History buffs know today is the 200 + anniversary of ‘The Shot Heard Around The World’ (know here, where it happened, as ‘Patriot’s Day’.) My fair state is in ‘Holiday mode’ but that is the exception, the stock markets and other ‘capitalist enterprises’ couldn’t justify sacrificing a days profits to the cause of freedom.
I mean hell, wasn’t the main idea behind the revolt to cement the wealth of the owning class? Didn’t all of those farmers sacrifice their lives so their children could become the merchant classes ‘debt slaves’?
Yeah, it seems there was some ‘misunderstanding’ about the cause/purpose of the revolution…but the fools bought it and their children are paying the price (even if that price continues to go up! It’s hard to believe that 230 years later and we’re still getting suckered by the same bunch!) Of course, it wasn’t their prosperity that they dangled before us like a prize, it was our freedom…and we’re still not there yet!
It is this realization that we have come ‘full circle’, that we have lost everything we thought we gained from the original revolution that makes today’s ‘new normal’ so dangerous.
Which is to ask if the time has come for a new revolution, one that acknowledges a reality the beneficiaries of yesterday’s social caste system refuses to see?
Too many workers and not enough jobs isn’t the kind of thing you can safely ignore for very long…
But that, ironically, is NOT the topic of tonight’s offering
CREDIT BUBBLE BULLETIN
It’s about trust
Commentary and weekly watch by Doug Noland
Perhaps last week will provide somewhat of a needed market wakeup call: Washington may have orchestrated a powerful reflationary backdrop throughout the financial markets. There are, however, myriad financial and economic aspects to the bust that will not be disappearing anytime soon. Trust in Wall Street and the marketplace is these days anything but impenetrable.
Some of you may remember when I regularly ran ‘The Credit Bubble Bulletin’ as my Monday offering…what you may not know is why I stopped.
The Asia Times is, above all things, a conservative/Libertarian online publication…and you frequently encounter their barely disguised contempt for government. Let’s look at the opening paragraph again, shall we?
“Washington may have orchestrated a powerful reflationary backdrop throughout the financial markets.”
Who is responsible for this ‘pumping up’ of the money supply? Our ‘elected representatives’ or the Republican ‘political appointee’ fondly known as ‘Zimbabwe Ben’ (and his faithful Republican sidekick Timmy?)
Geez, aren’t both of these guys members of the party of ‘fiscal responsibility’ (like the guy who originally appointed them?)
But let’s not fall into that trap…
Is The Fed a ‘closely held-private enterprise’ that is NOT required to reveal its book BECAUSE it is NOT publicly traded?
Which is to point out that despite the name, The Fed has NOTHING to do with the Federal Government. So where do these government hating FUCKTARDS get off claiming that the actions of a privately held corporation (something they worship, by the way) are instead the actions of our badly broken and corrupted government?
Seriously good citizen, how bad is it when our elected officials actually believe they are ‘window dressing’, elected to provide the public with the ‘illusion’ of representation?
Don’t you think the time has come to shake things up? (And not just for the sake of doing it either…)
Some of you are likely confused because you know I claim to be an Anarchist…but anarchists DON’T hate ‘governments’, it’s the Rulers we can do without.
Anarchist believe in ‘self-rule’, that the people should have a say in deciding the policies they will live under, rather than having those rules or worse, the end result of decisions they had no hand in being thrust upon them…like a war of choice.
True anarchists have another ‘funny belief’, they think that once you have exempted yourself from a rule, you have violated the whole ‘rule of law’. (Understand, ‘Fake anarchists’ are indistinguishable from Libertarians, neither believes in the rights of others. Like the typical Wall Streeter, they live in the world of ‘me’.)
Sadly, there are many instances where ‘it’s okay if you’re a free market lovin’ capitalist’! (But everybody else better toe the line.)
Now that I have alerted you to the author’s ‘conservative bias’ (as well as my own socialist leanings) we can proceed.
Irrespective of Friday's allegations regarding Goldman Sachs and the market pullback, reflationary forces have attained considerable momentum; massive government borrowings and ultra-loose financial conditions have incited a self-reinforcing stampede into risk assets. Almost US$50 billion exited money market funds in the past week alone, boosting the 15-week outflow to $380 billion. Money fund assets are down an incredible $900 billion in just 12 months, a historic wall of finance unleashed upon global risk markets.
The Morgan Stanley Retail index closed yesterday above its previous all-time high set all the way back in April, 2007. From its low of 68.41 in November of 2008, the Morgan Stanley Retail index has tripled in price. While down almost 3% on Friday, the S&P500 Regional Bank index sports a 2010 gain of 34.8%. During the height of the credit crisis, I wrote that I believed the US economy was heading into a depression. I was wrong. [This is a bizarre admission because he is really ‘mincing words’ here. What he is admitting is that while a large swath of the economy sank into ‘permanent’ depression, never to recover, the, er, ‘core economy’, much reduced in size, will, er, ‘continue’ to prosper. Which is to point out that it’s only a ‘recession/depression for some of us, ‘the chosen few’ are dancing like it’s still 1999! Perhaps the most disturbing aspect of this outcome is how fucking ‘Libbies’ are perfectly cool with it…]
A commentator on CNBC the other day suggested that the credit crisis had only interrupted an ongoing bull market. He explained that the complexion of the marketplace traditionally changes after a true bear market. New leadership emerges, while the old favorites tend to languish during the market recovery. This commentator argued that market leadership has changed little, and I can't disagree. I just don't share his sanguine interpretation of market dynamics. [CNBC has about as much ‘credibility’ as Faux News…so be wary of anyone citing either of them.]
The Federal Reserve and Treasury's historic reflation interrupted the US (and global) economy's sorely needed period of adjustment and rebalancing. I would argue that market leadership has not changed specifically because government intervention precluded economic restructuring. Massive government credit inflation has, at least for now, sustained the existing economic structure - buy retailers, regional banks, homebuilders, restaurants, etc. It's back to bubble-economy business as usual. [Um, hard to know what to make of assertions that there should have been no, er, ‘interference’ from the government in the operation of the sacred ‘free markets’ except that the rocks would be much bloodier had the government not cushioned the blow…although we can clearly see ‘who’ got most of the benefit!]
The bone I have to pick with the bulls relates to their view that buoyant markets are signaling the emergence of a sound and sustainable recovery. I see instead a desperate policymaker crisis response re-igniting credit bubble excesses and fomenting only deeper systemic distortions. Last week, Fed chairman Ben Bernanke suggested that the strong market environment is confirmation of the soundness of policymaking and market trust that Washington will get its fiscal house in order. Fed officials are again deluding themselves and, in the process, indulging asset market inflation and destabilizing speculation. [He KNOWS only a tiny portion of the global markets are going to, er, ‘bounce back’ but he can’t admit that because we victims are to be kept deaf and dumb on our short march towards the coming Banana Republic…]
But I've been to this movie before. I'm familiar with how the plot develops. And I have an abundance of gray hair and wrinkles as evidence of the number of reflations I've observed. I know how asset inflation fosters optimism in the bullish camp and discredit to bearish analysis. [Really now, Ding-dong is newly wed with an infant child…but this is supposed to be ‘short attention span theater, you’re not supposed to remember those confessions.]
Loose "money", as has been the case throughout history, breeds excess and malfeasance. The Wall Street/mortgage finance bubble was a fiasco, and last week's allegations against Goldman Sachs are a reminder of how ugly things turned in the waning days of the subprime mortgage scheme. Clearly, there was way too much "money" sloshing around - so much to be made so quickly by gaming the system and fleecing the less-informed. [This is a very bizarre claim, coming from the mouths of perennial scammers that are ‘gold-bugs’]
The destruction and inequitable redistribution of wealth are the hallmarks of financial bubbles. Today, trillions of securities are created globally on the basis of the creditworthiness of the borrowers coupled with perceived adeptness of policymakers. It is quite amazing how quickly trust has been restored. A new bull market is celebrated, while another bout of monetary disorder has unfathomable amounts of "money" sloshing around for the taking. [Which is to point to the broken status of the financial markets, there’s something larger than meets the eye going on here…]
At the center of it all, policymaking at home and abroad has distorted market perceptions and market-pricing mechanisms. The unsuspecting again have little notion of the underlying risks they are accepting. Fleeing zero rates and chasing inflating securities prices, investors have again been left dangerously exposed to another financial bubble and a postponed economic restructuring. It may never be called "fraud" or "misrepresentation". The outcome will be about the same. At the end of the day, markets are made or broken on trust.
Um, it’s not just the markets that will collapse one the flood of funny money is exposed for the fraud that it is.
Civilization will, er, ‘disappear’, vanish like it never existed…and if you don’t have a deep hole to crawl into, it is unlikely you will survive.
Oh, yet another ‘word of caution’… if that hole ain’t ‘secret’, odds are you’ll never exit.
At the ‘risk’ of repeating myself, tonight’s offering is just one more instance of someone belaboring the obvious…nothing has been ‘fixed’ nor is it likely to ever be fixed…because the Banana Republic is on the way.
Citizens of the US labor under the false belief that the economy and prosperity includes all of us, only the Europeans seem to recognize that economic inequality is a by-product of Royalty.
Understand good citizen, time is running out and this is the third massive ‘shrinkage’ of the economy in as many decades…and still the ‘happy talk’ persists!
They’ll happy talk you right into a mud hut (while convincing you that you’re ‘lucky’ to have that) as they sign you up to slave your ‘productive’ life away (for which you get nothing….)
Wake up and smell the coffee good citizen while there is still coffee to smell!
Thanks for letting me inside your head,
Gegner
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