The Epic Bull Market in Stocks, Accounting Fiction, and Fraud
At this point, the world of finance has become so completely and utterly moronic that it is all but impossible to write about it without wanting to smash one’s head through the computer screen.
There is no end to the allegedly clever arguments one can make up to support the belief that we are in an economic recovery. The media trots out anyone with a tie who claims that things are going well and marginalizes those who point out the obvious, that the economy is not going well and that in point of fact the last five years have been a disaster.
Indeed, when you account for population growth and the drop in average hours worked per week, the US has created net ZERO jobs in the last five years. Small wonder we’ve got 46 million people on food stamps.
In terms of the economic data, at this point most of it isn’t even worth using for projections because virtually every data point is massaged to the point of being fictitious.
If you’re using crap data for your inputs, the forecast will be crap no matter how sophisticated the model is. Inflation? Understated by ignoring real costs of living. GDP growth? Masked by inventory gimmicking and understating inflation. Unemployment? Hidden by ignoring people who aren’t looking for a job.
Hell, even the former head of the BLS has admitted that just about everything it produces is bogus. Why would any sensible human being listen to the announcements anymore?
As for stocks, they are going up because A) the Fed is pumping $55 billion into the system and B) with interest rates so low, investors have to find returns somewhere.
The Fed has created another bubble and it will end terribly, just as all the others have.
If you think these are the words of some lone analyst, consider that no less than Seth Klarmen, Carl Icahn, and Jeremy Grantham have all stated that the market is overvalued and primed for a collapse at some point.
Heck, even Warren Buffett, the ultimate fan of stocks, is sitting on a record amount of cash. Do you think he’d be doing this if there were a lot of great opportunities in the markets?
We all know what will eventually unfold: another collapse, this one even worse than that of 2008. The Dow Jones Industrial Average implies the ultimate downside target will be around 5,000 or so:
I have no idea when this will happen. No one does. But it’s obvious that it will at some point. Until then, the fraud and fiction will continue. Everyone with a vested interest in stocks moving up will do everything they can to perpetuate this.
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Phoenix Capital Research
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