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Guest Post: The Fed Cannot Stave Off The Inevitable Market Revaluation

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

The Fed Cannot Stave Off the Inevitable Market Revaluation 

The Fed has yet to learn that you can't fool Mother Nature for very long, but it's about to get a punishing lesson.

Did the Federal Reserve's QE2 program last year simply push the inevitable stock market decline forward a few months? It would seem so. In Remind Us Again Why Anyone Should Own Stocks For the Next Two Years (August 3, 2011) and The Junkie in the Pool and False Idols: Faith in Wall Street and The Fed Has Has Eroded (August 10, 2011) I included a chart of the current S&P 500 plotted against the two Great Bear Markets of last century, the Great Depression-era Dow Jones Industrial Average (1929 crash) and the Nikkei stock market from 1989.

It certainly looked like all the Fed accomplished with its $600 billion QE2 was stave off the inevitable by a few months:

Courtesy of The Chart Store, here is more evidence that the Fed just pushed the day of reckoning forward a few months: the first charts the current NASDAQ market plotted over the Great Depression Dow, and the second plots the current NASDAQ over the post-1989 Nikkei market.

The similarity of the two Bear market progressions is uncanny. As Ron Greiss of the Chart Store notes on the chart, "Did QE2 prevent nature from pursuing its intended course?" Judging by the recent "unexpected" cascade in stock valuations, it seems the Fed has yet to learn that you can't fool Mother Nature for very long:

Once again it looks like the Fed's attempt to stave off the inevitable crash in stock market valuations was temporary rather than permanent:

This week we see the same game plan being worked once again: smash the U.S. dollar and juice the risk trade, as if the inevitable recalibration with reality can be staved off forever. Judging by these three charts, that recalibration will take about another two years.

Perhaps when the stock market reaches its inevitable (i.e. unmanipulated) true value some time in 2013, then the Fed's attempts to fool Mother Nature will be seen for what they are: catastrophic failures.


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Wed, 08/17/2011 - 11:17 | 1568882 the not so migh...
the not so mighty maximiza's picture

dynamite stuff

Wed, 08/17/2011 - 11:18 | 1568888 Sow-puncher
Sow-puncher's picture

Market collapse, Bitchez!

Wed, 08/17/2011 - 11:18 | 1568889 Ancona
Ancona's picture

Doom on!

Wed, 08/17/2011 - 11:19 | 1568891 Waffen
Waffen's picture

~sigh~ 2013.. tell me that means Dec. 2011, cause I am sick of waiting.

Wed, 08/17/2011 - 11:36 | 1568965 SheepDog-One
SheepDog-One's picture

Dont worry, it wont be nearly that long, not with Obama warning of impending large scale terrorist attacks, and Obamas lead economist Krugman pining for an 'alien invasion world war.

These things arent offhanded remarks, theyre code warnings to people who have ears to hear.

Remember, remember, the 11th of September....

Wed, 08/17/2011 - 11:44 | 1569003 Syrin
Syrin's picture

Funny you should say that.   I try not to be a conspiracy theorist, but Obamugabe's statement got my attention because it is SO out of character to what he usually says.   It's almost as if it's the validation code signalling a sleeper cell to become active.

Wed, 08/17/2011 - 11:46 | 1569010 Snidley Whipsnae
Snidley Whipsnae's picture

The azz hats have one lever that is partially broken: Interest rate lever only works in 'down' position...

...and one lever that still works in both modes; money printing lever works in 'stop' and 'go'...Unfortunately, they have jammed the money printing lever to 'ludicrous Speed' and are leaving it there... regardless of what they say...

After all, they are now at the point of playing for one more day at a time... Their long term, medium term and short term plans all focus on Tomorrow...

IOWs... they are scared shitless...


Wed, 08/17/2011 - 12:05 | 1569109 SheepDog-One
SheepDog-One's picture

Yep theyre just going day to day now.

Wed, 08/17/2011 - 13:07 | 1569358 Smiddywesson
Smiddywesson's picture

Absolutely, everything they do is to just survive one more day, except of course, their purchases of gold.

The reason they don't attempt to fix the system is they know it is unfixable, so they are buying gold and delaying the inevitable.

Wed, 08/17/2011 - 13:22 | 1569428 Horatius Stormcrow
Horatius Stormcrow's picture

The printing presses can still be bumped up to "Plaid".  Hold on to your butts, folks!  Weee!!!!!

Wed, 08/17/2011 - 12:31 | 1569192 my puppy for prez
my puppy for prez's picture

Yes....false flag imminent.  But it is a SMALL scale "lone wolf" that they (including Big Sis Jan and Barry) are "worried about"!  Hmmm....

It was super of that "nice young Norwegian man" to give a video tutorial to the US patsy who will do it here....of course, it WILL be a "right-wing, anti-gov, tea party christian who opposes illegal immigration, abortion, the FED, and gun control"...oh, and stocking up on emergency provisions is suspect, too!  They have already said those things in their public warning pamphlets to surplus stores, motels, farm supply, etc.

Look for something like this to happen on dates that have '11' or multiples is an important # to globalist control freak sickos! 

Wed, 08/17/2011 - 12:36 | 1569217 Waffen
Waffen's picture

Honestly I just dont know.  Love him or hate him, thanks to Alex Jones and ones like him, the False Flag meme is almost mainstream.  TPTB will have to be very careful how they do it, because the people will be watching and questioning like never before.


Of course a suitcase nuke is like an I WIN button for TPTB, the sheep simply wont fathom the depravity it would take a government to do that to its own people.

Wed, 08/17/2011 - 13:06 | 1569354 my puppy for prez
my puppy for prez's picture

Well, I wasn't going to mention InfoWars IS "out there" to many.  I go there daily, but I use my judgement and read many other sources, too.  The comments there are just hysterical, too....everything from "we are in for a Harmonic Convergence" to "I'm just gittin' my guns and ammo ready for those MF's".  Gotta love the variety!

Maybe a suitcase nuke...but I kind of think they will have to use what would be common for a "domestic terrorist" to use.....hence, a 'copycat' of Breivek.  That way, the feds could say, "See?  This is a copycat attack!  We must now rachet down a bit more 'to protect our citizens'..."  They have been conditioning through the media for a long time to expect a homegrown terrorist eventually.  So very Goebbels of them! 

Wed, 08/17/2011 - 13:35 | 1569474 Shirley Wilfahrt
Shirley Wilfahrt's picture

DUnno.....but seems like that is way overkill....all that clean up....unless were talking Newark...then nobody would notice.

I think nothing on that scale is small low tech "dirty" bomb in the right place would bring the markets to their knees....smoke detectors and black powder....that way all those damn ammo reloaders could be shut down afterwards...

If they are real smart it will happen in DC...upwind of capitol bldgs of course....the terrorist was on his way when it went off....silly terrorists....good thing nobody was seriously hurt....



Wed, 08/17/2011 - 12:38 | 1569226 Barry Mcokiner
Barry Mcokiner's picture

Monday the 22nd.

Wed, 08/17/2011 - 13:09 | 1569369 my puppy for prez
my puppy for prez's picture

Or 11-11-11.  Wouldn't THAT be cute?  They think the repetition of numbers exponentiates their power.  Not that I believe that.....but THEY do.

Wed, 08/17/2011 - 11:19 | 1568892 LawsofPhysics
LawsofPhysics's picture

But, but, the VIX is down?  Please give me something to trade here.  What is the options trade on this?

Wed, 08/17/2011 - 11:48 | 1569018 urbanelf
urbanelf's picture

Sell puts on KKD.

Wed, 08/17/2011 - 11:20 | 1568895 BeerGoggles
BeerGoggles's picture

QE3 is coming, just BTFD. You bears will never learn.

Wed, 08/17/2011 - 11:21 | 1568907 snowball777
snowball777's picture

Finish the case of Schlitz before you're struck with a moment of clarity.

Wed, 08/17/2011 - 11:26 | 1568923 Cognitive Dissonance
Cognitive Dissonance's picture

I'm a Pabst Blue Ribbon man myself. Then again, there's no accounting for (the lack of) taste. :)

Wed, 08/17/2011 - 11:32 | 1568954 Dr. Richard Head
Dr. Richard Head's picture

PBR?  You would be better off drinking Coors and then pissing it into a PBR can.  : )

Wed, 08/17/2011 - 11:35 | 1568964 Cognitive Dissonance
Cognitive Dissonance's picture

Old habits die hard and I started real early.

CD working on an early drunk

CD working on his third of the morning. Thank God mom and dad stopped putting nipples on the can and just let me chug-a-lug.

Wed, 08/17/2011 - 11:48 | 1569019 Vic Vinegar
Vic Vinegar's picture

Holy cow man.  That was good.

When some of us spacemonkeys say it's still good to have you in the comments section we mean this.

Wed, 08/17/2011 - 12:10 | 1569127 Cognitive Dissonance
Cognitive Dissonance's picture

I am a deeply disturbed man. And I have my most fun in the general comment section where I can let me hair down a bit and just play around while trying to be somewhat topical.

So thank you. :)

Wed, 08/17/2011 - 21:12 | 1571082 StychoKiller
StychoKiller's picture

Colorado Koolaid (Coors) is all well and good, but I prefer Ales (Tooth Sheaf Stout FTW!)

Wed, 08/17/2011 - 11:34 | 1568959 anynonmous
anynonmous's picture

I was too but ever since the mouse in the can (dead) it's tap water for me

Wed, 08/17/2011 - 11:24 | 1568917 Yardstick of Ci...
Yardstick of Civilization's picture

We're not a sports team.

Wed, 08/17/2011 - 11:51 | 1569005 fuu
fuu's picture

Quit talking about my mother.


Side not, I love that dshort chart.

Wed, 08/17/2011 - 11:19 | 1568896 Cognitive Dissonance
Cognitive Dissonance's picture

The Fed has yet to learn that you can't fool Mother Nature for very long, but it's about to get a punishing lesson.

It is not about learning or not learning. It is about power and the exercise of that power. Consider the Fed to be a sovereign nation and the perspective becomes clearer.

Wed, 08/17/2011 - 11:34 | 1568960 Dr. Richard Head
Dr. Richard Head's picture

DAMN. The Vatican with an unlimited supply of toner.  That is heavy really.

Wed, 08/17/2011 - 11:54 | 1569057 Spastica Rex
Spastica Rex's picture

We live in a post-Enlightenment world. Meet your new priests, same as the old priests.

Wed, 08/17/2011 - 11:57 | 1569077 Dr. Richard Head
Dr. Richard Head's picture

In the name of the father, the son, and I'll fuck you in the ass - Lloyd Blankfien

Wed, 08/17/2011 - 13:19 | 1569412 Smiddywesson
Smiddywesson's picture

Exactly, the market isn't going to teach the Fed anything at all.  That should be apparent after last week.  Every 600 point loss will be met with more than enough money to erase those losses.  The Fed isn't going to run out of money because the money isn't real.  This market is going nowhere until the game of kicking the can and slowly acquiring gold comes to an end.  The things that could bring that about are:

  1. Uncontrolable rioting everywhere, especially in the US where the heart of the conspiracy exists.
  2. Gold or silver go vertical
  3. The COMEX blows up
  4. The central banks that matter agree that they all have enough gold to keep the banking system solvent.  Ditto for govenment coffers, but who really cares about the government?  They will do what they are told.
Wed, 08/17/2011 - 11:20 | 1568899 snowball777
snowball777's picture


Existing or lasting only a short time; short-lived or temporary: "the disorder of his life: the succession of cities, of transitory loves" (Carson McCullers). [Middle English transitorie, from Old French transitoire, from Late Latin trnsitrius, from Latin, having a passageway, from trnsitus, passage; see transit.]
Wed, 08/17/2011 - 12:34 | 1569212 my puppy for prez
my puppy for prez's picture

I REALLY prefer "tranitoire" makes the demise seem so CLASSY!

Wed, 08/17/2011 - 11:20 | 1568900 buzzsaw99
buzzsaw99's picture

stocks = short bus to school

Wed, 08/17/2011 - 11:22 | 1568911 entendance
entendance's picture

Fed's Plosser: Believe Fed To Raise Rates 'Well Before' 2013
-- FOMC Aug. 9 Decision Was 'Inappropriate Policy At Inappropriate Time'


Wed, 08/17/2011 - 11:53 | 1569050 Snidley Whipsnae
Snidley Whipsnae's picture

Plosser trying to appear a dissident again? If he bandies that fable around enough he might become an air casualty... Or, perhaps he is trying to avoid the 'war tribunals' that are in the last chapter of this book...

Wed, 08/17/2011 - 11:25 | 1568920 RunningMan
RunningMan's picture

I'm not smart enough to be able to trade this, so I've resigned myself to simply watching from the restaurant at the end of the universe.


"The major problem—one of the major problems, for there are several—one of the many major problems with governing people is that of whom you get to do it; or rather of who manages to get people to let them do it to them. 
To summarize: it is a well-known fact that those people who must want to rule people are, ipso facto, those least suited to do it. 
To summarize the summary: anyone who is capable of getting themselves made President should on no account be allowed to do the job." 

- Douglas Adams

Wed, 08/17/2011 - 21:16 | 1571088 StychoKiller
StychoKiller's picture

Sass that hoopy RunningMan, there's a frood that really knows where his towel is!  :>D

Wed, 08/17/2011 - 11:34 | 1568924 Monedas
Monedas's picture

Perfect the glans of a penis fits Barney Frank's thirsty rectum ! Monedas 2011 Comedy Jihad Overdrive

Wed, 08/17/2011 - 11:26 | 1568925 alagon
alagon's picture

If Crude oil fell to $60 per barrel(it won't ever happen), then we would see an economic boom.

Wed, 08/17/2011 - 11:40 | 1568981 HpDeskjet
HpDeskjet's picture

$60-oil can happen in 2 weeks as soon as enough people realize that both the FED AND the government are powerless in fighting the forces of nature. The only thing that prevents the total implosion of stocks/commodities/other "risk-on- trades", is the believe of people that sooner or later the FED will print until it runs out of trees.... QE3 is NOT going to happen => there is no need to finance additional stimulus. Any stimulus at this point will have to be financed by not spending money on something else.

Wed, 08/17/2011 - 11:57 | 1569075 OpenEyes
OpenEyes's picture

$60 oil won't happen.  If the price begins to drop to $80, supply will be sopped up by an oil-thirsty world outside of the US.  And, don't forget that OPEC will reduce supply to maintain $90+ brent.

Wed, 08/17/2011 - 12:08 | 1569121 WonderDawg
WonderDawg's picture

A couple of months ago there were multitudes of people saying we'd never see $80 again, but that didn't take long. When the SHTF, I believe oil will drop below $60, maybe even $40. I could be wrong, but I doubt it.

Wed, 08/17/2011 - 13:27 | 1569440 Smiddywesson
Smiddywesson's picture

Agreed, there is a virtually unlimited demand for oil and gold, so any significant drops in price will immediately lead to that supply being snapped up.  They can push it down, but they can't keep it down.

Wed, 08/17/2011 - 11:27 | 1568931 Downtoolong
Downtoolong's picture

I read a fascinating article yesterday which tried to summarize for mere mental mortals like me the state of the art science of black hole physics. I should point out that not all scientists believe in this stuff, or that even black holes exist. However, among those that do, the parallels between black hole behavior and our world financial system are too apparent to be ignored. For example: one basic concept that has been around for years is the idea of an event horizon. That’s the spatial sphere, around the center of the black hole from which nothing can ever escape once it  passes to the inside of the barrier. It’s the point of no return to the rest of the universe as we know it. The destiny of everything inside the event horizon is set regardless of anything that happens or someone does either inside or outside, and it ain’t pretty. Everything; mass, light, energy, even time itself essentially disintegrates and progresses through a fantastic cataclysmic process before ultimately compressing and converging in an infinitely small point of singularity (how does that sound for a retirement plan).  

I sense our world banking and financial system has crossed an event horizon. It’s convergence to a cataclysmic event may be sealed regardless of what anyone does. But, it’s not all bad news really. Some believe that black holes are portals, which after consuming a large part of one universe essentially spit out a whole new universe on the other side; another big bang type of event perhaps. That suggests we will eventually get another try at everything.

One thing to keep  in mind is that black hole physics is based mostly on equations and theory, whereas the management of our financial system is based on………….see,  there’s  another one of those parallels again.

Wed, 08/17/2011 - 11:58 | 1569081 WellingtonDowd
WellingtonDowd's picture

If you would be so kind, please post a link to said article.  You have piqued my curiousity.

Wed, 08/17/2011 - 12:02 | 1569100 rosiescenario
rosiescenario's picture

"That suggests we will eventually get another try at everything."


Ground Hog Day writ large.....thanks for the post.

Wed, 08/17/2011 - 13:38 | 1569463 Smiddywesson
Smiddywesson's picture

I heard that the inescapable nature off the event horizon was refuted, and that Stephen Hawking is working furiously to re-establish its credibility.  [I saw it on tv, so it must be true :-) ]

I won't spew out more about gold, but I think the "oh crap" moment came in late 2009 when stimulus didn't work and every central bank in the world started buying golden life jackets.  They noticed the system was within the gravity well of the black hole and gave up on fixing the system.

Wed, 08/17/2011 - 13:37 | 1569477 Smiddywesson
Smiddywesson's picture


Wed, 08/17/2011 - 11:27 | 1568933 tradewithdave
tradewithdave's picture


Consider this. If the Fed was a kamikazi pilot it just doubled its range. You are assuming they want to keep the Fed. I am assuming the decision to bury it has already been made. If the plan is nok rehab for the junkie but rather collecting his life insurance you can mainline a whole lot of heroin before he explodes.

Dave Harrison

Wed, 08/17/2011 - 11:37 | 1568970 DCFusor
DCFusor's picture

So, figure out what's meant by "collect his life insurance" and the mechanism for that, and you've got the best succint phrasing of the current situation there is.


So, how to collect that insurance?


Wed, 08/17/2011 - 11:48 | 1569016 fuu
fuu's picture

Gold bitches?

Wed, 08/17/2011 - 13:51 | 1569542 Smiddywesson
Smiddywesson's picture

Exactly.  The only way out of this is to change to a different measuring stick.  That will be related to gold.  And don't think for a second that the Fed has any intention of being removed from its seat of power.  If all goes according to plan, the Fed and the ECB will be sitting pretty, thumbing their noses at Russia and China and anyone unfortunate enough to have no gold, i.e., the American public.  The Chinese know this, so they protecting their citizens by pushing them hard to invest in gold and have gold denominated accounts. 

Central bankers are very ruthless people, and they don't care about us at all.

Wed, 08/17/2011 - 14:15 | 1569678 I Got Worms
I Got Worms's picture

George Carlin: "They don't give a fuck about you! They. Don't. Give. A. Fuck."

Wed, 08/17/2011 - 14:48 | 1569805 Raynja
Raynja's picture

as far as i can gather, the life insurance policy is going back to a gold standard.  first they will try to get everyone as far in debt as possible, this will be partly accomplished by creating inflationary conditions (the other part will be people/gov't irresponsibility).  creating inflationary expectations allows indiviuals to increase there debt burden with the idea that in the future when they pay back their debt it will be in dollars that are worth less.

if they then terminate the fed for its monetary irresponsibility, switch to a gold standard, and do not renegotiate bonds/debts.  this creates a massive deflationary event where the banks can demand payment of fiat loans in a gold backed currency.

Wed, 08/17/2011 - 11:56 | 1569066 MachoMan
MachoMan's picture

The entities are always diversions, scapegoats, and lines of defense.  The trick is to not watch the magician's assistant's tits, but to watch the magician's hands...  i.e. where the money eventually goes (private parties).  In this particular case, if one has a license to loot, pillage, and plunder and the only thing limiting this process is time, then why not try to prolong these abilities as long as possible?

Wed, 08/17/2011 - 12:40 | 1569237 my puppy for prez
my puppy for prez's picture

Instead of burying the FED, I hear rumors of folding it into the IMF.  Just rumors and whispers, now.  But it would be logical...continuation of centralization all the way up to the BIS!  And Putin is now talking about forming a Eurasian economic union, like the UN.  That is already underway!  Creepy times, to say the least!

Wed, 08/17/2011 - 11:28 | 1568936 saifstolemythesis
saifstolemythesis's picture

Why would anyone own stocks? I would own a stock of a company that makes a lot of money from operations all over the world, has a growing business, and can fight off all rivals.  25% US unemployment and 50% World unemployment don't really matter as long as Rome doesn't burn.

Wed, 08/17/2011 - 11:28 | 1568938 dbach
dbach's picture

Thank you Tyler, you read my mind. I was just thinking how nice it would be to see this market is mimicking other bear cycles. Perfect!

Wed, 08/17/2011 - 11:28 | 1568939 digalert
digalert's picture

Bob Pissonme of CNBS on why market is up:

"it's seller exhaustion"

Yep, that's right, the market makers are just too tuckered out, they've thrown in the towel...

Wed, 08/17/2011 - 11:38 | 1568972 SheepDog-One
SheepDog-One's picture

Yep, too tired to sell...may as well buy.

Wed, 08/17/2011 - 11:32 | 1568953 pan
pan's picture

PMs and farm land bitchez!

Wed, 08/17/2011 - 11:33 | 1568957 Archimedes
Archimedes's picture

Blah, Blah, one knows jack! Charles Hugh Smith is a clueless as everyone else. I have been hearing "wait until next year, that is when everything is going to collapse" for the past four years! I just predicted a crash will happen in late 2012-2013 too on Reggies post.

I am probably just as wrong as everybody else! Geez...this is getting old.

Wed, 08/17/2011 - 11:38 | 1568973 anynonmous
anynonmous's picture

but eventually someone will be right and get their 15 minutes or if they're good like Roubini turn the 15 minutes into 15 months and a $5mm penthouse and unlimited poontang


Wed, 08/17/2011 - 11:52 | 1569037 topcallingtroll
topcallingtroll's picture

Unlimited poontang


Wed, 08/17/2011 - 12:35 | 1569213 slaughterer
slaughterer's picture

"unlimited poontang" = Ted Nugent alert

Wed, 08/17/2011 - 14:24 | 1569710 I Got Worms
I Got Worms's picture

\m/ Wang Dang Sweet Poontang!  \m/

Wed, 08/17/2011 - 11:42 | 1568986 SheepDog-One
SheepDog-One's picture

The thing is, it will collapse because that was the plan from the start. Anyone who thinks the FED and DC are in there working to solve these problems with massive money printing which any FOOL knows is like putting out a forest fire by dropping gasoline on it. We just dont know the day theyve picked to pull the rug out, but I guarantee its far sooner than 2013.

Wed, 08/17/2011 - 11:53 | 1569047 sabra1
sabra1's picture

according to lindsey williams, the destruction of the dollar must be no later than the end of 2012. even globalist bastards have to keep a schedule! 

Wed, 08/17/2011 - 12:37 | 1569222 oddjob
oddjob's picture

..putting out a forest fire by dropping gasoline on it.

Back burning is a last resort.

Wed, 08/17/2011 - 13:23 | 1569429 The Man in Room Five
The Man in Room Five's picture

All we know is that the status quo is unsustainable. Unsustainable things fail eventually. We may keep making early guesses, but at some point they're going to be rigth.

Wed, 08/17/2011 - 11:38 | 1568958 SheepDog-One
SheepDog-One's picture

I dont agree, there wont be some long time playing out until we finally reach common sense and 'true market value' sometime off a few years in the future, theres a world war planned to kick off soon.

These markets are just a CROWD CONTROL device to keep people hynotized and calm! The sheeple have been trained to equate stocks with the general state of everything around them. Nothing could be further from the truth.

The rug will just be pulled out 1 day soon, (think 9-11) and people will scramble and beg and plead for the Gubment overlords to please do whatever it takes to save us!

Enter 1 world govt, 1 world currency.

Wed, 08/17/2011 - 11:42 | 1568988 topcallingtroll
topcallingtroll's picture


Didnt your doctor tell you not to stop your meds?



Wed, 08/17/2011 - 11:54 | 1569048 SheepDog-One
SheepDog-One's picture

Keep being a delusional idiot, believing all these PHD's are furiously printing trying to SAVE it all, when any idiot knows you cant print your way out of debt. 

Do you realize what a total idiot you are? Youre being SO gamed, and dont even know it, useful idiot.

Wed, 08/17/2011 - 12:00 | 1569087 Vic Vinegar
Vic Vinegar's picture

Here's a possibly unwelcomed, and possibly uninformed opinion re: TCT's comment for you Sheep - he's toying with you. 

You understand the game.  Have fun with it.

Wed, 08/17/2011 - 12:02 | 1569098 SheepDog-One
SheepDog-One's picture

If he's entertained at a 3rd grade level with being a troll, then he has far bigger issues.

Wed, 08/17/2011 - 12:03 | 1569102 Vic Vinegar
Vic Vinegar's picture

Possibly.  But then again we all have issues. :-)

Wed, 08/17/2011 - 11:39 | 1568979 topcallingtroll
topcallingtroll's picture

Ben and Paul would just point to the same data and say they just didnt create enough new money.

Enough new money can arrest that slope. Might be some unintended consequences though.

Wed, 08/17/2011 - 11:43 | 1568995 SheepDog-One
SheepDog-One's picture

They all know this is planned destruction. I refuse to fall under the spell that these people are in there trying their durndest to help to bail out the Titanic by adding more pumps to pump more water in. Bullshit.

Wed, 08/17/2011 - 11:43 | 1568994 gwar5
gwar5's picture


Market decline is already here.

QE2 and Fed intervention made the market go up in USD terms, but not in real terms. The USD lost about 10% over that time. The calculus for equity gains must take this into account for any artificial gains perceived in the markets.

Priced in gold, the markets are back to the March 2009 lows.



Wed, 08/17/2011 - 11:46 | 1569011 SheepDog-One
SheepDog-One's picture

Yep true, priced in dollars, which is what stocks and bonds obviously are backed with, stocks arent even treading water theyre losing. So we might have a DOW 15,000, and worth almost nothing priced in gold. The grand illusion on steroids.

Wed, 08/17/2011 - 11:44 | 1569004 Archimedes
Archimedes's picture

Whoa! I was just venting because I was in a crappy mood! You are talking apocalyptic Brazil type stuff. (The movie, not the country.)

Seriously though, there will never be a One World currency. Ever! Look how the Euro is working out. You think Americans or Russians and Chinese will agree to one World currency? Never gonna happen. That would mean one World government.

The sheeple have too much faith in the almighty dollar. Unfortunately that is not going to change anytime soon. Even when it is worthless (It probably already is!)

The only other catalyst for a World market demise is a European country blowing up that can't be saved because the ECB can't print enough to save it. When this will happen? I wish I knew. Because I would be a very wealthy man.


Wed, 08/17/2011 - 11:55 | 1569025 SheepDog-One
SheepDog-One's picture

Uh, yea thats what I said...the plan is a 1 world govt and a 1 world currency. Hey dont believe me, believe what EVERY world leader and heads of all shadow banking cartels has said many times on this subject! Not seeing the obvious endgame will be very hazardous to peoples lives very soon.

If people actually believe these world banksters are furiously printing money to try to SAVE the system, they got to be smoking copious amounts of Hopium sprinkled with Delusion dust.

Wed, 08/17/2011 - 14:02 | 1569601 Smiddywesson
Smiddywesson's picture

Yes, you don't fix your plumbing if your house is burning to the ground.  You just grab what you can and set about building another house. 

They are grabbing gold and kicking the can.  The future is pretty clear from their perspective.  They want to be solvent.  They want to remain in power.  And as SD1 pointed out, they intend to grab even more power in the confusion.

Wed, 08/17/2011 - 12:52 | 1569291 my puppy for prez
my puppy for prez's picture

The Euro is a trial balloon for them...they will learn from their mistakes and correct them.  Putin is already talking about a eurasian economic union.  germany and france are contemplating their version of our "super congress"...

Things get concentrated and centralized SLOWLY, VERY SLOWLY!  It is only the patient and diligent that will connect the dots long term.

But first, we will have a global trading currency that is NOT the dollar.  People will get used to that, and when the time is ripe for the right global crisis, they will sell a global commoner's currency on the streets.  This is quite a ways off, in my opinion.  But all signs point that direction, IF you pay attention to the right information.  That requires reading other things besides financial blogs (no offense to ZH!)

There IS an endgame, and it is easily documented.  They just can't control every single factor that occurs....only the general direction of things.  It's a lot deeper subject than market analysis.  Just MHO.....

Wed, 08/17/2011 - 11:52 | 1569031 Bob
Bob's picture

Sounds about right to me.  Why should Mr. Market worry, though?  The professionals and solo "investors" who do his "work" will cash out long before the bottom . . . it's the 401k and pension-dependent class whose wealth will be transfered into the saavy hands of the finance class the rest of the way up and most of the way down. 

Mr. Market likes it!  And so do all his good buddies.  Hey, it's all ripe for the taking, fair game, right? 

Wed, 08/17/2011 - 11:52 | 1569041 SheepDog-One
SheepDog-One's picture

RIGHT! A big part if the endgame is the transfer of 401K's and pensions to the treasury...theyll call it 'annuitization', in fact the Treasury already HAS called it that. Only a matter of time! And not much time left either.

Wed, 08/17/2011 - 11:55 | 1569060 Bob
Bob's picture

You're talking about what's left after Wall Street and its hard-toiling minions take the lion's share?

Wed, 08/17/2011 - 11:58 | 1569069 SheepDog-One
SheepDog-One's picture

Yep! And even after the valuations have been raped a bit and cut in half, thats STILL $2 trillion!

The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization Of 401(k) | zero hedge

Wed, 08/17/2011 - 12:03 | 1569103 Snidley Whipsnae
Snidley Whipsnae's picture

Hey Sheep Dog... Check this out... Blythe has a sense of humor... look at the double top she painted on the tape ~ 10am...

Wed, 08/17/2011 - 12:10 | 1569119 SheepDog-One
SheepDog-One's picture

Its unreal. Each and every market is totaly controlled, theres not a bit of law left in this market yet people still look to outside forces to assert influence on it all. Like this article says reality will soon force markets out of their unreal state. Nah.

Even the titale 'The FED cant stave off a market revaluation' puts belief in the notion the FED is working to prevent something. They know exactly what theyre doing, keep Goldilocks market conditions going for a bit to placate the herd.

Wed, 08/17/2011 - 14:10 | 1569650 Smiddywesson
Smiddywesson's picture

Yes, and we traders can throw most of those trading books on the fire now.  Anything regarding market fundamentals is completely irrelevant.  The same goes for swing and positon technical trading too.  A case can still be made for day trading using technical analysis, but at any point the Fed is likely to jump in and change everything.

Manipulation has always been the case, it was just disguised better in the past. 

Wed, 08/17/2011 - 12:06 | 1569112 The Gooch
The Gooch's picture

New punk rock anthem for all my "Paul tard" friends out there....

"We know how to fix this mess, fire Ben and his printing press"


Wed, 08/17/2011 - 12:11 | 1569131 rosiescenario
rosiescenario's picture

Speaking of 'overlays'....just read an interesting article that overlayed our more recent market with that from 1907.......summarizing the outcome, lets just say that a "buy and hold" strategy did not fare too well...using the 1907 peak shows a very long bear market that extended until 1985 when currency re-adjustments are made, but not including any correction for the survivorship bias that is always present in these reported indexes.

Wed, 08/17/2011 - 14:16 | 1569681 Smiddywesson
Smiddywesson's picture

Buy and hold has always been a very bad method of investing.  It is gambling that the holding period will be a lucky one.

Wed, 08/17/2011 - 12:15 | 1569150 the grateful un...
the grateful unemployed's picture

this thread is right off Elliottwave. Bob Prechter misses a lot of the details (fractal dissonance?) but he has the same overall projections. For my money he simply misestimated the Feds power (he says they have none, zero, and they just follow the market) - well except for the PPT and gradual airbrushing of the lines between the UST and private financials until the lipstick and the pig are synonomous. If you take the power invested in the FED and multiply it by the total number of countries in the G-whatever, and put them all in the same room, with the same marching orders, then you have even more capacity for extend and pretend.

in much simpler terms economics is a closed system, like an electronic circuit, it does what it is supposed to do, the outside world is sealed off. if by some chance outside influences do affect the economic outcome, they are hedonically removed.

BP follows this thread, he says the market does not follow the news, (is therefore a closed system, which is, (drum roll please) controlled by the mood of the public, or our collective attitudes, which in turn have to relationship to empirical feedback. whew!! either ways its a closed system, it has to function, at issue is the appropriate settings. is the economy programmed correctly??

The objective is to program growth is such a steady manner that markets and businesses can plan, years ahead if need be. we can write 50 year bonds, and have them index economic growth exactly, or rather we can predict growth rates YOY for longer periods and with greater accuracy.

then of course the world changes, and the program no longer functions the way it should. but in some ways it does, we have fewer jobs at a moment in time when we have demographically, fewer workers.

some deleveraging becomes necessary at moments of change, the programmer steps in, writes some new code, replaces the old code, and off we go. maybe the stock market won't matter as much to the next generation of investors as the bond market. (that's my guess)


and lots of changes occur which are unforseen, which opens the system up to variables which aren't programmed. when things become unworkable that's usually when we (the people) hit the restore point, and go back in time to an age and an economy we understand. (history is the story of one step back). and we're probably about to take one, and I offer as counter balance to the Fed chiefs economic history, the political and social history of the late 30's, which was dominated by Protectionism, Isolationism, and Pacificism.(considered the 3 evils in some places) in my mind those three things pulled us out of the depression at least as much as the feckless monetary policy we have in place then (and which the Fed chief seeks to emulate).

we need some modern version of these three things to get us through our current mess. Less reliance on China, less interfence in foreign affairs, and some Pax to go with the Pax Americus.

Wed, 08/17/2011 - 12:42 | 1569243 Smiddywesson
Smiddywesson's picture

Elliot Wave is based on the markets reflecting human emotion.  To the extent that those markets are manipulated, EWT begins to break down.  When those markets are manipulated to an extent never before seen in history, EWT becomes an easy way to lose all your money.

Prechter was very naive to believe that markets and the masters of the current system will not respond to conditions and change the game.  His view is deflation is inescapable, therefore there can be no inflation.  That's a very academic view of the world, and hasn't worked out very well for his adherents.  The Fed did quite well in creating inflation in stocks while everything else deflated.  Some of that inflation even leaked out to commodities despite the Fed's best efforts.  Yes, this market has to crash sometime, but you could say that about any market.  It's intellectually dishonest for Prechter to claim a win when you scared your clients out of a bull market for over a year. 

Prechter's biggest failures involve treasuries and gold.  He scared his clients into the worst investment (treasuries) and out of the best (gold).  Once again, his view of the world is overly academic.  He doesn't believe a central bank would willingly crash a currency, and that they system can't come to an end.  The cold hard truth is either this system is going to crash, or we are going to change to another system.  Either way, Prechter failed. 

Wed, 08/17/2011 - 12:56 | 1569316 the grateful un...
the grateful unemployed's picture

i still have his march 2003 interim report: REMAIN 200% SHORT.


Wed, 08/17/2011 - 14:29 | 1569728 Smiddywesson
Smiddywesson's picture

Those were great comments.  I print out and save the best ZH comments.  I printed yours.

It is not that EWT is useless to analyze a market, it is that this is not a market.

Prechter's thing is he has so many different publications that he can cover all his bases.  He also likes to make nebulous statements about a decline being just around the corner, but always leaves himself an out.  He also has created so many exceptions to his rules that he can never be wrong.  There is always an extension of a zig zag or something to get him off the hook.

Except this time.  He emphatically said treasuries were safe, the dollar would rise in value, and gold was a horrible investment.  Fail, fail, fail.  The worst investment advice in over a century of market history.

Wed, 08/17/2011 - 12:29 | 1569191 Smiddywesson
Smiddywesson's picture

Like most market observers, Charles assumes the Fed doesn't know the failure of the system and the crash of the markets is inevitable.

Yes, economists and central bankers can be stupid.  But can ALL of them be stupid at the same time?  And all the soverein nations too?  That stretches credulity.

Look, I'm sure that in the beginning they believed that they could print and inflate their way out of this, but they have since shot all their bullets and know that won't work.  They are kicking the can at enormous cost to the old system of measuring wealth and debt to buy time to switch to a new way of measuring wealth and doing business.  That new system involves gold.

There is only one action that is being taken by all the nations of the earth and all their central banks that is long term and doesn't relate to kicking the can.  That action is all of the nations and central banks AT THE SAME TIME, began to buy gold like crazy.  All of the crazy actions being taken only make sense if one understands that it doesn't matter how many trillions of US dollars are spent to kick the can, the system is doomed.  All that matters is how value is measured under the new system, and that system will involve gold.  That is why so many actors with disparate interests are cooperating, because they all have gold in common.  They are all kicking the can and spending critical resources on gold acquisitions because when this is over, all that will matter is gold.

Wed, 08/17/2011 - 12:33 | 1569204 YesWeKahn
YesWeKahn's picture

If that idiot prints again, we all will treat him well.

Wed, 08/17/2011 - 13:09 | 1569373 The Man in Room Five
The Man in Room Five's picture

What's with Martin Armstrong's turning points? Why do so many people believe they have good predictive value?

Wed, 08/17/2011 - 14:35 | 1569756 machineh
machineh's picture

Not only that, but it's inserted at the WRONG PLACE on the chart.

'6/13' refers to 'June 13, 2011.' It's already past, and nothing happened.

CHS prolly thinks it's next year. 

Wed, 08/17/2011 - 14:58 | 1569852 electronpaul
electronpaul's picture
“Those who do not learn from history are doomed to repeat it”
Wed, 08/17/2011 - 16:08 | 1570207 twotraps
twotraps's picture

Smiddywesson brings up an excellent point, about EWT and perhaps all tech analysis.  Hard to argue with the basic theory about waves etc, having it explained and seeing some examples is actually very interesting.  People see fractals, candles, wedges, Market Profile value areas or 'Minus Development' (one of my favorites)......getting back to his comments, his personal views took over his outlook.   He used the analysis of the wave count to justify his very strong feeling about the mkt, period.   Its just a trade, and people followed him.  Very few people acknowledge that Technical Analysis is not a strategy, it does not tell you when/how much/buy or sell/risk/add/reduce/reverse or cover your positions.  Neither does any dividend model or special top secret smoothing equation.  


I think fundamental analysis is great, been learning more about it all the time.  Started out 20 yrs ago on the floor and you learn to watch prices first....all day.  You end up learning about wedges and waves etc but at the end of the day, you finally learn that no formation will save you, you need to understand your own risk.

Great comments, keep'em coming.

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