A Weary Bear Starts to Hallucinate

(The bear’s lament penned by our friend Erich Simon provoked such a torrent of comments that we’re letting it run for a second day. Is the upward drift of stocks since March of 2009 actually a stealth bull market cloaked in some of the most depressing economic data since the Great Depression?  You can weigh in with your own thoughts on this by clicking hereRA)

Are stocks in a  short-lived sweet spot engineered to coincide with next month’s elections?  Or is there something much bigger in store: a Megabull market engineered by the Fed and Wall Street that will run for years?  And don’t discount this possibility merely because the economy has been so weak.  After all, in the last two decades, free markets have gone into eclipse and now serve not the public, but Masters of the Universe who seem able to manipulate prices any which way they choose, regardless of “fundamentals.” It’s also possible we’re at the point of global saturation, where there are not enough investible resources to satisfy demand.  And the government is not exactly a neutral bystander any more (not that it ever was).  The U.S. has taken an increasingly active role in propping up key stocks — and even the broad averages, if you believe all those stories about the Plunge Protection Team.

I don’t recall exactly where the trendline from the dot-com bust comes in these days, but it’s somewhere around Dow 12800.  The Industrial Average is trading now around 11000, but if it were to push past that trendline, you can be sure that some gurus would be making hay with predictions of Dow 36000.  Actually, they wouldn’t be the first, since there’s a book out with the title “Dow 36000”.  It was published in 2000, and although it’s considered something of a classic of wrong-headedness by many who have reviewed it on Amazon, I’m not aware that the authors, James Glassman and Kevin Hassett, ever retracted their prediction,  Perhaps their day will come?  If so, shorts will go the way of the dodo bird.

New, Improved Dollar?

With stocks headed to the moon, a vaporous dollar would collapse. But it wouldn’t matter, since the dollar is no longer a store of value; rather, it is more like an entitlement coupon, like food stamps (which are currently used by more than 40 million Americans). But don’t count the dollar out. The basis for its resurrection, from mirage to hard money, may be in the offing, plotted behind closed doors over the last ten or twenty years. The Fed would commandeer the U.S. credit markets, which they already have to a large degree. Is this our economic future?

Imagine the nationalization of…everything: a world where we all get microchip implants and fall into line. Scary stuff, for sure, but at some point The Government is going to have to reign in the autonomous, disenfranchised and socially disintegrating masses before all control is lost.  But if the Dow is trading at 36000 then, you can be sure the mainstream media will be telling us that life in America has never been better.  The odd thing is, most of us will probably believe it.

(If you’d like to have Rick’s Picks commentary delivered free each day to your e-mail box, click here.)

  • fcoykendall October 16, 2010, 4:51 pm

    johnny come lately I know, but it is a bull market, no matter how it’s defined, but a very hollow bull market with real value decline…all the dollars being made on the equity side and the commodity side will be less valuable; the unstoppable decline in the dollar, unsurmountable federal, state and municipal debt and smoking printing presses will make sure everything worthlessly runs to the moon…I might go long rutabagas because in five years, they might be more valuable than usual investments and the USD…and at this point, I’d like to say to redwilldanaher that, at this point, clarity is still the king of good prose and I might be daft, but at this point, I don’t know what the hell you were talking about in your post…I’m sure you had something to say, but at this point, uh….

  • SDavid October 14, 2010, 3:03 am

    There is something to be said about hope and optimism (or the lack thereof). So many people here have thrown in the towel, given up, and now place their “hopes” on an inanimate substance that comes out of the earth which has nothing to do with anything other than fear and/or greed. What has happened to us that we are spellbound by a chunk of yellow metal yet we won’t walk across the street to offer a homeless person a helping hand? Are we really any “better” than the bankers in this case? What about those who don’t have a home, little food and can’t even conceive the arguments we get into here on a daily basis?

    Most of us – the one’s who can afford to spend the money and access Rick’s touts and his course – are spoiled beyond belief when it comes to what’s going on with the rest of the world. And all we do is complain. The Fed this, the bankers that. Poor us!!!! All we have is our gold and then there are these EVIL bankers manipulating everything.

    Maybe we should all try going a few days on the streets with no shelter, no heat, and nothing to eat.

    There are people out there who have truly lost all hope.

    I can tell you this:

    If Rick were to set up a fund on this site to help those in need, I’m in.

    What about you?

    • SDavid October 14, 2010, 3:08 am

      If Rick is up to this …. I’ll donate the first $500

    • redwilldanaher October 15, 2010, 12:25 am

      Yes and we’re right to complain and object. Some would argue that you have a moral obligation to do so, while others would argue that you don’t deserve what was won for you and that you’ve throughout your life if you do not oppose these evils. Maybe people have been squeezed too much for too long by the parties they’re complaining about to effectively do much beyond insuring themselves in one of the few ways they can.

  • Chris T. October 14, 2010, 1:25 am

    “No crisis lasts forever. This one will pass too. ”

    What a great statement, but you are surely wrong in you approach to this.
    Your sense here is on of: at some point it will end, and then we will back to what we believe to be normal.

    BUT, when a dam breaks, yes it will be empty eventually, or when an earthquake begins, it eventually stops.
    But is left though won’t be like it was before. The larger this type of crisis, the less it will be like it was.

    So it may pass, but your view may never recover (you’re in a dark and damp box).

    Even if this one turns out to be not the final one, after which our view is permanently altered, it will happen.
    Unless the system we now have truly did discover the human/ecomomic/financial equivalent of the perpetuum mobile.
    (if so, then you can really never underestimate people’s stupidity, because it is only their stupid credibility which keeps this alive, and which is why Ben B. is so concerned with inflation EXPECTATIONS, not inflation itself. As long as they don’t get it….)
    To sum up, the crisis that rocked Rome, or the British Empire, or our empire, have, or will pass, but where is Rome or the British empire now?

  • GLENNH October 13, 2010, 10:12 pm

    “With stocks headed to the moon, a vaporous dollar would collapse. But it wouldn’t matter, since the dollar is no longer a store of value;”

    It has already been a couple of generations already since the dollar has had any resemblance to a store a value. Saying that is like waking up from a long sleep and repeating the first thing you think of.

    In terms of the DOW priced in Gold the index has retraced well over 80 % of the run from 1.38 (1980) to 44.12 (2000). A huge of amount of real buying power is already gone. People who are building strategies to protect the last wee bit of purchasing power are probably at risk of trading into the end of trend.

    In 1977 the DOW ended the year at 800 and dropped to 729 in Q1 1978 then went up 300 % two 1/2 more times, in the 30 years till the fun started in 2008 . For the current DOW to get to 36000 it “only” has to rise 311 %. Based on past performance is the DOW rising to 36000 such a stretch? Especially give the apparent risk and ultra low yields in bonds of all types.

    The other point that is ignored is the effect of the recent interventions (2008/09) by the Fed et al, In my model, they have yet to show up. Most of the distortions seen since late 2007 are the effects of the first easing which occurred in 2002/03. Yes? NO? (Looking for some other opinions.)

    I have always believed that it takes at least 24-36 months for this liquidity to be reflected in any economy and then another year or two for bad capital decisions to be made and things to blow up. (Humans, especially ivy league trained humans are incapable of saying, hey we got all this money..lets spent it wisely, never happens) If this is true (this = today’s mess is from policy enacted 5 years ago) then there is still substantial liquidity that could still flow into cash-flow positive sectors, primarily because these human are trained to seek out and invest in these areas …. and this herding causes massive distortions. This process could easily go into 2012 before another shake out like late 2007 and 2008 started. That is how I think some money could flow into stocks and the indexes could be bullish in the next few qtrs. GJH

  • Benjamin October 13, 2010, 9:16 am

    All these posts… Racap time!

    keith: “It’s a bird, it’s a plane… it’s time go to the beach!”

    Radar: “Welcome to the U.S. of Z, home of the best performing printing press in the world!”

    Drill Sgt SDavid: “Stop coloring outside the lines!”

    JeffM: “Bears… (hic)… Stupid bears… (hic)…Break out the hats. Yeah! Party!!!” (sorry, dude. You sound drunk)

    Yet, none of them disagree that the dollar isn’t in some seriously deep trouble. No one, among either side, defends government debt as safe and trustworthy. All seem to agree that the Fed will… Well, be the Fed, as they’ve been.

    Now, I re-present the same possibility that I presented to Mario, in his response to Tom Payne. What if…

    Due to the weight of the politically untenable economy, government gets real, real vicious about the massive personal debt burden and under/unemployment situation? ie Force them to spend or have the government do it for them, resulting in their loss by devaluation and/or negative real returns in investments that aren’t favored by the Guv?

    Money would not flow into stocks. It would flow into circulation, into the banks (debt repayment), and, most of all, commodities and just plain stuff on the shelves.

    I don’t know that that will happen, and there is the possibility that it won’t, but I think I have a pretty solid hypothesis as to how it would if it does.

    But does anyone have something similar, besides a general reference to Zimbabwe (no offense, PRS), that would explain, in detailed specifics, why money would just flow into stocks? I’m still open to the idea…

  • Steve October 13, 2010, 5:34 am

    JeffM,

    Prophets bet with their life, or they are not Prophets from which men profit. Do you bet Mr. JeffM. Are you a prophet is the greatest sense ?

    In the greatest sense everyone is betting with their lives, and the lives of their families on a 70 year old scheme that is either defeating the Laws of Nature, or a new paradigm of petit g-ds manifest in hues of males and females. Lindsey Graham, GOP con man, and Charlie Schumer are plotting, and have stealth legislation requiring a national I.d. with retinal, vein, or other scan capability in Order to Work. (Info, Rep. Ron Paul, Texas) First Amendment Rights on the Internet are under attack, hidden once again the middle of a 3000 page bill, to deny Free Speech. Don’t remember O’bamer crying because his healthcare con was being attacked on the web?

    Maybe one should not have too much fear of little soft finger attorney GOP LG, but; Schumer is super I.Q. and super canny, as well as super dangerous. Don’t worry – trade, trade, trade, and buy gold and silver; it eats so well.

    Who’s wages are increasing so that new loans might be made from banks who are sitting on tons and tons, not merely millions of paper fraud in accounting ? Ya all talk about hyperinflation being too much money chasing not enough product. Who has all this abundance of paper money/credit clicks? Is it you on the assembly line forging steel, or is it you on the farm producing real wealth that has all this paper money with which to chase too little with far too much ? Will ya throw your gold into the street for a measure of wheat ? Me thinks so! Maybe it is the workers at McDonalds that have credit / cash in order to obtain loans. Who is going to bid against AIG, or Morgan Stanley, or Goldman ? Is it the average American who has all this cash with which to inflate, because there is too little product, and way too much fiat in the hands of the people ? Some how the masses of fiat credit clicks have to be put in the hands of the People – is that possible ? Our National standard of living is falling fast, wages are going nowhere, and accounting fraud is legitimate business practice upon the legislative powers of the congress as the New Court of the feudal Lord in succession.

    Does a 1 ‘tally’ note get a stamp to be pasted on making it a 10,000 in the hands of the People – doubt it. Tell me how I can obtain all that ‘credit’ fiat currency that is floating out there waiting to drive the cost of a house to 5x Bubble 2007. If I was ‘them’ I’d do what in regard to gold ? Stimulus has been going somewhere, but; not into the hands of the people except as wages at 20hr that cost 200hr in debt by forced loans. I did some simple math last year using the numbers provided by the government based in total jobs created, and cost in forced debt. It worked out to about 1,000,000.00 in forced debt to produce a 50k job as a carpenter for the year ending 11/2010. Who got the 1,000,000.00 debt tally on their books, and who benefits from a 50k welfare job to buy votes of union house family?

    Me and mine, we cannot create hyper-inflation, and we cannot borrow that kind of funny money to hyper anything. My wages in Trade have been down slope because of increased commodities prices for 10 years. Every one of you out there are loosing traction in real terms. Can you “they” drive the perceived value of my feudal estate in fee simple to 10m ? Why will you not understand what We have lost ? 60 years ago We had Liberty. Now there is a feudal scam wherein persons do not have the right to inherit Unalienable Rights. Read your deed in Fee Simple Absolute – one may inherit slavery in a new feudal paradigm of the ruling class of the Foreign Court of the United States, citing Sheriff Joe Meeks, Oregon _ I am Minister Pleonpotentary, Envoy Extra-Ordinary from the Republic of Oregon to the foreign Court of the United States. Live in the present, trade in the present, and presently understand what FEE means, and what the law of Escheats says to you. Today we are slaves; like it or not THE TRUTH IS WHAT ONE FINDS NOT NECESSARILY WHAT ONE WANTS TO KNOW.

  • JeffM October 13, 2010, 3:59 am

    Just give up you bears….I want to see the DOW 36,000 hats already!

  • gary leibowitz October 13, 2010, 2:22 am

    I can’t grasp the notion that very low bond yields is up against sprouting commodity prices. In the past bonds were a great forecaster of the economy and inflation. For years I had heated arguments with people using the “conspiracy theory” to explain low yields and “hidden” inflation.

    As it turned out the bond forecaster was spot on. Is the fed finally able to hold down yields even as massive money supply is attempting to work its way past the banks blockade? OR, is the global debt situation getting worse. Can the Government really hold down bond yields with their owm repurchase?

    Is the deflation cycle over? Will history be denied and deflation gone from the equation? I think not.

    Had gold and silver been the only commodity that is rising at a fast clip I might consider the notion that inflation, or a total collapse of the economic system, was causing it.

    I wish I can fast forward 2 to 3 years and listen to the economic professors explain with such conciseness what happened and why it was so obvious.

    We are in peculiar times.

  • ricecake October 13, 2010, 1:47 am

    ———————–
    Bush to Iraq war: ” MIssion Accomplished.”
    Obama to US economy: “The Worst recession is over.”

    (I quote someone’s comment I read somewhere)
    ————————-

    Remember not long ago Japan blamed that China’s purchasing some small quantity of japanese debt was the reason why Yen went higher. Later the Chinese sold their holding of the Japanese bond but Yen still going higher, ( lol.) It turned out it was the British who had purchased large quantity of Japan debt. It’s very likely the British was hired by Tiny Tim to perform the procedure to up the Yen down the dollar.

    China is hold so much dollar cash I believe China is supporting to pop up the US stock market. What else can they buy? US Treasuries or what else? They can’t buy commodities all the time. Beside, they haven’t been able to buy much so far because of the resistance all over the world. China can totally pop up the US stock market.

    • ricecake October 13, 2010, 1:56 am

      Not to rule out some political deal between governments. Like China asked Obama people don’t bit too hard don’t bark too loud on the Yuan in return China helps to pop up to stabilize the US stock market so make things look good for Americans political election.

  • PhotoRadarScam October 12, 2010, 7:07 pm

    Refer to this article, http://www.dailyreckoning.com.au/zimbabwe-stock-exchange/2007/04/12/ from March 2007:

    “Zimbabwe is in the middle of an economic disintegration, with GDP half of what it was in 2000, and declining for the seventh consecutive year. Ever since President Mugabe’s disastrous land-reform campaign (an entire article in itself), the country’s farming, tourism, and gold sectors have collapsed. Unemployment is said to be near 80%.

    Yet the Zimbabwe Stock Exchange (the ZSE) is the best performing stock exchange in the world, with the key Zimbabwe Industrials Index up some 595% since the beginning of the year and 12,000% over twelve months. This jump in share prices is far in excess of increases in consumer prices. While the country is crumbling, the Zimbabwean share speculator is keeping up much better than the typical Zimbabwean on the street.”

    For anyone to say that we CANNOT possibly be in a similar situation (but to a different degree) is ignoring what has already happened in similar situations. I am confident there were people in ZMB in Mar 2007 making the same doom and gloom arguments as we’re seeing here. Is it sustainable? Probably not, but who cares? Recognize the trend and trade it accordingly, and be ready for when the trend change comes.

    • Larry October 12, 2010, 9:55 pm

      Japan is a more appropriate model to use than Zimbabwe.

      What’s the Nikkei done over the past 12 months?

    • PhotoRadarScam October 12, 2010, 10:08 pm

      That’s not the point. the point is an example of a bull market run in a declining economy. Many of the comments here dismiss the possibility that it can happen, but I provided a perfect example.

      I believe Japan’s economy is stable but fragile, whereas the US is declining while printing like crazy. ZMB is a better comparison.

    • Benjamin October 13, 2010, 9:40 am

      There is one thing I would like to point out about Zimbabwe…

      They were and still are crying out for relief of “the climate debt owed” to them by the likes the U.S., Europe, and Asia. Chavez is/was also on that boat, and they were quite voicieferous about it (and applauded, standing ovation) at the Coppenhagan Climate Summit last year.

      It’s not lost on the central planners of the world just what a huge re-investment in energy means. And it would seem to me that Zimbabwe’s troubles, starting back around 2000, were all planned for this larger agenda. By extension, the outcome we see.

      As Rick so often points out, HI doesn’t just happen. It happens as the result of major political decisions to do so. So the question is…

      How can we be sure the exact same politics will be enacted in the US to produce the outcome you anticipate? (especially since we’re “climate debtor number one” on the list of at least two seriously backward nations, who themselves in more recent times have had their political/currency troubles?)

      Bear in mind, I’m not talking about extent. I’m talking direction/destination of where over-issued currency goes.

  • ben October 12, 2010, 5:53 pm

    Won’t this weakening dollar provide a boon for corporate profits? After all, most large companies do the majority of their business outside the USA…and all those Euros they earn will come back with a nice premium over what they were getting a couple months ago…and just in time to drive markets higher for the elections.

  • keith October 12, 2010, 5:20 pm

    *yawn* what a boring day in the markets… bull or bear, I’m waiting for something amazing to happen.

    • cosmo October 12, 2010, 7:00 pm

      Funny Keith…You kick it off with a “Bull all the way, put me in a straight jacket” and now your here with a wish for “something” to happen. The reason its not ‘moving’ is because its running out of excuses to go up and the jugglers are getting tired(as described by many here). Just as in the dot.com phase, there were no reasons for it to go down… until reality hit. Reality WILL hit this market, no saying when, but it will hit and you better be running for cover well before(as many here are). Cover, for me, is G…O…L…D 100%

      Careful what you wish for…

    • keith October 13, 2010, 1:29 am

      Cosmo, naaaaaaa, I don’t have to be too careful what I wish for. I’ve been in gold and silver since the late 90’s. I’m 100% gold as well as you are. But I did have some gold mining stocks that took a HUGE hit in 08′. This time around I won’t be fooled again in a stock market crash. I don’t care what the fundamentals are. These days I only watch the technicals and they are telling me to shut off my computer and go sit on the beach.

  • Tom Paine October 12, 2010, 4:23 pm

    I’ve been thinking about a discussion a while back about how “every dollar has to be borrowed into existence” , but I am wondering whether in the case of QE or monetization of debt that is not the case. It is kind of confusing, but unlike with traditional Keynsian deficit spending where a dollar is created, given to the govt. and the govt. issues a bond, when the Fed creates a dollar to buy a bond that is already in existence, there is no new debt issuance, but there is a new dollar created, no? Am I missing something?

    Unless someone cvan show me that is wrong, then I don’t see limit to the amount of money that can be created to buy the bad debt out of the system. Of course, that is probaly just too theoretical. It depends on the world being willing to act like the public in the “Emperor’s New Cloths” story and simply ignore the bankruptcy of the system. Somewhere something will have to give, and probably that will be the value of the currency. This, of course, is what the FED is praying for, but what if the bond market gives way long before we get to fiat money heaven?

    It doesn’t much matter, because the die is cast! It is now either hyper inflate which may or may not work and will certainly not work out well for the majority of people, or let the house of cards come down, and that will also not work out well for most people.

    Got gold and silver?

    Oh yeah, I do think there could be one or more new liquidity highs coming for stock investors and one or more big hangover before we reach any kind of more stable situation. But I think we have a nasty dip coming up right now as the dollar does its dead cat bounce thing, which given all other currencies are also dead cats could be quite a shock to anybody going all-in right here.

    • mario cavolo October 12, 2010, 4:35 pm

      …with you all the way Tom…rising interest rates are the global nuclear meltdown…so as you say something “else” will have to give…funny I just realized the stock market isn’t the “driver” of it all in this sense..its 2nd fiddle to the bond market…so what would cause a mass exodus from the bond market?…

      Cheers, Mario

    • Benjamin October 12, 2010, 5:17 pm

      You almost had me going there with that display of “ignorance”, Mr. Paine. I laughed today 🙂

      Mario,

      “so what would cause a mass exodus from the bond market?”

      That’s an answer that I’ve not yet been able to solidly conclude.

      But if I recall, back in the last big hyper-inflation topic here on RP, there was a link to… Zerohedge?… Anyway, in it, there was a guy that talked about HI in Chile (iirc). I wish I had the link. It what was a good read, but there was also something in there that snapped together while I was reading it. But I do recall what it was…

      Diamonds would have to be traded for water in the desert. Bonds. That desperation would have to come about from a massive state decsion to simply mismanage everything, or a few things in very major ways. General prices rise, bondholders sell… fire-sale… Diamonds are cheap knock-offs when you really need the water, you know, and all the more when they really ARE less than chips of common glass.

      But the Fed would probably step in to buy bonds at face, masking the fire-sale, in order to maintain government credit. Meanwhile, the cost of mismanagement would explode with a glut of “placeholder” money granted by the Fed. Confidence would quickly errode and that would be HI, a rush out of bonds, even though bond price/yield might not reflect it. Not as a rush of money out, anyway. Just into circulation.

      So the big question really is what would cause government to do something wreckless enough to cause that kind of situation.

      Hate to sound like a broken record, but the unemployment situation and high personal debt/mortgage combo can’t last, as it’s too politically untenable to maintain that “we’re fine” when a growing population clearly sees we’re not. So they would have go FDR on the problem to make it worse. Work programs, spend money on anything under the sun, and, most of all, maintain the illusion that it’s government competence making it all happen… even as they screw up so many things. The alternative is death by burning at the stake.

      So government would do anything. That would be the point where major bondholders might start to itch enough to want that water more than their glass rocks. FOOD! OIL! STUFF! NOW!

      Bad as that sounds, though, it’s better than war or meteors hitting the earth. We should be glad if that’s all it is, seriously.

      And that’s how I see it, to this point. Subject to change, of course, as I learn more.

    • Benjamin October 12, 2010, 5:26 pm

      forgot one thing, Mario…

      It doesn’t have to be FDR-style ditch-digging/filling. They can also threaten corporations with taxation.

      Now, maybe they really do have all that cash that you frequently mention. Then again, it might be bond values (several times over, as they borrow to lend) on books/computers for all I know.

      Anyway, government threatens them… Either hire more workers at a “fair wage” so they can pay off their houses and send their next ten generations to college, or we’ll tax the money and spend it for you. Then, you’ll have NOTHING, see? Nothing!

      So off they would go. Commodities rise, all the more so with dollars flooding a world market that doesn’t want them.

    • ben October 12, 2010, 5:42 pm

      In quantitative easing, a bond IS created for the money borrowed. It’s just that the lender is the Federal Reserve and not some foreign central bank. That is why the Fed balance sheet increases in QE…they print dollars and then lend it to the Federal Government (collecting interest to boot)…adding the bonds to the assets of the Federal Reserve.

  • Rich October 12, 2010, 4:11 pm

    Aloha All
    Back from having bear balls fixed.
    Seriously, thanks Rick for the fitting Apache Attack pic with big bear capitulation.
    Right on time. 1040 here we come.
    What we have here may be a failure to comprehend today’s Fed Flash Crash and the end of QEII fantasies everywhere.
    Even Bove pointed out Bank earnings kaput as BF’s FinReg f’d Main Street for DC and Wall Street.
    Even EE admitted Debt Disease wasting markets.
    And MF rightly described a giant inflection point.
    With insider selling 2341 to 1 on Oct 1 and GS calling for $1650 Gold like $300 oil in 2008, the wheels and rotors may fly off as soon as today.
    Plus a Coronal Mass Ejection red storm alert.
    Batten down the hatches folks.
    Mahalo*Rich

  • Pete Giovine October 12, 2010, 4:06 pm

    Long ago, somewhere lost in time, a very successful stock
    market technician said, “Don’t fight the FED. Don’t fight the Tape.”

    This will NOT BE OVER until the dollar or some basket of fiat currencies is re-attached to something REAL.

    Poker Pete

  • mario cavolo October 12, 2010, 4:01 pm

    Heads up dear gang…tonite I attended the U.S. Consulate AmCham Shanghai monthly briefing here. The highlight was the report from the Door Knock to Washington committee which just returned from their annual door knock trip to the Hill. This is a group of the very top switched on foreign execs here representing U.S. biz interests in China and they went fully prepared and briefed. Tonite’s event highlighted their report on their bi-partisan trip experience meeting with a swath of over 30 groups in Washington with regard to U.S. China relations. What they had to say was pivotal, eye-opening, insightful, important, astounding and scary. It was the single best event I have attended since moving back to Shanghai four months ago. I will prepare a full brief in the coming days…the U.S. is indeed its own worst enemy right now when it comes to identifying and moving toward real solutions and that is not going to change anytime soon, particularly with regard to China relations….arrogant and myopic beyond belief….

    Cheers, Mario

  • cheongwee October 12, 2010, 1:42 pm

    Keith..

    Whether crash or not, isn’t important…but rather what we have to protect our investment..

    We shd not shout bear on the sideline and see our stock flying to the moon…

    Ride on the rally with eye open..always have a trailing stop..and not be too greedy will be doing fine…

    good luck to all

    cheongwee

  • SteveH October 12, 2010, 1:41 pm

    Here’s a guarantee!
    I guarantee that the printing presses will continue to run twenty-four hours a day until November 2. The PPT/POMO will aggressively continue until November 2

    ……………and after that? Who knows?

    This bear is hibernating until well after November 2.

  • Sutton October 12, 2010, 1:23 pm

    Erich seems to be a smart guy that makes ,in the end, wrong predictions.

  • Jeff Kahn October 12, 2010, 12:34 pm

    I remember all the same talk and arguments two years ago when the Dow was at 14000. Gosh, doesn’t anybody here remember back as far as 2 years? There was a PPT back then too, and many examples of why the Dow could never fade. LTCM. ETC. And now 2 years later the Dow is 3000 points lower and were still in a huge Bull market. Can anybody spell MYOPIA? We’re one EVENT away from 5000. What event? Who knows. But they always happen. Until it does stocks will grind higher. When it does, Look Out. And if you don’t think you stops will be bulldozed you’re living in a dream.

    • Steve October 13, 2010, 4:43 am

      Tend to agree with you Jeff. When the market goes south no one will be able to get a trade in, or get paid for what they made. Best to have some survival skills in the brain. If they are never needed; so what.

  • William S October 12, 2010, 12:08 pm

    Occam’s Razor…..

    The stock market is like that completely irrational friend who does what she wants without any rational reason for doing or believing so, and it works out fine for her. Meanwhile, we’re all pulling our hair out trying to figure it out. Well here’s your simple answer….the market is in a good mood so valuation is going up.

    All of us “in the know” understand perfectly well that any of the recent developments in the job market, in banking and mortgage fraud, in debt markets, etc, would’ve been the first (and second and third) reason used for the market going down, but it isn’t.

    In my short time learning economics (I’m self -taught and I can’t stop reading! Thanks to Rick and many others) I’ve seen technicals matter little and a lot. I’ve seen the dollar valuation mean everything for the direction of the market then mean little, and I’ve seen fundamentals mean something one day but mostly they seem to mean absolutely nothing overall. I think fundamentals are dead, have been for a long time, and now you are seeing technicals being stomped. Why? Because it’s economic freakout time! Those things meant something (REAL profits and losses, bubble/bottoming technicals) in a world that our grandparents grew up in, but now emotion, crowds, and corruption rule the day.

    One thing that does make sense to me is sentiment analysis. When it’s headed for a big swing up or down, get out of the way, because it cares little about what’s happening with foreclosures or Ireland or anything else.

    One thing we all know for sure is it is best to own something than nothing. Think Mad Max. Own commodities, including stuff you can eat and you’ll always be OK. You might even be rich. Then get yourself an “emo” girlfriend and the world will probably start to make more sense to you.

    Truly understanding the stock market??? No wonder all men are going bald. There might be a little play left in it for you traders but I don’t know how you do it. Screw it. Buy gold and silver, buy food, buy oil, buy natural gas, etc, and be done with it. Sit on your treasure. Let it keep you warm at night. I’m broke but I was smart enough to buy gold when it was $950. Had to sell it when I was out of work. Now I want the same thing I wanted when I was first learning all of this in late 2008….more junk dollars so I can quickly buy more treasure so I can sleep better through this madness. Hope you do the same!

  • SDavid October 12, 2010, 6:47 am

    Is it “belief” or karma? I don’t know, What I do know is I spend my time in a chat room with individuals who could probably have a good time at a weekend insurance seminar. They trade. That’s it, and that’s all. They don’t care if the market is going up or down. They trade what’s in front of them. Politics, conspiracy theories and the latest job reports are never discussed. They trade. Everything else will sort itself out. I can’t speak for anyone else, but isn’t that why we took Rick’s course in the first place? To trade what’s in front of us? Are we supposed to drive forward looking in the rear-view mirror? That’s up to us all as individuals to decide. But I didn’t take Rick’s course to listen to fundamental jargon while the markets continue to rise. I wanted to trade well and take advantage of whatever I could. I am ready for whatever direction the market goes, and I am not going to complain about it if I am wrong. It’s my money, my analysis, and if Wall Street catches me off-guard, good for them.

    • Rick Ackerman October 12, 2010, 5:27 pm

      We Pivoteers trade AND get the market right most of the time — even when it requires us, against all common sense, to wax bullish on the broad averages (check the archives if you doubt this). But to borrow a line from Mencken’s publishing partner George Jean Nathan, just as we drink to make others seem more interesting, we talk fundamentals to make the stock market seem more interesting.

  • Erin October 12, 2010, 6:45 am

    With all due respect…Erich simon seems to be a little behind everyone else…The towel should have been sent to the laundry a few months ago when all the outflows from mutual funds were driving stocks up. How does that happen? Not hard too see who is in charge. They continue to protect corporate profits thru the transfer of wealth plan and creative accounting standards and that is all they need to justify higher stock prices. Banana Ben and the chosen one have a plan and it is called Socialism. Society takes the losses and corporations take the profits. With all the flexibility that we have to hold other currencies and invest in international markets why would anyone want U.S. equities? Get yourself some loonies and aussie dollars and invest in markets that act more like real markets than the pig of a market that this banana republic has and enjoy some currency gains while waiting the complete collapse of our beloved country because this will not end anytime soon!!! End the fed now!!!

    • John October 12, 2010, 3:15 pm

      Just so you know the Aussie is tracking the stock market tit for tat . When the market goes south the Aussie will follow. The loonie has been as well but has better fundamentals. I would suggest the metals around their 50 day ma’s as a place to put your $ .Otherwise we are in complete agreement.

  • Terry S October 12, 2010, 5:29 am

    You can believe what you like but if you don’t hold an appreciable quantity of gold/ silver ounces you are in for a rude awakening!

    • Steve October 13, 2010, 4:35 am

      Have gold, it can be taken, and will be taken. 90% of firearm owners will roll over – seen it; ya better believe it !!!!!

  • SDavid October 12, 2010, 2:57 am

    The market shouldn’t be about emotions for experienced traders. Look at the charts, make a decision and set your stops. Blaming anyone other than ourselves for losses is a dead giveaway we are losing traders. Debating the “how’s and why’s” is moot. Our only concern should be “that.” The markets are going up right now and “that” is that. We can fight it all we want. Our only goal as HP traders is to be on the right side at the right time. And the bear’s time will come. Until then, either get on board or get out of the way.

    • redwilldanaher October 15, 2010, 12:29 am

      This site tends to have a slightly wider perspective than simply trading for profit. How much good would the run of your life in roulette have done for you if it happened on the Titanic? It is possible to bemoan blatant manipulation (fraud) and still profit (long metals producers et. al.) Or isn’t it?

  • DarkestKnight October 12, 2010, 2:08 am

    The proof, as they say, is in the pudding. And by all technical parameters, be they trendlines, oscillators, Elliott Wave Theory, or Seat-of-your-Pants-Hairy-Ride-Barometer: It’s Pudding Time!
    It’s true the bears have been talking a good game for a while, in spite of the in-yer-face rally since March 09, and now it’s time for the price action to reveal what is really behind the green curtain of mystery. As a bear I am convinced the next few weeks will show to all what a sham this rally has been, based on a powder-puff thin air recipe concocted by those cooks & charlatans who’s head are not far off the chopping block – you know who they are. The rally has left a landscape of rotting bear carcasses and those who are left are either feverish with hallucination or on the point of throwing in the towel.
    What a perfect moment for the air to finally escape the souffle and leave all gasping in it’s wake.

    • mario cavolo October 12, 2010, 4:09 am

      I’m in the frustrated “at the point of throwing in the towel” group… but isn’t this when the post Depression recovery went south?…or are we going to start a fresh Nasdaq tech bubble on a grander scale?…..all signs say the latter will be the case…the Fed and cohorts are manipulating it so that there is no choice… they have plenty of ingredients in the recipe, plenty of tricks up their sleeve and in the end, they can make plenty of surprise announcements to goose things…at night, they bump the futures forcing shorts, interest rates are low, that’s no time for a stock market crash…..we are in for a bout of stocks as part of an “asset inflation” campaign…that’s the undeclared game moving forward for many many reasons and it will move forward indeed. Doomsday collapse is becoming more of more of an irrelevant inapplicable concept than a threat…the interconnectedness of global business, currency and trading markets has created a situation where as I’ve said before the big blog monster will keep changing shape but remain the same total mass, not collapse or deflate/pop like a balloon. This is not a complicated picture….all “assets” whether consumable or dirt for your house will continue to go higher and higher in cost as they have throughout history, and as currency purchasing power continues to decline. People who don’t own any “assets” are the ones in trouble. One current exception: U.S. real estate, this is one asset category that will lag the rest of the markets substantially. But actually that will settle and turn too. As the USD heads down to 60 (could be) , US products/assets will become attractively cheaper and money will start flowing back into the U.S., that’s the new found massive China/Asia riches. The United States as an entity is sorty of breaking apart by the economic forces at work. Mark my words, as U.S. companies and assets lag, and as the USD declines, the China/Asia/Emerging market riches will start to flow back into the U.S….the whole cycle will reverse again, but the whole time the asset inflation cycle will continue higher and higher as it always has.

      In the coming cycle, say goodbye to yields and hello to asset inflation; that seems to be the global game in town. People who stay in cash are going to get hurt the worst. Like I’ve said, I don’t care if its freakin’ peanut butter or USD cash or Chinese RMB or crude oil or olive oil or corn or AAPL, I want to know what store of value to put my assets in. And as SDavid and so many others say, stop analyzing the hows & whys” just trade the numbers/trends with disciplined money management…much more difficult than it sounds.

      Cheers, Mario

      Cheers, Mario

    • PhotoRadarScam October 12, 2010, 4:40 am

      Just remember, Washington will save Wall St. before it will save Main St.

    • Rick October 12, 2010, 6:04 am

      The global financial system is far too unstable for economies and stock markets to simply muddle along indefinitely. The entire system is infected with the same virus that caused the May 6 flash crash, and sooner or later the panic that hit U.S.stocks that day will occur on a vastly larger scale. How could it not, when trade in leveraged financial instruments is more than ten times global GDP?

      Several of those who have posted on this topic seem to have gone Prof. Irving Fisher one better, asserting not merely that stocks have reached a permanently high plateau, but that they will continue upward indefinitely. This is nonsense. The foundations of the economic system are rotten to the core. How much more do you think we can pile on them?

      Nor will China escape the bust. But they will survive it, and they will be the first to recover. You (Mario) and I seem to agree, however, that the U.S. will not — that our standard of living will continue to ebb for perhaps a generation or two, if not longer.

  • Benjamin October 12, 2010, 2:04 am

    There’s really only one thing I can say to try and trump all of this… With all the trillions that’s been created thus far, why isn’t it all higher already?

    I’ve also a question about…

    “With stocks headed to the moon, a vaporous dollar would collapse… ”

    I suppose, but a rising stock market wouldn’t be essential for hyper-inflation. It’s just like the housing problem… How could it become worth trillions when its (or rather, its mortgage) is not essential to daily survival?
    By the same token, why own something that only nets one yeilds in worthless paper?

    “The basis for [the dollar’s] resurrection, from mirage to hard money, may be in the offing… The Fed would commandeer the U.S. credit markets, which they already have to a large degree.”

    Sort of contradictory there, no? If hard money and central bank credit were so compatible, it raises the question as to why so, so much was done to get gold and silver out of circulation.

    • PhotoRadarScam October 12, 2010, 4:43 am

      Why isn’t it higher? Because the money hasn’t been “felt” yet. It is tied up in the banks and hasn’t been released to the economy. There has also been a partial offset by a large decrease in lending. But eventually these dollars will be released, and watch out when that happens! The dollars will flood the economy when if/when bonds collapse.

    • Benjamin October 12, 2010, 6:47 am

      PRS,

      I don’t know what Mr Simon would say to my question, but to be perfectly honest, I already had an answer forumlated, the presentation of which was pending his answer, if any.

      I’d still welcome a further clarification from him, but until then, here’s my version of The Answer…

      Suppose the many corporations assets were in large part T-yields. That would explain why the 08 drop was so sharp. As yields collapsed, so too might have the value of their stocks.

      Given that, would it not be true that stocks would be limited in their rise by low T yeilds?

      And with Fed QE at the helm, would it not be more reasonable to assume that the more they do it, the more stocks will fall or just maintain (more or less) according to the weight of low yields?

      That’s where money has been tied up, waiting to be “felt”. Government has borrowed too much, and so corporations are forced to keep throwing in low yields into stocks. And…

      Commodities. So far, gold and silver have beat all. Ask Mario Cavolo about too high oil prices (sorry if that gets you started, Mario!). Some complain about sharply rising corn prices.

      And stocks… Well, there they are, in what looks to me to be a long, flattening arc, like a football thrown in the air back in 09, that has reached a peak.

      Lack of lending, btw, would only be a symptom of the sickness, not a cause. It reflects the increasing burden of astronomical debts, the same burden keeping stocks down and only painfuly, slowly risen on low yields to where they are now.

      The feeling of feelings may be a long time in waiting.

  • ricecake October 12, 2010, 2:04 am

    The Fed’s acting like Hedge fund called Hedge Fund USA with Ben the Fund Manager. Since there is so much cheap money eager to be taken by a master around the world and since the Fed can also print as it wishes, they use part of the free money to pop up the stock market supporting the US enterprises. So when time become good again, the Fed will then unload the stocks so the Fed’s making money and at the same time protecting the US enterprises from stock market crash. When the monkeys become disorderly panicky, scared, and over excited become forget who they are, the king monkey of course will take control. Someone have to. We are living in the era of State capitalism for the US big banks, the big corporation and the share holders. When the Fed can buy mortgages insurance securities, it can buy stocks, commodities, and lands tool. After all the Fed is bank of all banks and businesses and the government’s back bones.

    • Robert October 12, 2010, 6:52 pm

      “Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough money to buy it back again…” – Sir Josiah Stamp Director Bank of England 1928-1941

      – Rest assured that Ben Bernanke understands this quote perfectly.

      Regarding the stock market- c’mon people. An ever-rising stock market riding on the back of a Bond market that looks about as healthy as a 35 year old mare…?

      Time for a reality check. Nominal gains in stock indices mean nothing in a world where nominal interest rates are 0.000000001% and real interest rates are negative 4%.

      It’s a smoke screen, a ruse, a bluff, a false flag, a red herring…

      In other words, it’s pure BS.

      TPTB know that everyone is looking at their 401k balance as their last bastion of hope against a coming tsunami of grim reality (like the impending reality that their social security check is only going to finance about 20% of their grocery and energy bills.)

      Imagine a scenario where the largest US banks halt the foreclosure process on millions of mortgages due to the discovery of rampant fraud in the document origination process (sound familiar?) – now, if the banks can not process foreclosures, then the homeowners get to live in bank owned homes rent free (the payments have stopped, but since the banks can not foreclose, the owners just keep “living away”)

      How is this bullish for Bonds? indeed, how can this be bullish for Stocks? the major stock indices are based on financials, and financial performance on a national scale is about to be taken to the woodshed.

      Heck, as soon as I heard that JPM was suspending foreclosures I was tempted to abondon ethics and stop sending in my monthly payment- I can think of a lot of places where that cash will perform better than on my 15% upside down loan to value (but I ain’t thinking Best Buy stock, that’s for sure).

      The only reason I’ve continued making my house payment thus far is because my payment is still cheaper than rent on an equivalent house in my local market…

      The banks (as noteholder) are paying the title insurance, and the property taxes, on millions of non-performing mortgages. How this can be bullish for the banks’ financial performance is beyond me, especially since Obama did the right thing (for once) by pocket vetoing the midnight run makeshift show-of-hands voted Bill that would have made the falsified documents legal.

      Reality is what lies beneath the lukewarm, trend to nowhere performance of the stock market indices.

      11,000 is a number- how that number can be used to “project” an even bigger number requires more voodoo than sound, principled analysis.

      Let the stock market move against the fundamentals forever- I still guarantee that Dow 20,000 will not make anyone rich from a purchasing power or standard of living perspective (the Zimbabwe stock market analogy is prescient)

  • keith October 12, 2010, 12:45 am

    It’s not a hallucination… it’s a bull market.

    I’ve stopped in here from time to time and expressed my opinion that we’re in a stock market ‘bull’ driven by currency devaluation; only to be laughed at and ridiculed.

    Economic recovery? What does that have to do with the dollar going down and stocks going up? Yes, we can have a rising stock market with a slowing economy. Yes, we can have a currency that goes to worthlessness pushing stock prices to reflect the value of the currency. Examples can be given throughout history. I’m so bullish on stocks they should put me in a strait jacket and lock me up.

    Two weeks ago I posted in here DOW 16,000 in two years. What was replied?…economy, economy, economy. As it was then, so it will be now- laughed at.

    Stock indices the world over are beginning to shred technicals to the upside.

    The burden of proof is now on the deflationists because there is no economic justification for the almost 2 year rise in the stock market. They were wrong. The only last defense they have is to say….. ya but just wait, the bear market rally is almost over.

    Peace.

    • PhotoRadarScam October 12, 2010, 1:54 am

      I agree completely, Keith. It seems to be popular to blame market movement on manipulation and conspiracy (which can explain short-term moves), but the bigger picture is a reflection of macro economic realities.

      All one has to do is look at Zimbabwe’s stock market as their currency has fallen. Even though their economy has ground to a halt, their stock market has soared. I think commodities like gold have out-performed stocks in ZMB, but that’s not the point – stocks there went up big time, and the same thing is happening here. In the event of USD collapse and devaluation, there are worse places to be than the stock market.

      I think some people find it hard to believe because the dollar index hasn’t moved too much overall, but using the dollar index as a gauge is not enough. If the USD, Euro, and any other currency used in the index drops together and proportionately, the index doesn’t move, but commodities and stock prices will increase.

    • redwilldanaher October 12, 2010, 3:00 pm

      You are amazing Keith. You pop up with the same thing nearly every time and refuse to address questions that other commentators put forth. I’ve asked you several times to explain a few things further myself and you simply pretend that you haven’t read them. I have to ask you how long you’ve watched the markets for at this point? I’d ask the same of Photo at this point. I don’t recall too many around here arguing that a devalued dollar couldn’t or wouldn’t help stock prices, but to pretend this is a bull market in the traditional sense is ridiculous. If anything it is more akin to inflation in the price of stocks. You simply refuse to pay attention or perform any research — that’s the conclusion I have to come to at this point. If you think that this isn’t nearly entirely artificial, then you really need to spend several hours on the Interweb. As I’ve noted several times, this has been achieved nearly entirely with pre- and post-market futures manipulation. Intraday downside volatility has practically become non-existent. Volume totals have been abysmally low during this markup. If you can’t see that TPTB are acting in their own interest and the interest of their minions then you’re missing what’s happening. If you can’t see that they’re going to use large Rethuglicorp “gains” and “gridlock” as the cover story on Nov. 3 then again, you’re missing it. Is it possible that Sept. and Oct. thus far were all about making their, holding onto AUM, forcing the hands now of managers that were too patient. Engineering their own bonuses in Jan. because this may be the last sizable one for a while? Once again, if you want to simply argue that stocks will be price upwards due to the USD finally being recognized for the toilet tissue that it is, that’s fine. Showing up on the scene to chest thump without refuting or acknowledging other critical parts of the markup mechanisms is really starting to get old. BTW, I’m still long some mining stocks etc. so spare us all the typical response. Your routine may have finally forced me to put a few things together. Maybe I will and get some of it in Rick’s hands in case he hasn’t seen the exact same stuff before. I’d really like to see you dismiss it all in this forum. Here’s a simple example of what I’m referring to. Take a look at the USD vs. stocks in terms of correlation over the past decade. There have been alternating periods of positive and negative correlation. Should we expect a crash if they USD strengthens? What if the next phase of the scam is to frustrate USD Bears more so than equity bears? I know, I know, “it’s too big” but let’s just pretend like the media does. Let’s say that the USD lifts 30% against the basket over the next year. Should US equities drop 30%, or do you think that they could possibly “decouple”?

    • John October 12, 2010, 3:07 pm

      Check out the S+P/Gold ratio .Not a bull market. Anyone owning stocks is seeing their purchasing power go down,down ,down. If you view the stock market in nominal terms it will chop along for years to come. If you look at it real terms it will continue it’s decent indefinitely.”The invisible crash” by James Dines written about the 1966-81 market showed it breaking even over that time in nominal terms but crashing in real terms. If you bought IBM( pick any symbol you like)at 100 10 years ago and it is 100 now. Do you really think you are breaking even? Sorry Bear market rally.

    • PhotoRadarScam October 12, 2010, 6:49 pm

      I guess it depends on how you define a bull market. I don’t think stocks are going up because of earnings growth or potential. But I do know that stock prices are increasing for whatever reason (most likely dollar devaluation), and this is going to continue. Another factor is that as the USD devalues, most large DOW companies are international, and they do quite well when they repatriate their earnings at improved exchange rates. Again, the ZMB stock market isn’t soaring because of the ZMB economy or fantastic earnings, but it is (or was) soaring. You also can’t ignore the fact that there is a dearth of viable investment alternatives at the moment, so naturally money will flow into stocks. Finally, you have an improving political climate in which investors are certain that stability will come to government reglation and laws due to a rebalancing of power in congress.

    • Steve October 13, 2010, 4:24 am

      Have you been reading main stream news? They are saying the fed is moving the market higher. Also, it is reported that good ole’ republicrat Graham has a stealth bill with Schumer for National I.D. including retinal scans, or vein scans of the hand.

    • Cameroni October 13, 2010, 7:34 am

      “It’s not a hallucination… it’s a bull market”.
      ————————————————————

      Great line Keith. I too agree wholeheartedly. I even have a book warning me about this very unusual event. It is here in this big shipping chest I keep in the attic.

      Let me dig it out.

      (Rummaging begins). Ah look, toe socks! Nope that’s not what I was looking for. (More rummaging). Oh here it is. No wait. Those are bellbottoms.

      (More digging… and then finally: The book is found)

      I have it here folks. The title is clearly marked on the cover. It reads “Shorting for Dummies”.

      Crap! I knew I should have read that book. Would have saved me a fortune and stopped me from buying into the panic idea of the day. Stupid Hindenberg Omens cost me a bundle!

      Anyway, reflections from the past aside, I loved todays article and agree with much of what was written. The market is in an uptrend now and I expect the momentum to continue.

      That is a scary comment from a bear’s bear. This is not a hallucination though. Commodities have been on fire and inflation in all it’s ugly forms is headed our way. My how things have changed in the last 12 months. Who could have forseen the current events unfolding as they are now.

      I thought that Alan Greenspans comments of last week were telling too. He had noted how confidence was the missing ingredient in a real recovery and left the suggestion open that a falling stock market would seriously impact that confidence. This has been a theme of mine too for some time now and so I was not totally surprised his comment.

      There are very few events that would cause more damage to the confidence of Americans at this juncture than collapsing stock markets. I would hazard to suggest that such an event would precipitate a very serious outcome for the nation, possibly even leading to an outright financial collapse.

      It can not be allowed to occur. Every effort is being taken and must be taken to avert an event that might damage the very fragile confidence that still exists and plunge us all into the unthinkable.

      Even if it means full tilt Plunge Protection actions and a Fed buying up long bonds while easing credit conditions. The Dollar will continue to fall for a while longer of course but so what. We got poorer but our debts diminished at the same time. What matters most is that the wheels do not fall off the wagon until this treacherous economic situation cools down.

      No crisis lasts forever. This one will pass too. In the meantime, the trigger for inflationary growth has been found and it is in a coming commodities boom the likes of which no living person has ever seen.

      It will wreak havoc on the Third World too and so we must not lose our convictions in supporting the poorer members of our family. But it will drive inflation and save our sorry @sses in the end.

      I have thrown in the towel on shorting based on the catastophic prognostications of many of our most famous commenters. What they have been predicting just won’t happen. Too much is now riding on better outcomes for the global economy and as long as the majority of nations, the Fed and the public are on board with the program then it is up, up, up and away for most markets.

      The new trend we are witnessing is no accident. Perhaps it is stage managed too by Fed largesse with the cooperation of all the major players. We may feel sullied, insulted and manipulated by all these events but if we pay attention to the new investment opportunities we will also likely feel wealthier. And in the end is it not better to be solvent and manipulated than to be insolvent and “right”.

      So inflation is coming.

      And Commodities are the trigger. Got resources?

    • redwilldanaher October 13, 2010, 6:46 pm

      To Cameroni: “And in the end is it not better to be solvent and manipulated than to be insolvent and “right”. ”

      NO.

    • Cameroni October 14, 2010, 5:21 am

      I appreciate your honesty Red. Virtue is it’s own reward. I do not for a second doubt that most here believe that the markets are currently being managed and manipulated.

      We live with it every single day. It is incumbent on every investor to understand that an agenda is almost always at play. Nothing has really changed except the stakes are much higher now. By all rights, the markets should now be in a full tail-spin and going headlong in for a dirt bath. They are not though. Can you guess why?

      Economic fundamentals are terrible as we all know. The economy is in rotten shape. Unemployment as one example is sticky and climbing while housing continues to deflate. Commercial R/E is headed for disaster, consumption is declining, the Government wants to destroy our buying power through dollar devaluation and all the while stocks are rising.

      Confusing isn’t it? Or maybe not.

      It is clear to me that the powers that be will do everything in their power to arrest the imminently predicted market crash. (An epic crash according to some).

      And why would they not? The markets themselves directly represent investor confidence in the future and the general public knows it, at least on an intuitive level. Failure of the markets at this point in the game would put a stake through the heart of any possibility of a recovery for a very long time indeed and would damn both Fed initiatives and all of the efforts of the global community to stem the tide of fear and negativity that has gripped most financial markets.

      It is clear then that it is in the interests of most governments, the investment community and taxpayers everywhere to maintain the status quo, even if it is a lie. That an equilibrium and continuity in financial markets is preferable to anarchy and that it is in everyones best interests to preserve and nurture a positive and growing investment atmosphere.

      Growth at all costs, even if it is false growth.

      I am sure you are familiar with the old saying “build it and they will come”. This is no different in some ways. If the investment climate is nurtured and money is drawn back in to the wider markets then eventually new growth will materialize and the opportunity to escape the very negative consequences of a failed market will then make sense. A strong market draws in investors and rebuilds confidence. So build it they will.

      Perhaps it is the combination of direct interference and actions, the unseen interventions and market manipulations that you clearly find odious that are actually acts of faith on the part of the authorities that might ultimately reinflate the economy. We might hate it but I contend it is a valid exercise if it works.

      So you would rather be “right” than be solvent?

      So be it. Fight the Fed man. But get ready to lose your shirt too because all the stops are being pulled out to prevent the markets from “the big stall” and taking the biggest dirt bath ever seen.

      This will not be 1932 revisited. D-day for the Dow has been suspended to a future date far in the future. So start investing or get left behind. A big inflation is now baked in the cake. There is no other option.

    • redwilldanaher October 15, 2010, 1:26 am

      Cam, respectfully, I wrote a short piece over a year ago at this point as to why they would try to move the stock market up as much as possible in what effectively amounts to PSYOPS. Clearly I don’t disagree with your assessment there nor am I surprised by it having transpired. Perform a search of the news and you’ll likely find that the tipoff came from a G8 meeting in which it was determined that the US Consumer was the key (duh) to the global recovery. In today’s correlation addicted atmosphere its not hard to fill in the remaining blanks. Given that the PTB can’t easily fix the real structural problems (thanks to decades of severe abuse), one of the few remaining PSY levers left to pull was that of 401ks, IRAs etc.

      “Perhaps it is the combination of direct interference and actions, the unseen interventions and market manipulations that you clearly find odious that are actually acts of faith on the part of the authorities that might ultimately reinflate the economy. We might hate it but I contend it is a valid exercise if it works.”

      Acts of faith? Seriously? Do you actually think that the same people that caused this disaster and have benefited greatly from it are actually operating for the greater good? They either completely engineered or completely screwed it up, across the board, every step of the way and insert any other cliche of your choice here. The same maniacs are in charge and actually have more power now and your confident that they’re doing what’s best for us and it will work? Are they worthy of your trust and confidence. I’m hoping that you wrote the above tongue in cheek and that it was lost on me as I read it. Otherwise you’ll be leaving me nauseous.

      “So you would rather be “right” than be solvent?”

      NO, my argument is that we’re not better off in the long run. Are you arguing that you’d prefer to be a “kept man”? I’d rather endure pain in the short run and have a legitimate future in which neither I nor my children are merely puppets for global elites to play with to their liking. Do you really think it will all END HAPPY for you because they’ve made you HAPPIER in the short run? Again, please ask yourself why the still deserve your trust? Frankly, they deserve your contempt.

      “So be it. Fight the Fed man. But get ready to lose your shirt too because all the stops are being pulled out to prevent the markets from “the big stall” and taking the biggest dirt bath ever seen.”

      Fighting the FED for most of the last decade has paid off handsomely. I’m a small-timer but it has even benefited me as well. I’ve been long mining companies and the metals themselves at times over most of the past decade. Price the equity markets in metals and against Shadow Stats inflation and tell me how you’re doing. Fighting the FED also worked quite well when they lied to US regarding “the sub-prime issue is contained”. I’m sure you remember that.

      “This will not be 1932 revisited. D-day for the Dow has been suspended to a future date far in the future. So start investing or get left behind. A big inflation is now baked in the cake. There is no other option.”

      Your concluding paragraphs read a little too much like wartime government propaganda and frankly it scares me a little that you appear to be publicly admitting that you’d prefer to be a kept man by the powers that be and are willing to go along with a deceitful and in fact evil set of programs since you believe that you’ve figured out a way to personally benefit from it. It scares me because I believe your sentiments are likely to those of the majority. BTW, manipulation and conspiracy can explain more than the short-term moves. It’s not hard to understand. Collusion. Serial. Series. Wink. Nod. Giants vs. Dwarves. The Casino isn’t rigged it’s booby-trapped. There isn’t a square wall in the place and under the floor there are trap doors. You can have a good time for a while though.

    • Cameroni October 15, 2010, 8:19 am

      Red, I am not a “kept man” as you suggest.

      Far from it. I merely acknowledge honestly that we are being manipulated and should learn to navigate around the obstacles that are being presented to us daily.

      You are reading too much into my commentary that I did not say. Try to relax buddy. The world is not going to end. You may be surprised to find we are on the same side here. I am just pragmatic about our circumstances while you are incensed at the obvious violations.

      Remember your first girlfriend? You thought initially she was a goddess sent from heaven. Then you discovered (OH NO) that she was just a normal human being like you and a pain in the ass at that (the same as you).

      You discovered that she could be deceitful and manipulative and alluring and smart as a whip all at the same time. It was an impossible combination. You even likley discovered that she would leave you for your best friend when you didn’t come through as advertised and that was the icing on a tasteless cake.

      Well the stock markets behave in the same way. They will draw you in enticingly, outsmart you, insult your intelligence, drain your bank account and give you small comfort while all the time you love them with total faith and forgiveness, always angry at the betrayal and the small secrets you could not be part of.

      So take off the rose color glasses and wake up to reality my friend. This is the real world. It is NOT always fair. If you are married to the markets, then get used to it.

      As we say up in the prairies here “Grow a set!!”

    • redwilldanaher October 15, 2010, 3:33 pm

      I prefer that this doesn’t devolve into the personal but I couldn’t disagree more with what I perceive to be your attitude that pragmatism trumps all. Allowing yourself to be guided by an attitude like that is what makes it possible to steam over your own tow-line thereby cutting your most critical principles adrift. Much more than manipulation is and has been unfolding for some time. Your reality is nearly fully controlled on the macro level yet you seem to breaking new ground in terms of the stockholm syndrome. So you’re happy with effectively being deceived as long as you guess correctly how the deception is going to play out ahead of time? You trust and want the same psychopaths that have nearly destroyed this country, it’s currency, government, educational system, media, social fabric, etc. to serve as your caretaker because you’d prefer to not deal with the short-term unpleasantness that would result from the matrix they’ve built collapsing in a way and at a time that they hadn’t expected? Help me to understand how being pragmatic and cheering on asset inflation in stocks from hyper-manipulation and currency debasement sold to the public 1984-style should be preferred over a return to fiscal stability and organic macro realities. The stock market has always been and remains the most manipulated market of them all. I started trading professionally in the early 90’s, I’ve seen it for nearly 2 decades. The stock markets no longer draw me in. I’ve been fortunate enough to be slightly ahead of the next gambit of directional manipulation, generally speaking. Technical analysis has been critical to me in this regard. You want to own stocks? That’s fine. As I noted, I have preferred miners and the metals themselves at times. The performance of those classes has crushed equities over the past decade. I needn’t write more. You seem like a bright guy so I really have no idea why you’d close things out with the rose colored lenses comment and with the “set” comment. You also seem too bright to argue for a perpetuation of the matrix but you seem to prefer the perpetuation of the matrix. BTW, the world that you believe exists could come to an end very quickly since it is merely a grand illusion comprised of many other illusions held together by fraud, deceit and malfeasance.

      With apologies to the German Pastor:

      They came first for the governmental control,
      and I didn’t speak up because life was good.

      Then they came for the money supply,
      and I didn’t speak up because I was long blue chips.

      Then they came for the media,
      and I didn’t speak up because I was leverage long blue chips and only concerned with my immediate fortune.

      Then they came for me
      and by that time they were laughing at my pragmatic approach to it all.