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Future Tense
Years ago, before everyone had in-car navigation systems, I held on to an amusing little thought about traveling on the freeways: when you witnessed a huge backup on the other side (that is, traveling the other direction), and it went on for mile after mile, and then it finally cleared, you were put in the unusual position of actually knowing the short-term future of all the poor souls who, farther up the road, were zipping along, blissfully unaware of the hellacious backup that would soon face them. I would glance at the dozens of drivers enjoying their 70 MPH care-free spin, knowing that their lives were about to get worse really soon. As tragedies go, it doesn't exactly rank, but it was still an amusing realization of the power of fortune-telling.
I am going through precisely that same experience now, except it's with myself. For a variety of reasons, I am going through all the posts I've ever written for Slope. I am presently up to May 2008, and that is a particularly fascinating point in time, because the market had experienced a rather hearty slump (which I enjoyed immensely) and then began an unrelenting and inexplicable recovery higher, which I've tinted in green.
So my "driving on the highway" experience in this case is that I am both the observer (that is, Tim Knight doing this in late October 2013) and the observed (the Tim from over five years ago, expressing his increasingly-frustrated thoughts about the market's climb, after having tumbled over 300 S&P points earlier). I sound like a kid whose favorite toy had been snatched away........probably because that's exactly what it felt like.
On my post from May 13, I wrote, "I have no index exposure at this time. I simply find the potential for a breakout too disturbing, and the reluctance of the market to fall, no matter what the news." (Please note that these old posts lack graphic images, because they didn't survive the move from Typepad to Wordpress).
A couple of days later, I had become so disgusted with the market that I decided to only write one post on my blog per day which, for a blogoholic like myself, is pretty extreme: "Until the markets get enjoyable (e.g. bearish) again, I'll be returning to my "one post a day" format after the close. A lot of folks have become accustomed to my frequent intraday posts, and I'll do that again if sanity returns, but until then, it's back to the old routine."
On May 15, I was really approaching the breaking point: "It's hard to remember a time that I felt so disenchanted with the market. I enjoy charting, and I enjoy trading, but when the world seems turned upside down like it is, the whole affair loses its charm...........You can tell from my tone I'm feeling pretty miserable about the market. I can deal with markets, be they up or down, as long as they make some kind of sense to me. This one doesn't. So it's discouraging for someone who wants to analyze price action to be faced with what appear to me to be baffling contradictions. So I'm sorry I don't have anything more inspiring to say."
And the next day, I openly mused about whether one should just throw their hands up and buy, just like everyone else was doing: "Does one simply dive into these stocks? Some do. And they have, by and large, profited handsomely from doing so. The difficulty is figuring out when the music is going to stop playing. Was today the top for these stocks? Or is the top several years and many hundreds of percent away?"
On the exact day of the recovery top, I had become so morose that readers started sending me emails to try to buck up my spirits: "I've been deluged with emails from folks telling me that the top is in and everything is going to start plunging again. While I genuinely appreciate the heartfelt sentiments – - – I know they are from true believers, and I know they are offered to make me feel better – - the grotesque fact of the matter is that the U.S. Government, whose principal drivers are colluding directly with their Wall Street buddies, has mortgaged the future of the country in order to bail out the zillionaires in Manhattan. This sounds like aluminum-hat-wearing type drivel, and I'm sorry that it does, but I truly believe this to be the case. Were it not for all of Bernanke's meddling, the meltdown would have continued in all its full glory. As it is now, the day of reckoning has been simply delayed."
Well, the "day of reckoning" started happening at that very moment. But just like those folks driving on the road at the top of this post, there was just no way to tell at the time what was about to take place. (I've tinted the "when will this rally end?" whining period in the chart below).
Of course, the "relentless" rise hasn't been for two months this time.......it's been for nearly five years. And I can tell you, reporting directly from the heart of the Silicon Valley, the zeitgeist around here is 1999 and 2007 compressed together and supercharged. I present you a snapshot I made of the magazine sitting at the grocery store a few days ago:
A baby. Wearing Google Glass. Good God. And in a fitting exhibition of the total lack of self-awareness, the words chosen are as close to "It's Different This Time!" as they could muster (Specifically, "This time, the tech explosion doesn't have to end in tears.") People never learn. Ever. Even the really smart ones.
I'll close with this blast from the past. I scanned for you a comic from late 1999 from This Modern World. The same people reveling in the present bubble (which dwarfs the Internet bubble) would still find this little snippet amusing, particularly since they would figure the world has become a lot wiser since then. (Click on it to give yourself a better chance of actually making out the words).
- advertisements -
Timmy, thanks for the walk down memory lane!
I too, took a look back at posts from that period.
Remember how aghast we were at the TARP total of over 700 billion dollars? Remember how shocked we were when the deficit went over 1 trillion dollars? And remember how utterly crushed everybody was, when the Fed started to monetize its debt, and calling it 'quantitative easing'?
Remember the tremendous amount of hope? Yes we can? Change you can believe in? Different this time?
All gone now. How jaded everyone has become. Debt over 17 trillion. Ho-Hum. Fed printing over 5 trillion. Ho-Hum. Obama breaks another promise. Ho-Hum. Massive manipulation of markets. Ho-Hum. Until it breaks.
When the "break" does come? Holy Hell! Look out! There will be hell to pay! Getting closer now. VERY close.
Baby with Google Glasses, bizarre and perverse.
Should be crying and have a ball and chain on it's ankle and the Grim Reaper staring down at it from behind; that's the future we're molding for future generations.
well........I still don't get how all the "it's NOT different this time" people can continue that mantra in the face of irrefutable evidence that it most assuredly IS different. Never in history has Fed/Status quo/MIC TOTALLY sold out to insane MOMO fiat pump, openly endorsed criminal activity, BLATANTLY lied about and fabricated econ "stats" etc ad infitum. Oh, did I mention a quantum leap in (real) structural unemployment? Or tightly focused & GM agriculture? Or etc.
Ergo---it IS different. And hence so is "solution" = lock everybody up and break out the (already printed) "red" money or whatever color it is at 1:100 or such. Sure will be interesting.....and BRAND FUCKING NEW
The article talks about people living in their cars, just so they can be in SV and part of the game. Is that so different from farm girls coming to Hollywood or Las Vegas? The thing is, job prospects are so stinky in the rest of the country, this old trend seems rational to more people. I too think most of the action in today's SV is pointless and irritating, but *some* of it works out, and by contrast with say Detroit, of course some people are going to come running. At ever lower salaries, and at ever longer odds.
And I'm disgusted at the H-1B business too, don't even get me started on that.
The people-living-in-cars phenomena in SV is planned; Planning and Zoning in Santa Clara, San Mateo and Santa Cruz Counties for decades have prevented the contstruction of small "starter" homes, while "requiring" multisectional or multi-bedroom homes built to rediculous building-code standards and requiring draconian compliance with "seismic" and "environmental" regulations that prevent construction, drive up costs, and drive out the middle class. Banks will not loan on the 70-year-old bungaloes that are available, even though the bank owns them through foreclosure, because they are "uninhabitable". Thousands of rental units sit empty, but rents are in the 2K range while the average service worker here earns less than that per month. So veterans and others are forced into sleeping bags and into RV's if they're lucky. The latest City wisdom is to outlaw sleeping in RV's anywhere except in an RV Park (of which there are very few, and no vacancies). This travesty has already been legislated in Palo Alto (home to one of the largest and best equipped Veteran's Hospitals in the US), and in urban/rural Santa Cruz- a one-time recreational destination for Bay Area workers- where you are forbidden from spending the night in your RV on land that you OWN- and where, in the name of Green Environmentalism (/sarc) you are forbidden from building TOO SMALL OF A HOUSE. Net result: Joe Sixpac has left the building (for better or worse). They PLANNED it that way.
So, take your choice: $300,000+ "houses", $2000+ "apartments" or condos, or sleep in the woods. And don't get caught: they're BULLDOZING homeless camps in Fremont. While CNN shows Bourdain instead of news.
That article should have had John Connor, homeless in a sleeping bag, wearing Glass.
"Look! Through the smoke and rubble! That used to be Cupertino..."
The Feds have been aware of the crisis since 2002: America's Affordable Housing Crisis: A Contract Unfulfilled.
Also see Forbes:
America's Emerging Housing Crisis...You cant successfully trade for 20 plus years without respecting current market trends.
To fix the problem in the Silicon Valley, it will be necessary to deport all of the H-1B's and fraudulently obtained green card holders. And let Americans get back to work. You know, the tens of thousands of US tech workers, STEM grads, who submit their resumes not even to receive human consideration of such.
The current system, of using H-1B's, of allowing financial and marketing people, not engineers, run the show, is leading to the demise of the industry and the Bay Area economy. Don't be fooled, a few headline companies may be doing well on account of the dirt cheap equity issuance, but the situation beneath the surface is one of rot and decay.
Big Brother (NSA) sure isn't helping sales overseas either.
guys, i've thought about this, and raged about this, and spent the last few years waiting for the big splat. i'm starting to add it up a little differently. tim, i too love fundamentals, and the ability to use my analytical skills to see around the corner five minutes ahead of the next guy. i know the frustration of not having any meaningful information to compute. i don't think printing is going to zimbabwe us. think of a bucket with a lid, keep pumping water into it, it explodes (hyperinflation). but what if the water leaks out (american financing of globalization) at the same rate as you pump? water in the bucket stays about the same. what if the price inflation we see is just 'because we can, where else you gonna get it' gouging? i may be crazy, but maybe not.
You can read the magazine article here:
http://www.modernluxury.com/san-francisco/story/the-care-and-feeding-of-...
Based on how Obama handled the software project on his ACA project I'm sure he will have a good plan for recovery after the mega bubble blows.
joego1
What do you suppose our leaders will do in the event of a 'no trucks moving cuz the credit systems broke' kinda problem?
Fema camps could not hold even a large rock concert. They sure can't hold all the folks who have the left-overs in their frig as emergency supplies. The concept of '3 days from empty shelves at the grocery store' is so well known that it is a cliche yet there is clearly no plan of action for when it happens. We know this because it would have to be announced. This government can't even organize it's biggest piece of legislation in decades.
I had held out hope that somewhere in the halls of DC there was small office of 'holy fuck we need to act now!'
There is no such group. I think we are going to have a really, really bad time when the inevitable happens. There have been several items in the news this week alone which could mean that the rest of the world is done with us.
Considering that the death rate will be in the millions you'd think those compasionate, inside the beltway folks would at least try to make it look like they were trying to prevent this famine.
I hate to even think about it because I really do not want starving bands of the helpless at my door but the incompetence of our government is beyond criminal at this point. Maybe they really do have an underground tunnel system to retreat to. Maybe they are in league with (Satan, the Illuminatti, the Ananuki, the Ruskies...hell the Republicans even...take your pick). I only suggest these options as nothing else makes sense. Pure incompetence at this level is beyond belief.
" I really do not want starving bands of the helpless at my door "
If things play out as you describe (something I somewhat share) the only way to survive will be to completely hide the fact that you have any preparations or stores of food/supplies. You'll need to eat just enough to survive so the weight loss is visible and go begging for food along with everyone else at the government give aways. The second anyone understands you have a store, it will be taken from you and no amount of lead will be able to stop it.
It would be beyond belief if it were pure incompetence. Alas, it is something else. Reading the full, unredacted minutes of FOMC meetings from April, 2004 through fall of 2008 describes something other than incompetence.
Bought and paid for, baby.
Exactly. We passed peak incompetence long ago. We're now approaching pure evil at light speed.
Who is going to stop them from "easing"? Techies?
Exactly.
Just 9 meals.
Away from ANARCHY!
"This time, the tech explosion doesn't have to end in tears."
Famous last words.
The mathematical fact is that it is never different this time. 100% of booms end in a bust. Math does not allow for an exception.
"How one industry's growth can benefit us all."
More famous last words.
The auto industry's growth benefittted us all, but a Great Depression began in 1930, anyway. I remember someone saying that tech companies could not crash because they had no debt. What he didn't mention to the bag holders was that the tech companies clients did have debt. The Nasdaq collapsed 76%.
Whatever tech boom the author is talking about, is destined to end the same as all others before. It is always just a matter of time.
Almost none of the tech companies actually make money. Those who do are mostly doing so on the back of cheap slave H-1B labour, while American talent is pounding on their doors (or virtual equivalent).
SF isn't a lot different than NYC. An entire region kept afloat financially through pump and dump schemes.
Isn't there some company raising money to build or retrofit a large ship that would sit in international waters off of SV? I remember reading about that somewhere. The idea would be they could use illegal tech labor and pay even less for the labor. If that actually gets going I suppose I would count that as a top and plan accordingly.
Many of them didnt have any debt. More important was that they didnt have any revenues or operating cash flow.
We are at a fork in the road and we will take it. Which direction we take is the question, and I believe it will be decided by the 2014 Midterm election. If the Dems retake the House, they will hyper-stimulate and inflate the debts away. If the status-quo of divided government is retained, a deflationary collapse is favored.
No man, the fork has been taken and stuck in, we are done!
Tim, I wonder if you can analyze your posts in '11 and '13 to see if you are getting the same intensity to your mood as 07/08?
I've done something like 15,000 posts, so it's going to be a long time before I get there. I think my frustration is far beyond wherever it was in May of 2008. My only surprise is that it took until 2008 for it to dawn on the Fed that they could just print up a trillion a year to keep things artificially hunky-dory.
Zimbabwe figured it out so much faster than we did!
It's really hard to tell with TK. He is always seriously bearish, and I've seen him worse and better.
The one sure fire thing to cheer TK is to play chocolate rain.
Seriously, google it. Works like a charm!
OMG That link eventually led to this one.
http://www.youtube.com/watch?v=37eqoYbj1QM
Yet the MSM Magazine front cover contrary indicator usually works like a charm...