Tuesday, October 30, 2012

The Party Is Over

Six For the Road
The party's already over so all we are doing now is waiting around for Wall Street and clueless policy-makers to reach the same conclusion...This situation reminds me of my younger days at the bar with my cousin when he would order six shots of whiskey for each of us at last call because he didn't want the party to end...good times.  Of course Wall Street's complimentary Mix Master Bernanke has been pouring for four years straight and just now with 'QE Eternity', he opened all the bottles and put them on the bar.  Of course, it's all fun and games until the hangover.

Faux News Says No to 'Redistribution' - Wait,  unless of course, it's from bottom to top...
While we wait for the lights to come on, let's assess the damage that has already been incurred.  Below are the only charts necessary to realize that the Middle Class left the party years ago and hasn't been back since.  These are the scary stats that neither Presidential candidate nor the lamestream media wants to discuss.
First, Median Household Income (inflation adjusted), from the latest U.S. Census data.  This chart shows how fucked up this economy really is.  This is what Main Street is trying to get across to the tone deaf morons running the country.  Income below 1996 levels.  Those were the Macarena days.  And notice how income peaked twice - once in 2000 and again in 2007 both peaks coinciding with a top in the stock market.  Yet this time we are again at/near a third multi-year peak in the stock market (shown at right), except this time, median income didn't come along for the ride.  Since the top in 2007, it's been straight down.  The country is now going in reverse.  Five trillion dollars of new debt was added since 2008 and what does the middle class have to show for it - declining wages.  Just to put things in perspective $5 trillion equates to $42,000 per household handed straight to the ultra wealthy via Obama & Co, specialists in reverse wealth transfers.  I mean "Economic Recovery".  This income data just further bolsters my assertion that the corporate plutocracy used "Shock Doctrine" principles during the 2008 crisis to give cover for outsourcing the middle class.  Of course, what comes around goes around, as the middle class can no longer afford iPads and other non-essential trinkets, so overall corporate revenues are shrinking.  The economy is a zero sum game between wages and profits, with a limited time to expiration.  The stock market went up as profits were squeezed out of the middle class, a strategy that has now reached its predictable bad ending with the nascent decline in corporate revenue.  The salesmen of the day killed their own market.  And what more proof do we need, to show that monetary policy is only benefiting the ultra wealthy at this point and otherwise obliterating the middle class via higher commodity (food and energy) prices i.e. stocks straight up, inflation-adjusted incomes straight down.

Stock Market

This second chart makes fools out of all the cheerleaders who say that the jobs market is improving.  We are constantly told that the unemployment rate is falling, however, it's only falling because people have given up looking for work.  In other words, some corrupt government bureaucrats have decided that as more and more people give up finding jobs, the unemployment rate should fall, falsely signalling an improving job market.  With fucked up logic like that, it's only a matter of time before the unemployment rate will soon be at 0%.   And then won't the politicians be surprised when the streets are lit up like the Fourth of July, even though it's not a holiday.

Here below from the Bureau of Labor statistics is the real story.  The percent of the eligible U.S. population that is gainfully employed.  Once again, cliff diving.  This chart goes back to 2002, so clearly despite the multi-trillions wasted on "fiscal stimulus" the Middle Class are getting ploughed under.  No surprise, the trillions fell straight to the bottom line, bypassing the Middle Class.

Instead of me making yet another dire prediction, I leave to you to draw your own conclusions as to how all this turns out.

Saturday, October 27, 2012

The Joys of Cliff Diving

If it seems that I keep saying the same obvious things over and over again, it's because today's policy-makers keep doing the same stupid things over and over again, which keeps us death-locked in their downward spiral of  stupidity.

Part of my reality-check program is to check around other blogs to see if what they are seeing in any way correlates with reality.  Obviously I am biased toward ZeroHedge if only because they tend to operate on a similar intensity level.  Just today, I checked in with Barry Ritholtz and he told me to "Reduce My Equity Exposure".  You don't say.  That said, he also told me that we should not expect a major crash, because "We um, already had that one".  No shit, Sherlock.  Now, the only reason I check Barry's blog, is because he wrote the book "Bailout Nation" basically explaining all of the corrupt things Wall Street did to cause the 2008 debacle i.e what he refers to as "..that one" (as if god has deigned that reality is a singular event).  Barry of all people, should know, that not one thing has changed since that era to make us safe from an even greater collapse.  In other words, Barry, like all the other overstuffed comfort seeking Baby Boomers, can't bring himself to contemplate what would happen if another event like 2008 were to occur right now.

Which only guarantees that it's going to happen.

The "Fiscal Cliff"
The latest morally bankrupt invention of the over 50 set is this bogus concept of the Fiscal Cliff.  This refers to the automatic forced ending to all of the unaffordable tax cuts and spending programs that were concocted over the past 10 years.  The entire reason these wasteful policies have a forced expiration is because it's the only way they could ram them through Congress with a straight face - as in, "this profligate and irresponsible giveaway will only last two years, so it won't cost that much in the long-term".  And of course now that those arbitrary dates are all coming due, the Idiocrats of the day are now panicking because all of their totally unsustainable goodies are expiring.  By inverting morality, they make it sound as if the "fiscal cliff" is some sort of national crisis.  What they really mean, but won't say, is that they would rather prolong tax cuts for the ultra wealthy (who already have tax free offshore bank accounts) - prolong interminable military blunders - prolong unsustainable spending on the bloated Military Industrial Complex which has doubled in the past decade - all at the expense of borrowing yet more debt to be paid for by our grandchildren who will enjoy one tenth the standard of living of America's ultimate party generation - the Baby Boomers.

The Moral Cliff
This Baby Boomer generation is the most morally corrupt generation in the history of the United States, without comparison.  They have lied and obfuscated and overspent for decades now.  At this point, it would be far better to let these bloated comfort seekers who have ruined the U.S., eat dog foot for their rest of their lives than to allow them to put one more ounce of burden on future generations.  They have an unlimited capacity for throwing money down the shit hole while leaving behind nothing to show for it.  We can only hope that reality will arrive in time to put these corrupt morons out of our misery.  

The Reality Cliff - Steep and Deep
Speaking of reality, getting back to Ritholtz's comment, it's abundantly clear that even those who express in depth knowledge of the events of 2008 are all bought in to the Bernanke Bargain.  So the real question on the table is whether or not Bernanke's latest promise of indefinite money printing will be enough to break the market through that triple top shown above.  Or will reality come back for the third and final round of ground and pound, catching the Idiocracy wholly unprepared to face the inevitable consequences of their actions.  Given that this generation can't even win a battle with its own dinner fork, I don't expect too much of a contest.  As you can see on the chart above, we have cliff dived twice before from this same level and survived, giving everyone a false sense of invincibility.  Also, each dive has been steeper and deeper than the last, on increasing volume, so given the dopium-induced complacency at this juncture, this next dive should be even more exciting.

QE To Eternity What Could Go Wrong?
Lastly, this latest vacation from economic reality is sponsored by "QE Eternity", which is the indefinite money printing (debt monetization) program just implemented by the Federal Reserve.  It's their latest increasingly desperate effort to cram more dopium into the addicted financial markets, which have overdosed already.   These ever-increasing monetary programs have now driven a massive disconnect between market prices and underlying company fundamentals, as company after company is now reporting declining profits and reduced forward guidance.  Therefore, Mr. Creosote provides the most apt depiction of monetary policy at this juncture:

(Still) Livin' La Vida Loca

Time to step back from the hyperbole and gain some long-term perspective.  As we see in the market charts below, there have been three major bubble eras in the past 15 years, each driven by its own set of unique factors.  However, the one key driver and common factor to all three bubbles was highly accommodative monetary stimulus.  Stepping back and looking at the second (uncommented) chart below, it's impossible to deny that despite the ever-increasingly desperate interventions of global policy-makers, their efforts to paper over the cracks in the global economic foundation are losing efficacy.  The market level we are at now was first crossed back in 1999, when we were "Livin' La Vida Loca".  Looks like we still are...:

Of course, there are always those math challenged denialists who say that the U.S. National debt, now at $16 trillion, is not that high when compared to GDP.  First off, it's the highest it's been since WWII.  Secondly, the U.S. needs to borrow a trillion dollars a year just to keep the economy out of recession (i.e. 8% of the debt-sustained economy).  So the real question on the table, that no one from this comfort-seeking generation wants to answer, is how much would GDP be without the ongoing deficit?  Or put it another way that even math morons can understand - it's hard to pay down debt when the country is still borrowing.  Alternatively, we can assume like the esteemed "Economist" that only externally-owed debt matters and that Federal debt owed to Americans doesn't count, because it's money we owe ourselves.  Which is the same as losing one's job and taking a pre-retirement loan telling yourself it's ok, because it's just money you owe yourself.  Unfortunately, with that strategy, there's always the unpleasant adjustment to eating dog food in retirement.

So, until we get a definitive answer and solution to this problem of using ongoing borrowings to pretend to be solvent, then we can only assume that we are now just in the third sequential fantasy bubble phase that will once again end very badly, just like the last two.

Self-cannibalizing Capitalism - Last One Out Turn Off the Lights
I just finished reading Matt Taibbi's excellent article on Mitt Romney and all all I can say is "Wow".  Suffice to say, I would evince no sympathy for a jobless Middle Class dumb enough to elect a man who was at the vanguard of outsourcing the U.S.  Both Darwin and Ayn Rand would agree that any species that acts against its own self-interest, won't be in existence for very long, which means that the Idiocracy is now on borrowed time.  Meanwhile, the self-cannibalizing vulture capitalism model first went after the Middle Class, but now it's going after its own.  No surprise, that one company after another is reporting dismal earnings and revenue in this quarter, following four years of ephemeral outsourcing sponsored pseudo-growth.  The latest casualty on Friday was Apple which came in below earnings expectations and gave a dismal fourth quarter outlook.  Having just launched the MiniPad to limited fanfare, they are now working on the MaxiPad in hopes it will boost their flagging sales - at least with women.

Thursday, October 25, 2012

There's A Price To Be Paid

Just tonight, another blatant example of the corruption and malfeasance that the Idiocracy seems to assume is just business as usual.

After the close, Amazon reported a less than stellar quarterly profit, so as one would expect, the stock was down after hours, but oddly it wasn't down that much.  According to the Efficient Market Hypothesis (EMH), stock prices instantly reflect all publicly available information, so it was odd that the stock was not down much more on the massive miss on earnings.  But then when I pulled up Amazon's chart, I was reminded that the text book "Efficient Market Hypothesis" is really just the "Corrupt Market Reality" (CMR), because apparently the market is so damn efficient that it priced in today's news, two weeks ago.  For those who have never heard of the "Corrupt Market Reality", it postulates that someone always knows more about a given stock than you do, and therefore owning stocks is a game for fools i.e. this chart of Amazon below is based on today's closing price prior to the earnings release.  As you can see, Amazon had been one of the best performing stocks all year, up until the end of this past quarter...

But more importantly, I leave this bread crumb for the masses at large, fat and happy on the couch watching The Kardashians or the latest Presidential game show debate.  Contrary to popular belief, there is a price to be paid for ignoring this ongoing corruption, and assuming it's just "business as usual".  

So let's review the mounting charges:

There's a price to be paid for ignoring Wall Street's ongoing corruption and pretending that 2008 never happened.

There's a price to be paid for invading other countries for their resources and to pump them full of junk food and junk culture.  The average hill billy wouldn't tolerate another government interfering in the U.S. for one minute, but thinks nothing of invading other countries at every opportunity. 

There's a price to be paid for electing phony corrupt politicians who promise to bankrupt your grandchildren to gain your vote

There's a price to be paid for watching Faux News and voting against your own economic interest, because you are too fucking stupid to understand what's in your own interest

There's a price to be paid for pumping your kids full of toxic waste junk food as you worship the false idol of "consumer choice"

There's a price to be paid for turning a blind eye as corporations temporarily boost profits by handing jobs and technology to foreign countries.  When is everyone going to correlate mass outsourcing with the fact that there are no jobs?  Even now the Idiocracy considers electing ex-Bain chief Romney as Outsourcer-in-Chief.

There's a price to be paid for Bernanke's Faustian Bargain which is implicitly subsidizing this temporary vacation from reality.

Unfortunately, for those who are STILL blithely ignorant at this juncture,  there is a steep price to be paid for all of the above "business as usual".  For most people, that price will be everything they have, and then some.

Tuesday, October 23, 2012

The Temple of Greed Is Already Collapsing

Unbeknownst to the Idiocracy at large, steeped in its junk food induced coma, the Temple of Greed is already collapsing, even as I write.  And also as expected, the media is equally oblivious at this juncture, because they don't really have an in depth clue about anything, and also because they are too busy covering that pointless sporting event known as the Presidential election.  In searching my usual sites today, I found absolutely no one pounding the table saying that risk was high.  Wall Street is equally oblivious, because they are face down in the Central Bank feed bag and otherwise making up every excuse in the book to ignore reality at this juncture.  So when I said before, that this time when the Temple of Greed collapses, those caught worshipping inside will be trapped.  Here is what I meant:

Saturday, October 20, 2012

The Last Days of the U.S. Empire

When I say "days" I am speaking metaphorically of course, however, looking back in time, historians will mark the inevitable M.O.A.C. as having precipitated the steepest decline in global power in U.S. history.  At this juncture, the U.S. empire exists merely as a thinly veiled facade, therefore it won't take too much dislocation to reveal that the emperor has no clothes.

Friday, October 19, 2012

Humpty Dumpty

Humpty Dumpty Sat On a Wall,
Humpty Dumpty Had a Great Fall.
All The King's Horses and All The King's Men,
Couldn't Put Humpty Together Again.

Today is the 25th Anniversary of the October 1987 market crash, so everyone is piling onto the "it can happen again" theme.  

When I read Cashin's recount of that notorious day, there were a couple of key points that I found resonated with today's set-up.

Wednesday, October 17, 2012

The Failure of Democracy

What we are witnessing in real-time is the abject failure of representative democracy.  It's now abundantly clear to all but the most oblivious of comfort seekers, that global political dealers will not take any definitive action to resolve this ongoing globalized economic fiasco, until they are forced to do so.

Of course, by that time, it will be far too late.

Tuesday, October 16, 2012

M.O.A.C. (Mother of All Crashes) Is Inevitable

While the pollyannas of the day run around desperately trying to escape reality, let's review the facts so everyone can reach their own conclusion on what happens next.

It's abundantly clear what I think:   I believe that 2008 was just a warning and therefore the true M.O.A.C. is now overdue.  Given that nothing has structurally changed since 2008, we are now on sudden death borrowed overtime.   

That said, I have been wrong so far, which offers the pollyannas among us an ongoing glimmer of hope however tenuous...

Saturday, October 13, 2012

The Last Bull Market: Bullshit

Having brought it up recently, I will now ground and pound my assertion that America's main export right now is .999 fine grain Bullshit.  Case in point, the only winner out of this impending election will be the advertising firms and media outlets that are raking in hundreds of millions of dollars from all of the disinformation spewing forth daily about the election.  Given that both parties and respective candidates are taking every precaution to assiduously avoid the truth regarding the nation's dire financial situation and eroding global status as a world superpower, one can only agree wholeheartedly with Ron Paul's characterization of the "One Party System".   Similarly, back in June, I pointed out that both Robama and Obamney are owned by their own base of special interest groups, assuring that regardless of who gets elected it will be all sides against the undefended middle.

Thursday, October 11, 2012

Another Glimpse Into The Future

Just today, we were again rudely reminded how the multi-decade outsourcing bonanza has hollowed out the U.S. economy and left nothing in its wake but discardable marketing shells aka. multinational corporations.  The economy is now an illusion supported solely by the ongoing plundering of our children and grandchildren, all because this current morally devoid generation, will in no way accept responsibility for its past excesses; instead, rebranding all efforts towards fiscal sanity as the "fiscal cliff" which could bring a premature end to the pillaging of our grandchildren.

Wednesday, October 10, 2012

Liquidation Sale: Everything Must Go

Guess what made a new all time high today on massive volume...