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Guest Post: The Turning Point

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

The Turning Point

Some technical analysts are calling for a major rally from here, but the massive injections of financial insulin don't seem to be reviving the sagging global economy.

The stock market and economy are both at a turning point. Analyst Martin Armstrong's Economic Confidence Model (tm) set the turn date as June 13/14, 2011.

In the stock market, a number of technical analysts are issuing strong buys based on the negative sentiment of so-called "dumb money"--small investors--and the number of stocks below their 50-day moving averages.

Others such as Armstrong are predicting that Greece has no alternative to default and the Euro is untenable as "one size does not fit all."

It is rare to find a market where the technical evidence is so compelling for a strong rally yet the fundamental basis for such a rally so lacking. Exactly where do Bulls think the growth and rising profits are going to come from?

The answer for the past few years has been massive Federal Reserve/Federal intervention and stimulus, and a weakening U.S. dollar that boosted overseas profits via the legerdemaine of currency devaluation.

But three years of these policies have accomplished nothing but load the taxpayer with staggering amounts of debt: none of the causes of the 2008 implosion have been fixed or even addressed. As Armstrong notes, the massive interventions did not shorten the crisis, they have prolonged it.

This reality has filtered down to the political swamp, and now the politicos are hesitant to bet their own futures on additional trillions in stimulus and quantitative easing. For the first time in memory, the Federal Reserve is on the defensive. Simply put, its policies have failed to accomplish anything except prop up a rotten, insolvent banking sector that needs to be declared bankrupt and swept into the dustbin of history.

As I have noted here before, the next round of QE (quantitative easing) will fail to inflate the stock market regardless of its size or tricks. The fact that QE3 is needed will spook everyone who understands that it is a last-ditch effort to keep the Status Quo financialization from imploding, and since QE2's sugar-high was so brief, others will be spooked by the possibility that the next high will be even shorter.

This is the dreaded Diabetes Financial Syndrome--the Fed is pouring ever larger amounts of financial insulin into the system, but the financial "body" no longer responds to this insulin. The financial system then goes into toxic shock and implodes.

Let's look at two charts for context. Here is the S&P 500 from 1965 to 2011. Hmm, are there any aberrations visible here, any gigantic spikes of speculative frenzy? Just because these spikes of speculative, financialized frenzy have been normalized doesn't mean they are no longer speculative, financialized frenzies.



Has the economy really been healed? If not, then what is the basis of the market's spectacular rebound since 2009? We all know the answer: $6 trillion in Federal financial insulin and another $2 trillion in Federal Reserve insulin. The entire rally, in other words, is an artifact of Central bank/State intervention.

Courtesy of dshort.com, here is an inflation-adjusted chart of the S&P 500. This chart clearly illustrates that unprecedented Central State stimulus and intervention/manipulation have juiced the market higher than previous post-crash highs.



But the whole financial-insulin project is looking a bit long in tooth compared to previous post-crash markets. In the long run, perhaps we can attribute this extension of the euphoric high of "recovery" to the Fed's QE2, which pumped half a trillion dollars into stocks in a matter of months.

Short of the Fed simply buying trillions of dollars in stocks outright, then it looks like this "recovery" rally is about to have a Wiley E. Coyote moment, as it has raced off the solid ground provided by the Fed's QE2 injections and is now poised in thin air.

Of course the market could rally from here, but it's hard to see on what basis other than a technical dead-cat bounce. The Fed could announce another round of intervention, and that would certainly give the comatose body a jolt. But for how long?

If it does respond to gravity, then we might want to re-visit the definition of "dumb money:" small investors have been pulling money out of the stock market all during the QE2 insulin-rush rally while the "smart money" has been piling in, blubbering piously about the key tenet of their religious faith, "don't fight the Fed."

So which do you think is all-powerful, smart money--the Fed or gravity? We're about to find out.

 

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Fri, 06/17/2011 - 08:44 | 1377138 hugovanderbubble
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ThankS Charles Hugh,

Fri, 06/17/2011 - 12:32 | 1377876 Highrev
Highrev's picture

The June 13-14 turn in the Economic Confidence Model marks an 8.6 year cycle LOW.

 

Fri, 06/17/2011 - 08:40 | 1377139 Larry Darrell
Larry Darrell's picture

"Simply put, its policies have failed to accomplish anything except prop up a rotten, insolvent banking sector that needs to be declared bankrupt and swept into the dustbin of history."

This could and should have been done a decade ago when the consequences wouldn't have been as drastic.  Still, doing it now is better than waiting and can kicking even longer as the scope of negative consequences continues to build.

Fri, 06/17/2011 - 08:45 | 1377140 HelluvaEngineer
HelluvaEngineer's picture

Exactly where do Bulls think the growth and rising profits are going to come from?

Since when did the Bulltards start thinking about anything? Booyah, all.

Fri, 06/17/2011 - 09:13 | 1377235 SheepDog-One
SheepDog-One's picture

Thats right, as long as the bulltards see their 401K as 'ok', then all is well for the Treasury until they decide its time to seize the 401K's and pensions. 

Bernank and the central bankster cabal did not do all this monetizing to ensure mom and pops could retire comfortably thru their golden years at The Villages.

Fri, 06/17/2011 - 09:25 | 1377265 HITMAN56
HITMAN56's picture

HelluvaEngin...great call on VXX a few days back btw

Fri, 06/17/2011 - 08:45 | 1377141 Rodent Freikorps
Rodent Freikorps's picture

Cloward-Piven Chaos, bitches.

 

Fri, 06/17/2011 - 09:11 | 1377228 SheepDog-One
SheepDog-One's picture

Bunch of old-timey street thug organizer nonsense. 

Fri, 06/17/2011 - 08:47 | 1377142 Greeny
Greeny's picture

Very interesting Article on possible QE3

"Bernanke said: "A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years).

"The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well."

Read more: Pimco's Gross Tweets Fed Will Curb Treasury Yields

http://www.moneynews.com/StreetTalk/Pimco-Gross-Fed-Treasury/2011/06/16/...

Fri, 06/17/2011 - 08:51 | 1377166 Tyler Durden
Tyler Durden's picture

We always appreciate when Reuters takes our ideas and observations without attribution:

Bill Gross Warns QE3 Is Coming In The Form Of "Operation Twist" For The 2 Year

Fri, 06/17/2011 - 08:55 | 1377179 Cognitive Dissonance
Cognitive Dissonance's picture

Tyler,

To attribute anything to you would be to acknowledge you which would then require a whole bunch of explaining. Can't have that from one of the MSM keepers of the public (financial) myths.

Fri, 06/17/2011 - 08:57 | 1377187 mayhem_korner
mayhem_korner's picture

Maybe you're the new deepthroat.  Take it as a badge of honor.

Fri, 06/17/2011 - 09:06 | 1377204 Cognitive Dissonance
Cognitive Dissonance's picture

Only in this case the MSM wants to stuff a rag down Tyler's deepthroat and silence the heretic.

Fri, 06/17/2011 - 09:04 | 1377209 mayhem_korner
mayhem_korner's picture

Good call, but methinks the MSM has been losing the battle of silencing the heretics (aka truthtellers) of late...

Fri, 06/17/2011 - 09:16 | 1377243 Caviar Emptor
Caviar Emptor's picture

As the old memes die, and events deviate consistently from the old playbook, they find themselves stammering to explain what is going on to the public and even to themselves. Suddenly Tyler makes a whole lotta sense. Wass't that a song Suddenly Tyler  ?

Fri, 06/17/2011 - 09:25 | 1377255 Cognitive Dissonance
Cognitive Dissonance's picture

I've thought about this long and hard. And while a growing minority are waking from the dream those who wish to remain asleep will do so and will use the MSM (or anything else for that matter) as a convenient excuse to dream on.

Ultimately it matters not who speaks the truth but who is moved by the truth or lies. Even when the entire stinking edifice collapses I have no doubt the MSM will be used to deflect blame and find scapegoats. As long as lying is still effective truth is immaterial except to those who value it above all else. To those still dreaming truth is not welcome and thus the lies are deemed extremely valuable.

It is not the liars who are the most dangerous, but rather the majority who accept the lies even if they do not believe them. An inconvenient truth is inconvenient precisely because the lie is welcomed and thus very convenient. Truth telling in and of itself is not enough. Truth must be embraced.

Fri, 06/17/2011 - 09:26 | 1377278 Caviar Emptor
Caviar Emptor's picture

CD: as usual great insight. 

You might be interested: in my travels to different cities in the US recently, I find that in talking to the plain folk out there that they aren't drinkin' the Kool Aid anymore. And not afraid to tell you so. They tell you how bad business is, how everybody's on the defensive and have changed their spending patterns markedly. They think politicians chose not to get it. And they believe in peak oil and global warming more than they believe in evil speculators. To my surprise. 

Fri, 06/17/2011 - 09:50 | 1377331 Cognitive Dissonance
Cognitive Dissonance's picture

As I have continued my Johnny Silverseed wanderings I too am sensing a change in perception and awareness. However this might just mean that we are entering a Soviet Union style era where the population doesn't believe its leadership and in minor ways even tries to subvert it yet does nothing to effectively undermine it.

As more and more people are compressed into the lowest common denominator class and need to fight on a daily basis just to put food on their table they will not direct energy towards fighting the greater evil or even protecting the greater good. It is only when they have nothing left to lose that they will act like they have nothing left to lose.

This is why I suspect this insanity will go on for much longer than most here on ZH believe is possible. Things can always get worse and our own inner denial can always put off to tomorrow the revolution that needs to take place today.

Fri, 06/17/2011 - 13:24 | 1378076 MrButtoMcFarty
MrButtoMcFarty's picture

Agreed. 

Inflation is good for TPTB and bad for the unwashed masses/bottom 95%.

That is exactly why inflation is a sure thing for much longer.

Fri, 06/17/2011 - 18:44 | 1378978 prophet_banker
prophet_banker's picture

the revolution that needs to take place today"   - so well said +1

Fri, 06/17/2011 - 09:32 | 1377290 mayhem_korner
mayhem_korner's picture

"What is truth?" Pilate asked.  (John 18:38)

Fri, 06/17/2011 - 09:55 | 1377345 Cognitive Dissonance
Cognitive Dissonance's picture

Truth is simply a perception because it comes from an external source and thus is subjected to distortion and manipulation. Knowing comes from within and when sought is irrefutable and undeniable.

(CD 2011)  

:>)

Fri, 06/17/2011 - 09:54 | 1377356 mayhem_korner
mayhem_korner's picture

It wasn't a question, CD.

Fri, 06/17/2011 - 10:00 | 1377370 Cognitive Dissonance
Cognitive Dissonance's picture

I know. See my smiley face above? I was being silly and foolish. Except about the knowing part.

:>) :>)  <---- two smiley faces, one for me, one for you.

Fri, 06/17/2011 - 10:11 | 1377398 ibjamming
ibjamming's picture

And WHO was there writing this down?  Nobody...  Yet you believe these words to be TRUTH?

 

Just making a point...not meant as an insult to you personally...to all religious followers.

Fri, 06/17/2011 - 10:42 | 1377496 Cognitive Dissonance
Cognitive Dissonance's picture

The vast majority of the Bible was written and gathered together centuries after the fact. In today's world that would be consider hearsay.

BTW I love the fact that the word 'heresy' is so close to 'hearsay'. The manipulation of language has been going on since language was first used. It is embedded directly into our words and phrases and continues to this day.

Fri, 06/17/2011 - 11:36 | 1377686 Raymond Reason
Raymond Reason's picture

And that is why Truth and Correct Doctrine are the charge of the Church.  It was always the Church that was charged with preserving Jesus' and Paul's and the early Church Father's teachings.  And if you study the teachings of the Orthodox Church you will find "the gates of hell have not prevailed...". 

Fri, 06/17/2011 - 11:09 | 1377611 mayhem_korner
mayhem_korner's picture

What point are you making?

Fri, 06/17/2011 - 13:29 | 1378081 falak pema
falak pema's picture

That Emperor Constantine did a good job when he chose those who would figure in his bible and those who would not; the latter would then be charged, for time immemorial, by the "official" gatekeepers of the Christian church of Roman Emperor, as "heretics"...and not the true followers of Constantine's spiritual reform of his Empire.

No more Zeus and all those other gods who were growing by the dozen, like a new fad in a decadent empire.

Not on! As cause for internal tension amongst those who continued to worship the traditional pagan hellenistic gods.

Fri, 06/17/2011 - 09:49 | 1377341 SecondComing
SecondComing's picture

Re: Truth

"A truth’s initial commotion is directly proportional to how deeply the lie was believed. It wasn’t the world being round that agitated people, but that the world wasn’t flat. When a well packaged web of lies has been sold to the masses over generations the truth will seem utterly preposterous, and its speaker a raving lunatic.” — Donald James Wheal

Fri, 06/17/2011 - 10:00 | 1377362 Cognitive Dissonance
Cognitive Dissonance's picture

Nice quote.

I often say that truth isn't the problem. It's letting go of what truth displaces that cause the pain and disruption. Teaching an infant 'truth' is not a problem at all. Teaching an adult 'truth' who has been indoctrinated in a different 'truth' (usually distorted and manipulated 'truths') all his or her life is a major disruption.

The liar always says he is speaking the truth and that the others are the liars. This is why we must all search within to discover our inner knowing.

Fri, 06/17/2011 - 10:22 | 1377433 SecondComing
SecondComing's picture

There's another quote about inner knowing, CD.  I've said it before, many times, in many forms, and I will write it again for conversational flow:

"I am the Truth."

Even the Cretan paradox cannot disprove the Self-referential nature of Truth.  That is, only I decide(s) to accept or reject this irrefragible ontology. 

...talk about cognitive dissonance.

Fri, 06/17/2011 - 11:18 | 1377479 Cognitive Dissonance
Cognitive Dissonance's picture

In my book there is a world of difference between 'truth' and 'knowing'. You mention a "quote about inner knowing, CD." but the quote then uses the word 'truth'.

Not arguing with you. But the words 'truth' and 'knowing' are often used interchangeably (IMO to obscure and to promote dependence upon an external source for 'truth') and based upon a strict definition they should not.

Fri, 06/17/2011 - 15:09 | 1378415 Dental Floss Tycoon
Dental Floss Tycoon's picture

 

 

"Be still and know . . ."

 

 

Fri, 06/17/2011 - 11:15 | 1377627 mayhem_korner
mayhem_korner's picture

Spot on.  That's why I absolutely hate the phrase "his/her truth" or "his/her reality."  Perceptions are moldable, truth is immovable.  And inference is not truth, either, which is a bad habit the world has picked up.

The most difficult concept I find people struggle with is when they do not know the truth (i.e., they cannot discern it absolutely).  That's when our own, individualized version of the "truth" fills the vacuum.  And we bear it like an absolute, contesting with others as to who's logic holds the most weight.

And in the midst of all that, absolute truths are branded as heresy.

Wonder why the "market" behaves in ways we believe it shouldn't?  C'mon now! 

Fri, 06/17/2011 - 11:21 | 1377633 mayhem_korner
mayhem_korner's picture

the Self-referential nature of Truth

You've just called out the sleight-of-hand of environmentalists.  Who's at the center of one's environment?  The irony of the moral high-ground pining enviros is a bottomless pit.

Fri, 06/17/2011 - 09:05 | 1377201 Greeny
Greeny's picture

Thank you very much, Tyler, great read, very informative.

Fri, 06/17/2011 - 10:38 | 1377484 mendigo
mendigo's picture

for what it's worth, i have seen zh cited by Colin Barr

there are more raw facts here on any day than in a month of msm articles and many of the facts will never show-up on msm 

should be pay service

i wish your articles were posted or could be viewed as a thread

Fri, 06/17/2011 - 10:48 | 1377532 Al Gorerhythm
Al Gorerhythm's picture

That SP 500 1965-2011 chart is one raw fact that should scare the crap out of anyone who really looks at it. Go on, stare at it for a while and watch what it says about our bloated society. Its under-lyings, reading from left to right, range from Meh to OMG!!!, and the scary part is it is only one metric of the unleashing.

Fri, 06/17/2011 - 11:07 | 1377603 mendigo
mendigo's picture

possibly, but needs to be viewed in light of inflation - particularly now that goldman runs the presses

Fri, 06/17/2011 - 09:16 | 1377222 nevadan
nevadan's picture

If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well."

The key words in the Bernank's statement is "if" and "likely".  It starts with an assumption "if it were successful" and ends with a prediction "would likely fall as well".  Based on his track record of economic predictions there is a high probability that just the opposite will happen.

http://www.youtube.com/watch?v=GbOWiJ94Xvg

Fri, 06/17/2011 - 08:46 | 1377144 Badabing
Badabing's picture

Lets see the charts priced in gold

Fri, 06/17/2011 - 08:55 | 1377167 mayhem_korner
mayhem_korner's picture

Priced in Ft Knox gold it goes to infinity.  :D

Fri, 06/17/2011 - 09:12 | 1377229 chartcruzer
chartcruzer's picture

ask and you shall recieve,   beware its UGLY

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s235939273]&disp=P

can you say "road to nowhere"?

Fri, 06/17/2011 - 09:20 | 1377242 mayhem_korner
mayhem_korner's picture

Ouch.  'most put my eyes out.  Be careful with that thing.

More of a "down escalator" than a "road" to me...

:D

Fri, 06/17/2011 - 09:21 | 1377260 Badabing
Badabing's picture

Thanks i just puked

Fri, 06/17/2011 - 11:13 | 1377615 mendigo
mendigo's picture

now that's the real deal - tobagan ride the hell (bitches)

thanks!

Fri, 06/17/2011 - 08:43 | 1377146 yabyum
yabyum's picture

This is going to hurt. You can't keep this propping up shit forever.

Fri, 06/17/2011 - 08:47 | 1377149 razorthin
razorthin's picture

You never, ever argue with the technicals.  Sorry, I know many here do not agree, but it is my conclusion in reviewing my successes and failures.  If you look at historical market data and the concurrent fundamental stories, you will find an almost perfect inverse relationship at major turning points.  What the technicals predict seem to magically materialize in the fundamentals (public knowledge that is) a short time later.

That said, I don't think we are nearly at the sentiment extreme for a major reversal.  Minor counter-trend bounce, sure.

Fri, 06/17/2011 - 08:58 | 1377184 alien-IQ
alien-IQ's picture

"You never, ever argue with the technicals."

oh really? I got one word for you: RIMM.

based purely on technicals, it should have bounced at 47...yet the fundamentals have taken over that situation...and once upon a time...fundamentals mattered. Is everything old becoming new again?

Fri, 06/17/2011 - 09:12 | 1377192 razorthin
razorthin's picture

Did you see a confirmation of an actual trend reversal?  Thought not.  Since the breakaway island gap down from the low 50's (precipitated by a failed breakout above the 25 DMA, I might add), there has been no successful test of support, and it's gone nowhere near another test of the major moving averages.  However, it is at significant support right now.  We'll see.  Nice swing trade long opportunity.  But this pig has a lot of work to do to be investible.  For starters, the 25 needs to cross back above the 50 and the price needs to clear that convergence.  Tough row to hoe.

Fri, 06/17/2011 - 09:14 | 1377221 alien-IQ
alien-IQ's picture

why don't you pull up a chart for RIMM and stop at April 28, 2011. Looks like a pretty good reversal forming...but then...reality entered the picture.

In day trading (intra day moves) I agree with purely technical plays. I do that. But on the bigger time frames. The bigger picture, Fundamentals eventually matter.

It don't matter how pretty the daily chart is. If the company is shit, the stock will eventually reflect that reality.

Fri, 06/17/2011 - 09:15 | 1377239 razorthin
razorthin's picture

Perfect example of failure at the 44 support level.  I was still 4 points from the 25 dma - hardly confirmed the move.  One of my hardest and painful lessons is waiting for confirmation to initiate a long term position.  It's very difficult for mere mortals.

Fri, 06/17/2011 - 09:26 | 1377269 alien-IQ
alien-IQ's picture

was it "technicals" or "fundamentals" that caused the next days price action, which saw it drop from 56 to 48?

Fri, 06/17/2011 - 10:30 | 1377464 LawsofPhysics
LawsofPhysics's picture

More importantly, does any of it matter when productive, under compensated people who produce things of REAL value say "fuck the system" and go offline.  Send lawyers guns and money bitches.  Divest of all things paper, period.

Fri, 06/17/2011 - 09:02 | 1377195 zKeyserSoze
zKeyserSoze's picture

it seems so. Newton's apple was an apple and the erroneous quantum physics of how it fell from the tree didn't make it edible, but it was just the same

Fri, 06/17/2011 - 09:02 | 1377153 scatterbrains
scatterbrains's picture

Lets just go straight to .999,  1-grain $10 dollar coins... err chips, flakes what ever.

Fri, 06/17/2011 - 08:51 | 1377158 apberusdisvet
apberusdisvet's picture

So:  will history record Bernake as the worst Charistan ever, or will historians marvel at his ability to set in motion the Master of the Universe end game of the neoMarxist or CorporateFascist NWO totalitarian regime?

Fri, 06/17/2011 - 08:54 | 1377182 topcallingtroll
topcallingtroll's picture

Neither.

He just found himself in the wrong place at the wrong time

Fri, 06/17/2011 - 09:21 | 1377262 mayhem_korner
mayhem_korner's picture

I don't buy that.  If you find yourself in the "wrong place at the wrong time," you get the h*ll out.  Treason doth not prosper.

Fri, 06/17/2011 - 08:48 | 1377159 alien-IQ
alien-IQ's picture

Gravity always prevails...just ask Wiley E. Coyote.

Fri, 06/17/2011 - 09:07 | 1377216 hamurobby
hamurobby's picture

I believe he would say "it sucks"

Fri, 06/17/2011 - 09:21 | 1377247 alien-IQ
Fri, 06/17/2011 - 08:49 | 1377161 mayhem_korner
mayhem_korner's picture

Fed stimulus has hit what burn-outs refer to as "cocaine blues" - the high can't even get the user back to the "normal" state that prevailed before the abuse started.

Technical analysis is very suspect when there is a major exogenous force occluding the core market behaviors.  Algos are reinforcing catalysts to the normalcy biases of reversion and breakout, but they ultimately can't override the gravity of whether fundamental earnings are there.

My guess is panic slope will increase rapidly in the next 2-3 weeks...

Fri, 06/17/2011 - 08:51 | 1377169 HelluvaEngineer
HelluvaEngineer's picture

But today we rally...

Fri, 06/17/2011 - 08:58 | 1377183 mayhem_korner
mayhem_korner's picture

That's what Canuck fans were saying at 9am on Wednesday...

8D

Fri, 06/17/2011 - 09:19 | 1377238 chartcruzer
chartcruzer's picture

take a look at the $tick readings.   At least a short rally is probabalistically in the cards.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s208587727]&disp=P

fear not,,, after that full scale melt down will resume,,,,,,,until QEx

Fri, 06/17/2011 - 09:19 | 1377252 mayhem_korner
mayhem_korner's picture

Bingo.  But I agree with the main thrust here that equities are not going to bounce back with QEx (or Oliver Twist or whatever it will be called). 

I think the real interesting thing here is what will hold the most as the commodities complex and equities tank.  Gold's been a rock so far, but where's all the investment going to migrate...? 

Fri, 06/17/2011 - 08:53 | 1377164 topcallingtroll
topcallingtroll's picture

This is why paul krugman is wrong.

In theory countercyclical spending works.

In human nature and in human practice we cant stop the deficit spending when necessary, because it feels so good.

Then we eventually start getting concerned about the size of the deficit and reach a point where psychologically the numbers become big and frightening. Even Berskanke is worried about the backlash to the amount of monetization necessary and the unexpected emergent phenomenon of the potential loss of fed autonomy.

The amount of deficit finance and/or monetization needed to just keep things from crashing looks huge and terrifying, but that is about the highest amount allowed by politicians and the public who demand "an end to deficits"

The natural tendency to compromise allows enough deficit spending to avoid the depresionary crash, but not enough to pull us out of the slump. Then we slowly turn into japan.

Fri, 06/17/2011 - 08:52 | 1377173 mayhem_korner
mayhem_korner's picture

Redundancy.  Paul Krugman is always wrong.

Fri, 06/17/2011 - 09:14 | 1377224 docj
docj's picture

+1

Fri, 06/17/2011 - 10:48 | 1377527 Biosci
Biosci's picture

This is (one of the reasons) why almost all economic theory is wrong:  it is divorced from politics.  When an economic theory makes a prediction about what policies would best serve the almighty Growth, it can say nothing about the likelihood of that policy being implemented, or being reversed when no longer needed.  My brochure-level understanding of Keynesianism is that government spending is supposed to prop up the aggregate when private spending lags, but during boom times public spending should be low or negative to save for the proverbial, and inevitable, rainy day.  But of course that never happens.

Scientists tend to fall into two camps:  theorists and experimentalists.  Only in physics do pure theorists really play a central role, and they've earned it for how amazingly right they've been.  As you march up the ladder of complexity from elementary particles to people, the feedbacks and nonlinearities that emerge from the increasingly complex interactions of actors make a mockery of predictive theories, except over very small regions of state space.  Here theory takes a back seat to observation.  Only in the last decade have cell biologists begun to systematically understand what happens to a cell when you perturb any given gene; the technology for deciphering what happens when you perturb _two_ genes (gasp!) is just being developed. 

What's this got to do with economics?  I'll be extremely generous and include economist as scientists.  They are largely unable to conduct experiment, so they become pseudo-theoreticians who use historical data to try to derive fundamental priciples, and to use those principles to predict events and proscribe policy.  But the complexity of the system necessarily renders their predictions weak. 

Bernanke's focus has been the depression; when faced with a crisis, and the possiblity of debt destruction that could lead down the path to a full-on depression, he used the closest historical parallels:  the US GD and Japan.  It's a good bet that he'll continue to see signs of impending doom (the decline of shadow banking has been well documented on ZH, and virtually nowhere else; housing is pretty obvious) and react in ways opposite of the ways that exacerbated previous depressionary cycles (Bernanke's analysis of Japan has been analyzed on ZH, and virtually nowhere else -- god I love this site).  But combine high existing debt, reserve currency, a badly broken political system, and a demographic time bomb to the current state of affairs and it casts some (!) doubt on the applicability of prior lessons.  Not to mention that doing the opposite of a fucked up policy isn't necessarily implementing a good policy.

Predictions?  Hardly.  The only thing I'll predict is that the politics of the system will inevitably interfere with whatever economic policy is championed, rendering it moot (witness Greece).  Times of economic upheaval are times when old political orders get swept away.  There's your black swan -- manage your risk accordingly.

Fri, 06/17/2011 - 11:20 | 1377646 mayhem_korner
mayhem_korner's picture

Agreed, with a slight nuance.  All economic theory hinges on the proverbial "ceterus paribus."  So the theory can never be proven wrong because the imaginary "all other things equal" never is.

It falls into the category of the "non-disprovable theory."  Kinda like evolution - either it's true or we keep looking for evidence of it being true.

Fri, 06/17/2011 - 14:09 | 1378203 Biosci
Biosci's picture

Exactly.  The utility of any theory lies in its predictive power, and the predictive power of much of economic theory seems to be pretty reasonable given the "ceterus paribus" regime.  But outside that regime, it fails.  Does that mean the theory is wrong?  Newtonian physics is an awfully good description of the world at roughly our scale, but fails utterly at the quantum level.  Does that mean it's wrong?  No, just incomplete.

The relevant question, then, is, "How big is ceterus paribus?"  It's probably a postage stamp on a football field.  Or, like you say, never.

 

Fri, 06/17/2011 - 11:26 | 1377661 Peak Everything
Peak Everything's picture

Most economists do not understand our current predicament and are unable to predict the future because:

1) They do not include debt in their models.

2) They lack sufficient intelligence to use differential equations.

Steve Keen is one of the few economists on the planet that understands what is going on, predicted it would happen, and has some concrete solutions that would prevent a recurrence.

 

Fri, 06/17/2011 - 11:37 | 1377706 mayhem_korner
mayhem_korner's picture

Are you saying Steve Keen can predict the future?

Fri, 06/17/2011 - 13:09 | 1378023 blunderdog
blunderdog's picture

Anyone can predict the future.  The only metric is what your success rate is as your predictions are evaluated.

Fri, 06/17/2011 - 13:57 | 1378153 Biosci
Biosci's picture

Is he bulimic?

Fri, 06/17/2011 - 16:31 | 1378698 Peak Everything
Peak Everything's picture

No, unless the ratio of debt to GDP gets too high. Then anyone who understands debt can predict the future.

Fri, 06/17/2011 - 17:08 | 1378791 mayhem_korner
mayhem_korner's picture

have yourself a very greecy Christmas...

:D

Fri, 06/17/2011 - 14:27 | 1378241 Variance Doc
Variance Doc's picture

I have to disagree with your charaterization of scientists ex physics.  Statistics and applied mathematics has constant feed back between theory and experiment; often the best researchers are versed in theory and applications.  This feedback deepens the questions and pushes the boundary of knowledge.

An example is Bayesian statistics/probability.  With the advances in MCMC computing, there was a revolution in theory and applications almost over night.

Also, no matter how much they would like, economists are NOT scientists - they can't experiment.  They set up these equilibrium evironments so they can apply the full power of mathematics.   They then masturbate with this math to show how smart they are.  Is it relevant to the real world? No.

I agree with your notion of ignoring politics, but that is not so easy to quantify and add to a mathematical model (statistically it is much easier) 

 

Fri, 06/17/2011 - 15:00 | 1378386 Biosci
Biosci's picture

Statistics and applied mathematics has constant feed back between theory and experiment; often the best researchers are versed in theory and applications.  This feedback deepens the questions and pushes the boundary of knowledge.

I absolutely 100% agree.  My point was more general:  the fraction of researchers who have those skills is pretty small.  The computational statisticians in my field are a very small group, and although they are clearly thought leaders, there is still great resistance to their approaches from the non-quantitative set.

Fri, 06/17/2011 - 16:04 | 1378591 Variance Doc
Variance Doc's picture

"...is still great resistance to their approaches from the non-quantitative set."

Yep, I see this all too often. 

Fri, 06/17/2011 - 08:55 | 1377168 zKeyserSoze
zKeyserSoze's picture

it's an illusion and belongs to the dreamweavers...

Chief Joseph, In 1879 he gave the following speech during a visit to Washington D.C.:
I am tired of talk that comes to nothing. It makes my heart sick when I remember all the good words and all the broken promises. There has been too much talking by men who had no right to talk. Too many misinterpretations have been made; too many misunderstandings have come up between the white men and the Indians. If the white man wants to live in peace with the Indian he can live in peace. There need be no trouble. Treat all men alike. Give them the same laws. Give them all an even chance to live and grow. All men were made by the same Great Spirit Chief. They are all brothers. The earth is the mother of all people, and all people should have equal rights upon it. You might as well expect all rivers to run backward as that any man who was born a free man should be contented penned up and denied liberty to go where he pleases. If you tie a horse to a stake, do you expect he will grow fat? If you pen an Indian up on a small spot of earth and compel him to stay there, he will not be contented nor will he grow and prosper. I have asked some of the Great White Chiefs where they get their authority to say to the Indian that he shall stay in one place, while he sees white men going where they please. They cannot tell me.

Fri, 06/17/2011 - 08:52 | 1377172 monopoly
monopoly's picture

Just call me dumb.

Fri, 06/17/2011 - 08:52 | 1377176 somethingelse
somethingelse's picture

The FED:  Defying Gravity for 98 Years

Fri, 06/17/2011 - 08:59 | 1377185 Tater Salad
Tater Salad's picture

Making predictions is useless, short and long.  I've looked at the mega bear chart for years and understand the parallels but you still don't know where the next rabbit and hat are going to come from.

Bull, bear, who cares....you just need to be nimble.

Fri, 06/17/2011 - 08:57 | 1377190 JW n FL
Fri, 06/17/2011 - 09:16 | 1377231 JW n FL
JW n FL's picture

if you are short on time..

 

watch this one only.. I promise you go back to watch the 1st part.. becuase this is a mirror in time.

 

 Fiat money inflation in France - Part 2: Assignats

http://www.youtube.com/watch?v=U4aRuiO1OuQ

Fri, 06/17/2011 - 09:06 | 1377210 sbenard
sbenard's picture

Well said, Charles. I've been expecting this dead cat bounce for the past week or so. The news is awful, but Wall Street has a Pollyanna Party every time the news is bad, but just not as bad.

Wall St is so drunk on bailouts, stimulus, debt, and Fed money-making that they have no perception or recognition of the risks. Sounds like 2008 all over again!

Most Americans still have no realization of the magnitude of our debt. Social Security, Medicare, and the interest on the debt amount to more than ALL individual indcome tax revenue. That is a catastrophe in the making!

A debt debacle is coming, and the government is not the answer; it is the creator of the crisis. Best to plan and prepare accordingly.

Fri, 06/17/2011 - 09:06 | 1377212 KickIce
KickIce's picture

Duh. Just don't look down.

Fri, 06/17/2011 - 09:13 | 1377220 SheepDog-One
SheepDog-One's picture

Pretty crazy times when the people get it, and the politicians dont. Of course the game was to BRIBE said politicians till they were blinded, now they see danger ahead as the public gets more angry.

Fri, 06/17/2011 - 09:13 | 1377234 docj
docj's picture

Oh, they get it.

They just can't acknowledge that they get it because if they do then they pretty much have to do something about it - and doing something about it would greatly, wildly upset their paymasters at both ends of the economic ladder (the Rent Collectors and the FSA)

Fri, 06/17/2011 - 09:23 | 1377256 Caviar Emptor
Caviar Emptor's picture

Agree. They get it. They get it good: bribes, hookers, promises of future wealth beyond their wildest dreams after they retire and if they do the master's bidding

Fri, 06/17/2011 - 09:33 | 1377297 docj
docj's picture

Spot-on - they're already talking about The Tweet Weiner getting his own TV show.

If not, he'll probably land a $200K+ light-work job somewhere in the Fed.Gov or lobbying same.

Fri, 06/17/2011 - 09:15 | 1377227 Caviar Emptor
Caviar Emptor's picture

I've decided to do a 180 and back the TBTF and TPTB. 

We need to rally behind our failed financial enterprises and rotten banks and back them like we backed the American Revolution, the journey to the moon and D-Day.

Long live the ancien regime!

Fri, 06/17/2011 - 09:16 | 1377241 eddiebe
eddiebe's picture

Ok. stocks could take a big hit. But is that really the big story? I don't think so.

What about bonds as in U.S. treasury? What about a confidence crisis there and in the U.S. dollars?

 The worlds biggest corporations are wealth creating machines compared to the toilet paper machines and I.O.U's traded for actual lifetimes of blood sweat and tears of populations.

 That's the real story.

I view the gyrations in the stock markets as much of a smoke screen as the latest weiner stories.

Fri, 06/17/2011 - 09:21 | 1377249 Caviar Emptor
Caviar Emptor's picture

I've said this before: if the entire human race was destroyed by a biowarfare agent, the bots and algos would open the market higher the next day. As programmed. Until the final drop of energy finally runs out.

Fri, 06/17/2011 - 10:29 | 1377461 HowardBeale
HowardBeale's picture

I'm in. Where do I buy those options?

Fri, 06/17/2011 - 09:24 | 1377250 lynnybee
lynnybee's picture

.....luv what he writes / luv Charles Hughes !   i'm so deep into this story that it's starting to consume every waking moment, the more i find out, the more i want to know, the more i NEED to know !   it's the story of our lives, the biggest fraud & scam in the history of America !    Here's what i listened to this morning & it's got me shaking / quaking in my boots ! :

     http://www.youtube.com/watch?v=8Qsll_5-FXc&feature=feedwll

Fri, 06/17/2011 - 10:00 | 1377374 JW n FL
JW n FL's picture

he is nothing short of fantastic!

Fri, 06/17/2011 - 12:14 | 1377793 Metropolis_Minx
Metropolis_Minx's picture

I don't know whether to thank you or not for the link, Lynnybee. That is disgusting--like a horrible car crash that you just can't look away from. And it looks like there's plenty of documentation to back it up.

Last year, I researched the Bank of International Settlements and the corruption involved with that fine, upstanding institution ^sarc^. And it left its mark for weeks afterwards. I've found that there's a price you pay for knowing certain dark things and you have to develop an armor or it will wreck you emotionally.

Armor...and lots of hot showers. That's how I deal with it.

M_M

Fri, 06/17/2011 - 09:22 | 1377251 RobotTrader
RobotTrader's picture

ECB now turning around and now considering more rate cuts, fears of deflation as the CRB Index is now suffering.

Might be the start of a rally, maybe not.

We turned right at the 200-day, probably depends on if the Plutocrats in Europe scheme up something over the weekend.

Too early to tell, we'll know more on Monday.

Fri, 06/17/2011 - 09:25 | 1377264 Caviar Emptor
Caviar Emptor's picture

Goldman (and others) announcing big cuts today. Not the best day for a rally. Disgruntled traders ya know. 

Fri, 06/17/2011 - 09:49 | 1377325 css1971
css1971's picture

Yay, more debt. Everyone should be in debt. More debt for everyone!

Wait. Everyone already is...

Fri, 06/17/2011 - 11:38 | 1377695 jomama
jomama's picture

nah, i have zero debt, sans monthly bills.

Fri, 06/17/2011 - 09:32 | 1377293 casey13
casey13's picture

Martin armstrong is predicting DOW 30000 for 2015

http://www.martinarmstrong.org/files/Will-the-Dow-Reach-30000-by-2015-08...

 

Fri, 06/17/2011 - 09:41 | 1377304 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Great post T. D.!  All investments must be looked at from a “inflation adjusted” basis not a “nominal” basis.  That is why having silver and gold as part of your investment portfolio is so important.  It will get you from point A to point B without a loss in purchasing power which is what this is all about.  For example, if the establishment media touts U. S. economic growth at 3.5% on an annual basis but the non-fabricated annual price inflation rate is 5% that means the economy is going backwards in real terms by 1.5 percentage points.  So, since the majority of us live in the real world we should look at real statistics, that is data which has been adjusted for price inflation.   To put it another way, silver and gold have not been going up in the last ten years, the purchasing power or value of the U. S. Federal Reserve Note has been going down.  The privately held Federal Reserve was established in 1913 and the U. S. Federal Reserve Note has lost 1 percentage point of its value per year since then.

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Fri, 06/17/2011 - 11:30 | 1377668 css1971
css1971's picture

To put it another way, silver and gold have not been going up in the last ten years, the purchasing power or value of the U. S. Federal Reserve Note has been going down.

That is the nature and reality of fiat currency and of the stock, commodity, property markets. I find it amazing that so many people are so unable to see the simple truth that everything is not going up... The money is simply going down in value.

To become wealthy, really all you have to do, is prevent others from stealing the value you have worked for.

Fri, 06/17/2011 - 09:41 | 1377308 Stuck on Zero
Stuck on Zero's picture

People on the stern of the Titannic were pretty darned happy.  "Look!" said one, "we're getting higher and higher."

Fri, 06/17/2011 - 10:05 | 1377381 JW n FL
JW n FL's picture

I have tried to educate these idiots..

 

but they want austerity! so I say fucken letum have it! LOL!!

 

I have sang the warning songs to no avail!

Fri, 06/17/2011 - 09:48 | 1377323 rsnoble
rsnoble's picture

I have a goodie 2 shoes sisterinlaw who only watches fox news and over here at least once a week and tells me everything is fine because the stock market keeps going up.  No kidding.  I don't discuss any of this with the idiot.

Fri, 06/17/2011 - 09:46 | 1377327 rsnoble
rsnoble's picture

She'd make a good little communist I might add. Makes me fucking puke to just be around her.

Fri, 06/17/2011 - 09:51 | 1377332 rsnoble
rsnoble's picture

btw I was expecting a bounce off the 200, came close.  I'm wondering if it won't be time to reload shorts around the 1300 level.  We'll see.

Fri, 06/17/2011 - 09:52 | 1377350 straty01
straty01's picture

The thanksgiving turkey loves charts and stats. It is a perma bull, it gets fed every day, gains weight and size, the turkey plots it all on a nice chart with MACD's and candlesticks, no elliot wave required, it is all straight up......

Fri, 06/17/2011 - 09:54 | 1377354 topcallingtroll
topcallingtroll's picture

There are many people who think krugman is always wrong regarding my previous posts.

He and the keynesians are correct, or at least not catastrophically wrong about countercyclical stimulus or deficit spending when total debt is "not too high" wherever that threshold is.

However by failing to end deficit spending at the appropriate times ( or at least decrease it to the minimum necessary to maintain a global currency), the cumulative misallocations and increasing deficit take the usa outside the boundary conditions where keynesianism works.

Fri, 06/17/2011 - 10:08 | 1377390 JW n FL
JW n FL's picture

so you are saying that you dont like them feeding the ballon's but everything else is ok. (ish).. I dont think you are to, too wrong.. as there was two choices.. print and not print.. and we all know damn well what no printing would have brought about (as all the conservative rapture nut jobs salivate).

Fri, 06/17/2011 - 10:28 | 1377463 Shell Game
Shell Game's picture

So, desiring to live within one's means and have a country run within its means makes one a 'conservative nutjob'? 

Fri, 06/17/2011 - 10:42 | 1377495 topcallingtroll
topcallingtroll's picture

Sometimes debt can be good.

The return on my 60,000 student debt back in the old days when it was enough to get me a lucrative postgraduate degree has benn over a million dollars so far.

Business and government in theory can use debt to increase productivity and material wealth in aggregate.

Not all debt and all deficit spending is bad. However i agree in practice government deficit spending is always wrong. Bureaucrats dont have to pay for financial mistakes with bankruptcy and unemployment, so they arent as careful in their allocation decisions.

Fri, 06/17/2011 - 10:51 | 1377519 Shell Game
Shell Game's picture

In this example there is one requirement, honest money, not debt-backed FRNs.  Yes, there was that window of opportunity that you, me and many other were able to take advantage of.  Yet, the course was set. We were always slowly and relentlessly marching toward a cliff.  It has always been a fools path that most of us didn't see or understand until the cliff was in view.

This is just another reason why we all are culpable in this mess.

Fri, 06/17/2011 - 12:50 | 1377949 MachoMan
MachoMan's picture

I don't think it's reasonable to call keynesianism a success in any form or fashion other than prolonging having to deal with structural problems...  In other words, you can't separate the accumulated misallocation from any temporary injection...  they're ultimately one and always end poorly (ostrich approach).

Fri, 06/17/2011 - 15:20 | 1378443 Shell Game
Shell Game's picture

History is a great teacher, if only we'd listen..

Fri, 06/17/2011 - 11:39 | 1377696 css1971
css1971's picture

If debt were simply moving money from here to there temporarily, it would be good, a useful thing to do. Loan your money to someone who can make better use of it, earn some interest on it in the meantime; Full reserve banking.

That is not what happens though 99% of the population believe it is. New money is created which is loaned, so you have growth in money (inflation) and in debt (and then deflation). This is the problem.

 

Fri, 06/17/2011 - 10:12 | 1377400 Greenhead
Greenhead's picture

The real reason Keynesianism can't work is because of the human element and behavior of the politicians.  The desire to reward their power base and dole out largess is why it is at best a theory but in practice the countercyclical withdrawal of spending and monetization will never happen.

Fri, 06/17/2011 - 10:42 | 1377506 topcallingtroll
topcallingtroll's picture

These are the cumulative misallocations I refer to.

Fri, 06/17/2011 - 10:23 | 1377453 Shell Game
Shell Game's picture

Yes, I suppose if one is dead set on taking the path of fools, one would have choices that are of lesser and greater foolishness.  Epiphany.

 

Fri, 06/17/2011 - 10:40 | 1377501 topcallingtroll
topcallingtroll's picture

Good point.

The first taste of deficit spending is so good it is hard to push away from the table. Perhaps best never to allow a nation even the first taste.

Fri, 06/17/2011 - 11:05 | 1377597 Shell Game
Fri, 06/17/2011 - 12:33 | 1377896 MachoMan
MachoMan's picture

If borrowing is too alluring for individuals to deny, then why would it be any different for the collective?

Fri, 06/17/2011 - 09:59 | 1377358 Shell Game
Shell Game's picture

What a shameful mess they/we made of things.  I foolishly thought this country would lack the cowardice to do the right thing when the big test came along.  Even with the example of Japan right there in front of us, still we took the path of cowardice by way of hubris.

Again, I wash my hands of our leaders. They are dead to me.

In many ways this is like a messy divorce.  As much as one would like to strike back at the betrayal or cruelty of a former spouse, so too do we want to seek a target for our vegence. In the end, one only harms themselves by harboring the desire for retribution.  When you realize you can't control another person, let alone a socio-path, you are left with only being able to work on yourself and rely on yourself.  Little comfort there other than knowing you are being the person you were meant to be.

 

Fri, 06/17/2011 - 09:59 | 1377361 swissinv
swissinv's picture

if you expect real inflation you should also expect rising equity prices, just make sure you hedge the USD

Fri, 06/17/2011 - 10:07 | 1377384 John Law Lives
John Law Lives's picture

IMF slashes U.S. growth estimates for 2011 and 2012:

http://ca.news.yahoo.com/imf-cuts-u-growth-forecast-warns-crisis-1305295...

Goldman Sachs also announces plans to slash $1 Billion in costs over next 12 months.

Fri, 06/17/2011 - 10:42 | 1377494 PulauHantu29
PulauHantu29's picture

I disagree. There will be some form of QE3 because it is essential to:

1. weaken the dollar;

2. boost pension holdings since they are seriously under water right now.

The Fed is forced to lift the market and lower the dollar imho.

House prices will fall for years ..that's a cycle they can do nothing about.

Fri, 06/17/2011 - 10:52 | 1377531 topcallingtroll
topcallingtroll's picture

But bernanke never realized one unexpected outcome of this complex system would potentially include the end of Fed autonomy.

Now he has something else that has to enter into his calculations.

The compromise he makes will result in either no qe3, a qe3 that is too late, or a qe3 that is too little.

I think I'm turning Japanese I think I'm turning Japanese I really think so.......

Fri, 06/17/2011 - 11:41 | 1377716 Fiat Money
Fiat Money's picture

as ZH reported yesterday, they  are continuing "QE" - the Fed is "buying Treasury DEBT" ("buying," that is, with MADE UP OUT OF THIN AIR  Fed "judenfetzen" Bernanke bucks http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7909432/The-Death-of-Paper-Money.html )  under The Fed's so-called "LOOSE Monetary Policy."  Yesterday reported at $5 billion.  Repeat every week - or more often as "deemed necessary."  Not quite the $90 billion per month of past 10 months (yep, pretty close to a TRILLION $$)  that we could actually see on the surface - but this is just an immediate  stop-gap to keep the Dow from dropping below 12,000 (again)...  they will THINK OF SOME WAY to shove more Bernanke bucks in to  the market tomorrow or next week.) 

Fri, 06/17/2011 - 10:47 | 1377512 mendigo
mendigo's picture

article is patronizing

yes the us financial system is corrupt and fubar 

but many companies are making money - by whatever means and will probably continue to do so

bernanke's got the wheel so sit-down, shut-up and hold-on - we are in mad max territory need to survive on what is

Fri, 06/17/2011 - 10:51 | 1377545 topcallingtroll
topcallingtroll's picture

Well bernanke may have the wheel, but we backseat drivers are not shutting up.

Fri, 06/17/2011 - 11:11 | 1377619 Metropolis_Minx
Metropolis_Minx's picture

I just finished reading Armstrong's newsletter in the link Charles provided. I've always considered M. Armstrong as one of the most brilliant minds in Economics/Finance... But now he has changed his tune and is saying the can has been kicked down the road to 2016-2020?

 I just don't see this as possible.

Any thoughts?

 

M_M

Fri, 06/17/2011 - 13:47 | 1378136 KickIce
KickIce's picture

I think food shortages will come into play long before 2016, maybe even by the end of this year.

Fri, 06/17/2011 - 11:34 | 1377665 Fiat Money
Fiat Money's picture

"Exactly where do Bulls think the growth and rising profits are going to come from?   For Past few years... the answer  has been massive Federal Reserve/Federal intervention and 'stimulus', and a weakening U.S. dollar that boosted overseas profits via the legerdemaine of currency devaluation.  

 But three years of these policies have ACCOMPLISHED NOTHING** but LOAD TAXPAYER[s] with STAGGERING  amounts of DEBT: NONE of the causes of the 2008 implosion have been fixed or even addressed."

  **(note: as they explain in Finance 101, "all financial transactions are TWO SIDED AFFAIRS" -  one person's DEBT PAYMENTS, are the other person's PROFITS.  the bankers have gotten RICH, PILING  crisis extortion "TBTF"  DEBT on us, for THEIR   bankruptcies, failures & insolvency!)

  Terrific distillation:  equals   pure, abject SOCIALISM,  free money from govt. (or the PRETEND "gov.t" very private 'Federal' Reserve central bankers' cabal)  for  FAT CAT,  piggy bankers.   

  well... "pigs get fed... hogs GET SLAUGHTERED"  and the Wall St. piggies who've been feasting on those TRILLIONS of free "confetti" Bernanke & Geithner bucks  $$ http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aY0tX8UysIaM 

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9MTZEgukPLY  are, indeed, all bloated hogs by now. 

(anyways, when everyone else is starving, even little piggies face the butcher's knife!) 

Fri, 06/17/2011 - 11:36 | 1377701 collegepunk
collegepunk's picture

start using log charts.  Your arithmetic chart of the S&P 500 is b.s.

Fri, 06/17/2011 - 11:53 | 1377729 Problem Is
Problem Is's picture

" since QE2's sugar-high was so brief, others will be spooked by the possibility that the next high will be even shorter.


This is the dreaded Diabetes Financial Syndrome--the Fed is pouring ever larger amounts of financial insulin into the system, but the financial "body" no longer responds to this insulin."

Insulin LOWERS Blood Sugar, There Smitty
Smith is using a really inaccurate analogy since insulin LOWERS blood sugar...

So how could the Fed give the market a sugar high with insulin?

An accurate analogy might be:

"The Fed is pumping sugar into a diabetic patient, the Wall Street TBTF banks. This will end up in the emergency room..."

Stick to finance and economics Smith...

Fri, 06/17/2011 - 11:57 | 1377748 Girl Trader
Girl Trader's picture

Very nicely stated.

Fri, 06/17/2011 - 12:05 | 1377772 tony bonn
tony bonn's picture

"Simply put, its policies have failed to accomplish anything except prop up a rotten, insolvent banking sector that needs to be declared bankrupt and swept into the dustbin of history."

euphonious, melodic, symphonious, corruscating, didactic, exquisite, dulce.....i would ask for an encore but this formulation cannot be recreated with improved results.

Do NOT follow this link or you will be banned from the site!