Guest Post: Understanding Why It Feels Different This Time

Tyler Durden's picture

Submitted by StreetCry via the blog,

There probably isn’t an over used phrase thrown across the media landscape than, “It’s different this time.”

One can’t look at the financial markets, the political stage, and more without shaking ones head. Nothing seems to make sense. Yet if one wants to lazily answer, “It’s different this time.” Things become crystal clear.

Water now seems to run uphill. The definition of words no longer mean what they once did. (we’re still marveling on what is – is) Free society means the loss of only a few freedoms per year, as opposed to everything at once. Work is a bad thing however, if someone else goes to work and pay for your things – then that’s good. You can keep your plan if you like your plan – but if we don’t like it – well – you can’t. The Federal Reserve would never monetize the debt – however if you’re a preferred dealer in the QE (quantitative easing) program – they’ll do it for you. I could go on but for brevity’s sake, I’ll stop there. I believe you get the drift.

These precarious times leave many scratching their heads. It has been (and continues to be) extremely difficult to rationalize exactly what one personally, or business and investing wise should, or should not be doing.

When everything one has both learned through experience or looked back through history for clues now seems irrelevant, or worse – indifferent. It truly makes one question one’s sanity as you wrestle daily with the over whelming feeling that you just may be – the only sane person in the asylum. And that is not a comforting resolution to one’s conclusions. For it begs the rebuttal: Then who’s truly the crazy one?

I was asked the other day why I continue to make arguments for caution where some people at times are having a field day with the equivalent of kicking me in the shins as the financial markets rise higher, and higher, to ever higher heights? It’s a good question and I thought I’d extrapolate more on what or why I’m seeing blatant warning signs others can’t or, refuse to.

Let me express why my observations cause this with the following line: When everyone is on the band wagon – except the band. You had better take notice.

First, let me give some background as to why I have standing to make such arguments.

In addition to my business acumen, I cut my teeth and actually traded my own money (not some form of 401K account – a true margin account) in the futures markets and more both before, during, and after the financial market meltdown of 2009. A period where; if you momentarily dared to turn away from your screens to just shred a document, your positions could be up six figures (as in making money) or down the same. (as in lost)

So turbulent and crazy this period of time was, many had to shake their heads to snap out of their contemplations of; “Hmmmm?” after seeing a Depends® commercial roll across the TV. And every single one almost to a person of the so-called “smart crowd” paraded across the financial media landscape not only didn’t see it coming – they were patently dumb struck on why it was happening, and what one should do about it. (People think these commercials are placed because of age demographics. After 2009, I started to question that argument. It now seemed to speak to a far greater group. But I digress.)

During that time, I have traded with open positions when the markets has been “Lock limit down.” For those not familiar with the term it basically means the markets are halted or shut down as to try to stop the panic.

I have been in situations (and know of many other veteran traders) where positions were unable to be closed as to stop the bleeding – as one watched the account balances disappear, or worse  – go negative. Not to mention the frustration when the inability to get hold of brokers to alter or close positions when platforms freeze, while account balances swing wildly out of control.

There are people who’ll line up to tell me about how they currently have this or that hedged. How X will take care of Y and so forth. All sounds good, the rationale appears sound, but experience will tell you, a backup plan for the markets is insufficient and foolhardy at best. You need a backup plan – to your backup plan – with an additional backup plan. Along with the ability and faith you can execute it in a panic situation. Period. And that’s just for starters.

You haven’t truly traded volatile markets till you’ve stood and stared doe-eyed watching the money in your account as it spirals downward out of control with seemingly no way to stop it. There are ways, but very few know, never mind could execute in the moment. I would venture to say based on people I’ve spoken or listened to, 4 out of 5 are ill-equipped for any real shock to the markets. Especially at where they are currently. However it’s exactly this crowd that is the most vocal using the guise of “The Fed’s got their back.” as if bad things now can’t happen. So why worry? Because – (you guessed it) “It’s different this time.”

I know and try to relate first hand stories of veteran market traders worth millions wiped out in near moments and far, far more. (Never-mind by their own hand or trades just ask a victim of the MF Global™ scandal) Yet, it continually falls on deaf ears as one talks to people who just believe the markets are, “ducky.”

Many (if not most) either just started handling their self-directed 401K accounts (which is the way to do it in my opinion) over the last few years. To them the tone and tenor of anything market related falls into the category of, “Everything of the past is old news.” “The Fed’s got their back,” and more. I’m usually left to myself just shaking my head.

Personally, I have read more books on technical analysis, market psychology, option studies, probability studies, volatility strategies by all the best known authors, along with even more brilliant yet, less heralded ones. I have put money to work via investment advisers, as well as real-time trading strategy/execution services. Yet, if I question someones thinking or thoughts on the markets? I get a look like, “Yeah sure. What do you know. Can’t you see? It’s different this time!” And once again, the conversation just about ends there.

I’m begging to feel that in some strange way they may have a point. But – it’s for all the wrong reasons. And here’s why…

A few things (although very big) have changed over the past 5 years since the great market collapse. These are in no specific order of importance.

First: The advent of government involvement within the financial markets is unprecedented in its history. It can not be understated the influx of Trillions of dollars via the Federal Reserves QE programs, and the levered effects that influence has brought to bear. We don’t have a shred of true market forces that warrant such levels. (Please save the emails. You’ll do better with CNBC® than me.)

Who cares if war, or anything else pops up on the horizon which not that long ago (say before QE?) at the very least would cause the markets to take at the very least – a defensive position. (Remember Greece?) Nope, not in the least.

As one nation after another with its cities on fire, citizens battling in the streets, cries of defaulting on sovereign debt, export/import disruptions, and more. Since the intervention of the QE programs; as long as the spigot remains open – the world and its crises are mere footnotes.

Just look at what is taking place today in the Ukraine. Quite possibly the greatest global uncertainty wrench into the gears of the world at large. Russia puts boots on the ground, test fires an ICBM to heighten threats. North Korea test fires more missiles during this same period. At the same time our largest holder of debt and largest trading partner China publicly sides with Russia’s invasion calculations, not to mention their newest economic figures have been awful (and they are notorious in fudging them as to make them better than they truly are)  and the markets reaction? Not only higher, but Investor Intelligence™ surveys show that traders are the least caring of a market hiccup in over 15 years!

That’s the equivalent of more unicorn and rainbow thinkers in the market today than the dot-com bubble! Absolutely mind-boggling in my view.

Back all this into an algo-filled, machine dominated, high frequency trading environment and you can make the rational argument that the once ,”free” financial markets. Are now truly different this time.

For if the machines only care about the numbers – will act on those numbers – and you only supply the numbers the way the machines care about. Well, you do in theory have control, right?

Well yes but (and it’s a very big but) till you don’t. Then what?

And that’s where my arguments still fall. Again, far too many whether they be entrepreneurs, traders, business executives, and more are not calculating, “what ifs?” That is a recipe for disaster in my view.

To show how far we’ve come from reality all one needs to do is to look at how or what the media will or will not cover. Remember, Black Monday? That was back in 1989 when the markets crashed. Over, and over, and over this was reported on anniversary after anniversary. Now? For all intents and purposes, it passes quieter than two ships passing in the night.

I bring this point to the forefront for the sole purpose of pointing out there was an anniversary this week. It was the 5th anniversary of the financial markets collapse. The worst since the era that brought about The Great Depression. And if I didn’t bring it to your attention now, many of you probably didn’t even know it. The near mention of this event had more in line with the Harry Potter character of “You know who” as in “He that shall not be named.” The 2009 financial collapse now seems to be of the same ilk.

Again, as to push the point I made earlier on things that leave people scratching their heads. Black Monday (a far less eventful matter as compared with the final declines of 2009) was headlined, spoke of, theorized, along with a great whaling and the gnashing of teeth – every anniversary. And what about this one? The silence was deafening.

Here’s the rub – we all know the unemployment #’s are worthless. We know they’re currently manipulated to the point of absurdity. We know that GDP (gross domestic product) trade deficits, and much, much more are now running inline with as much controversy as to their validity as those we get from the Chinese government. Accounting standards and the reporting of earnings are once again venturing on comedic.
(As in an a company lost money according to general accounting, but based on Non-general? The place is rolling in dough!”)

Fact or fiction seems to no longer matter anymore. It’s now blatantly obvious: spin a tale no matter how large for if it sticks – it’s now considered fact. And if they don’t believe the first lie – just readjust or recalculate the formulations to provide something they will believe. It’s becoming near maddening.

So I guess it truly is, “different this time.”

Just what happens when it’s realized that puddle on the floor isn’t from unicorn tears but from someone who didn’t see a Depends commercial is now anyone’s guess.

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Martin Silenus's picture

Had to spell out what QE stands for?  lol  I thought it meant Quicksand Everywhere.

jubber's picture

as someone mentioned elsewhere , this is a "Trueman Show" market, seems to sum it up for what it is

booboo's picture

I can't be bothered with this, I'm waiting for the next episode on the "Hero Channel" where everyone that receives a government check is now "a hero"
You too can be a "hero" by signing up to boot stomp a homeless guy off his meds, Carry on.

Borrow Owl's picture

"Everyone that receives a government check is now "a hero"
You too can be a "hero" by signing up to boot stomp a homeless guy off his meds"

Welcome to the (not so distant) future.



Bear's picture

We all the know the 'End' has to start some time ... or to quote Churchill ... we are at the 'end of the beginning' of the 'End'

Atomizer's picture

I love you down voters. When the shit hits the fan and you have a gun shoved down your mouth. How do you plan in making a call to United Nations hotline?

Keep the Ponzi alive, kill people and reorganize new social security rat asses to pay into your fucking system.

KickIce's picture

Next thing you know they'll set up military bases all around the world...  Oh shit.

Dollarmedes's picture

The Fed hasn't just distorted the market, it now IS the market. No news, no matter how bad or good, can compete with QE.

I wonder what happens when QE is reduced below the 'depends' threshold.


*edit* I take that back...there is one piece of news that could override the Fed: China collapse.

Bear's picture

already happened  ... China created $450 billion in new debt in January

Dollarmedes's picture

That's not a collapse. That's the Chinese trying to prop up the failing system with more debt. The collapse comes when Chinese companies allowed to default reach the teens, and thereafter.

Dollarmedes's picture

See, China already created $15 trillion. They could theoretically create $15 trillion more with no problems, if investors don't see it as a sign of impending collapse and withdraw their money. Creation of more debt is meaningless in itself, as it is subject to interpretation/confidence.

What isn't subjective is the acutal default of Chinese companies on their debt payments.

ebworthen's picture

If there were any validity to the FED and QE they would have sent every U.S. Citizen filing a tax return in 2008 $3 Million Dollars tax free in 2009.

The fact that banks/corporations/insurers were bailed out by an act of CONgress to the tune of nearly $1 Trillion Dollars and that QE then ensued and over $10 Trillion Dollars has been thrown at Wall Street proves one thing - we have become a nation whose unofficial yet crystal clear preamble is:

"Of the Banks, By the Banks, For the Banks".


J S Bach's picture

Amen, Eb.

The money changers' tables must once again be overturned in the temples of NYC and London... this time not by one fearless man, but by endless educated masses of plebs.  Whether enough can BE educated in time is the question.  Debt-based money must be globally done away with.   What has been illicitly attained by ALL banksters and their lackies must be ruthlessly confiscated... to the last zinc-penny.


lasvegaspersona's picture

I hate it when financial writers try to do more that write convincing articles. Save the attempts at sounding clever for your novel.

DOGGONE's picture

To massively deceive the people, these are kept out of sight:

The Public Be Suckered

matrix2012's picture


Thanks for the patrick link, and wonder why anyone downvoted you???


A reader there said it very well as below:

"What these charts chart is THEFT by Quantitative Easing. The banksters print themselves money and buy valuable things, including the government and justice system. The money "trickles down" on the little people, devaluing the currency by the time they get any. Taxation of income and basic essentials (mostly gas/workers) completes the cycle of wealth transfer from the increasingly poor majority to the bankster minority, preventing the printed surplus from hyperinflating the serfs into stampeding."



The Wisp's picture

read somewhere that the most important lesson to learn about all the financial crisis,

is the number of experts who lost their shirts

b_thunder's picture

StreetCry via the blog,   wrote:  "Remember, Black Monday? That was back in 1989 when the markets crashed."  -  sorry, i do not. I don't think S7L crisis of 1989 is referred to as "black monday."

it's time for ZH to start banning morons from posting gibberish  and waste readers' time.



nakki's picture

Glad someone caught that. Maybe people should proof read before posting. I remember it clearly. Had just started trading a spread between the S&P and the old CBOT MMI (Maxi)contract. Going home that day thought it was the end of stocks. Silly fucking me. Anyways 1987, 1989 you know one of those years.

Seize Mars's picture


Right.  Friday, October 13, 1989 was -7%, and was considered a sort of minicrash. "Black Monday" was Monday, October 19, 1987, where the Dow Industrials were -22%. Good times.

Anyways I remember the Major Maket Index; I used to trade the shit out of that thing. I thought it was a great contract.

matrix2012's picture

"Black Monday" was on Monday, October 19, 1987, where the stock market crashed.


The S&P 500 Index lost 20.5%, the Dow Jones Industrial Average (DJIA) lost 22.6% and the NASDAQ Composite lost "only" 11.3%. But this severe one-day US stock market crash also affected other international stock markets.

The aggregated implied volatility of at the money options on the S&P 100 (OEX) soared from 36.37% (Friday, 16.10.1987) to 150.19% (Monday, 19.10.1987). The intra-day high - and therefore the all time high since inception of this indicator - was at 152.48%!!!


Friday the 13th Mini-Crash

On Friday, October 13, 1989 the Dow Jones Industrial Average (DJIA) lost 6.9%, and was considered a sort of mini-crash.


The author made a slight error there but the article is sound and reflects the current situation... who can deny the trueness conveyed by its contents there?

earleflorida's picture

fantastic read!


Ewtman's picture

It is NOT "different this time". It is never different this time. In 1929, Irving Fischer, the most noted economist of his day, said "the stock market has reached a permanent new plateau". In other words, it was different this time. Well, guess what? It wasn't. 

We are all part of the greatest stock market bubble probably in the history of the world. Bubbles burst, sometimes spectacularly. This one will likely be the most spectacular ever. Unless, of course, it's different this time.

Iam Yue2's picture

BMO Capital Markets on Household Debt in Canada;

"Don’t forget, some European countries have much higher ratios and are ranked higher on the UN’s happiness index."

Don't worry be happy......

Sufiy's picture

US Dollar Slides To The New Low 79.51 As Ukraine Situation Moves To Economic Warfare

 US Military Complex can not be challenged by anyone in the open conflict, but once things are moving into the field of asymmetric economic warfare tactics of Financial Wars U.S. has a problem. Economy can not really handle any external shocks now, Bubble in the equity markets is not translating into the healthy growth so far. Any serious correction in the market can bring very weak economic data further in the proximity of potential recession. And this is where Ukraine situation is coming so handily to the FED's rescue out of Taper. Do you really think that the banks want the tigthening of the money supply now? FED wants Weak US Dollar, FED wants Inflation and FED is ready to pause Taper at any excuse now. Further escalation around Ukraine situation will provide this excuse right in time when the economic data will be turning even weaker than now.

UselessEater's picture

Soro's Slams Parasite Banks: George Soros, the billionaire investor, believes the banking sector is a "parasite" holding back the economic recovery and an "incestuous" relationship with regulators means little has been done to resolve the issues behind the 2008 crisis.

"The banking sector is acting as a parasite on the real economy," Mr Soros said in his new book "The Tragedy of the European Union".

Well, Soros is an expert on parasites now isn't he?

kenezen's picture

George is a One World Government believer as long as it's his prescribed structure. He's also one of the smartest monetary traders around in this world even today. I sincerely hope his wives quit hitting him. 

He was, from scurolous rumor,  one of the first donars to then Senator Obama. He does have indirect great political input into most Western Governments. He would be considered by our measurements politically very far left. 

matrix2012's picture


moneybots's picture

"US Military Complex can not be challenged by anyone in the open conflict, but once things are moving into the field of asymmetric economic warfare tactics of Financial Wars U.S. has a problem."


The problem is that the U.S. is insolvent.


kenezen's picture

The dollar's slide in price is because of several current reasons and will continue. The dollar's slide in purchasing power has been going down since the early 1900's. A comparison From it's reliably tracked beginning after 1920 until now has the current dollar at something under 5 cents in purchasing power.  The dollar currently near its all time lows in the futures market will continue down and after any rise.   

It's interesting! Our dollar slide on a slower and longer timeline but directly in conjunction with middle class employment and pay.

Radical Marijuana's picture

This is all now on automatic, indeed, algo automated, since it is structurally NOT different this time. It has not been "different" for a long, long time. What we are looking at is the exponential rate of the development of the consequences that civilization is a system of organized crime, based on backing up lies with violence, which became legalized lies, backed by legalized violence.

BASIC HUMAN HISTORY WAS DECEITS BACKED BY DESTRUCTION SEGUEING INTO FRAUDS BACKED BY FORCE, INCREASING AT AN EXPONENTIAL RATE. The only things which are "different" are that as each doubling of the overall debt insanities become more obvious to more people, the threat of matching or surpassing death insanities are now on the horizon of history.

The only thing that is "different" is that the lies are electronic, and the violence to back them up is the threat of weapons of mass destruction. Otherwise, it is the same social pyramid systems as have existed for thousands of years. The same old lies, backed by violence, multiplied trillions of times by technology, while the more scientific understanding of things that enabled that technology to work is not allowed to enter into social and political systems, since that would require facing facts that Neolithic Civilization was built on deliberately denying and suppressing.


I have no credentials as a market trader, because I recognized several decades ago that systems of exponential financial frauds, backed by weapons of mass destruction, were INSANE, and therefore, I have been attempting to change those systems, rather than make money within them. However, I have recently abandoned all reasonable hope that we have enough time left to succeed with doing that, before it is too late ...

moneybots's picture

"I have recently abandoned all reasonable hope that we have enough time left to succeed with doing that, before it is too late ..."


We are well past that point.  Nothing will be done until there is a crisis.

As Chuck Prince of Citi said, we have to keep dancing while the music is playing.

Calling Elvis's picture

new Radical Marijuana

This is all now on automatic, indeed, algo automated, since it is structurally NOT different this time...... 

WOW - that was awesome - I honestly think more and more people are getting it - hopefully exponentially 

Quinvarius's picture

it is the death of fiat.  Stop measuring in fiat and it makes sense.  That includes fiat paper gold.

Yen Cross's picture

  It doesn't feel any different to me...I must be getting old?  ;-D

Ban KKiller's picture

There are lies then there are accounting lies. There are no honest accountants on Wall Street or in government. Honesty will get you fired. 

Isn't it time for a Chinese chicken virus scare? Dead pigs in the river thingy?

Carl Popper's picture

It may not be different this time, however,

A lot of current productivity cannot be measured. If you can as a novice do your own repair job more efficiently from a youtube video than you could from a book or a friend's advice, then that is a definite increase in productivity but just one example of many possible examples of unmeasured productivity improvements. Efficient availability of information has a huge but difficult to measure effect on productivity.

Used goods are more efficiently allocated thru ebay and other sites. Manufacturing productive capacity is more elastic than in the past.

The world wide web has brought us tremendous productivity improvements that are only obvious to those of us who lived and worked in the pre internet era.

There are so many niche markets and areas with small demand that could not be exploited by large corporations with high fixed costs but one can see examples of individuals satisfying market demand, personal steam engines, book copying machines, niche manufacturing by mom and pops. That stuff isnt captured in payroll data.

In short, more people are "producing" than is captured in economic data, productivity is a lot higher than we can measure it, and deflationary pressures are huge. Interest rates will likely stay low for a long time

The "market" may be reacting to the real productivity and likelihood of a semipermanent low interest rate era, rather than to official "employment" and productivity numbers.

Bad Attitude's picture

If you can as a novice do your own repair job more efficiently from a youtube video than you could from a book or a friend's advice, then that is a definite increase in productivity...

Be careful, or the the government will figure out how to tax the the imputed income from doing the repair job yourself.And, don't forget the "social justice" angle of doing a repair yourself, thereby denying someone else an employment opportunity.



angryBuddhist's picture

Add to that the penalties and prison time for for planting a garden (are you zoned properly for agribusiness?), cooking your own food (does your kitchen meet commercial safety standards?), painting your house (do you have a contractor's license?), filing your own taxes (are you a certified accountant?), defending yourself in court (giving legal advice w/o being a lawyer?), diagnosing a headache yourself and taking asprin vs. going to an emergency room (practicing medicine w/o a license?) . . .

The list goes on and on . . .

stopthejunk1's picture

Black Monday was 1987, not 1989.  Apparently you don't remember it either.

What a lot of blathering.  If anything is clear in this article, which makes no hard assertions whatsoever, it's that the author is just as confused as he thinks everyone else is.

moneybots's picture

 “The Fed’s got their back.”


They better watch their 6.  There has never been a bubble that didn't burst.  Math overrules the FED.

TapperIsTicked's picture

Who cares. That was then. It's different this time.

I remember watching Lou Dobbs on Money Line for a few answers. Heard a talking head. Went to my night Econ Class and the Prof had no answers.  Really, looking back, that was a very valuable clue.

chistletoe's picture

excuse me?  had you not heard? have you not seen? Water DOES run up hill nowadays....