odysseus, have stuffed their ears with wax so as to silence the allure of such sirens.
Like Odysseus, the successful return to the Ithaca of market efficiency (i.e., the purging of Wall Street's siren songs of capital destruction), will ultimately require continued resistance to the temptation of a relapse into the Ponzi. Yet we are rather confident that having gone far beyond merely a contrarian indicator, the recent divergence of fund flows out of equities and into money markets (to a small extent, and a 180 degree shift from patterns established earlier in the year), but mostly in fixed income, the case is now that with the demographic shift accelerating to the point where few if any are hoping for "double baggers" (and are willing to allocate capital to trades which have worse odds than playing blackjack in Las Vegas), the attempt to front run the dumb money has failed. What this means is that the proverbial bagholder is now Wall Street itself, namely the various prop trading desks, and assorted HFT non-overnight holding strategies (and yes, there are thousands of these). Thus instead of slowly, calmly and methodically selling to the last money in, Wall Street is now stuck in a Catch 22 of how much higher beyond fair value can the "Pig Farmers" (as defined by David Rosenberg) push stocks, before defection becomes the normative game theory mode, and the market crashes to unseen before levels, especially since prevalent short selling levels are now at near record lows, eliminating the natural buffer to a downside acceleration.
More from the FT:
Beyond the two big equity bear markets of the past decade, it’s no surprise that Main Street has soured on equities thanks to the Madoff scandal and the bail-out of Wall Street banks, followed by high bonuses paid out to bankers last year, all crowned by May’s “flash crash”.
While retail investors ran from equities and piled record amounts of their cash into money market funds in 2008, what really hurts the Street is their failure to forget and come back.
The common punchline on Wall Street is that once the markets have rallied for a while, you wait for the “dumb money” to rush in for a slice of the action. Then the “smart money” sells out and sit backs as retail investors get hosed when the market falters.
Except this year, the dumb money has resolutely stayed away and kept buying bonds and foreign equities, leaving the professionals twisting in the wind. So far in 2010, $50.2bn has been pulled from US equity funds on top of the $74.6bn in outflows during 2009, while $152bn has flooded into US bond funds, according to EPFR Global.
Such flows aptly illustrate Wall Street’s sour mood. Talk to people in prime brokerage at big banks and they mutter darkly that many hedge funds are struggling to make money and risk big redemptions later this year. The recent decision by Stanley Druckenmiller to wind down his Duquesne hedge fund is the type of shot across the bow that people in the industry could well look back upon as a foreboding omen.
Of course, this is verbatim what we have been warning about for months and months and months. And just as we have warned about the economy tanking, which is now confirmed by even the biggest permabulls on Wall Street (and we note with a deliberate dose of gloating the even Morgan Stanley's "economists" have now stepped away from the Kool Aid punchbowl to their unquantifiable chagrin...and derision), the next leg down is stocks themselves, first as multiples collapse, and second, as all those corporate decisions to conserve cash (absent a few idiotic decisions by corp fin departments ostensibly populated by crystal meth snorting monkeys such as those of HP and Dell), are finally seen for what they have been all along - prudent capital management in light of the next major downleg in the economy (and, yes, a major rise in corporation taxation) seen all too clearly by corporate Treasurers and CFOs, are all effectuated.
As for the winner out of this?
For many on Wall Street, the pain has been minimal, which perhaps
underpins their usually bullish take on stocks and why they think the
economy is currently experiencing a soft patch. The reality for Main
Street, however, has been and remains a lot harsher. Unless the economy
starts picking up speed, housing stabilises and unemployment abates,
Wall Street stands to learn that the “dumb money” has a much better
handle on the outlook for the economy and stocks.
The dumb money also knows one other thing - that the Fed has now run out of all options to restimulate the economy (and prepare for the Fed's escalating appeal of the Pittman decision to the Supreme Court in the week before mid-term elections to take on a very contentious gravity from a political angle), absent for the nuclear option. That option, as Bernanke knows all too well, will do nothing to reflate leverage-heavy assets, and will merely shoot critical commodities like wheat, oil, cocoa (as recently demonstrated by deranged speculation) into the stratosphere, finally ending the lie of the Core-CPI "disinflation." Wall Street has yet to realize just how ahead of it the "dumb money" finally is - we have long said that Americans, especially those of financial decision-making relevance, are nowhere near as dumb as Wall Street would like to believe, and they just need the right pointers now and then.
Zero Hedge will continue to provide such "pointers", and will be more than happy to read additional validation as this particular FT article, which also confirms that unlike even moderately wise people, who are all too aware that they know nothing at all, Wall Street, being at the other end of this spectrum, believes it knows everything, when the reality is precisely the opposite. And now that the majority has finally been awakened to Wall Street's simplistic ploy to control capital markets, and the general economy, with nothing else up its sleeve than a confidence game, it will be time to finally pay for decades of outright lies to those whose interests Wall Street should have held in highest regard all these years.
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Rangy, quick and dumb. Sounds like a wild turkey, no?
The Siren (Leo) sings as Smart Money has charted and is sailing a course to Ithaca, leaving Leo sitting lonely upon the rocks of financial ruin.
Good night, Hannibal Leo Lecter, as you no longer have your lambs for slaughter, as your reference stated last evening.
That's one school of thought.
Another is that Leo is just a paid shill and an amateur douche in his spare time.
Now if the people who intelligently have been pulling their money out of the casino start voting with the same acumen in November we may be getting someplace!
It's that exact logic that perpetuates the problem year after year.
They are all the same. Controlled by the same people and entities.
Please consider a new thought process.
I understand that and recognize that the differences between the Dems and Reps are biological and not political. I'm open to suggestions.
I know I don't have to repeat this to you as I have read your posts before.
PM's are the logical alternative to fiat collapse-a-cons.
Munitions for defense. Knowledge for offense. The best defense is a good offense.
Turn off the TV and develop a real physical network for communications. Always remember that there is a big ON/OFF switch on this thing called the Interwebs(darpanet).
Lastly; start to slowly take action.
Agreed my friend. I hope we all have the time. Take good care.
You're out of the loop, 4th, not paying attention. Mainstream America is about to give the ruling class in both parties a beating. Just a prelude to 2012 and 2014. The Loser in Chief has sparked a movement for change, but not what he and the totalitarian socialists had in mind. The new thought process says restore the Constitution, sound money, free enterprise, impartial taxation. This ain't Europe.
I'm happy to see that you have plenty of horseshit to assist your reforestation efforts.
Some argument.
Most creditor nations laugh at our political and financial leadership, some in private, and some out loud. I met with a Chinese national yesterday who is in the restaurant business in my town. A young man, no more that 30. He is so much more ahead of the vast majority of Americans. He explained how in China the population is purchasing Panda bullion coins at NO premium with encouragement front the central government. He is buying American gold coins with extra money from his restaurant. Australia, Brazil, China, Canada, Singapore all know what’s ahead, as do the Warren Buffets, George Soros, etc. Buffet is one of the largest owner /manufacturers of finished silver and gold jewelry in the world. He has the ability to receive added premium to the metal costs for labor and design and is present at every trade show via his wholesale companies. If sales are weak he owns the underlying bullion at below market prices. We all know what Soros does with currencies and gold, but his hold on the Democratic Party has provided multiplier returns via debt creation and jesters like Krugman, Obama, Pelosi, & Reid. Sites like Zerohedge are hated, witness Geithner's invite to "mainstream" financial bloggers" to chat with him at Treasury. Unwittingly they are being played similar to the White House having lunch with "journalists". Eugene Robinson, Rachel Maddow etc, all useful idiots enjoying their White House snacks. I cannot tell you a major QE won't occur inflating the asset prices, or a major crash won't precede such an event, nor if a false flag event will happen. What I can say is these events have a very high probability so nimbleness is the key. November’s G20 in Seoul may have a key role in simultaneous worldwide currency devaluation. These are interesting times and turbulence is the only constant for those outside the private rooms.
I made the resolve to stay long the bounce until the SPX 1200 level was reached. This level was my target based on the head and shoulders bottom....I got out the day before the final high. I day trade now going home flat daily. I believe we are about to embark on the journey to the final bottom of this bear around SPX 450 to 480....This will set up a price/MACD divergence on the monthly charts providing a nice long term entry.
I'm really intrigued here.
Not directly responding to the article but related nonetheless, are there many of you Zhers who have traded the markets for a long time, say 20 or more years?
And, if so,is the difficulty of trading this market unprecedented or has it always been like this, or similar?
It might seem like a naive question but I'd be very interested to know.
DavidC
This is new. Direct intervention at these scales (e.g., cutting a check for $700B here and $1T there) is unprecedented on planet Earth.
The Fed has never before directly monetized Treasury auctions, purchased private companies, and performed currency swaps with central banks around the world at these levels. The US Treasury has never before found taxpayer contributions to be irrelevant and independent to what they spend.
In the past, there was some semblance of a market where "risk" related to "return". Bubbles formed, but you could see the shift in productivity and demand in industry and sectors (e.g., PC boom, telecom boom, energy boom, biotech boom, real estate boom, etc.) Only a couple decades ago dividends really *did* track with stock price (that changed quite a bit with the arrival of the 401K, and changes in tax policy that made dividends *bad*). So, at some level, analysis mattered (you could trade with rationale).
However, what you see today is mere "noise" as everyone realizes that debt, arbitrary political statements, and recently announced political programs are the only things that drive the market. Technicals don't work, fundamentals don't work. The only traders "claiming" success are the ones front-running the Fed or other government announcements/programs/cycles.
Because politics are now the only thing driving the market, unless you are in the room making those political decisions spending taxpayer money, and thus able to front-run the public announcement of those decisions, you can't trade this market. You can't trust any contract agreement, nor any securitized position established through contract law. You can't trust counter-party agreements. You *must* assume unquantified liabilities.
Finally, in the past, you purchased things of value (bonds, stocks, whatever). If it were your birthday and someone gifted to you all the shares for Fannie & Freddie, your sane response should be, "No thank you." (They are worth less than zero, even though they still pretend to trade, with the only perceived value the vague future promise of perpetual taxpayer gifts.) Many very big companies with very big names are similarly worth zero (or less).
This is the death of the market. Transactions no longer occur. It will get worse.
The "dumb money" isn't so dumb now (record withdrawals) because they realize the information disparity means that no matter their trading strategy, the little guy is most likely to be a loser (as they are "whipsawed" into oblivion, mowed down by the "big players" that win-even-when-they-lose).
This is true capitulation. In itself that is not new -- after very big cycles, true capitulation typically flushes out the remainder of the excess capacity, permitting a new cycle of growth. So while not common (it does not happen in minor cycles, an investor typically sees true capitulation once in a lifetime), true capitulation can somewhat be "expected". However, like the growing tide of "government backlash", this is an abnormal form of capitulation in the sense of "investor backlash". People leaving the market now will *never* return (due to demographics and sentiment of betrayal not seen since the 1930's). In short, the market is now inevitably and fundamentally changed for decades (e.g., at least a generation, possibly more).
IMHO, the market will soon exist under a new legal framework, similar to the dramatic shift after a war and the imposition of a new government. That also will be new.
I've done a little trading in futures, but no longer, too irrational and risky over there. I bet on miners because the PMs seem to be the only bull market in town. But with the price manipulation by the bullion cartel, it's not rational either, but less risky. It's like shooting craps with some hedge bets. Betting Don't Pass on the come roll. Betting a single on Craps when you come out with the dice. Sticking to lightly betting the sixes and eights, no long shots or sucker bets just for fun. Still, you only win if Lady Luck is smiling on you. I now spend a lot of time moving stops around, just like in futures.
+1 Most excellent comment.
I am not sure what you are driving at. 20 years ago Banks offered CD's at 15% interest, car loans at similar interest and whatever else at very high interest. I bought a car (Foolishly) turning a 7600 car into a 16200 money pit after the entire loan was paid. It was very good for the salesman and the dealer, not so good for me.
Next time I see 15% accounts at the bank, I will open one.
Er, that would be around 30 years ago, and no, they never offered CDs at 15%; CDs always go for roughly 2% less than the average prime 30-year mortgage rate at best (e.g.,credit unions), which at the time was around 16%. I know, I had one, and worst of all, while it was theoretically fixed, any deviation upside was added in to the back end of the principal. Some states now outlaw this practice, but many still do not. The good news was that by 1984, rates had gone down to 11-10%, and continued further, part of the Reagan recovery.
Zapata George teaches you more about the stock market in 5 minutes than you will learn in 10 years.
http://www.youtube.com/watch?v=HiW2-hygtzU
Can't wait to see what he does on talk like a pirate day....
Aye Mate, Zapata is in Davey Jones Locker.
http://www.nakedcapitalism.com/2010/07/steve-keens-scary-minsky-model.html
.
Steve Keen’s Scary Minsky Model
....
His comments thus far:
deflationist junk
don't worry, take off your socks.
Economic Deja Vu? How the economy has changed since 2008, including the golden indicator.
http://inflation.us/videos.html
Big Black - Bad Penny
http://www.youtube.com/watch?v=tjneXSsvc88&feature=related
Default is around the corner. Someone is going to find a party favor in their lap.
Dude, inflation.us is a scam, it's a Jonathon Lebed front.
interesting concept, looks painful.
Well at least we know what hedge fund had to do some serious unwinding this week.
http://online.wsj.com/article/SB10001424052748704913704575454011349605640.html?mod=WSJ_hps_LEFTWhatsNews
Perhaps this also explains why CNBC's ratings continue to fall. The "dumb money" has finally caught on to their endless stream of market-pumping, economic rah-rah, propaganda and general bullshit. Clueless anchors and reporters (with the exception of Santelli) and the constant parade of guests that are 90%+ perma-bulls, have created a massive credibility problem for them.
The only thing the dumb money needs to do now is get out of bonds before it's too late. In my view, the next leg down will result in a sell-off across all asset classes.
i often wonder if this isn't part of their plan
'bail out everything'
worse that could happen is they own it all ... makes central planning easier
just wondering
they'll be holding a bag with everything in it, and others will be holding just an empty bag
there is no plan. we are in outerspace and there is no plan.
plan accordingly
(A movie for our financial times)
INSIDE JOB Official Trailer/Website (Sony Pictures)
http://www.sonyclassics.com/insidejob/
release date oct. 8 ?
a real stocking stuffer.
just getting some extra milage outta these guys :)
Sunday redux of Friday musiq
limit down (a bumpin playlist): http://www.youtube.com/view_play_list?p=39E281A11EE2D483
down the boulevard (a smooth playlist): http://www.youtube.com/view_play_list?p=D99EC6935E5AF3
just getting some extra milage outta these guys :) + gals.
your the best!
A sizable portion of retail in muts is driven by ten year returns (five and three as well, and some one year chasers, but mostly ten). Fund flows follow.
The Ponzi That Be front run this.
A non-dividend paying common stock is by definition a Ponzi.
The realization that much of life is a Ponzi predates Ponzi himself. The astute investor creates legal Ponzis or invests in ones they feel have a reasonable chance of returning the initial investment and target return before collapsing. This occurs in all time frames from milli-seconds to decades.
A non-dividend paying common stock is by definition a Ponzi.
Not necessarily.
But a non-dividend paying common stock where the company engages in share buybacks definitely is.
Sorry- you're completely wrong. NVR is one example. The key IMO is for the company to have a policy on buybacks vs dividends and stick to it. Given that dividends look to be going back to a 39.6% max tax rate, if the profits are devoted to speculation in the company's own stock and everyone knows that's its policies, OK w me. Or even better, they could follow Loew's lead and let shareholders elect stock dividends OR cash dividends.
is Wall Street nothing more than a pure-play enabler of the ponzi regime's status quo,
That would be Yes. Hence the "siren song" trying with evangelical zeal to lure back the opium-prone masses.
But like any "Yesterday Religions", once the spirit of the core belief system is gone, once the fever-spell of virgin volcano sacrifices and blood offerings lets up, then one day the preacher beholds that dark moment of recognition that the choir are the only true-believers left.
Main Street no longer sees the connect between its destiny and the Dow Jones Industrial Average.It's a perfect anachronism and symbol of disconnect that the headline measure of America's red-bloodedness still contains the word "Industrial" when the truth is most of the country's Industry has been shipped long ago to lands that worship other gods. To the man or woman on the street, the country's "Industrial Average" has been plummeting for 40 years.
The lure of lucre isn't working. America turns away from 'Get Rich Quick". A younger generation stands in wonder at the notion that people could piss away the country's future on "sock-puppet.com". Who has benefitted and who has not has never stood out in starker contrast than today.
The major parties just don't seem to have the average woman or man's best interest at heart, despite elections and speeches, promises and slogans.
somehow this ...
.
http://www.wikio.co.uk/video/sheriff-scene-blazing-saddles-256692
.
again
I thought pension funds were the ultimate bag holders?
As long as the PPT is around the equity market will always find a floor.
The PPT is an old concept. There have been many changes in this vertical. Some of the original PPT members turned Reston6 now dominating other markets as promised by the power elite;
http://www.pjm.com
High Freq traders who now own the Energy market. As we know from all of Michael C. Ruppert's work, energy is the power base, not equities.
Energy is the fulcrum. Without the fulcrum the lever has no leverage.
Generally, I do not watch the corporate media controlled by WallStreet but some occasional glimpses tell me that recently Wall Street shills are getting very bearish, plenty of TV Jews prediciting market crash, and so on. Probably, something big with the dollar (or rather private FRN) is about to happen, either collapse or devaluation. This would drive all the commodity related stocks to the moon, esp. gold and silver shares, DOW and SP500 comfortably up.
This is the ZH article of the year. Absolutely, 100% spot on. I think perhaps the most promising thing that happened in 2010 was that J6P didn't fall for the scam and rush back into the market. In my opinion, that plan explains entirely why the market has hovered around 10K and why HFT exists in the first place. I can't wait until the "Big Boys" start going after each other.
Truly great write-up, TD.
If I could add one point, it would be that this ridiculous Ponzi was fully sanctioned by Congess. From the Emergency Economic Stabilization Act:
The bolded part basically says, "Abandon all hope of price discovery, ye who enter here."
Make no mistake, this wasn't done as a favor to the middle class, it was done to preserve the illusion that Wall Street's model for "investment" by the masses works. It doesn't. Preserving that illusion is bait for future policy follies (like privatizing Social Security). America isn't taking the bait this time, and as Tyler points out - Wall Street itself is the current bagholder - let's keep it that way.
And while we're here - how's that public accountability thing mentioned in part (D) working out?
http://www.law.cornell.edu/uscode/html/uscode12/usc_sec_12_00005201----000-.html
Technical note: Odysseus did not stuff wax in his ears. He had his sailors lash him to a post, tied up, so he could hear but would not be able to follow. His sailors did put wax in their ears.
I am lashed to the mast as well, so that I cannot trade this "market". I do like to keep my ears open to hear all of the different siren songs of trading methods, however. My lashes consist of having gold and silver, and putting all available funds into PMs and trading what I know: coins and stamps. These are my daily "trades". The PMs, being a tad illiquid, keep me away from the stocks and bonds alluring song.
The PMs, being a tad illiquid... will be even harder to sell when the PM market crashes.
There. I finished your sentence for you.
http://www.youtube.com/watch?v=VLnWf1sQkjY
Thanks, Coop. I just couldn't bring myself to directly address the cretin.
So you had Colonel Sanders do it for you? LOL.
Posting a youtube video that I still haven't, and will never see, isn't exactly responding in any meaningful way.
You couldn't bring yourself to spell raccoon correctly either. Don't you use a browser with spell check?
What's next, are you going to bring that chick with the mustache in to post the link as well?
I still haven't seen it.
When I read this article, one question comes to mind: why do we think that "dumb money" is not so dumb this time if it always has been in the past? Isn't that like saying "it's different this time"?
Maybe the difference is that Wall Street is not the beneficiary at the moment if they are focused on equities and commodities. The real beneficiary appears to be the government.
If dumb money is so smart, does that mean all the ZH readers are following it and piling into U.S. gov't bonds? Of course those bonds are going up with all the demand from those baby boomers who are now becoming conservative and desperately trying to save some money to retire on.
I have an uneasy feeling that the lemmings are massing and heading toward the edge of a cliff.
Nobody's really "piling in" to government bonds. There's been some flow toward bond funds, sure, but mutual funds as a group dumped more than $100B in Treasuries in 2009. Who's buying them? In effect nobody. So what you're looking at here is a double Ponzi (both stocks and bonds) in search of greater fools.
I've never been happier to be a spectator.
I'm fairly certain I am regarded as "dumb money" and yes, burned in the equities.
Just looking for a safe place to keep money that will stay ahead of inflation and "Pops"
Some PM, some short SP and cash. There is no investment I see that even meets the first criteria.
I am not inclined to jump onboard anything, especially if it looks really good. It's a holding pattern until whatever breaks decides to go ahead and break. How does one prepare for the unknown when available tools appear broken?
the rest of the world is moving away from the US in general because of wall street/Fed/DC/rating agencies, sub-prime scamming, etc..
The end result is bypassing the USD in bi-lateral agreements and wall street in offerings/delisting from it.
Main Street correctly distrusts the Fed/Wall street/mainstream media cartel.
When a-hole extraordinaire Cramer had his meltdown on CNBS saying his friends on Wall street were getting laid off and the Fed needs to do something about it now, everyone saw through the hypocrisy. It's OK to outsource Main street for profits but not the useless idiots in Manhattan.
The Republicans were thrown out last election because of the Wall street bailouts, the Dems will lose big because they did the same thing.
Hopefully we eventually get somewhere, get claw-backs on the grand theft of the last 10+ years.
Looks like the bears are about to get shafted.
Bank of Japan readying massive intervention.
“We are ready when necessary to take bold measures” in
the currency market, Kan told reporters in Tokyo last week,
without elaborating.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=a1C7oJZXLIlw&pos=2
Sorry but your photo depicts 1 Chinese, 2 Korean, and 1 Chinese/Japanese mixed.
Still yummy, nonetheless. :P
I thought the one on the left had Thai eyes, other then that I don't know.
Back on topic... Seems like the "dumb money" still managed to make a huge mistake but jumping into the bond market just before we have a currency crisis.
3 weeks.
Somehow I am OK with that.
I'll hold the tape!...
Daughters of the US Army.
Sorry, but your photo depicts Inflation.
The people, through their actions, seem to want the financial industry to return to its historical % of GDP; the PTB want the financial industry to stay ginormous.
Look for DC to rewrite any and all rules to force the people's money back onto Wall Street. If they need to they will send the money directly from DC itself.
The financial industry is DC's lifeblood, both at congressional level and the personal level. They make their legislative bribe/play money from finance... and their own personal fortunes as well.
The people will prop up Wall Street... even if they must compel them to.
Great article. Few thoughts in no particular order, apologies in advance for some of the examples:
- Sometimes I feel like 'America' is often used like a whore where individuals only see what and how fast they can get 'some' for themselves, damn the consequences for the future. I fear though that between our politico's & corporate's massive greed for the immediate is / has destroyed the future and guess what? It seems the future has arrived.
- Deflation will suck for most of the people on this board, but many of my relatives are poor and I can tell you a general bout of deflation for the class that used to be considered 'middle' (I'd argue there's only two classes now - upper and lower) would be a huge win for them as long as they still have a job of course.
- The great 'leveling' (see a couple prior posts) continues, but I'm worried our gamble of dealing openly and fairly with China has backfired. Our geopolitical bet was (my opinion) that we could create a middle class in China fast enough to avoid a collapse of our middle class. Unfortunately (again, my opinion) I think we underestimated the ability of the power-elite in China to control so many people as to basically keep a nearly 'slave labor' class of several hundred million people, perhaps equal to the working middle class adult populations of the G7, intact and in captive 'factory towns'. Yes, the average wage in China has went up, but the distribution of wealth is horribly lopsided.
- Not a big believe in the last 40% of this rally (or maybe former rally). Maybe we bounce here but I think the big financials are going to take it in the shorts between the pull-back from the public, the slow volume, etc. If you really think about the ability of the financials to pull $100's of million out of their trading desks quarter after quarter you have to go back to first principles and ask yourself where that money was coming from? Of course it was coming out of the marginal transaction of the individuals, pension funds, etc. Once people and organizations decide that this 'game' doesn't work anymore guess what? The only ones left are the big banks trying to suck money out of each other, a truly zero-sum game.
- Finally, I think the big banks are about to really get the stuffing kicked out of them. The political class has to be working up their polling data for the final run into the elections and I would bet the issue that really polls well is turning the double-barrels onto the financial class. I'd argue up to now the financial class was able to out-wit and / or convince the politicos the end of the world would have happened if they didn't drop their drawers and give them the key to the FED. Now, the end of the world really is happening - no not financially (although I keep looking back at 666 on the S&P and wondering if that isn't just sitting there as a number to be taken out) but politically! If you're a politico the end of the world for you is when you lose your election and your access to power is cut-off. I think we're finally setting up for a much harsher treatment of the big banks and the just announce new SEC investigations are just the start. Perp-walks are coming and I'd forecast 100% chance of heavy downpours for the street for the next 18 months.
We are definately gonna have a ball bustin WTF rally next week or so, the sentiment is so fukkin negative it can't go down much more than 1040 fer now...
LORD KNOWS I'M A VOODOO CHILD
http://williambanzai7.blogspot.com/2010/08/voodoo-child.html
LORD KNOWS I'M A VOODOO CHILD
http://williambanzai7.blogspot.com/2010/08/voodoo-child.html
Great article. It just adds further confirmation to the existence of a massive Ponzi scheme.
Many of the the recent underwater mortgages and delinquent loans could probably get out of their mortgages scott-free, esp. the daisy variety, if they knew enough to consider it.
ZeroHedge>>>>"Dumb money" defenders
Well done TD.
The Emperor Wears No Clothes
Two swindlers (central bankers) came to town, and advertised themselves as the finest weavers in the world.
The Emperor of the town in this tale is the stock market. And he spent all day long in front of the mirror posing and dressing because he loved new clothes and his appearance more than anything. Soon he heard about these two weavers and contracted with them for new clothes.
The Emperor, of course, wanted the finest silks and purest gold thread that money could buy. But, unbeknownst to him, the weavers didn’t use his money to buy material for the looms.
“Then the swindlers went on to demand more money, more silk, and more gold, to be able to proceed with the weaving; but they put it all into their own pockets—not a single strand was ever put into the loom, but they went on as before, weaving at the empty loom.”
And then the swindlers gave out the story that their “special clothes” were invisible to anyone who was not fit for the office he held, or who was impossibly dull.
In growing anticipation and hoopla of a big Dow parade, the Emperor sent his faithful old minister, Congress, to look at the cloth being made on the looms for his new clothes. Alas, he saw that the looms were empty.
The flim flam weavers said to him, “See how fine the cloth?”
The Emperor’s man thought, “If I say I see nothing, I might lose my job; the Emperor thinks I’m supposed to be wise.” And so, he ooohh and ahhhh over the invisible cloth.
At last, the flim flam bankers came to dress the Emperor in his new clothes. The Emperor, too, saw nothing. But he thought, “If I can’t see the clothes they’ve made, it means I’m not qualified to be emperor.
And so he swelled with pride while the flim flam bankers, Ben and Alan, pretended to wrap him in the finest satins, and wind belts of purple silks around his waist and drape his shoulders in the finest of loomed brocades.
And the Emperor preened like a peacock as he walked proudly down Wall Street while the chamberlains, the media, who were to carry the train, stooped and pretended to lift it from the ground and walked along with their hands in the air.
All the while, of course, the flimflamers' spokesmen, the MSNBCs and Bloombergs and WSJs, pounded away at the message, that those who couldn’t see the Emperor’s clothes weren’t qualified to speak.
And all the people, hoping to see which of their neighbors was a fool, thought, “If I can’t see anything, it’s my fault.” And they praised and clapped as the Emperor made his way.
Until one child spoke out. And guess who that little boy was? Zero Hedge!
And little Zero Hedge looked at the Emperor and exclaimed, “But he has got nothing on!”
“The Emperor writhed, for he knew it was true, but he thought ‘the procession must go on now.’ So he held himself stiffer than ever, and the chamberlains held up the invisible train.” -- Hans Christian Andersen
elegant, JR. simply put, but very, vivid. evocative, simple narrative for us common folks to comprehend. like your style, always have. good man, great context for mereZH.....er's to revel in. bless you!
McDonald's Corp, as red-blooded American as any corporation gets, raises capital in the Hong Kong market in Yuan-denominated bonds. And they were the first non-financial to rush in and do it. Now THAT's change you can believe in! Faith in the dollar, in US markets dwindling fast with a move like that. The times, they are a changing.
"Red-blooded" indeed. Good one!
I am a vegetarian cardiologist who is long MCD. Like the intl moves they make. Including veggie menu in India . . .
Smarter Main Street ? or Simply that the Dumbest Money is Long-Gone ?
This may just be Darwinian winnowing: the dumbest money was entirely cleaned out by Mar 2009, got no bailout, and a large portion of it has lost the funding — i.e. discretionary income — that will permit it to ever return.
The portion of Main St. money in the market now is thus relatively smarter, and smaller, and has accordingly exited while an increasingly unfit Wall St. goes long, to be soon(?) gone.
FINALLY we have an tacit admission that ZEROHEDGE got you out of the market WAY lower than here...2 months + from the March 2009 bottoms near SP900 btw
"When Zero Hedge first admonished our readers in June of 2009 to stay away from markets in light of a general deterioration in market structure..."
Be warned readers.....this is what happens when you only read a perma-bear BLOG... Am I discounting ZH has some good info? Hell No. I am pointing out you can't trade many actionable ideas off this blog. I am pointing out that constant perma-bear ideas and spin is not a balanced way to look at the WORLD nor of specific stocks.
Aside from the "daily divergence" specials we point out when the whim strikes us , and which have a 90% track record, please demonstrate which "actionable ideas" you are referring to.
Are you fucking serious ?
Is a ten year record not good enough for you ?
Do the math yourself, Compare $100,000 invested in 2000 in the DOW, in FRNs,in the s&p, and in gold and see who has made money.
And see who has lost money. I know this blog was not around in 2000 but Austrain economics was and that is what this blog is all about.
You heavy metal heads. :)
And the bull market will last forever. It'll last way longer than ten years. Maybe 100? Six million years?
Gold will never go down again.
No bad money can drive out good. All comex has to do is sell off all it's gold and raise interest rates to 5 6 7 percent on money market.
There ya go. That's how you can do it. You might notice there are a couple problems with that plan. It's like 1980's again except something is different. Though I can't put my finger on exactly what is different. Though I know something is different.
Let me see. Can anyone tell me what is wrong with that plan.
maybe there is no longer such a thing as good money?
or money is money and is neither good or bad, some other
agent exists to imbue that qualifier.
http://en.wikipedia.org/wiki/Gresham%27s_law
Yes there's no longer such a thing as good money. It's all 100:1 leveraged smoke and mirrors and collapsed world trade centers and 400 oz tungsten bars, copper pennies with very little copper in them, nickles without any nickle in them and big steaming pile of incoming collapse.
Welcome to the greek tragedy.Get your bills with ugly disgusting men of scum glaring blankly back ya.
http://www.federaljack.com/?p=12550
sweet.
"it is a sad and beautiful world. that is a good one." t.w.
stop me if you heard this one......
http://www.youtube.com/watch?v=ZP2tqJTSfgU
.
http://www.youtube.com/watch?v=Rgs-zgz9MQw
.
speakin' of money
.
http://www.youtube.com/watch?v=-eELOuoLB_0&feature=related
.
http://www.youtube.com/watch?v=HkOMiA_uGso&feature=related
last the record version. best audio.
http://www.youtube.com/watch?v=VLnWf1sQkjY
Are you bragging that you have effectively traded a Ponzi scheme?
Most Americans don't care and no longer have the means to time the market.
That is currently Wall Street's game since the economy is still crumbling, capital is moving offshore and the Dow would be at 2000 without the mother of all taxpayer bailouts. Which is running out of gas fast. Hence the alarm bells at Jackson Hole. Read.
Exactly, and Dow 2,000 (or even Dow 5000) pretty much is the sign of 'game over' for the US economy, as, without equity, debt cannot be sustained. The reason why the US economy is not, and cannot recover, is that policy, both in terms of law, and in terms of monetary policy, is stacked so much against equity owners, in favour of the bondholders.
Price of gold on Sep. 10th, 2001, the day before the horrible terrible Osama bin Subcontractor attacked us because he hates our Freedom Fries: $271.50. Current price of gold: $1,240 - up 357%.
S&P 500 on Sep. 10th, 2001: 1,093. Current S&P 500: 1,065 - Down 3.%
This does not take into account the dividends that one would have gotten from owning the stocks but I doubt that it would make much difference. “Current” price as of 4:30 PM Aug. 27, 2010)
Gold up 357% stocks down 3%
Comrade peasants, we have been at war with the horrible terrible Islamo-fascists for almost nine years. Show me one war in all history without an increase in commodity prices or without an increase in the desire for gold, just one.
Efficiant, logical, effective, and practical.
Using all resorces to the best of our ability.
Changing, designing, adapting our mentalities.
Improving our abilities for a better way of life.
Chorus:
Babies. mother. hospital. scissors.
Creature. judgement. butcher. engineer.
These are the little children, the future in our hands.
When all god's children on this earth inherit all our plans.
These are the lies they tell us. but this is the only way.
When all god's children on the earth will evermore be saved.
Repeat chorus (2)
These are the little children, the future in our hands.
When all god's children on this earth inherit all our plans.
These are the lies they tell us. the future's good as sold.
In all the things we do and know, we really must be told.
The last line is problem here. You're looking for actionable.
In all the things we do and know, we really must be told.
Looks like you are done being engineered. Have fun with your task master as an ego extension of "the decider"
http://www.youtube.com/watch?v=_YkEBtFbOGg
Yup. I think the recent exodus of retail out of equities is very telling. Why does nobody on the FOMC understand that keeping rates at zero is imploding domestic consumption? How man retirees are there in the US? And same with corporates and cash balances. When duration is terminal, then so are the markets. I got a post on this will cross link tomorrow. Chris
Chris, working on an analysis of the incremental purchasing power of US households which now presumably own 50%+ of US marketable debt. Assume a 4% rise in rates, on +/- $5 trillion in debt, this is equivalent to $200 billion a year in incremental fixed income. Add IG purchases and you get about half a trillion in additional purchasing power in annuity form. That's more than 3% of GDP per year funded by US consumers who finally reap the benefits of saving and not consuming. But yes, house prices will tumble another 20-30% in a rates rise scenario (and PIMCO will out of business). The only question is finalizing the sensitivity analysis to the US economy of whether the consumer GDP pick up will offset the loss from Wall Street and asset writedowns.
I think this will be the major question for 2011.
That's a complex set of assumptions, parameters and potential outcomes. In a non-market driven economy attempts to push fail often. Higher rates, unless suicidally high, will fail to stem the attractiveness of developing markets while also pressuring domestic demand. Tough little puzzle.
Not tough at all. Get anyone out of the business of setting rates. Neither the redoubtable Chris Whalen nor any of the Tyler Durdens (if there are still more than one) know any better than Gentle Ben or Sir Alan what the "right" rate is-- and it may be in a country as large as the U. S. that there is more than one "correct" rate-- the way it was when the Fed was created.
In any case, Tyler, why waste your time. If Ben is aware of you, he disagrees with you (to put it mildly)!
Salvage operations to rescue failed operations just gum up the works even thicker than before.
Can anyone find a time in history when retail money got in at the bottom? I can't. In following the liquidity train...retail gets out at bottoms. Much due to fear and hate of equities...much due to fact demographics mandate some liquidation/shifting to bonds as baby boomers retire.
in effect they are creating a bond bubble..which might have finally topped last week.
I agree, FED could eventually raise rates .25-.5% and actually INCREASE people's incomes and confidence..how ironic would that be. LOL
I will say it again since most perma bears don't get it yet...MUCH of SP500 companies earnings are coming from abroad. the future is Brazil, india, and china and more and more earnings will be coming from there ..and from THEIR favorable demographics and spending habits. In the end these very favorable global demographic increases and spreading of free enterprise will continue to drive amazing growth, revenue, and profit opps while doomers continue to focus on the 350 million people in our borders only.
As Karl D has pointed out...the USA could do some amazing pro business and favorable tax changes to UNLEASH the Human Spirit IN this country and to drive more foreigners here. When the government wakes up via force/revolution or by Ephiphany....and rewards innovation, commerce, and that human spirit...we will finally be on the path to solutions and get out this mess we've created. But we only have a relative small window to DO it.
The retail money had to jump in on the top of the bond market bubble. Why are you focusing on stocks so much ?
As for what Karl D pointed out.....
That is laughable. Tax revenue is already plummeting from the contraction in the economy . Somebody other then the Fed has to make payments on the debt you know. That window was long gone 2 years ago.
You are completely misinterpreting history. The reason retail investors appear to sell at the bottom and buy far from it has little to do with the decision making process. What you are actually observing is the effect of front-running on changes in policy.
The front running process starts again when Wall Street thinks retail investors will be returning. People like you have assigned the idiotic axiom "stocks recover before the broader economy" to this phenomenon. Gibberish that passes for wisdom.
So like a cheesy seaside resort vendor, Wall Street marked up prices at the start of the "season". No one's coming. Now what are you gonna do with all those "I'm with Stupid" T-shirts?
First, increasing rates is FAR from certainly going to increase "people's" incomes. For consumers, it raises the cost of credit carry logarithmically since incomes are stagnant, real assets are deflating and employment opportunities are deflating. The domino effect would hit business (especially small biz) where margins would be crushed between a constrained consumer and higher rates .
People are piling into bonds not because they're "chasing yield " (laughable) but because they want assured return OF principle . They're scared by what the real economy looks like to the average Joe on main street, the negative 12 year returns in stocks, tanking real estate and the capriciousness of Fed policy which favors banks only.
Last, you seem to be under the delusion that a boom in developing economies will be good for the US. LOL. Lotsa luck with that when import prices keep rising, capital flees US shores and the dollar gets more worthless by the hour.
raising rates HELPS those who save...and/or on fixed income. they then re-invest it in banks or deploy in other above market rate opps to leverage their income or they spend it. simple as that
.25-.5 raise after a few months of job creation will do the markets much good IMO..but this could be some ways off.
As far as the bond market...they provide income to people. just like a cd. part of the motivation is return of principle/safety...part is a certain guaranteed income/yield. and dam right they are scared...that is a raw human emotion that creates BUBBLES. i 100% believe government bonds are a bubble. all bubbles are a result of excess HUMAN emotion in either Greed AND/OR FEAR. I dare you to find me 1 case that is not subject to these 2 emotions. Some hoard these bonds because of fear...some hoard them or FRONT RUN them because of the government/FED/PPT Front Running going on. In every way, its a bubble like dot com stocks.
and don't tell me leverage is not being used in bonds, bond funds. you know it is. no doubt debt has been used by the FED and by these front running tutes to play this game of musical chairs.
here is the big problem...once these bonds drop enuff to start scaring people away from them because the PIDDLY yield/ROC won't be enuff to keep them in if the capital losses start looking real bad vs amout of time to hold to maturity. we will then get a mass liquidation over many months
all of a sudden phsycology will change...bonds will look like the overvalued asset and risky asset to people. they will start viewing international blue chips as the safe companies..you know IBM, PG, etc...and get a nice yield and UPSIDE of ownership in equities
this is a bold prediction...i know..but i believe it will come true and some day people might remember this contary post.
own equities...which is a piece of ownership in a real cash flowing corporation who makes and sell things that are productive...or own government bonds...a ponzi scheme instrument based on nothing, backed by nothing but words in the end
There are so many errors in this post, I barely know where to start. One example should suffice:
'raising rates HELPS those who save...and/or on fixed income.'
If the savers are invested in bonds, and rates are raised ... they lose. Period. If they have fixed income savings, they are screwed by rising rates. Elementary bond math 101. The value of their current fixed income investment will decline so that the yield on it will equal the new higher return they can get from rising rates. This is not HELPING those who have chosen to save by buying bonds today or any other day...
That is a good question - what happens if you convert on the run coupons into ever higher payments? In a perfectly efficient market with no frictions there should be no loss on capital (which of course is bullshit). obviously yields drop but that is only an issue if you expect a payment at maturity. How many of those who buy the 30 Year believe the US will not be bankrupt by then? (hopefully all of them).
So here is a thought experiment: Zero Hedge will accept a $1000 bet from everyone who thinks that in 30 years, the US will be solvent, which we will repay at maturity. In the meantime we will pay the current coupon of the most recent on the run (3.875%) and we will set aside a sinking fund for the full value of principal plus future interest, so there is no counterparty risk. We will make this bet with as many readers who want to take it.
how about japan??? been insolvent for years and yet still survives
u will likely lose the bet because in the years ahead USA will be forced to shrink the defecits and thus...survive
as long as people give them money for nothing, us will print. you can't have it both ways td.
I am offering to become the US, and to raise capital for myself (or Zero Hedge) at the American 30 year cost of capital. Which I can hedge perfectly by buying a 30 Year UST. So in other words, if I lose the "bet", the US goes bankrupt.
http://www.myvideo.de/watch/3070675/JOE_WALSH_The_Confessor
No deal at any price
No need to buy Treasuries, I'll sell credit default swaps for you, bro.
Look around ... see deflation ... call it class deflation.
The largest measure of "money supply" has exploded.
What has not exploded is that money that circulates among the middle and lower classes.
Money is moving up the greed chain. The rich and super rich are in better shape than ever. Some dumb CEO can run a $B corp. into the ground and get a severance package in the hundreds of $M.
The guy laid off in his factory gets $256 a week in unemployment.
The amount of money for the little guy has dried up. The amount of money available for the rich to buy a $10M yacht is just chump change to be frittered away to stave off boredom.
The sad part is that as prices continue their upward spiral, the middle class is shrinking.
The % of the population who can raise a family and make it by working in a stable career has shrunk for the past 50 years. The last 25 years has been fueled by the idiotic notion that one is just as well off if he borrows, rather than saves.
Those that believe in deflation have a valid perspective. BUT, they had better prepare for the inflation that will be recognized soon, or suffer an very unpleasant fate.
Debate is healthy. A pile of greenbacks is of temporary comfort.
Get physical while you can. No matter which camp you are in , inflation or deflation, it will ease the pain.
In the end GATA will be seen as having been right for the last 11 years and as a real service to those that will take the time to heed the message.
Viva LeMet. !
The sad part is that as prices continue their upward spiral, the middle class is shrinking.
The % of the population who can raise a family and make it by working in a stable career has shrunk for the past 50 years. The last 25 years has been fueled by the idiotic notion that one is just as well off if he borrows, rather than saves
+10
Us DumbmoneyRetailers have chained ourselves to the mast of physical gold and silver, while we sail on through the debt ebbing tides to the Ithaca of Revoery. Wallstreet sings, beackons us with lyrical ballads of stockmarket riches in a bottomed out recession. Fromm our vessel we look back at these captivating sirens with bar arms outstetched, on the Isle d' Wallst and then we see their claws glint behind their backs
Wall St. has been playing games on retail investors since day 1, way before most here were born. Try look up the book "And where are the customer's yachts - A hard look at Wall St.".. It was written in 1940 and updated in the 1950s. Yes, there were people who knew Wall St. is full of sh** 60 years ago. It's not like this is a new insight.
People around here are acting like the Wall St. of today is "ourrageously" criminal. It is not more criminal than it was in any of the previous decades. Like if Wall St. was full of good guys in the 70s, 80s or 90s and just now it's all crooks.
Wall St. was always full of crooks. Markets have always been rigged. Whenever you followed Wall St. advice blindly you were fleeced as bankers filled their pockets. It's the same old game and what we saw in the last 12 months is NOTHING out of the ordinary. Not at all.
Well said, Godfader, though as always there's something new under the sun going on in the past 12 months. Like ZIRP while Fed policy is for +2.5% acknowledged inflation per annum! Or the Feds screwing GM bondholders.
And no matter how smart and on-target Dr. David Rosenberg has been, the truth is that he's out to make money for his employer, too. Who really wants to own Federal debt for 30 years at 3.7% interest per year? If you're not an insurance company selling a spread product, pension fund manager or the like, maybe Rosie and Gary Shilling, but no one I know wants in.
Meanwhile it may be that the cheapest way to buy into emerging economies that didn't drink the CDO-squared Kool-Aid and thus actually have solvent banking systems is through multinationals selling at low valuations and with dividend yields at least equal to that of a 10-year T-note.
Oh but it is different this time. 100X leverage didn't exist in the 50s-80s. Glass-Steagal at least protected the economy from the global meltdown.
When the zionist partners had to gamble with their own money, they were far more prudent. When they went public and became 40% of gdp is when everything began to go off the rails.
There was 1000% leverage in the 1920s for equities. It was only after 1929 people learned to respect the dangers of leverage and the risk of equities. That's why nobody in their right mind thought stocks were a "safe investment" in the 1950s. People understood the risk.
Unfortunately, a 20 year bull market with a lot of media fan-fare gave people the confidence that if they're only in for the long haul nothing will go wrong. Heck people thought they can all retire at 40 if they just put enough money into stocks.
IMO once it's all said and done (e.g. 2020, that would mark two lost decades) the middle class will be completely disillusioned with stocks/real estate as a form of "safe" investing and finally be back to respecting the risk of owning risky assets.
So, in your opinion, this charade will continue for 10 more years, before the middle class finally gives up? That's a long time for folks to wake up. If you don't mind me asking, where do you see the market short, intermediate and long term? If you are seeing another lost decade, do you anticipate the market to head higher for the next few years, before continuing with the slide?
Great piece Tyler...Thanks
"..The dumb money also knows one other thing - that the Fed has now run out of all options to restimulate the economy...".
Presuming that Ben and his accomplices EVER had any intention of giving the economy a woody is fairly naive.
The FED took very good care of its Semite brothers who have come out of this debacle with trillions that not only rewarded them for abysmal failure, but gave them bonus money on top of it.
The Fed doesn't give a fuck about the economy.
can someone help me appreciate this?
"once the full extent of the carnage of the flattening of the steepener bandwagon trade is fully appreciated"
thanks
Yield curve gets flatter = Banks make less easy money
Appreciated.
this is a mysterious and poetic allusion, i think?
it may also refer to loss of volume and trust by the clients
of hedge funds and investment institutions due to the
front running and prop trading taking precedent, resulting
in lost , it is not explicit, money and business. carnage?
AUGUST 22, 2010 - Wall Street Journal -
" The Santa Monica, Calif., investment firm Mr. Taleb helped start and still advises, Universa Investments LP, is in talks with China's $300 billion sovereign-wealth fund, China Investment Corp., and Middle East government funds about investing in Universa, according to a person familiar with the matter. Specifically, sovereign-wealth funds are willing to pay the firm in the hopes that if the market dives, at least some part of their portfolio will profit... Taleb said he couldn't discuss Universa client talks.. But he has consulted with several sovereign-wealth funds about his "black swan" philosophy in recent years."
http://online.wsj.com/article/SB1000142405274870434050457544795066715890...
Am I behind the curve? Did anyone else realize Bernanke's speech the other day was at the KC fed? Where Thomas Hoenig is? One of the last of the inflation hawks, and Bernanke's biggest critic within the system?
What a dick!
Yield curve gets flatter = Banks make less easy money
Great commentary Tyler!
SPX on a long slow grind down below the 666 watermark. It'll happen.
The U.S. stock market has finally been outed for the ponzi like scheme that it is.
It'll happen s'right, deadhead! Some Friday, when the “dumb money’s” all gone, the War of the Machines will be fought as they rip each other off, ending in a final flash of meltdown smoke. And the Dow will be no more. :)
Reality Trumps Manipulation
It continues to amaze ... so much of the economic commentary these days focused on the issue of a double-dip recession.
Look around! This is not a mystery. Scroll back a year and all the media outlets are rejoicing ... green shoots.
No amount of factual analysis was going to get in the way of that fairy tale, not many people wanted to hear the truth. The markets were going higher, and the spin seemed so believable. Why rock the boat?
How many people are in better shape today? High paying jobs replaced by McJobs...for those who are lucky enough to find work. Even using the utterly phony employment numbers cranked out these days, the unemployment problem has gotten worse, not better.
Totally bogus data for a few quarters hinted the glut of housing was in decline, the current stats. tell there is a record supply of unsold houses on the market. Foreclosures continue ... a problem, and the delinquency rate tells that this problem will get worse before it gets better.
Personal bankruptcy levels are rising. Is this recovery?
The biggest lie out there is that by holding interest rates artificially low, somehow this is going to help get things back on track. Really?
For consumers maxed out on credit cards, unable to borrow more, and this will stimulate consumption?
Home owners deep underwater, and low interest rates are no incentive to keep making payments on an existing mortgage. Low interest rates hurt people who saver; depend on income from bonds to make ends meet.
How does taking money right out of the pockets of responsible savers go towards helping restart a broken economy?
Last year we were screaming to the heavens that the green shoots idea was pure nonsense.... not much about green shoots anymore!
Recovery or Double Dip?
This is one long grinding decline that is dragging on and has much further to go, as a result of the terrible economic policy decisions.
If it was just about printing money and encouraging spending to bail out of this mess, then the FED should have handed every family a voucher to go spend at the mall for all those billions of dollars. Instead, that money was handed over to corrupt banks, and eventually paid out in bonuses to the same schmucks that caused the problems. Nothing has been fixed.
Gold and Silver have held up while one crisis after another rocks the system ... yet the shares of the mining companies are mostly down. The majority of the commentary still wants to pretend that gold is a bubble.
The same bozos on TV tell why gold is going lower, or some article in a magazine or newspaper gets it all wrong ... flawed analysis that would shame a grade school student.
Break out the coloring books and the crayons!
Eventually all of this will be resolved.
Who is left out there that does not know that the markets are manipulated?
Anyone?
People still do not want to talk about it ...all that pretending has not made things better: the media shills actually believe their own bullshit?
Will some of them find the balls to start telling it like it really is? So far it has been a tiny minority that speaks truth. This too will change.
Reports that the harvest of wheat, coffee, soybeans, is projected to be much lower this year than most official numbers suggest. Some of this is fallout to the financial crisis which has limited the ability of farmers to plant and maintain crops. Some of it is due to poor weather. Some is due to bonehead government policy. The worldwide food situation may be thin for a year or more, prices of agricultural commodities are rising.
Gold production in particular has been in a drought for the last 5 or so years, with total world production in decline despite the higher price trends. If the inventory situation for silver has been drawn down as much, then things may become unstable soon.
Reports of slow delivery for contracts, various world mints have trouble keeping enough stock to meet demand, the offer of cash settlement at a premium to avoid having to deliver silver bullion to the specs.
Not heard yet is that industrial consumers have been unable to get the physical silver needed to produce products. There maybe decisions made that real silver users get priority delivery over investors and spec. players.
Maybe ...maybe not?
Either there is plenty of silver around or there isn't. Its that simple. Media spin can go only so far. Manipulate the price down and discourage investor interest may drag out the eventual outcome. If indeed silver is in short
supply, the metal will eventually trigger a default for real industrial consumption. No amount of manipulation or cover up will prevent that. When the news comes out that some large production line has been halted due to lack of silver, that’s the day people will have to wake up and understand its not just people in tinfoil hats that are the problem.
If the world wants to play pretend games and ignore the reality of the economic situation this too will eventually be resolved. Let them debate on inflation/deflation, green shoots, and recovery or recession. Let them pretend that endless deficits and a blizzard of money printing doesn't matter.
Lets cook the books!... flood the market
with phony paper investment products, and cover up sour loans and insolvent banks. If the CFTC is indeed acting to protect crooked banks that are trapped short, the wheels will come off that also. In the end, all of this will be exposed and no amount of spin can keep it hidden. It's a question of
time.
Rant and be disgusted through the process but sometime along the way it is inevitable that reality will trump spin, myth, lies, and bullshit.
Everything that happens in between is just noise.
MexicoMike @ LeMet
Can't argue with you.
I can only say that those of us who take the time to find out what's going on have a somewhat better grasp of the situation that the ones who prefer to spend their time being entertained.
The truth is always elusive, but the big pile of facts is there. We can sift through it and prosper, or we can believe what we're told and eventually end up living under a bridge.
It's sad that most people don't want to know what's going on. But that's their choice.
And besides, the more people who don't know about investments like silver and gold makes it that much easier for people like me to scoop up a few more ounces of the good stuff while others buy that vital bass boat.
Investors Pull $7.1 Billion From Stock Funds Globally, Buy Emerging Bonds
http://www.bloomberg.com/news/print/2010-08-26/investors-redeem-7-1-billion-from-global-equity-funds-in-week-epfr-says.html
"Why did the "dumb money" for the first time ever, not bite on the Wall Street siren song lure of an economic "rebound", but instead has hunkered down, proving that not only is Wall Street nothing more than a pure-play enabler of the ponzi regime's status quo, but that all those who were warning that the economy is far more dire than Wall Street represents, were proven right."
Simple, to my way of thinking, NO WAY they risk what's left of their life's savings, after seeing ZERO recovery, in any sector.
Fool me once,shame on you, twice, shame on me.
Plus, they(dumb $, is madder than a mofo at Wall Street anything).
It is poetry such as this that has me looking for the donate link!
And when there were no idiots left they asked themselves what have we done ............. and lo no one was left to answer them.Reap what you sow,Reap the Whirlwind .................
I think you meant "no other idiots left..."
During the housing boom a few years ago, a contractor friend of mine told me that most of the local developers thought that the Yankees, who'd come here to North Carolina, came with nothing more than "a bag of money and a box of stupid."
It's not an expression I'd ever heard before...but well worth remembering.
Hmm. So, how's your contractor friend doing now? Probably would love to see a Yankee with a bag of money about now...if he's still in business. And no, I'm not a Yankee. Southern boy through and through.
Overdose
This is the story of the greatest financial crisis we will ever see... The one that is on the way.
ABC Australia Documentary - Original Broadcast: 23rd August, 2010.
An ABC - Four Corners documentary about the coming economic crisis, featuring Gerald Celente and Peter Schiff. Original air date: 23rd August, 2010.
http://www.informationclearinghouse.info/article26264.htm
the madoff scandal, besides being a cia job, was not the precipitant to the exodus of "investors" from the stock markets....it is fraud and fear undiluted....
the crooked and hopelessly corrupt fasb, the totally captured sec, and the pure evil of sociopathic wall street leave no option but to stampede for the doors....there isn't a signle balance sheet in america which is reliable, readable, or honest....buying stocks is no more informed than buying cracker jacks for the prize.
people sense that trillion dollar deficits as far as the eye can see are not economics except of the voodoo variety....wars of imperial aggression will not restore economic fortunes...
plow wall street under; call the undertakers to haul away the rotting putrid carcasses and start anew....we need a year of jubilee and a return of moral hazard to say nothing of a return to sound money (i.e. gold).....
the most educated generation in american history has utterly bankrupted and destroyed the country - irreparably...of course it was decades in the making but the ilk who started the sinking are at the helm playing aud lang syne on the magnificent resinking of the titanic....
" (absent a few idiotic decisions by corp fin department ostensibly populated by crystal meth snorting monkeys such as those of HP and Dell)"
Haahahahaha!!!! That made me spew my beer!! I deal with them regularly...
+ 1
Let's watch as the HFT vultures start eating each other
as Washington D.C. (Marie Antoinette) says to the middle-class 'let them eat cake'...