Main Street Sours As Wall Street Soars

Tyler Durden's picture


"Wealth Effect"


(h/t @Not_Jim_Cramer)

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Wed, 02/27/2013 - 19:39 | 3283728 Just Ice
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They're breeding resentment.

Wed, 02/27/2013 - 19:41 | 3283735 MrX
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Get Ready!  ---->

Wed, 02/27/2013 - 19:50 | 3283751 TruthInSunshine
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Bernank's "Virtuous Circle" monetary and de facto macroeconomic policy, blessed wholeheartedly by one Paul Krugman, Ph.D., Professor Emeritus Douchebagus of Fail-Nomics, one particular Larry "Jabba Sleepy Hut" Summers, one Hank "I've Got 400 million USD in tax-exempt stawk options on the line so pass TARP/TALF/QE4ever Bitchez!" Paulson, and one Break It Again Timmmmay!, will go down in infamy.

Wed, 02/27/2013 - 20:10 | 3283833 LawsofPhysics
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Isn't fascism fun.  All the simple advice rings true in times like this.  If it is too good to be true, it probably is; If you can't identify the sucker at the table then it is probably you, etc. etc.

Wed, 02/27/2013 - 20:25 | 3283877 espirit
Wed, 02/27/2013 - 20:51 | 3283899 LawsofPhysics
LawsofPhysics's picture

Here is another for those arrogant fucks in NY; "When fraud is the status quo, possession is the law."  Just walk away Argentina, just walk away.

Wed, 02/27/2013 - 21:10 | 3283999 derek_vineyard
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party like its 1999!

Wed, 02/27/2013 - 21:32 | 3284075 espirit
espirit's picture

Keeping record.

Argentina's got to be the first one to say it...

Molon Labe!

Wed, 02/27/2013 - 22:27 | 3284207 DaveyJones
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as empires corrupt and fall, their finance section often balloons to cover the frauds while everyone else suffers

Thu, 02/28/2013 - 00:25 | 3284556 Spirit Of Truth
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Misled faith in Mammon has historically resulted in catastrophic collective consequences:

Wed, 02/27/2013 - 23:15 | 3284316 GMadScientist
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They Repsol!

Wed, 02/27/2013 - 23:45 | 3284421 TruthInSunshine
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If you're feeling like Bernanke & Co. have stacked the chips against what is a shrinking middle class, just go new vehicle shopping to take your mind off of things, given the incredible strength of Ben Bernanke's 'Virtuously Circular' policy driven economic recovery (as long as you're connected to the incestuous inner circle with ties to the Federal Reserve Bank of New York or Capitol Hill):

Of All Major U.S. Cities, Only Median-Income Households In Washington D.C. Can Afford Average New Vehicle

Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city [fucking parasitic, taxpayer-sucking Washington D.C....whocould'veknowit?] actually can afford the typical new vehicle.

The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales.


According to the 2013 Car Affordability Study by, only in Washington could the typical household swing the payments, the median income there running $86,680 a year. At the other extreme, Tampa, Fla., was at the bottom of the 25 large cities included in the study, with a median household income of $43,832.

Wed, 02/27/2013 - 20:53 | 3283954 LetThemEatRand
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To err is human, to be a douchebag, Bernanke.

Thu, 02/28/2013 - 06:42 | 3285028 Stoploss
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Wed, 02/27/2013 - 19:51 | 3283778 Cursive
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@Just Ice

I'll just leave this here.

What happens when the sleeper awakens?

Wed, 02/27/2013 - 20:35 | 3283850 LawsofPhysics
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If the "sleeper" is new to the work force, even the sleeper must pay some dues.  these kids coming out of college demanding to be paid the same as another employee who has been successful for ten years is just plain ignorant.  I don't care how much debt you have.  Do what I did, work your way through school dumbass.  "Work" can be anything, get fucking creative, hell if most freshman used some of their loans to buy PMs in 2009, they would have had things paid off when they graduate this spring.

Wed, 02/27/2013 - 21:47 | 3284114 PeeramidIdeologies
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Work and precious metals, phyz that is, is a notion worth noting.

Wed, 02/27/2013 - 20:02 | 3283812 insanelysane
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People are too busy buying houses for higher values to be spending money at Walmart and JC Penny.

Wed, 02/27/2013 - 19:53 | 3283733 Cult_of_Reason
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Tulip mania 2.0

On a serious note, the stock market is being manipulated. They are trying to hold the market up. No Ifs, Buts, or Maybes.

Greenspan, "if the stock market can hold up through this, then the effect (of sequester) will be rather minor".

Wed, 02/27/2013 - 21:49 | 3284117 PeeramidIdeologies
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There's just this joke about gardening tulips...

Thu, 02/28/2013 - 06:15 | 3285001 Notarocketscientist
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Just as with the 40B housing..... the Fed prints and hands out cash to the banks at ZIRP with one instruction:


Wed, 02/27/2013 - 19:42 | 3283737 McMolotov
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This is probably what it would look like if you could graph a hardcore drug addict's daily mental health. Depression, euphoria, then back to depression. Eventually they just die. That's what will happen to Main Street.

The dealers usually do fine, though.

Thu, 02/28/2013 - 09:13 | 3285240 TruthInSunshine
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The dealers either have to keep their existing customers alive (meaning having them die is toxic for business), or they must find an equal or greater number of new customers to consistently replace those who die, in order to maintain or grow revenue and margins (assuming economies of scale are normalized).

For sake of this simple example, I'll not muddy the waters with talk of additional dealers entering the market, but merely speak of the customer base or "pie."

It's economics 101.

Wed, 02/27/2013 - 19:42 | 3283738 Racer
Racer's picture

HFT are not people so they don't care

 Quod Erat demonstrandum

Wed, 02/27/2013 - 19:44 | 3283747 orangegeek
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Dow Jones Hourly is in a vertical climb.


And of course we have another six year high.  Isn't that excellent?

Wed, 02/27/2013 - 19:45 | 3283750 kaiserhoff
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Commercial real estate is on a death watch.  That can't help main street, or the 8,000 or so banks and other financials that lend there.

Wed, 02/27/2013 - 19:53 | 3283783 Son of Loki
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It's sad to see the malls die in my town. They used to be pretty nice. Now, as one by one stores close up, the black curtain is raised in the window like a funeral home. Then a new store apears, usually of some no-name low quality  junk stuff. The "people" walking in the malls are mostly teens with their jeans dropped down to their knees showing off their filthy underwear. It's too depressing going to these malls anymore.

The only local outdoor strip malls that survive have a check cashing place, nail place and perhaps a pizza or donut store if they are lucky.

Bleak is the word that comes to mind. Perhaps "dismal" is even more accurate.

Wed, 02/27/2013 - 19:56 | 3283796 Moe Howard
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Booze stores seem to keep the strip malls alive around here, of course the mandatory nail shop as well.

Wed, 02/27/2013 - 20:02 | 3283813 McMolotov
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I've noticed the same thing. The Detroit-ification of the whole country seems to be picking up speed.

Wed, 02/27/2013 - 21:51 | 3284124 PeeramidIdeologies
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Actually you just described the wealth effect.

Wed, 02/27/2013 - 23:16 | 3284319 GMadScientist
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Now where will you trawl for jailbait!

Wed, 02/27/2013 - 23:55 | 3284459 Tijuana Donkey Show
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Facebook. "Hey baby, I have a hot meal over here!"

Wed, 02/27/2013 - 19:48 | 3283762 Cursive
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What is "financial repression," FTW, Alex!

Wed, 02/27/2013 - 21:14 | 3284016 max2205
max2205's picture

Turn that frown upside down.

Wed, 02/27/2013 - 19:55 | 3283773 swissaustrian
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Not the first time Wall Street was behind the curve:

Wed, 02/27/2013 - 19:51 | 3283776 bidaskspread
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Must be the bullish run from the sequester; correlates to the 2013 decrease in discretionary income and non-seasonally adjusted claims. Just need some mass layoffs (thanks JPM) and this thing will hit 15,000!!!

Wed, 02/27/2013 - 19:52 | 3283780 ebworthen
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People losing jobs, cashing out 401K's and IRA's, paying a decade of income to get healthcare, and the "we won't raise taxes" 2% tax hike starting January wouldn't have anything to do with confidence, would it?

Wed, 02/27/2013 - 19:55 | 3283791 trebuchet
trebuchet's picture

wall st dump and pump = smart money dump  + "BTFD sheeple"  


look at how the bottom getting bigger and bigger and the subsequent top not quite making it up to the old one


One of these days we gonna get a deer in the headlights moment


I just LOVE that piccie!!!



Wed, 02/27/2013 - 21:50 | 3284118 Dr_Lucid
Dr_Lucid's picture

Speaking of cashing out 401(k)s / IRA's, you sir are spot on.  I recently met with an old college buddy who is now a "financial advisor"  He went on and on about how his firm was raking in AUM due to client's tapping their DB / profit sharing / tax deferred plans.

Not only are American's taking loans on their tax qualified assets ( the 401(k) was a massive mistake) , but they are falling over themselves to take advantage of 72(t) code provisions or in-service distributions allowing for

  1. ... part of a series of substantially equal periodic payments made, at least annually, for the life or life expectancy of the individual or the joint lives or joint life expectancy of the individual and his designated beneficiary.

You can take withdrawls all day as long as long as they are at least 5 years running or up until you reach 59.5.   No need to wait until retirment age and no need to worry about the 10% penalty.

And JUST LIKE THAT, where the past run in equities was stoked by the ATM know as the home equity loan, given that the home equity well has run dry advisors have found another tool to keep the fiat spend growing and this time its America's retirement funds.

Thu, 02/28/2013 - 09:27 | 3285273 TruthInSunshine
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Even with the historically epic bear market rally of 2009 through present (which only has been matched by another bear market rally seen amidst the Great Depression, from 1929 to 1933), massive numbers of "long term" 401(k) and other equity market-funded retirement plan holders are significantly underwater (and this is true even if one uses nominal figures, and doesn't adjust these portfolios to reflect real returns due to inflation) on the equity market-derived portion of their retirement plans.

The next true super crisis that's already begun is the literal "that which shall not be referred to often- or if given a choice- at all" underfunded pension/401(k)/retirement fund gap, which is going to devastate dozens of millions over boomers over the next decade.

I do not have the precise data at my ready, but the replacement of funding into equity-derived and other 401(k)/pension/retirement funds by the generations younger than boomers is something like 17% or 18% on the dollar.

Think about the long term implications of that as it pertains to the economy & entitlement programs, let alone the next wave of paper wealth destruction that's essentially certain to take place given the basic arithmetic.

Wed, 02/27/2013 - 19:52 | 3283782 Dr. Engali
Dr. Engali's picture

Americans are freaking stupid. How many times can they fall for the scare tactics out of Washington and the media? I'd love to see that confidence chart plotted along side every debt ceiling manufactured crisis.

Wed, 02/27/2013 - 19:53 | 3283784 busted by the b...
busted by the bailout's picture

You unlock this door with the key of imagination. Beyond it is another dimension - a dimension of sound, a dimension of sight, a dimension of mind. You're moving into a land of both shadow and substance, of things and ideas.

You've just crossed over into the Crash Zone.

Wed, 02/27/2013 - 19:55 | 3283792 NoWayJose
NoWayJose's picture

The only wealth effect today is going to banks and HFT's. Yes, some 401k's are up, but you cannot touch them until retirement and there is no certainty it will be there when you retire (especially if QE goes away). There is no wealth effect to stimulate the economy today.

Wed, 02/27/2013 - 19:56 | 3283798 davidsmith
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It should be obvious what is going on: the oligarchy is cannibalizing the society.  First start with the poor: boot their asses right out.  Then move up and take all the money away from the working poor (J.C. Penney results).  Then move up for the major assault on homeowners.  It's the corporatist playbook.

Wed, 02/27/2013 - 19:57 | 3283800 chump666
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Have you been following the TB outbreak in LA?

Wed, 02/27/2013 - 21:25 | 3284049 toady
toady's picture

The wife said she was coughing up blood. Maybe she should go to the doctor ....

Wed, 02/27/2013 - 22:52 | 3284260 Orly
Orly's picture

Chump, surprisingly, the Japanese didn't much care for Abe's picks.  This might be a sell the news event.  Euro back under pressure.  I'll watch the EJ to see if it breaks lower.

Is it risk-off for real this time?  Starting to get that creeping feeling...

How do you think?

Wed, 02/27/2013 - 23:20 | 3284330 GMadScientist
GMadScientist's picture

Who cares if the homeless have healthcare?


Wed, 02/27/2013 - 19:58 | 3283804 SillySalesmanQu...
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We can see from those charts who is truly confident...

Wed, 02/27/2013 - 20:02 | 3283815 GrinandBearit
GrinandBearit's picture

Wealth effect, huh?

Plot the DOW (inflation adjusted) against gold and see what happens to the graph.


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