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"What Looks Like A Rally May Just Be The Elites Passing Money Among Themselves"

Tyler Durden's picture


Authored by Chrstopher Caldwell, originally posted at The FT,

Why are citizens of the developed world looking a gift horse in the mouth? The Dow Jones Industrial Average rallied beyond 14,300 points this week, passing the highs it reached in 2007 just as the world economy was starting to wobble. Sure, there are reasons to be sceptical about the Dow. It is weighted, rather arbitrarily, by share price. But at least it is a quantifiable index of something. We look at 1954 – the year the Dow returned to its 1928 pre-depression high – as marking an epoch. And yet, this week, investors and pundits warned us not to read too much into it.

They have a point. In the half-decade since the western financial system almost collapsed, the relationship between stock markets and the “real” economy has seemed more tenuous. The Dow owes some of its robustness to expectations of a strong Friday employment report.

Then again, European stocks rose to a four-year high following a rise in unemployment to 11.9 per cent. Other solid-looking economic correlations are melting into air. The US property market rebounded in 2012, according to the Case-Shiller index, but the Yale economist who devised it, Robert Shiller, warned in January: “Any short-run increase in inflation-adjusted home prices has been virtually worthless as an indicator of where home prices will be going over the next five or more years.”

Part of the reason people get less giddy about the Dow than they did five years ago is because they have learnt a bit about inequality. They suspect, more than they used to, that significant developments in the economy go on over their heads. What looks like a recovery, a rally or an increase in consumer confidence may just be the effect of elites passing money among themselves.

Most western leaders hold power today because they weren’t in power during the bleakest days of September 2008. (Germany is the important exception.) They claimed a mandate for radical action, but the economy stumped them. So they have been radical on non-economic matters instead: Barack Obama with healthcare reform, David Cameron with gay marriage and Ireland’s Enda Kenny with abortion. If you were to examine their rhetoric of a few years ago, you might suspect these initiatives were hocus-pocus. Their economic policies don’t differ much from those of their predecessors.

The West’s leaders are vulnerable to the accusation that the policies they lay out on behalf of society as a whole are benefiting only a small group. Joseph Stiglitz, the Nobel Prize winning economist, accuses the Obama administration of trying to rebuild the economy from the top down, not the bottom up. The Occupy movement and the Spanish indignados filled squares with young people eager to make a similar point. Last summer the leftwing Syriza movement won a quarter of the seats in the Greek parliament. In effect, party leader Alexis Tsipras asked Greeks not to take seriously the warnings that Greece would be cut off from the European financial system if it rejected austerity, arguing that they were cut off from the fruits of the system anyway. The strong performance of Beppe Grillo in Italy’s elections is a sign other countries’ voters are willing to call the system’s bluff.

Remedying inequality is harder than it looks. Unless you want to govern like a communist, you must work with existing institutions and social customs. That means you can wind up making society less equal. In the US, the first-time homebuyer tax credit, broached by George W. Bush and continued by Mr Obama, lured more people into the housing market. Those who bought in poor states – where property was hard-hit – generally fared badly, sometimes seeing their house values fall by more than the value of the credit. People who bought in wealthier markets got their good investments subsidised.

Similarly, in the latest issue of Foreign Affairs magazine, the intellectual historian of capitalism Jerry Muller argues that the age-old Washington remedy for inequality – “investing” in education – may actually exacerbate inequality. Prof Muller quotes the late political scientist Edward Banfield in The Unheavenly City Revisited: “All education favours the middle and upper-class child, because to be middle or upper class is to have qualities that make one particularly educable.” Education is a good that benefits the already well-positioned, rather as stimulus tends to benefit the cronies of those in government.

A sense that some, but not all, are benefiting from the stock market’s rise is what has muted the response to this week’s news. The US Federal Reserve has added more than $2tn to its balance sheet since 2007. In general, that tide of liquidity ought to lift all boats in the harbour. But when the harbour is an equity market, you won’t find your yacht lifted unless you own one.


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Sat, 03/09/2013 - 15:04 | 3315260 kaiserhoff
kaiserhoff's picture

Musical chairs is so much fun.

Why doesn't that game go on forever?  Oh, right.

Sat, 03/09/2013 - 15:10 | 3315281 King_of_simpletons
King_of_simpletons's picture

It will be fun to watch these elites devour each other when the piper has to be paid. They will not have "money in the sidelines" to jump to their rescue anymore. Now they wait for mom and pop to get in. If that doesn't pan out, it's cannibalism time.

Sat, 03/09/2013 - 15:41 | 3315378 ZerOhead
ZerOhead's picture

If you build it    (equity/bond bubble)

They will come   (jobs and prosperity)

~ Allan Greenspan  (Cargo cultist and former Fed Chairman)

Sat, 03/09/2013 - 16:25 | 3315487 IPA
IPA's picture

I know the market is expensive, but I find it hard to believe it is a bubble. None of the people I know are buying stocks, have any interest in the stock market and Yahoo has numerous stories along the lines of, will this really last and is it time to sell. When I see headlines like hurry and buy, analysts touting and exclaiming why the s&p will go to 2,500, once it gets to 1,600 and when my friends start buying individual stocks and telling me about their gains, and the market makes a more parabolic move. Just not many classic signs of a bubble. There have been several articles on zh recently about retail outflows in the market. Does that sound like bubble formation? 

I do realize most of my friends participate through 401k/ mutual funds.

Sat, 03/09/2013 - 17:24 | 3315616 negative rates
negative rates's picture

The yachts are coming free from Japan, they should hit shore within the next 18 months, why worry?

Sun, 03/10/2013 - 10:02 | 3316719 francis_sawyer
francis_sawyer's picture

 "Now they wait for mom and pop to get in. If that doesn't pan out, it's cannibalism time."


Mom & Pop will still end up paying... In the end ~ they'll just pick a winner & a loser... Loser gets everything 'monetized' by the Fed and slithers in to the shadowy parts of the opeation... Grandma's catfood goes up... Winner gets to 'monopolize' whatever assets are there for the taking & control prices... Oh ~ & I forgot to mention that one of them loses their job... 

Sat, 03/09/2013 - 17:45 | 3315659 disabledvet
disabledvet's picture

don't know why you were down arrowed for that one. of course as i coined the term "inside every trader is a market timer waiting to jump out!" so i can now coin "inside every short seller is market maven screaming BUBBLE!" you have to start by educating yourself (no better place to do that than here...the ONLY place in financial media to do that actually) and then further your research to gain an understanding of what the difference between an equity, a bond and "other marketable securities" is. Buffet is a open subscriber to the Benjamin Graham theories: Buffet became one of the wealthiest men in human history because of that sounds like a good place to start. my favorite though is this guy: while many others would follow in his footsteps few....actually NONE insofar as mutual funds go have ever actively managed as well. and there are MANY similarities to the 80's and right now actually...the stock market is suddenly off life support, the dollar looks good for the first time in decades, we're coming off a needless and needlessly provacative war, we may be entering a far more dangerous conflict. deficits are unbelievably high. unemployment is God one believes in the market, commodities have had an extraordinary run, real estate has been considered "the only safe play" for some time, etc...etc...etc. the one thing missing (so far) is "jobs numbers like under Reagan." or..."you can blindly buy gold and declare the end of the world is nigh!" as the magazine The Economist used to say back in it's "golden days" (the 80's as well.) i am of the opinion that this is a (temporarily) bad time to be in equities...and so far i've been totally wrong. but i'm not a short seller so i'm not going about demanding "Dell Computer give me all their billions in cash or else die" like "the Big Guy's" who have been massively shorting treasuries for the past decade have been doing.

Sat, 03/09/2013 - 19:28 | 3315840 Orly
Orly's picture

"...the stock market is suddenly off life support, the dollar looks good for the first time in decades..."

Tell me you forgot the </sarc> tag.


Sun, 03/10/2013 - 00:01 | 3316267 IPA
IPA's picture

I know why I was down arrowed, I usually read this site logged out so I can decide for myself the validity of others thoughts. I think the market is in a bubble, but I hear people use the reasons for gold not being in a bubble to explain why the stock market is in a bubble... my taxi cab driver is not a day trader right now, that is all I am trying to say. 


Found the article of recent the p/e graph somewhat down the article... remember markets can stay international longer than you can stay solvent, or something like that.

Sun, 03/10/2013 - 02:19 | 3316416 Vlad Tepid
Vlad Tepid's picture

This bubble is not generated my "consumers," like times previous.  It's generated by Fed liquidity (Funny Money). The gold bubble (which isn't) is a function of Gresham's Law. You must not read this site logged out too much if that passed you by.  

Sat, 03/09/2013 - 15:34 | 3315352 Crash Overide
Crash Overide's picture

reap, sow... 

Sat, 03/09/2013 - 15:44 | 3315390 ZerOhead
ZerOhead's picture

In the case of TBTF's...

Reap, reap, reap...

Sat, 03/09/2013 - 15:48 | 3315398 Kassandra
Kassandra's picture

More like..

Rape, rape, rape...

Sat, 03/09/2013 - 16:24 | 3315484 e-recep
e-recep's picture

the fight of the fattest cats usually ends up in large scale wars.

Sat, 03/09/2013 - 17:16 | 3315600 Downtoolong
Downtoolong's picture

I've been calling the process playing with themselves. As it turns out, even that isn't nearly as funny to watch as I thought it would be.

Sat, 03/09/2013 - 15:06 | 3315264 Chupacabra-322
Chupacabra-322's picture

People are waking up, and the only “anesthetic” they can use to put us back to sleep is another demonetization stunt. Their tactics are getting old and repetitive, and in the past few events they’ve manufactured, we can clearly see the unorganized haste at which they are operating at. They’re nervous and becoming sloppy, so we have the upper hand at the moment people. The awakening has caught them off guard in ways I doubt they could have even possibly foreseen. If we stay observant, their play book will become useless.

Sat, 03/09/2013 - 15:30 | 3315269 Hongcha
Hongcha's picture

We've topped right here, right now.  They may gap it to 156 SPY on Monday but that's it.  I'll add to my short if they do.  

That fucking 1-year chart is unsustainable except to a madman or a crack addict.

The problem is the 'ramp and camp' shit which causes shorts, including myself, to be mighty tempted to cover yet again...

And when it turns, boys, there will be a mighty hard fight out of the exits.  The Fed morphine drip is the ONLY sustainance.  We could easily wake up to a 5% gap down.  Say the word, Fed...

Sat, 03/09/2013 - 16:07 | 3315436 eatthebanksters
eatthebanksters's picture

I heard Bernanke crack pipe is close to being burned beyond functionality...

Sat, 03/09/2013 - 16:15 | 3315459 spinone
spinone's picture

You've got brass balls Hongcha.  The FED has a printing press, and they haven't lost a fight yet. 

Sat, 03/09/2013 - 15:10 | 3315284 Fishthatlived
Fishthatlived's picture

"Remedying inequality is harder than it looks." 

And why is it necessary to remedy it in the first place? Is that really the job of the federal govmint?

Sat, 03/09/2013 - 15:19 | 3315315 Bam_Man
Bam_Man's picture

'From each, according to his ability. To each according to his need.'

History and human nature be damned.

Sat, 03/09/2013 - 16:08 | 3315437 eatthebanksters
eatthebanksters's picture

Long live Hank Rearden, Francisco D'Anconia, Dagny Taggart and John Gault!

Sat, 03/09/2013 - 22:12 | 3316151 absente reo
absente reo's picture

John Gault?  Who is he?  I think you mean John Galt :-)

Sat, 03/09/2013 - 22:53 | 3316226 fourchan
fourchan's picture

when is part 3 coming out?

Sat, 03/09/2013 - 18:52 | 3315773 Law97
Law97's picture

It is the job of the people to tell their government to remedy inequality....when the governmet itself IS the cause of the inequality.


What people forget is that artificial wealth redistribution can happen both ways, not just from the top down but also from the bottom up. 

Sat, 03/09/2013 - 15:12 | 3315295 km4
km4's picture

What looks like a rally may just be the effect of elites passing money among themselves

Nail meet hammer !

The US Federal Reserve has added more than $2tn to its balance sheet since 2007. In general, that tide of liquidity ought to lift all boats in the harbour. But when the harbour is an equity market, you won’t find your yacht lifted unless you own one.

Sat, 03/09/2013 - 15:15 | 3315304 phat ho
phat ho's picture

"Long live the oligarchs" and 'this way to the life boats'

Sat, 03/09/2013 - 15:35 | 3315363 disabledvet
disabledvet's picture

here's the book about them: no i'm not one of them. and no "they don't have life boats" either. they have "life yachts" to escape from their 300 foot long ships. YOU and I have "lifeBOATS." there is a fly in the ointment however...but you must read below before i will tell you.

Sat, 03/09/2013 - 15:15 | 3315305 gould's fisker
gould&#039;s fisker's picture

I didn't think the market needed a reason to go up anymore.

Sun, 03/10/2013 - 09:45 | 3316702 dark pools of soros
dark pools of soros's picture

Inflation is a helluva drug!

Sat, 03/09/2013 - 15:19 | 3315310 Atomizer
Atomizer's picture

BRICS vs. Uncle Ben one minute Reserve Currency rice dish.

New Chinese president Xinping to attend BRICS summit

Sat, 03/09/2013 - 15:25 | 3315338 Winston Churchill
Winston Churchill's picture

2013 is turning out to be just as monumental as 1913 was.

2014 will be to 1914.

Sat, 03/09/2013 - 15:50 | 3315401 disabledvet
disabledvet's picture

still not giving it away (keep reading)...."but what you are talking about is the Middle East right now" in my view.

Sat, 03/09/2013 - 16:19 | 3315471 Kirk2NCC1701
Kirk2NCC1701's picture

Only if the Elite in The City create another Lusitania event, with NWO types over here helping along.  Different 'donkey' this time, but same 'Pin the Donkey' game.

Sat, 03/09/2013 - 16:25 | 3315486 Atomizer
Atomizer's picture

Raises hand. Me,me,me. Can I wear the first blindfold in this next game?



Sat, 03/09/2013 - 16:23 | 3315482 Kirk2NCC1701
Kirk2NCC1701's picture

Only if they create another Lusitania event.  Different 'donkey' this time, but same 'Pin the tail' game.

Sat, 03/09/2013 - 15:19 | 3315318 phat ho
phat ho's picture

assume the crash position....

Sat, 03/09/2013 - 15:21 | 3315324 phat ho
phat ho's picture

er, excuse me; resume

Sat, 03/09/2013 - 15:22 | 3315328 ekm
ekm's picture

Do you guys understand what I've been saying?

Even MSM is pushing the same line.


Money has no more meaning, because there's too too too much of it.

Sat, 03/09/2013 - 15:50 | 3315405 fonzannoon
fonzannoon's picture

somebody has to hit the sell button right ekm? Those who panic first win right?

Sat, 03/09/2013 - 15:59 | 3315421 ekm
ekm's picture

I have already panicked.

I am 100% cash, after listening to David Stockman's interview to Casey Research last year.

I am only waiting.

Sat, 03/09/2013 - 17:07 | 3315573 Bingfa
Bingfa's picture

+1  It's not a matter of "IF"

It's "WHEN"

              It's going to be swift

Sat, 03/09/2013 - 16:04 | 3315428 ekm
ekm's picture


This is why I say, it's over. Money has no more meaning for the elites because they have too much, liquidity bubble.

If you have $50k, it's ok. If you have $500 million (in cash or treasuries), you are screwed or war.

Sun, 03/10/2013 - 09:54 | 3316710 dark pools of soros
dark pools of soros's picture

You're missing the control angle. When they have their next event and let inflation stretch its legs in the states, the elites don't feel it, and those with 50k are screwed.

The next step is widespread inflation, not some crash towards fundamentals

Sat, 03/09/2013 - 16:01 | 3315424 kaiserhoff
kaiserhoff's picture

If it's weighing you down, feel free to send a ton or two to me.

Sat, 03/09/2013 - 15:22 | 3315329 l1b3rty
l1b3rty's picture

Actually moving the money would be too much work. The algos are in the hotseat...

Sat, 03/09/2013 - 15:23 | 3315332 swissaustrian
swissaustrian's picture

Corporate stock buybacks to allow insider options excercises at records prices, so execs can immediately sell thereafter. That's the reason for record stock buyback programs and record insider selling.

Sun, 03/10/2013 - 10:05 | 3316722 dark pools of soros
dark pools of soros's picture

Exactly - anyway to control a market is the only way to play. It always has been but now it is the only way. That greater fool dumb money retail crowd stopped coming to the casino (but most still left their wallet there with their 401ks)

Sat, 03/09/2013 - 15:28 | 3315344 steve from virginia
steve from virginia's picture




First of all, the 'Tide of Liquidty' doesn't lift anything, because this 'liquidity' isn't real. Nothing real is lifted, the financiers are quite able to lift their own BS, they certainly are not helpless.


Unless that is the argument Caldwell is intending to make.


Finance cannot lift the real economy because it costs too much, the real economy is both a credit- and an energy dependency. Banks cannot lend crude oil so they don't try, best to lift the asset markets instead.


Face it, the real economy is bankrupt, it is capital deprived, we invented a clever capital destroying machine and turned it loose. Now we get to pay for it.





Sat, 03/09/2013 - 16:05 | 3315433 kaiserhoff
kaiserhoff's picture

Free money for the government and the bankers.  The rest of us are expected to actually repay loans.

That doesn't seem to be a model for getting any real work done.

Sun, 03/10/2013 - 10:10 | 3316735 dark pools of soros
dark pools of soros's picture

Why worry about real markets when you can just tap future money to line their pockets today? Those that spend inflated dollars first win. There is no debt ceiling when places like Chicago can sell 100 year leases on parking meters and spend it all in a year or two. Just sell thousand year leases when you need to

Sat, 03/09/2013 - 16:17 | 3315465 bjfish
bjfish's picture

"we invented a clever capital destroying machine" ...

Are you referring to the Democratic National Party?


Sat, 03/09/2013 - 16:43 | 3315506 ekm
ekm's picture

There is zero, absolutely zero difference between the repubs and dems, nada.


Boehner is equally powerful to Obama and Reid as per the constitution. He's not using his power to say no to them.


He is like them.

Sat, 03/09/2013 - 17:16 | 3315598 NoWayJose
NoWayJose's picture

Boehner is the worst speaker in over 50 years

Sat, 03/09/2013 - 17:24 | 3315615 ekm
ekm's picture

So is his caucus. Real conservatives are just tiny minority.

Most of the repubs caucus would easily be democrats.

Sat, 03/09/2013 - 15:34 | 3315355 tawdzilla
tawdzilla's picture

Do "gift horses" shit skittles just like unicorns?

Sat, 03/09/2013 - 15:46 | 3315393 disabledvet
disabledvet's picture

and to answer this fine question "if they are Presidents yes they do." But there's a problem as i noted above and here it is:
ain't no personal checkbook on the planet big enough to handle this one. and what is the nationality of the UN Secretary General?
"Please do not adjust your set. please do not...

Sat, 03/09/2013 - 15:42 | 3315384 LawsofPhysics
LawsofPhysics's picture

A gift horse? Does this ignorant motherfucker not understand who is really paying for it all or who is collecting all the fucking interest on all the debt? Roll the guillotines already for christ's sake.

Sat, 03/09/2013 - 15:52 | 3315406 fonzannoon
fonzannoon's picture

damn right Laws. Unless people start being held accountable we will just do it all over again.

Sat, 03/09/2013 - 17:22 | 3315611 Totentänzerlied
Totentänzerlied's picture

"we will just do it all over again."

That is precisely what Laws of Physics desires. A new Reign of Terror. Once the guillotining begins, no telling when it will stop. No excuse for not admitting this. Contrary to the much-derided lefty "if it saves even one snowy owl" line, Laws of Physics's line seems to be "better 10 innocent men dead than one guilty man free" (which, if memory serves, was said of the Great Terror).

Sat, 03/09/2013 - 15:43 | 3315388 phat ho
phat ho's picture


Sat, 03/09/2013 - 15:46 | 3315395 resurger
resurger's picture

"Save yourselves, Buy Stocks"

Sat, 03/09/2013 - 15:50 | 3315402 dojufitz
dojufitz's picture

Money is always  scarce.... when money is no longer  scarce it is no longer money.

Sat, 03/09/2013 - 15:50 | 3315404 Haloween1
Haloween1's picture

"The strong performance of Beppe Grillo in Italy’s elections is a sign other countries’ voters are willing to call the system’s bluff."

That's like saying that Al Franken's election to the Senate by Minnesotans was a challenge to the system. 

The reality is that election of comedians and rock stars to positions of leadership is a victory of the system.


Sat, 03/09/2013 - 17:06 | 3315571 Ghordius
Ghordius's picture

Grillo is irrelevant and didn't even candidate. The elected MPs and MSs, on the other side are... a very fresh and young wind in the halls of the Italian legislation. and they will demand a lot of explanations, for a while

will be interesting to watch

Sat, 03/09/2013 - 17:25 | 3315619 Totentänzerlied
Totentänzerlied's picture

You mean they will demand deck-chairs be furiously rearranged, while Rome burns. I enjoy mixed metaphors. Nothing will change.

Sat, 03/09/2013 - 17:39 | 3315647 WmMcK
WmMcK's picture

Let's stick a fork in the tires of this train wreck.

Sat, 03/09/2013 - 17:14 | 3315593 NoWayJose
NoWayJose's picture

The one time the system did not win was when Minnesota elected Jessie Ventura - twice. When you see Rand Paul do battle on the floor of the senate while senior Republicans wine and dine at the White House you almost wish that there was a separate conservative party.

Sat, 03/09/2013 - 15:54 | 3315412 lemosbrasil
lemosbrasil's picture

554 points is the number of the Beast.

The first insane leg of SP500 from March-2009 to May-2010 was 554 points.

The second insane leg of SP500 still is not over.....

So....If we get 1.010, minimum of july-2010 and add the same 554 points, we take 1.564 points. 

Just 11 points from the historic top ? Yes.....of course....but this is not the fundamental question......

1.564 must be the final top of this insane Bull Market....

See here:

Sat, 03/09/2013 - 16:08 | 3315434 Jack Burton
Jack Burton's picture

The smoke and mirrors have reached unprecedented levels. No one in their right mind would argue that these markets are not manipulated and that the Fed ocean of liquidity ,via QE flowing into the hands of entities that are acting mostly on behalf of the top 1/2 of 1%, is not THE driver of equity prices. We all like to think we have a stake in the market because we have 401Ks, but how many really have abig stake in the markets? Most average middle class people are not heavily weighted in stocks, in fact, as personal income stagnates, these folks are less and less likely to put a portion of their badly needed income into a 401K every month. Paycheck to paycheck becomes more and more the norm. Nobody can argue that most people's incomes are not stagnant or falling. People lose good paying jobs and get employed later at a fraction the former wage.

Basically, the only folks still fueling consumer recovery are government workers and those working in health care. These fields have rising incomes and job growth.

Shadow Stats can show beyond doubt the increasing level of fakery in the government economic numbers. Government sends 1.2 trillion of extra unearned spending power into the economy every year. The Fed prints and adds 82 billion a month, much of which fuels equities and commodities.

I say 90% of the recovery is pure money printing and smoke and mirriors. It is primed for major collapse.

Sat, 03/09/2013 - 19:00 | 3315785 Law97
Law97's picture

Is it any wonder why the Fed's policies have only benefitted the wealthy?  Does anybody really think the Fed didn't know what it was doing? 


90% of stocks are owned by the wealthiest 10%.  (70% owned by the wealthiest 3%.)  Case closed. 



Sat, 03/09/2013 - 16:10 | 3315441 eatthebanksters
eatthebanksters's picture

And, on top of that, what good is the equity in your 401k if your yield has gone from 8.5% to 1/2%?....

Sat, 03/09/2013 - 16:15 | 3315457 Kirk2NCC1701
Kirk2NCC1701's picture

Different classes have always been passing 'money' (symbolic or barter units) among themselves. 

What's different now, is with much less DI (Disposable Income) being passed within the Middle Class -- since a lot of it was transferred to the Upper Class -- the official stats produce a false and distorted view of the economy.

Now the money activity of the top echelons dominate the stats -- and the talking points of a 'recovered' economy, as manifested by the MSM and its Talking Heads.

Sat, 03/09/2013 - 16:15 | 3315458 Atomizer
Atomizer's picture

Many of you have no idea what’s happening behind the scenes. This is a spoof, laugh and enjoy.



Sat, 03/09/2013 - 16:16 | 3315460 yogibear
yogibear's picture

Find out where the den of snakes are and chop off their heads.

Sat, 03/09/2013 - 16:17 | 3315461 Michelle
Michelle's picture

The wealthy can battle it out and maybe a few will get hurt in the end but none of them will ever be destitute and living paycheck to paycheck as many Americans do today.

In my opinion, low income tax rates and accompanying lucrative loopholes over decades has been the major contributor to the wealth gap. There are only two ways to reverse the trend - 1) tax both wealth and income for the 1%'ers at very high rates until the imbalance corrects OR 2) create a financial collapse that wipes most of them out. Of course there's a third option - that both 1 and 2 occur.

More than anything I'd like the corruption and cronyism to end, at least that's a start.


Sat, 03/09/2013 - 20:47 | 3315978 bsdetector
bsdetector's picture

Taxing the wealth is an interesting redistribution idea. It's been done before but today it seems that only real estate wealth is taxed.

Sat, 03/09/2013 - 20:51 | 3315983 bsdetector
bsdetector's picture

As a practical matter how would we get to all of the financial wealth in the Caymans, Switzerland and the other offshore destinations. Well they're not really destinations they're just waypoints in the round trips of circulation, right?

Sun, 03/10/2013 - 01:51 | 3316393 slightlyskeptical
slightlyskeptical's picture

I love the idea of a wealth tax. Have it kick in say at 1% at $5 million and end at 5% for those with over a billion. Eliminate all other income and capital gains taxes.  Enforcing it would be the biggest issue. For it to work it would have to be global and all bank secrecy ended. No hiding the money in foundations, charitable trusts, etc. It is all taxed.

Sat, 03/09/2013 - 16:17 | 3315462 Mark123
Mark123's picture

You's funny but back in early 2009 people were panicking as their stock portfolios collapsed.  They all said - "if stock prices bounce pack by some miracle I am cashing out - I've learned my lesson". I hear the same people smugly telling me how they haave figured things out in the stock market - unbelievable!  But it is hard to argue with someone when the stock market is back at new nominal highs.




America will be energy independent soon.

Europe is doomed.

China is doomed - aging population.

Manufacturing coming back to America.

The Fed will keep markets sable and interest rates near zero.


Of course, what they ignore is monumental.



Sat, 03/09/2013 - 20:12 | 3315914 slightlyskeptical
slightlyskeptical's picture

I have people saying that don't care what price they buy at. I tell them to wait for a pullback, they tell me what difference it makes if they buy at 15 or 17 if it's for a long term investment? Well it's 12%, much more than the average annual equity appreciation. So people are willing to give up more than a year of appreciation just to be in. It's pretty scary and the worst of it is they will be right for a short while before the hammer returns with a vengance. The smart money takes their money off the table following a 5 year bull market. The dumb money will always stay dumb.

Sat, 03/09/2013 - 16:19 | 3315470 vegas
vegas's picture

Every index, statistic, and economic indicator is being massaged and managed for the low information voter. Amerika is too stupid to know the difference.

Sat, 03/09/2013 - 16:30 | 3315494 km4
km4's picture
Jack Lew, Citigroup and the Ugland Truth

So keep your eye on Jack Lew’s stewardship of the nation’s bankbooks. You may know him by the company he keeps. As the poet wrote, no man is an island — Cayman or otherwise.


Julian Abrego • a day ago ?
I get sick to my stomach reading about the financial system. It could be decades before we get this under control....if ever.

Owen Johnson • a day ago ?
The appointment of Lew is an insult to working, taxpaying Americans and amounts to hypocrisy from the White House. But then, getting confirmation from the Senate just goes to show where THEIR allegiance lies. "Too big to fail, too big to jail, gimme my campaign money."

Sally Leong • a day ago ?
This article did not mention the secret 2 trillion dollar interest free loan that Citigroup got from the Federal Reserve in 2007 and that was revealed in a recent audit of the Fed who loaned many banks and companies a total of $16 trillion in 2007 before the bailout (see Bernie Sanders website). Yes I am very disappointed in all of the new appointments and most of the old. Record stock market gains while most average people have experienced a decline in wealth and are struggling to pay basic expenses.


Sun, 03/10/2013 - 01:39 | 3316379 slightlyskeptical
slightlyskeptical's picture

Gave C money before the bailout? Doesn't that mean they could have baiiled out Lehman? Doesn't it mean they are lying through their teeth when they say they legally couldn't do it?

Sat, 03/09/2013 - 16:39 | 3315497 Kirk2NCC1701
Kirk2NCC1701's picture

This can come to a head sooner with a growing underground economy that removes FRN's and Credit out of the FRB system. 

In other words:  Spend less, save more (in form of PM coins).  Use cash instead of Debit (forget Credit!), barter whenever possible, spend what you need not what you want.  Grow more of your own food.  Freeze, dry, pickle, or home-preserve the excess.  Make it a fun social event to teach others to become more self-sufficient, to help propagate the story & lifestyle.

Since TPTB will likely draw the Depression (their "recovery") until they've recovered almost all your wealth, we all have to adapt & survive in the debt-free Barter/Cash economy, until their wealth is affected also, and the out-flowing tide strands their yachts more than our boats & dinghies.

Keep stacking, storing and packing.

Sat, 03/09/2013 - 17:01 | 3315561 Bingfa
Bingfa's picture

This is exactly what's going on in my small community...

It works and anybody can do it


Sat, 03/09/2013 - 18:56 | 3315769 W74
W74's picture

"To help propogate the story and lifestyle"

3-4 years ago many of my friends and family saw me as "nuts".  Now most everyone I know can sense that something is wrong.  I even lost a couple friends, but they and I didn't go back too deeply anyway.

Now people look to guys like me for help and advice, and I'm more than willing for those who haven't shuned me in the past, even for no direct benefit on my end. I will absolutely help folks out if they're seeking it for indeed when SHTF the strong and smart among us will indeed be our brother's keepers.  But, having said that, fuck the true believers who want to keep this system going, especially if they enjoied the economic rapine of hard-working men and women for their own benefit, directly or indirectly.

I think only the true bobbleheads who aren't paying attention, the sheeple, and the "true believers" (you know, the ones who joined the Red Army and slaughtered anyone even perceived to be associated with the White Army) can't seem to sense that anything is amiss.

Perhaps those that directly benefit from the system are not going to engage in measures counter to it, even if it'll save their butts (a few are stocking up anyway) and those who indirectly benefit are looking the other way, but those of us who are being hurt/punished by the current regime have every reason to hegde against it's downfall.

Self-sufficiency is the answer. In this day and age I guess that makes you a part of the radical fringe that Chris Mathews keeps talking about.

Sun, 03/10/2013 - 11:08 | 3316848 thewayitis
thewayitis's picture

  Totally Agree. WHy can't people see whats coming. Bartering is what this will come to. We didn't need BANKS back in the day. Soon they will be EATING each other......Gold,silver and self sufficiency.......

Sat, 03/09/2013 - 16:33 | 3315499 W74
W74's picture

Wow, even ultra liberals like Joseph Stiglitz (and a Jewish one at that!) are criticising the Obama regime for misguided economic policies.  Perhaps even Keynesians are learning that top-down command economics doesn't work.  That's a far stretch, I know, but even if the spark is just a candle in a dark cave they look on frighteningly, wonderingly and are drawn toward it's truths nonetheless.

Sat, 03/09/2013 - 18:39 | 3315751 Totentänzerlied
Totentänzerlied's picture

No, just playing politics. Stigshitz is a craven imbecile just like Krugman. They simply can't be wrong, it's un-possible.

Sat, 03/09/2013 - 16:39 | 3315515 malek
malek's picture

 “investing” in education – may actually exacerbate inequality.

Well then not to worry, the US is clearly on a path to lessen that horrific effect (not from a price point, but for sure from a value point of view).

Sat, 03/09/2013 - 20:03 | 3315897 W74
W74's picture

Liberals *know* that many individuals from all groups, and even a majority of individuals from certain groups, are never going to acheive any sort of reasonable or functional standard; so instead they simply cheapen the quality for everyone.  What's funny is that millions succeed in spite of this dumbing down as kids who are intelligent (and perhaps bored at school) seek knowledge elsewhere on their own.

If you want to see something amazing read letters written by Civil War soldiers, especially those written by ENLISTED soldiers, and compare them to what kids, even college students and grad students are writing today.

Sun, 03/10/2013 - 02:02 | 3315521 Muppet
Muppet's picture

I don't fear collapse, I think it will save us.    

Fueled by Fed dollars intended to spark the economy; financial firms have instead misallocated that enormous amount of money into speculative assets.  So much so, that the financial industry is now finding themselves becoming sole owners of the market and this, they are realizing (or soon will), will cause their ruin.    They've been pumping equities higher so that their balance sheets, profits and reserves look good and all has been going well for them.   However, the emerging big problem that there is no one else is in the room.    The financial industry is recognizing (or soon will) that it is becoming a dog-eat-dog industry.  Trading only in-between each other is a real concern.

You keep hearing "when will retail investors return?".   Think about it, why should the financial industry care?   Their reason is that the financial industry despartely need others, from somewhere, to buy back into the market game.    They need players.    Their hope is that retail investors will come in and somehow keep the market credible.... regaining credence and acceptance.    Otherwise, someone will blink and the whole entire market will collapse.    The US Fed and other Governments are easy shills and they have buying assets like crazy, but the industry cannot control and reign-in its greed to keep pumping stock prices higher.   IMO: It is the financial institutions, not the Fed, that needs to slow down in their zeal to keep pumping stocks.   This point is not understood or discussed.   Maybe the financial industry should consider using the Fed dollars in a more altruistic way?   There's a dream. 

IMO, a stock market collapse will disproportionately harm Wall Street versus Main Street.   Retail investors own little of the market compared to the financial industry which has their every dollar tied up in the market (with valuations they alone conjured).      A collapse will crush the financial industry for sure.  But this seems to be just what is needed to restore sanity.   Folks on Main Street will be set back, but they'll survive... unlike most of Wall Street.   I don't fear collapse, I think it will save us.    

Sat, 03/09/2013 - 16:48 | 3315532 kevinearick
kevinearick's picture

Children: Inferential Demand

Do you tell your brain what to do, or does your brain tell you what to do?

You can submit to your spouse, or you can submit to the majority, everyone around you. To be an effective parent, you must be able to identify future values and make current decisions accordingly, against the currency of artificial empire supply and demand, as an example of faith over time to your children. Labor’s positive feedback loop with community serves as a negative feedback loop to the empire positive feedback loop.

The empire can only chase you with numbers, offering relatively innumerable bridges to nowhere, to disguise your path. The one and only path forward, to protect your investments, is to build your foundation upon the basis of that which make you unique, that which the empire, and its participants, cannot see, for it has no perception, except replication, unless you give it one, Skynet or no. The Microsoft cloud is just its latest extension, and Stuxnet was classic empire stupidity, what goes around comes around.

The tide on the fulcrum is a function of time, relativity, which is an artificial construct in your brain, granting you free will to explore the perceptions of others or to create your own. The fulcrum and pendulum are one and the same, from different perspectives, the alpha and omega. The resulting multiplexer bypasses origin, dividing perception by zero over time, resulting in the calculus of demographics.

Wealth is a function of net present value of future cash flows, itself a social construct, a perception realized over time, with all kinds of opportunities for the empire to dissuade you from realizing your value. Take a second/cycle and think about it. If you are going to have 100 great grandchildren that love you, you are incredibly wealthy before your first child is born. Wealth is a function of timeless values, regardless of what anyone in the majority, all of whom are quickly returning their genes to the DNA churn pool, has to say.

The majority solves the same problem, the empire, everyday (a cheap mirror of the universe), the inception of artificial crisis for the sake of extortion, over and over and over again, repeating its perception of history over a time period of whatever peer pressure event horizon its participants choose. Yes, you can short Warren Buffet, but, as you have repeatedly seen, the Fed will replenish him every time, to keep the demographic insurance monopoly ponzi going; he’s a dinosaur. If you get in the way of a dinosaur, it has something to eat and replicates. Get out of the way and the empire implodes – reversion, backwardization, retardation, whatever word suits your purpose.

You can know gravity, and therefore its magnetic counterpart by inference. You also know that planetary diversity increases over time if viewed on a positive number line, either at the microscopic or macroscopic level relative to your viewpoint. Diversity among large species is declining rapidly, which tells you that microscopic diversity is increasing rapidly, and weather variability tells you that quantum threshold is on the empire horizon.

You also know that the land must be harvested productively, but the empire employs artificial property control as a means of extortion, to supply free money from the top/legacy down, creating future slave debt demand from the bottom up, 700% payday loans. Psychologically, the empire cannot tolerate leakage, but it must have your product, inferential demand of independent-thinking children, real oxygen, creating prisoners dilemma for the majority, which has chosen of free will and expects you to do the same, backed by the artificial force of artificial numbers.

When you walk out of privacy, you enter class warfare, complete with artificial choices and artificial outcomes. Hyperinflation / deflation is an act of war. Of course those believing in free money are surprised; they are paid to be surprised, with other people’s interest payments. It works both ways.

Neither a borrower nor a lender be. It’s less expensive to give the money away intelligently. Labor has no interest in any national currency or gold, all of which are controlled by central bank artifices. Labor doesn’t need to issue currency, and it can value any currency any way it wants at any time it wants. Get out of the way and let the empire misdirect itself, until you don’t.

When you net it out, those “intellectual” wardens occupying the ivory prison spire can’t do anything, and there is only a “reality” on the other side of their switch to the extent you provide one. Timing is everything. Let them play last man standing. Why would you play a game that can only be lost, over time, when you can play a game that may be won any way you want, any time you want?

Sat, 03/09/2013 - 18:42 | 3315756 Totentänzerlied
Totentänzerlied's picture

"Do you tell your brain what to do, or does your brain tell you what to do?"

They're one and the same. Take your new-age mysticism elsewhere, we're all stocked up here.

Sun, 03/10/2013 - 16:32 | 3317609 Clowns on Acid
Clowns on Acid's picture

"Wealth is a function of net present value of future cash flows, itself a social construct, a perception realized over time, with all kinds of opportunities for the empire to dissuade you from realizing your value."

What if interest real rates are negative? What does that do to your NPV / social construct?

Live for the present?

Sat, 03/09/2013 - 22:29 | 3316184 GMadScientist
GMadScientist's picture

Fucking lit crit majors.

Sat, 03/09/2013 - 17:14 | 3315592 Downtoolong
Downtoolong's picture

Their game falls apart quickly when there are no Muppets left to sell to.

We won't be fooled again. Yeaaaa, maybe this time will be different.


Sat, 03/09/2013 - 17:30 | 3315629 Stuck on Zero
Stuck on Zero's picture

Of the thousands of bills passed into law in the House and Senate in the last twenty years can anyone here think of one that benefits the Middle Class?  Anything?  Was it all special interest legislation.  That's my summary judgement.


Sun, 03/10/2013 - 02:03 | 3316403 Muppet
Muppet's picture

One.  That the volume of TV commercials is not supposed to exceed the program itself.  

Sat, 03/09/2013 - 17:40 | 3315649 RopeADope
RopeADope's picture

This rally is all about Bernanke enabling debt holder losses to be passed on to equity holders bypassing mark to market on worthless private and government debt. Take it in the rear America, your overlords command you.

Sat, 03/09/2013 - 18:18 | 3315713 WhiteNight123129
WhiteNight123129's picture

Money is being pushed in the real economy by falling treasuries and inflation expectation in a re-inforcing feedback loop. It is game over for money snuggling in bed doing nothing.


Sat, 03/09/2013 - 18:27 | 3315732 shovelhead
shovelhead's picture


My yacht is a garbage scow with toredo worms. Sorry, no bilgepump bailouts for me.


Here. Have a cement lifebouy.

Sat, 03/09/2013 - 22:28 | 3316181 GMadScientist
GMadScientist's picture

Good thing you've already beached it.

Sat, 03/09/2013 - 18:50 | 3315767 Smuckers
Smuckers's picture

DOW - The little engine that could:
I think Icahn, I think Icahn....

Sat, 03/09/2013 - 18:53 | 3315775 thisandthat
thisandthat's picture


Joseph Stiglitz, the Nobel Prize

As you know, there's no such thing as a Nobel Prize on Economics.

We should expect that ZH, at least, would be aware of that and call it like it is.

Sat, 03/09/2013 - 19:35 | 3315853 yrbmegr
yrbmegr's picture

Balance sheet expansion, again.

Sat, 03/09/2013 - 22:22 | 3316168 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Bernanke: I will print 85bio of the worlds reserve currency FOREVER

Blankfein: thank you for the heads up Benyamin. (phones Dimon) Yamie (sic), you bid up the dow 50 points today and I will sell it to you...tomorrow you bid it up 50 points and I will buy it...what's that? probs, Benyamin is going to give us l the money for settlement.

Dimon: Beseder, Toda raba .


Moral of the story :DO NOT BE SHORT...DO NOT PLAY!!  It's a smallish religion, and u aint in it!!


Sun, 03/10/2013 - 03:05 | 3316449 q99x2
q99x2's picture

Great insight. I agree with this concept 100%. They'll wait to get everyone's 401K then collapse it.

Sun, 03/10/2013 - 11:19 | 3316869 thewayitis
thewayitis's picture

   When does it all end? WHen do we stop printing? When does Europe STOP printing? There WILL be civil unrest soon folks. ....As Celente says "When people lose it and have NOTHING else to lose, THEY LOSE IT" . We're seeing this in Europe bigtime now. It will happen in the East first and come over here. Why do you think they put the Internet kill switch in place folks? The shit has to hit the fan soon. Too much DEBT out there.

     Not pessimistic...Just reading the writing on the wall. Best to be prepared.

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