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Hopium: How Far Can Irrational Optimism Take The U.S. Economy?
Submitted by Michael Snyder via The Economic Collapse blog,
If enough people truly believe that things will get better, will that actually cause them to get better? There is certainly something to be said for being positive and thinking that anything is possible. And as Americans, optimism seems to come naturally for us.
However, no amount of positive thinking is ever going to turn the sun into a block of wood or turn the moon into a block of cheese. Any good counselor will tell you that one of the first steps toward recovery is to stop being delusional and to come to grips with how bad things really are.
When we deny reality and engage in irrational wishful thinking, we are engaging in something called “hopium”. This is a difficult term to define, but the favorite definition of hopium that I have come across so far goes like this: “The irrational belief that, despite all evidence to the contrary, things will turn out for the best.”
In hundreds of articles, I have documented how the U.S. economy is mired in a long-term decline which is about to get a lot worse. But most Americans see things very differently. In fact, according to a brand new CNN/ORC poll, 52 percent of Americans describe the U.S. economy as “very” or “somewhat good”, and more than two-thirds of all Americans believe that the U.S. economy will be in “good shape” a year from right now. But if you asked most of those people why they are so optimistic, they would probably mumble something about “Obama” or about how “we’re Americans and we always bounce back” or some other such gibberish. Well, it’s wonderful that so many people are feeling good and looking forward to the future, but are those beliefs rational?
We witnessed a perfect example of this “hopium” on Wednesday. Sales at McDonald’s restaurants have been in decline for quite a while, and the numbers for the first quarter of 2015 were just abysmal…
The ubiquitous burger-and-fries chain said US sales, the largest share of global income, fell 2.6 percent from a year ago for comparable outlets.
Sales in the Asia-Pacific and Middle East region dropped 8.3 percent, helping bring overall global sales down 2.3 percent, “reflecting negative guest traffic in all segments,” the company said.
Total revenue sank 11 percent to $5.96 billion in the quarter to March 31, and net income plunged 32.6 percent to $812 million, or 84 cents a share (-31 percent).
So you would think that the stock price would have tanked on Wednesday, right?
Wrong.
Thanks to news that a “turnaround plan” would be announced on May 4th, McDonald’s stock actually skyrocketed…
McDonald’s closed up 3.13 percent after spiking more than 4.5 percent in early trade as investors cheered a turnaround plan expected on May 4. However, the fast food chain’s earnings missed on both the top and bottom lines.
This is pure hopium. Why don’t McDonald’s executives just tell us what the plan is now? But instead, the mystery of a “secret turnaround plan” gives people just enough hope to keep the stock from tumbling – at least for the moment.
And of course there are all sorts of other stocks that are being massively inflated by hopium right now.
Many years ago, when I was an undergraduate, I was taught that a price to earnings ratio of more than 20 was really, really high.
But these days that is the norm on Wall Street, and at the moment there are quite a few stocks that actually have price to earnings ratios that are greater than 100…
There are 10 stocks in the Standard & Poor’s 500, including industrial giant General Electric, video-streamer Netflix and oil and gas explorer Cabot Oil & Gas that are trading for 100 times their diluted earnings the past 12 months excluding extraordinary items, according to a USA TODAY analysis of data from S&P Capital IQ.
And if you can believe it, General Electric has a PE on its training earnings of more than 200…
Take General Electric, the industrial giant that’s swiftly selling off banking assets so it can return to its manufacturing roots. GE sports a PE on its trailing earnings of 227, says S&P Capital IQ.
This is completely and totally irrational. General Electric is a giant mess and is being very badly mismanaged. But investors continue to pay a massive premium for GE stock because they hope that things will turn around eventually.
Look, hope will get you a lot of things in life, but it won’t put money in your pockets or dinner on the table.
Our politicians and the mainstream media continue to sell us hard on the idea that things are getting better in America, but meanwhile our economic infrastructure continues to decay. Just check out what is happening in the steel industry…
United States Steel Corporation issued layoff notices to 1,404 workers in the latest sign of struggle for the American steel industry. The missives went out in recent days to workers producing pipe and tube products that are used in the oil and gas sector. Job cuts could come as early as June for 17 to 579 employees at a plant in Lone Star, Texas, 166 at a factory in Houston, 255 at a mill in Pine Bluff, Arkansas, and 404 managers across the company’s tubular operations nationwide.
Since last June, the company has informed 7,800 employees of potential job cuts, a tally from Pittsburgh Business Times indicated. U.S. Steel spokeswoman Sarah Cassella said the ongoing layoffs are the result of “challenging market conditions and global influences in the market including a high level of imports, reduced prices for oil and natural gas and reduced steel prices.”
A little over a month ago, I published an article entitled “10 Charts Which Show We Are Much Worse Off Than Just Before The Last Economic Crisis” in which I demonstrated that we are in far worse economic shape than we were just prior to the last recession, and now another great economic crisis is at our door.
Unfortunately, most Americans have no idea what is going on out there. Most of them get their news from the giant propaganda matrix that very tightly controls the flow of ideas and information in this country. This is something that I explain on my new DVD. Six colossal corporations control over 90 percent of the news, information and entertainment that Americans consume, and that gives them an awesome amount of power.
And right now that propaganda matrix is assuring the American people that everything is going to be just fine.
Well, they better be right. Because if not, they are going to have millions of people extremely angry with them when things really start falling to pieces.
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Immigrants
Fucking Morons "Hoping" that the stock market will translate into a REAL GOOD Economy somehow someway... omg!
A: To infinity... and beyond! - Buzz
Hopium?
None here.
(unless it's 6pc McNutt for a buck)
The new normal.
It is not irrational if it is a Bubble...
We best get a hold of things folks. - Scrap
History of Central Banks and why we must End the Federal Reserve
Part 1 (48 B.C. - 1791)
Part 2 (1791- 1865)
Part 3 (1865- 1913)
“The Federal Reserve is now a government within a government. It is totally out of control. Congress doesn't control it. It's funded by the banks and we either have constitutional government or we don't."
- Ralph Nader on CNN
"The Future Monetary System -- No More National Debt".
According to Bill Still, the global monetary system has been revised every 30 - 40 years through history.
He predicts that our current monetary system will collapse within a few years.
Also included in Bill's lecture is a potential model for the monetary system of the future.
Bill Still at the Open Mind Conference 2012. Skanderborg, Denmark
https://www.youtube.com/watch?v=BXEioXVdB24&feature=youtu.be
The Secret of Oz
https://www.youtube.com/watch?v=jjUtBGqLAxY
The Money Masters
https://www.youtube.com/watch?v=iDtBSiI13fE
Thanks for that link to Bill Still's The Money Masters. I substituted that link into my collection of Excellent Videos on Money Systems.
Big Fail trying to teach Mrs. Rainman how to wash clothes in the river.
She just doesn't listen.
Try it on a regular basis, it sux.
Does not the proverb say that I felt sorry for myself because I had no shoes, until I met a man who had no feet.
So I said "Hey buddy can I have your shoes?"
It's called propaganda not optimism
Read all about it from Mr. Bernays himself...!
http://www.historyisaweapon.com/defcon1/bernprop.html
Thanks!
GE is a $3 stock masquerading as a $29 stock. GE masqueraded some folks.
The folks whom read this site and maybe Stockman's and such are the smallest percentage of people in this country.
Given my observations I would say 99.5% of the population is utterly clueless or - more interestingly simply refuses to acknowledge how bad it is.
Your average to above average prol is propagated from the time their little eyelids flutter open in the morning until their empty head hits the pillow at night. Orwell wrote about the omnipresent machine and state. Even he had no idea that a so called 'free people' would voluntarily drink the Cool Aid day in and day out. The 'press' in this country is a fucking joke.
I find the whole thing a fascinating exercise in mass brainwashing. Certainly never been done on this scale before and this pervausively.
MMAD, I think the 99.5% may be a little on the low side. Even my friends that I consider half way intelligent are clueless to how things really work. The only thing that will wake the sheeple up is a collapse of the system and even the MSM can't hide the truth. I live near a casino in NY and yesterday they had a job fair for valet Parker's, room cleaners and security guards and the line was a mile long. Can't last much longer but this sickness needs an amputation.
He forgot to mention that there is no escape.
Forgot to mention that around the world there are many people with insane rage US citizens.
People that was bombed, suffered instigated revolutions, tortured people etc. .
Aversion gone beyond "the US government" and is now on tourist "made in USA".
I see it in Brazil, nowadays you do not see two guys tops, blond Mormom church or black-haired English speaking walking the streets, today there is always an American and a Brazilian but ....
The guys were with CIA agents stigma during the military dictatorship in Brazil.
Today feels like restaurants to some discomfort at the tables when there is "gringos" British or US citizens.
Approval may be warm but apparently, is to know where the guy is, after that there is an aggregate negative rancid. It is the memory of what we had to go through the greed of you and your government "exceptional".
Sorry sincerity.
: - /
Who punches, forget it.
Who takes a punch in the face NEVER forget.
That's it.
: - /
Extremely upset and extremely armed
And when the financial system finally implodes and ATM's don't work because the banks are vaporized it will get extremely ugly extremely quickly.
Sandy Hook and Boston marathon were merely conditioning for that soon-to-arrive day.
Think of the opportunities, we can franchise loan shark errr, money laundering, umm. I mean we can open a S&L to bailout Mr. Potter.
It's a wonderful life ahead of us.
/sarc
I always wondered what that will look like. Imagine a whole bunch of people waking up to a Greece or Cyprus type situation, lining up outside the bank demanding their money back. As broke and indebted as most Americans are, there are still many millions that at lest have a few thousand dollars in a checking or savings account they will want back. And many of them are armed. Pictures those same angry mob but armed to the teeth. Won't be a pretty picture.
Perhaps that's another reason the banksters want to do away with cash.
Heck... with on-line banking there are no buildings to do drive-bys or fire bombings on. Perhaps that's something Greece should look into...
How far? All the way, baby -- right off the cliff.
Actually nothing surprising about McDogshit stock going up when you think about it.
Wall Streets' gottem right where they want them. Basically forced to liquidate themselves and the future (and the cash and the company) on stock buybacks.
Don't even want to think about where 'corporate AmeriKa' is going to be about 10 years from now.
I agree, not surprising at all. They could very well just start issues a lot of cheap debt to buy back more stock. An announcement that they were closing a few stores here and there, along with laying off a few thousand mid management types across the country will probably see it sky rocket.
I remember many years ago stocks were rising on shitty earnings. Someone (wish I could remember who) explained that it was a "kitchen sink" quarter. He went on to explain what was happening was that the company was throwing all of the bad results into this report. Thus next quarters report would be much better.
Not saying that is what is happening here, but it is possible.
p/e > 100X isn't as bad as the negative infinities
About twice the speed of sound into the solid rock mountain wall.
Woo, hoo!!! Splat.
.338 Lapua?
The "ride" will go no further than the masters intend for it to travel - not before and not after the appointed time... the game, I fear will continue until it is unable to do so, until then, play the game and play it well.... Wallstreet will always be a scenario of "flys around shit, bee's around honey"
Come join us for free at www.gunsgrubandgold.com
Survival links, blog, post, create a community!
No censorship, everyone welcome!!
unsterilized bond monetization took stocks up 250% while PMs get hammered
Here are some more signs of a coming recession.
http://michaelekelley.com/2014/12/20/leveraged-loans-predict-crash/
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
Here is how to prepare yourself.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Good luck!
We keep getting this scare mongering about how we are all doomed if the masters lose their license to keep slaves. But all we have to lose are these chains.
McDonalds is teaming up with Pfizer to create synthetic burgers laced with anti depressants and nicotine in order to create a captive consumer base. Happy Meals, Bitchez........
"And as Americans, optimism seems to come naturally for us."
Optimism comes naturally to everyone, otherwise, what's the point?
Optimism in america is imparted, and it's not optimism it's delusion. And it's part of the game of confidence and consumerism.
HOPIUM = the new OPIUM
It will NOT happen. The Nuke launches are set for Sept. - Oct. timeframe is the even money bet.
The stoopid it burns....
What exactly do you base that on?
If it's good enough for NASA, it must be better of us peons. :p
Astronaut Breakfast with Tang TV commercialhttp://m.youtube.com/watch?v=A-gML3S0WK8
When this shit falls apart the finger pointing will be interesting.
Lot's of smashed mirrors in the future........
Driving through life using the rear view mirror.
as far as the puppet masters like.
Please do not mistake central bank open market operations for irrational optimism.
The only people who believe the matrix narrative are the CNBCtards.
Brokeback Barry and his unicorn will save you.
https://youtu.be/67xtC_6xPhU
Just one more
7/2/2007- Peter Schiff On Kudlow & Companyhttps://youtu.be/wB0eFrmUOhw
https://www.youtube.com/watch?v=67xtC_6xPhU&feature=youtu.be
7/2/2007- Peter Schiff On Kudlow & Companyhttps://www.youtube.com/watch?v=wB0eFrmUOhw&feature=youtu.be
Gold will hit $5000 any day now.....
sarc/off
Most people I meet know what is going on and don't listen to the mainstream news. Or, if they do listen to it they believe it or not and they believe all the other news also. They are nervous. I'm in college and so it is a younger crowd. The older people of all generations that have lived believe the world is going to hell in a handbasket because they are getting closer to death. The atmosphere is that we are doomed but I have hope that the singularity will arrive and stop the NWO.
The older people of all generations that have lived believe the world is going to hell in a handbasket because they are getting closer to death.
Experience is what makes the older generation nervous. Something you obliviously lack, but it's not you fault you are just young. Here is a little clip from Aug 2008 from FOX Bulls an Bears. Here is one quote I love from one of the talking heads. Buy Lehman. 50 seconds in.
https://www.youtube.com/watch?v=q8_y_XYO_DY&feature=youtu.be
The singularity manifested March 10th 2008 @ 11:00am Bear Stearns New York City time. Within the first hour of trading a Mandelbrot Set was triggered and the global economic Ponzi imploded. Seven years later the so-called 'experts' are waking up to the fact that the entire World is imploding economically all around us here in the West. Election polemics are already focused on appropriating the wealth transfer that was appropriated from the 99% over the last 40 years. Hill n Bill want to take the wealth of the top 1% as an election platform plank so that Hill n' Bill make it to the White House. Frankly, Hill n' Bill would say anything on the electoral circuit in order to gain the seat of President. What is obvious in today's milieu is that basic economics is front and center this electoral round because the entirety of the USA is flat busted broke, and all of the politicians know it now. Moreover, there is no more New World Order due to what manifested back in 2008. Suffice to say that the dollars needed to actually pull off the New World Order are no longer there. The United States of America is insolvent. In brief, the zeitgeist is to head directly to World War Three and do not pass go, and do not collect $200.00!!
Celente talks Obama and other important American news.
http://trendsresearch.com/stories/TheBestOfCelente-Volume27,2837?
And once they are extremely angry they use them as cannonfodder or treat them as - extremist!
Kiki would break anything real as to not interfere with her pretend world.
at least another 238,900 miles (distance from the earth to the moon)
Really? how far? When there is nothing else but never-ending CB intervention? This “New Normal” is now just normal. It can never stop or it all collapses. The Fed will keep their balance sheet around $5T or expand it further if they need to. They are ecstatic that their models were 100% right on and there has been no apparent downside. Fed jawboning is enough to reverse any weakness, and talk of more QE would add 1,000 points. Rate hikes? Right. The American “growth” story was over a while ago, but loose credit has kept millions of fools entertained using their I-Toys for FB and NFLX. “Earnings” have peaked but stock buybacks using cheap Fed $ keep the growth illusion going.
We outsourced way our futures. Productivity increases? Where? How? Millions have given up on working and are better off with handouts. Fast food workers complain about low wages and drive around in new BMWs and Escalades. Many supplement their income selling crack and do not even report it to the IRS as required (Form 1040, line 21). We all want cheap crap from China, but bitch about Wal-Mart paying workers nothing and squeezing their vendors to death. The country is bankrupt but constant money creation hides it…for now. Nine-year no-qual auto loans keeps GM alive.
Undoubtedly one day a black swan will arrive…and it doesn’t have to be just one big event. More like news ISIS has taken over Baghdad overnight in a surprise attack and surrounded the Green Zone. The Iraqi puppet regime will have fled on U.S. helicopters. ISIS will be lobbing in mortar rounds and Obama will have to make a tough choice. Go along with the generals and oligarchs and re-invade, or stay out and try to safely evacuate our forces. The whole region will descend further into chaos. Coincidentally, word will spread of Silicon Valley beginning large layoffs as sales plunge. There will be loud calls for more stimulus and more QE. Talk of the Fed buying the indexes and equities directly like the BOJ. This will ignite huge bear market rallies all the way down. The party will end…it always does.
otoh
Of course by then they'll have a lot of other things/people to be moar/extremely angry with.
Like the gang of thugs firing bullets through their living room windows.
Just kidding.
(but passes a bottle of 100 proof Hopium to the nervous nellies before Make_Mine_A_Double grabs it and drains the bottle in one gulp.)
I know many Americans were delusional, but " according to a brand new CNN/ORC poll, 52 percent of Americans describe the U.S. economy as “very” or “somewhat good”, and more than two-thirds of all Americans believe that the U.S. economy will be in “good shape” a year from right now." Damn!
Hem I don't think investors that are pariticipating in this stock market believe the economy is doing better. They are simply making any excuse to pretend the economy is getting better, or will get better. What their really motivated by is cheap money and able to make a profit simply by asset appreciation. Another words they're biased and really won't admit the real reason why they are bullish and the real reason for the bullishness is the Federal Reserve. Very few will admit that. Of course they won't admit that, to make light the system that is enabling this obsessive gambling. It's all a charade and the financial media seem to prove themselves to be lap dogs of the Federal Reserve. Politicians are no where near making light of the dysfunctional stock market, other than "crazy Ron Paul" maybe. Reality will come down on them...someday. Seems like a collusion to keep up the charade of false profits, which is just really inflation from the central bank. I mean really ain't it obvious? Should be by now.
"Hopium: How Far Can Irrational Optimism Take The U.S. Economy? "
I'd say a good thousand feet past the edge of the cliff..
We're back to the same old thing again with people who confuse virtual values with the real world and it's getting bigger all the time. I believe in real optimism myself, but darn you can't take it into a fantasy algo land for very long as the arrays of data will eventually not be able to suffice what the queries demand:)
http://ducknetweb.blogspot.fr/2014/03/virtual-worlds-real-world-we-have....
Well, they better be right. Because if not, they are going to have millions of people extremely angry with them when things really start falling to pieces.
Man, I wish I could believe that.... Unfortunately, MOST people will be utterly clueless as to who to blame and will look to the same slimy fucking propaganda whores to TELL them who to blame. I can't count the number of times I've heard shit like "Well, if that were true, it'd be reported on the news" - and I look at that person and ask them, "When was the last time the "news" warned you about anything truly important - like a market collapse? 2000? 2007? Oh - wait - now I remember ...yeah ... in 2007 when they said, Holy crap, the wheels are about to come off - get your money out of the market NOW! .... oh, hmmm, right.... I don't remember that either....
Many Americans are hopelessly brainwashed at an early age in the monopoly education system under the Department of Education. As they come of age, their brainwashing is reinforced by the monopolistic media and maintained by peer pressure (others who have been brainwashed too). Of course they are optimistic that things are in good hands and will end well - that is what they have been trained to believe.