This page has been archived and commenting is disabled.

Must Read: Fear And Loathing On The Marketing Trail

Tyler Durden's picture


Submitted by Ben Hunt of Epsilon Theory

I shared a dark suspicion that the life we were leading was a lost cause, that we were all actors, kidding ourselves along on a senseless journey. It was the tension between these two poles – a restless idealism on one hand and a sense of impending doom on the other – that kept me going.
Hunter S. Thompson, “The Rum Diary”

There lives more faith in honest doubt, believe me, than in half the creeds.
Alfred, Lord Tennyson

Preach the Gospel at all times, and when necessary, use words.
St. Francis of Assisi

Faith is the bird that feels the light and sings when the dawn is still dark.
Rabindranath Tagore, 1913 Literature Nobel Prize winner

Hold faithfulness and sincerity as first principles.
Confucius, “The Analects”


Fear and Loathing on the Marketing Trail, 2014

I’ve spent the past few weeks meeting Salient clients and partners all across the country: New York, California, Illinois, Texas, Minnesota, Massachusetts, etc. With four teenage or tweenage daughters at home I don’t mind the travel, talking about Epsilon Theory topics with smart, engaged people takes me back to what I loved about academia, and I find tremendous value in listening to what investment professionals have to say about markets today. Of particular note to me is how investment professionals are experiencing markets. What does it mean to be a professional investor or investment advisor in the Golden Age of the Central Banker? Two observations surprised me, and I believe they’re connected.

First, when I had these conversations six months ago I would get a fair amount of resistance to the notion that narratives dominate markets and that we're in an Emperor's New Clothes world. Today, everyone believes that market price levels are largely driven by monetary policy and that we are all being played by politicians and central bankers using their words for effect rather than direct communication. No one requires convincing that market price levels are unsupported by real world economic activity. Everyone believes that this will all end badly, and the only real question is when.

Second, trading volumes are abysmal. I know it's summer, but this is more than just seasonality. Here’s a chart using data from my friends at Barclays showing the 10-year trend in US cash equity volumes.

Source: Barclays Capital (July 2014)

I love charts that require absolutely no explanation. Since the outbreak of the Great Recession, with a few exceptional months marked by panic selling, trading activity in US equity markets has done nothing but go down. And when you take into account the growth of algorithmic trading and other machine-to-machine activity, which now accounts for as much as 70% of daily trading volume, the decline in actual human beings buying or selling stock in order to acquire a fractional ownership share in an actual real-world company is much more dramatic than this chart shows.

But wait, there’s more. Here’s a 50-year chart (!) from my friends at Deutsche Bank showing the steady growth rate of trading volume in the S&P 500. With an r-squared trend line fit of 96%, this growth rate of 9.3% is an incredibly strong and stable pattern. Until late 2008 or early 2009, that is, at which point the pattern breaks like a thin, dead twig.

Source: Deutsche Bank (July 2014)

How unusual is this 5-year break in the 50-year pattern of equity trading volume growth? Is this perhaps a transitory or random blip? Or maybe just a more pronounced version of a cyclical trough in trading activity.  Ummm … no.

Take a look at the chart below showing the degree of deviation from the trend line. Back in the 1973-74 recession trading volumes dropped slightly more than two standard deviations from the trend line. Today we are more than four standard deviations below the trend line, and the separation is steadily getting worse. The 50-year boom in US equity trading activity has not just stopped. It has reversed.

Source: Deutsche Bank (July 2014)

Is this just an equity story? Nope. Here’s a 20-year growth trend and deviation chart for US bonds.

Source: Deutsche Bank (July 2014)

Source: Deutsche Bank (July 2014)

This summer’s anemic trading volumes in both stocks and bonds are neither seasonal nor temporary. As you might expect, the Powers That Be at the bulge-bracket market makers are pretty freaked out and are pushing hard to generate some activity (not that we'd want any account churning, mind you). But all of these efforts announced from on high … all of the reorg’s and all of the revised compensation programs and all of the new investment platforms … it's all just pushing on a string if there’s been a fundamental change in the behavior of advisors and investors. Unfortunately, that’s exactly what I’ve been seeing and hearing over the past year, and particularly the past few weeks. It’s a buyers’ strike, a massive “meh” about public capital markets, and it’s growing.

These two observations about the state of mind of advisors and investors today – a prevailing belief that market outcomes are driven by monetary policy (what I call the Narrative of Central Bank Omnipotence) and a lack of appetite to do much buying of anything – are two sides of the same coin.

The overwhelming perception I had of the advisors and investors I met over the past few weeks is that they feel as if they're going along with some big charade. There's a profound disillusionment with political and economic leaders ... not that these leaders are necessarily incompetent, but that they are completely insincere. The advisors and investors I met – no matter how successful they had been over the past five years – were weary of the game and wary of being told what to think. They’re not suckers. They know they’re being played by Authority, whether it’s a Famous Investor talking up his book on CNBC or a Central Banker jawboning the entire market for the umpteenth time or a Chief Economist pushing his latest prediction from some macroeconomic crystal ball, and they’re playing the game right back, usually pretty well. But OMG are they sick and tired of the lack of authenticity in the investment world today!

There’s still plenty of "confidence" in markets, per se, because these advisors and investors are justifiably confident in their knowledge of how the game is played. No one is running for the hills or hiding under a rock. On the contrary, everyone is pretty much fully invested because they feel like they have to be. But there's no faith in markets, which is a totally different thing than knowledge or intellectual confidence. No one is excited or bulled-up about anything in a visceral or emotional way, so there's neither a powerful push nor pull to buy anything. I saw lots of faces like this guy in the classic WWI propaganda poster, sort of a wistful far-away gaze, wishing that they had enough faith in something – anything! – that would trigger their animal spirits and get them up out of their comfortable chairs and back into the trenches of actively buying and selling to make a real difference in their portfolios. But alas, no.

I don’t think you have to be an ace salesman or marketing guru to appreciate the crucial difference between knowledge and faith when it comes to driving action, the actual buying behavior that creates markets. My favorite quote on the subject comes from a perhaps unlikely source, St. Francis of Assisi, when he wrote, “Preach the Gospel at all times, and when necessary, use words.” Brilliant! Faith, regardless of its venue or form, is only faintly reflected in words and speeches and Fed employment models. But it shines like the sun from what we DO. Without a faith or belief system to drive us, we human animals tend to DO very little, or at least very little with passion, energy, and growth. Faith, to quote Indian Nobel Prize winner Rabindranath Tagore, is the little bird that feels the dawn of a new day well before the first light of the sun. Where is that little bird today? It’s sure not flitting around in the financial advisor offices that I visited recently.

The animal spirits of greed and fear have been crushed, not so much by zero interest rates or any other specific policy, but more by the non-stop game-playing of our political and economic leaders as they seek to maintain a political status quo within a deleveraging and fragmented world of overwhelming public debt. In macroeconomics we talk all the time about “the crowding-out effect”, where public sector borrowing sops up available private capital and diverts it from more productive uses in the overall economy. What we are experiencing today is a Narrative crowding-out effect, where public stories and words in the service of political goals dominate market expectations and prevent private narratives in the service of greed and fear from taking root in the hearts of investors. When every real-world event is interpreted for us by Voices of Authority within seconds, when Bernanke’s farewell speech is all about social control through communication policy … well, that’s a world designed to tell you what to think, which among thinking people inevitably becomes a world where you are hesitant to act. That’s a world where public insincerity reigns and private authenticity is painted as either quaint or dangerous. That’s a world of “macroprudential policy”, to use our current Fed Chair’s favorite phrase, and you better believe there’s no room at that inn for good old-fashioned greed and fear.

Are there exceptions to this general rule, small pockets of faith in real-world economic activity that retain their power to compel action? Sure. The "US Energy Independence" story, for example, remains strong and motivating among its devotees (of which I am one). In general today, the farther away an investment narrative is from public market game-playing and the closer it is to private market opportunities, the more it inspires belief and action. Everyone I know still believes with their heart of hearts in private market opportunities. It’s the public markets where faith has been lost, and that’s why the Golden Age of the Central Banker poses existential risks for firms and business strategies based on trading activity within those public markets.

For all of us that rely directly or indirectly on healthy, growing public markets for our livelihood, it’s high time to recognize that these markets are neither healthy nor growing. They are hollow and declining. A 50-year bull market in the market itself ended with policy responses to the Great Recession, and we are now in the 5th year of a bear market in the market itself, a bear market that shows no sign of abating but rather of accelerating. I'm calling this an existential risk, because it is, but it's also a phenomenal opportunity for any investment firm that can make an emotional, animal-spirited connection with public market investors. The capacity for faith is there. Investors will absolutely come back to public markets if they’re given a rationale that works not only for the head but also for the gut, if they’re given a philosophy that is not only smart but also something they can believe in.

What is that investment philosophy that can inspire as well as inform? I don’t know where it ends, but I know where it starts. It starts with what Tennyson called honest doubt. It starts with what Confucius described as his first principles – faithfulness and sincerity. There’s absolutely nothing sincere about the public sphere today, in its politics or its economics, and as a result we have lost faith in our public institutions, including public markets. It’s not the first time in the history of the Western world this has happened … the last time was in the 1930’s … and over time, perhaps a very long period of time, a modicum of faith will return. This, too, shall pass. But in the meantime, investment firms immersed in the public markets had better start adapting to these new political realities.

How? By embracing honest doubt and rejecting the didactic, crystal ball-driven approach to asset allocation and broad portfolio construction that is so rampant in our industry. By embracing sincerity and rejecting the hard sell of “alpha”, as if market-beating returns in this politically-driven investment environment were just a matter of listening to this analyst’s opinion rather than that analyst’s opinion. Adaptation to difficult times is never easy, and the implications of embracing honest doubt and sincerity within an investment philosophy will start to seem rather uncomfortable and weird to most investment firms pretty quickly. But as Hunter S. Thompson said in his most famous line, when the going gets weird, the weird turn pro.

Without adaptation and on its current trajectory of trading volume declines, vast swaths of the professional investment community will have a hard time surviving another 5 years just like the last 5 years. It’s time for reform, not in the sense of adding regulations or government oversight, but in the sense of re-forming our investment beliefs based on first principles of honest doubt and sincerity and, yes, greed and fear. Only then will our actions speak more loudly than the politicians’ and central bankers’ words. And won’t that be a sight?


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 08/05/2014 - 18:49 | 5051456 Cattender
Cattender's picture

God i wish Hunter was alive today..

Tue, 08/05/2014 - 18:58 | 5051482 max2205
max2205's picture

Low vol, low Vix, nobody's selling

When the market goes down on high vol. watch out

Where's all the crap about HFT's...huh?

Tue, 08/05/2014 - 19:06 | 5051499 y3maxx
y3maxx's picture

...hmmmm...May as well buy a million homes in Detroit for a dollar each and put grow opps in all of'em.

Tue, 08/05/2014 - 19:11 | 5051521 Stackers
Stackers's picture

I shared a dark suspicion that the life we were leading was a lost cause, that we were all actors, kidding ourselves along on a senseless journey. It was the tension between these two poles – a restless idealism on one hand and a sense of impending doom on the other – that kept me going.
Hunter S. Thompson, “The Rum Diary”


Until I stuck a .357 to my head and blew my brains all over the kitchen counter

Tue, 08/05/2014 - 19:19 | 5051541 nmewn
nmewn's picture
"In a closed society where everybody's guilty, the only crime is getting caught. In a world of thieves, the only final sin is stupidity."
Tue, 08/05/2014 - 19:58 | 5051703 NoDebt
NoDebt's picture

This article is all well and good, but do you know the pain that would be required to get to that point?

Just imagine for a moment we were to do something "honest" like run a balanced federal budget.  $2T in tax revenues a year is nothing to sneeze at unless you are spending $3T, most of it on auto-pilot since it goes to "social welfare" programs (at all levels of society, across individuals and corporations).  

Imagine the screams of pain.  Not just from those directly receiving the benefits, but from big companies like WalMart that would see a DEVASTATING crash in their sales reveue.  Sucking $1T out of our economy overnight would definitely "leave a mark".

If this debt ponzi was ever cleared out you would find that probably half of our economy was entwined in it.  The crash across the country and the globe would be a MULTIPLE of that reduction in spending, not a fraction.

We had a chance in 2008 to start to clear some of this stuff away, but it was squandered.  Back then some of that pain would have been tolerated, since it was largely expected.  Not now.  Too late.  Everyone is back to being "promised".  From welfare queens and their EBT cards to Wall St. financiers with their promise of endless Fed backstops.  They'll ALL hold onto what they're getting until it's pryed from their cold, dead fingers now.  Everyone knows if you give an inch, they'll take a mile and they'll never give it back.  

All that is left is pain and it's approtionment.  Me?  I'm doing what rich people do.  They'll get less pain than the rest, if recent trends hold.


Tue, 08/05/2014 - 20:06 | 5051741 Escrava Isaura
Escrava Isaura's picture


US Private Debt (Not including financials and government) = $42 trillion dollars / 316 million Americans = $133 thousand each man, woman, and child.

NoDebt, you are being too naive. Debt is a problem... but debt is nothing compared to what is around the corner:

The Long Descent: The End of the Industrial Age 


Tue, 08/05/2014 - 20:24 | 5051805 NoDebt
NoDebt's picture

Without having to write my own book, I am limited to tackling one facet of the issue.  I know what you're saying and you're right.  Empires don't collapse for a single reason.  

Wed, 08/06/2014 - 00:56 | 5052774 Seer
Seer's picture

In case you haven't read it:

Great dissertation on the collapse of empires.  There's a pretty common pattern.  I'd have to state that ALL empires place themselves on this projected path and that NONE escape the final outcome: collapse.  The details aren't the drivers, they're just subplots, markers along the trip (you can see ones that we're driving by today).

Tue, 08/05/2014 - 20:10 | 5051750 nmewn
nmewn's picture

"Imagine the screams of pain.  Not just from those directly receiving the benefits, but from big companies like WalMart that would see a DEVASTATING crash in their sales reveue."

That is it, on the head.

We saw it when a simple 1-3% actual cut was proposed (not a cut in the growth of government "goodies"...but an actual CUT). You would have thought an asteroid had been sighted heading directly for DC.

And it was ;-)

Wed, 08/06/2014 - 01:01 | 5052784 Seer
Seer's picture

All the contracts, all the promises are based on (projections of perpetual) growth.  The entire System requires that there be something above neutral/zero else it cannot operate.  Seems we can never accept the fact that we have always operated on buy a small margin; this small margin is threatened, and with that REAL threat (perpetual growth WILL end at some point- so says reality) comes the threat to the System itself.  For some time they've only fakes the numbers to make it appear that we're above zero; with zero and sub-zero it all comes undone, the Ponzi blows up.

Wed, 08/06/2014 - 00:01 | 5052661 drstrangelove73
drstrangelove73's picture

The most hilarious piece on ZeroHedge in months.One can FEEL the pathos,even the bathos.
Good Lord,when can one find meaning again in trading 'stawks'
Oh, tempore!
I haven't laughed so hard since I read of the death of Little Nelle in UNCLE TOM'S CABIN...

Wed, 08/06/2014 - 00:12 | 5052685 drstrangelove73
drstrangelove73's picture

Over a stupid peroxide whore who was with me for the residual$.
Go for the gusto!
Hunter S.Thompson,RIP
Putz extraordinaire.
Not that I don't quote him weekly.
"Even a blind pig finds an acorn once in awhile"

Wed, 08/06/2014 - 07:39 | 5053120 oudinot
oudinot's picture

I talked a couple of time with  Hunter in the late 80's.

He was sick, so he pulled the trigger.

If you were that way would you have bee man enough to have  done that?

Don't think so.


Tue, 08/05/2014 - 19:07 | 5051510 SheepDog-One
SheepDog-One's picture

It's got kind of an 80's feel to it, it's like when I watched Black Rain the other nite.

Tue, 08/05/2014 - 19:18 | 5051528 Escrava Isaura
Escrava Isaura's picture

Talking about the 80’s and market crash… This will bring great memories:

The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988 by United States President Ronald Reagan.

Wed, 08/06/2014 - 01:45 | 5052833 Seer
Seer's picture

The financial floodgates opened up during Reagan's administration.  I don't fault Reagan (POTUS doesn't really do anything that TPTB don't want).  It was a natural progression to start lfaking growth.  By the time Reagan got in office the USD had been solidified as being fiat (Nixon), which pretty much was the nail in the coffin.  The LIES had to continue... they've held up pretty damn well!

Wed, 08/06/2014 - 00:05 | 5052674 drstrangelove73
drstrangelove73's picture

One of my favorites! One of the most stupid movies ever!I could feel my IQ declining with every moment of the film.Michael Douglas is one of those actors who an make it seem as if you are living longer,because time passes so slowly when he is onscreen.It almost comes to a stop.

Tue, 08/05/2014 - 21:57 | 5052181 Dead Man Walking
Dead Man Walking's picture

low volume will continue until it's high volume. Then high volume will beget higher volume. Going down on low volume always scared me because it shows there are absolutely no buyers. healthy mkts go up on low volume.

Tue, 08/05/2014 - 19:17 | 5051533 Seer
Seer's picture

Sadly, it would probably be granted, but only with an accompanying reanimation of some foul character :-(  (really, imagine being immortal along with a bunch of the jokers that are running the carnival)

Tue, 08/05/2014 - 18:49 | 5051457 Gringo Viejo
Gringo Viejo's picture

Hunter Thompson. The last American MALE?

Tue, 08/05/2014 - 19:19 | 5051548 Escrava Isaura
Escrava Isaura's picture

Why did you phrase it as a question?

Tue, 08/05/2014 - 19:32 | 5051604 nmewn
nmewn's picture

Some of the most vicious creatures on the planet are female. I can personally vouch for this, the first time I had ever seen an Erlanger beer bottle, it was coming toward my head.

(No, I ducked, her boyfriend wasn't so lucky, his face found my truck

Tue, 08/05/2014 - 19:58 | 5051697 Escrava Isaura
Escrava Isaura's picture

In the U.S., the rate of violent crime for girls and women aged 10 and older is one in 56; the corresponding figure among their male counterparts is one in nine. Men commit close to 90 percent of the murders in the U.S. and more murders than women in all the countries researchers have examined,

You see, nmewn, there are no available resources for battered men.

Instead of expressing their angry emotions with their fists, women tend to use what in 1995 psychologist Nicki Crick, then at the University of Illinois, termed “relational aggression,” a less overt form characterized by social manipulation, especially of same-sex peers.

nmewn, you need some help. You are clueless.

Tue, 08/05/2014 - 20:42 | 5051868 Ness.
Ness.'s picture

..women tend to use.. a less overt form characterized by social manipulation, especially of same-sex peers.


Urban Dictionary:  Commonly referred to as the "butch" in the relationship.  

Tue, 08/05/2014 - 20:46 | 5051882 JB634
JB634's picture

Violent men raised by single mothers. There's a generational effect.

Tue, 08/05/2014 - 20:06 | 5051742 Gringo Viejo
Gringo Viejo's picture

@Escrava: Hear ya 'bro. Mea Culpa.

Tue, 08/05/2014 - 20:11 | 5051755 HardAssets
HardAssets's picture

"Hunter Thompson. The last American MALE?"

I don' know what that means.

But I've gotta feeling the real guys are ones you never heard of.

Actors, writers, and other so called celebs try too hard creating an image to sell. They become cartoon figures. I lost interest in Superman and Batman when I was 8.

Tue, 08/05/2014 - 20:19 | 5051786 Escrava Isaura
Escrava Isaura's picture

Good for you that you overcame the indoctrination/propaganda early on.

Too bad that many still can’t overcome it… Think for themselves.

Tue, 08/05/2014 - 18:56 | 5051478 SheepDog-One
SheepDog-One's picture

Fear and loathing lost wages.

Tue, 08/05/2014 - 19:01 | 5051487 AldoHux_IV
AldoHux_IV's picture

I don't know why I ever give these guys the faith of writing anything inciteful or at the very least inciting anything but disdain for their lamentations of the "good ole days".

Tue, 08/05/2014 - 20:03 | 5051722 HardAssets
HardAssets's picture

At first I liked the article, but that declined as I got further into it.
But then he mentioned animal spirited connection with public investors to generate faith. Groan.
What he writes about gold and central banks in the link found in this article is even worse.

Of course no real addressing the Ponzi money/banking system which ultimately makes thes markets a fraud. But you wouldn't really expect a stock salesman (no matter his title) to do that.

Tue, 08/05/2014 - 20:16 | 5051771 Escrava Isaura
Escrava Isaura's picture


Wed, 08/06/2014 - 01:48 | 5052838 Seer
Seer's picture

"Of course no real addressing the Ponzi money/banking system which ultimately makes thes markets a fraud. But you wouldn't really expect a stock salesman (no matter his title) to do that."


Hence my squeezing in my note on this all being part of the workings of an empire, and, of course, that ALL empires collapse.  Picking at lint from a sheep on the tracks with the train appoaching... or, in this case, trying to get us to do that.

Tue, 08/05/2014 - 19:06 | 5051488 kill switch
kill switch's picture
'I hate to advocate drugs, alcohol, violence, or insanity to anyone, but they've always worked for me.” HT


Tue, 08/05/2014 - 19:09 | 5051518 Seer
Seer's picture

ALL empires go through pretty predictable phases and ALWAYS terminate in collapse (roughly 250 years total timeframe).  Sir John Glubb suggests (against my better emotional judgment) that govts actually stabilize trade.  Regardless, this is only a very small comment on his part in what otherwise is quite a telling picture of the absolute certainty of empire collapses:

Glubb failed to map the problem to that of growth and the inevitable inability to acquire more and more resources. 

Tue, 08/05/2014 - 19:22 | 5051559 Escrava Isaura
Escrava Isaura's picture


Some people here are in a hurry. Let's collapse tomorrow.

Tue, 08/05/2014 - 19:17 | 5051534 dobermangang
dobermangang's picture

"The secret of success is sincerity. Once you can fake that you've got it made."  - Jean Giraudoux

Tue, 08/05/2014 - 19:27 | 5051577 Escrava Isaura
Escrava Isaura's picture

“It’s all fake” When Harry met Sally -- (1989)

Tue, 08/05/2014 - 21:20 | 5052029 Kirk2NCC1701
Kirk2NCC1701's picture

Elaine:  Fake! Fake, fake, fake, fake, fake, fake, fake!

Jerry:  What about...?

Elaine:  Fake!

Tue, 08/05/2014 - 19:22 | 5051536 vulcanraven
vulcanraven's picture

I would love to have heard HST's commentary on social media and the influence it is having on our society.

Tue, 08/05/2014 - 19:23 | 5051566 NOTaREALmerican
NOTaREALmerican's picture

He was viewed as just another un-Merican immoral malcontent by a majority of REAL Mericans!

Country first, hippy.  Love it or leave it!   

Tue, 08/05/2014 - 19:34 | 5051619 Mercury
Mercury's picture

HST would have loved ZH.

Tue, 08/05/2014 - 19:18 | 5051540 saycheeeese
saycheeeese's picture

The central planners have not lost faith (due to their banksters`friend on the hook...) in  the asset inflation price model  so.... their model shall prevail even if the investors`animal spirit  has lost faith in it.  Maybe the animal spirit will awaken without warning,  maybe the currency market could be a good starting point or maybe the simple quest of "how to preserve wealth" could be the viceral trigger of this asymetrical situation.

Tue, 08/05/2014 - 19:20 | 5051547 1stepcloser
1stepcloser's picture

Picked the wrong day to quit Mescaline

Wed, 08/06/2014 - 00:34 | 5052730 Implied Violins
Implied Violins's picture

There's always ayahuasca...GOD I would have paid to see HST write while under the influence

Tue, 08/05/2014 - 19:29 | 5051586 hobopants
hobopants's picture

Well that was a waste of time. Yes the markets are all theater and nobody likes the story much but they all play along anyway, welcome to the last six years.

Tue, 08/05/2014 - 19:30 | 5051600 NOTaREALmerican
NOTaREALmerican's picture

An "investors" gotta do what an "investors" gotta do...

Tue, 08/05/2014 - 19:32 | 5051605 kill switch
kill switch's picture


His ashes were blown out of a cannon into the rocky mountains...With all his friends in attendance...


God I love him...He was we....

Tue, 08/05/2014 - 19:42 | 5051647 buzzsaw99
buzzsaw99's picture

that was a lot of words

Tue, 08/05/2014 - 19:46 | 5051657 stevefromthenet
stevefromthenet's picture

from the master himself HST on 9/12 from

It was just after dawn in Woody Creek, Colo., when the first plane hit the World Trade Center in New York City on Tuesday morning, and as usual I was writing about sports. But not for long. Football suddenly seemed irrelevant, compared to the scenes of destruction and utter devastation coming out of New York on TV.

Even ESPN was broadcasting war news. It was the worst disaster in the history of the United States, including Pearl Harbor, the San Francisco earthquake and probably the Battle of Antietam in 1862, when 23,000 were slaughtered in one day. The Battle of the World Trade Center lasted about 99 minutes and cost 20,000 lives in two hours (according to unofficial estimates as of midnight Tuesday). The final numbers, including those from the supposedly impregnable Pentagon, across the Potomac River from Washington, likely will be higher. Anything that kills 300 trained firefighters in two hours is a world-class disaster. And it was not even Bombs that caused this massive damage. No nuclear missiles were launched from any foreign soil, no enemy bombers flew over New York and Washington to rain death on innocent Americans. No. It was four commercial jetliners. They were the first flights of the day from American and United Airlines, piloted by skilled and loyal U.S. citizens, and there was nothing suspicious about them when they took off from Newark, N.J., and Dulles in D.C. and Logan in Boston on routine cross-country flights to the West Coast with fully-loaded fuel tanks -- which would soon explode on impact and utterly destroy the world-famous Twin Towers of downtown Manhattan's World Trade Center. Boom! Boom! Just like that. The towers are gone now, reduced to bloody rubble, along with all hopes for Peace in Our Time, in the United States or any other country. Make no mistake about it: We are At War now -- with somebody -- and we will stay At War with that mysterious Enemy for the rest of our lives. It will be a Religious War, a sort of Christian Jihad, fueled by religious hatred and led by merciless fanatics on both sides. It will be guerilla warfare on a global scale, with no front lines and no identifiable enemy. Osama bin Laden may be a primitive "figurehead" -- or even dead, for all we know -- but whoever put those All-American jet planes loaded with All-American fuel into the Twin Towers and the Pentagon did it with chilling precision and accuracy. The second one was a dead-on bullseye. Straight into the middle of the skyscraper. Nothing -- even George Bush's $350 billion "Star Wars" missile defense system -- could have prevented Tuesday's attack, and it cost next to nothing to pull off. Fewer than 20 unarmed Suicide soldiers from some apparently primitive country somewhere on the other side of the world took out the World Trade Center and half the Pentagon with three quick and costless strikes on one day. The efficiency of it was terrifying. We are going to punish somebody for this attack, but just who or what will be blown to smithereens for it is hard to say. Maybe Afghanistan, maybe Pakistan or Iraq, or possibly all three at once. Who knows? Not even the Generals in what remains of the Pentagon or the New York papers calling for WAR seem to know who did it or where to look for them. This is going to be a very expensive war, and Victory is not guaranteed -- for anyone, and certainly not for anyone as baffled as George W. Bush. All he knows is that his father started the war a long time ago, and that he, the goofy child-President, has been chosen by Fate and the global Oil industry to finish it Now. He will declare a National Security Emergency and clamp down Hard on Everybody, no matter where they live or why. If the guilty won't hold up their hands and confess, he and the Generals will ferret them out by force. Good luck. He is in for a profoundly difficult job -- armed as he is with no credible Military Intelligence, no witnesses and only the ghost of Bin Laden to blame for the tragedy. OK. It is 24 hours later now, and we are not getting much information about the Five Ws of this thing. The numbers out of the Pentagon are baffling, as if Military Censorship has already been imposed on the media. It is ominous. The only news on TV comes from weeping victims and ignorant speculators. The lid is on. Loose Lips Sink Ships. Don't say anything that might give aid to The Enemy.

Dr. Hunter S. Thompson's books include Hell's Angels, Fear and Loathing in Las Vegas, Fear and Loathing on the Campaign Trail '72, The Proud Highway, Better Than Sex and The Rum Diary. His new book, Fear and Loathing in America, has just been released. A regular contributor to various national and international publications, Thompson now lives in a fortified compound near Aspen, Colo. His column, "Hey, Rube," appears each Monday on Page 2.

Tue, 08/05/2014 - 19:46 | 5051661 Reaper
Reaper's picture

Faith and trust are vices that provide a temporary respite from the pains of thinking and taking responsibility.

Tue, 08/05/2014 - 19:48 | 5051666 Professorlocknload
Professorlocknload's picture



"Meeting groups of Investment Professionals" eh?

"No group of professionals meets, except to conspire against the public at large." Mark Twain

Tue, 08/05/2014 - 20:05 | 5051735 explodinghead
explodinghead's picture


And the one thing he is excited about is this 'real' American Energy independence play?

Tue, 08/05/2014 - 21:24 | 5052036 Kirk2NCC1701
Kirk2NCC1701's picture

It is better to be feared, trusted and respected, than loved. 

For if they can’t trust or respect you, they can’t love you either. And whatever love they had, will disappear.

-Kirk's father

Tue, 08/05/2014 - 22:02 | 5052213 eddiebe
eddiebe's picture

It sure took a lot of words to state the obvious.

Tue, 08/05/2014 - 22:26 | 5052336 Milton Waddams
Milton Waddams's picture

Stock market as a policy tool; it happened arounf 2009 when every big bank economist began parroting the "recovery" and "green shoots." It was clearly a MOCKINGBIRD-like infiltration of the economist-class because these clowns were lock-step in their "predictions." At the same time electronic federal reserve notes were being doled out to typical war time industries. And the rest, as they say, is history...

Wed, 08/06/2014 - 07:22 | 5053094 Raoul_Luke
Raoul_Luke's picture

Or could it merely be an artifact of the massive stock buybacks large corporations have used to artificially produce enhanced "earnings?"  Less stock outstanding means less stock

Wed, 08/06/2014 - 08:52 | 5053266 Pee Wee
Pee Wee's picture

"...friends at Barclays."  Threw up here -- readers should have too.

Facts are facts, smart money has been out of the *cough* mar-ket for years. The mar-ket died with TARP, circumventing creative destruction the world over, and the poor man's chance to adapt and remedy what the big boys lost.  Nope - Fascism instead of opportunity. Larry Summers instead of Joe the Plumber.

If you are exposed in any way to paper assets (lol!) you will lose all or most of those assets.  The biggest losers are those that contribute blindly through payroll deduction to IRA's.  It is this outta sight outta mind investor that is already creamed.

Fri, 08/08/2014 - 21:01 | 5068454 Mercantilist
Mercantilist's picture

Here is the point you are missing.  

Much of the cheap money being created issued is directly and indirectly is going back to corporations who have discovered the wonders of share buy backs or investors who are seeking yield – a vicious circle.  These share buy backs, pumping, decent but not super strong corporate profits, by juicing EPS.   So on an EPS basis, stocks are cheap...anyway, the result is a combination of excess demand for stocks (also created by cheap money) and declining share issuance; this will keep driving stock prices higher.  Not to mention margin debt, which is adding fire starter on the flames!  And according to Factset, we may not be at a record in 2014, but we are right near the higher end of share buybacks not too far from 2007 levels.   And we have the same situation with bonds; there you have the FED itself taking both MBS and TB/Bills off the market.  So yeah, volumes are dropping and there is not much chance of volumes rebounding.

And, what happens in the next crisis? First of all, to have a crisis you need prices to reach frantic levels and we are not close to those yet - in fact too many people are looking for the bear and every time the market bounces  - shouldn’t it?  Until liquidity dries up or corporate profits come under (so they cant buy back more shares), we will not see a meaningful correction and unless its driven by real fundamentals it should be bought into....yeah!  But know this – its speculation, not investing.   Keep that in mind.

So what brings it all down?  Either a geopolitical event that causing real demand to suddenly shrink (and don’t underestimate how quickly that can happen) or inflation.

Now we haven’t had a lot of that, but its coming and when it bite, and it will bite far sooner than people imagine, that could be the spark.   What is going to trigger it when it seems QE hasn’t?  My theory is the de dollarization will be the spark.  Look at the BIS – it uses SDRs for its accounts – not dollars.   If we want to see all central banks just match the current SDR regime, we would need to see a 20-30% drop in USD reserves – but that assumes the SDR isn’t rebalances and the RMB comes into play.  With China internationalizing its currency an being the second largest economy cant we see it taking a role in the SDR trade.  And why has China been happy to create RMB?  So it can let them loose as international reserves.   If the RMB continues to increase as a reserve currency, then dollars will be sold and one way or another USD prices of everything will continue to rise and probably a lot faster then anyone anticipates now.

When that happens corporate profits will get squeezed….and humpty dumpty will come tumbling down.

Do NOT follow this link or you will be banned from the site!