Friday, July 8, 2011

Fiddling While Rome Burns

No surprise, today's jobs report for the month of June came in at only 18k against Wall Street expectations for jobs north of 100k.  The stock market puked on the news, yet remains near multi-month highs, as the billionaire jet set continue to turn a blind eye to the total disintegration of the Middle Class.  Despite all of the hyperbole though, stocks remain at levels first achieved back in January, 1999, 12 years ago.  Ho hum, what's new - anyone heard from the Backstreet Boys lately?

Meanwhile, in other news, the Wizard of Bernank recently declared victory for Monetary policy and wrapped up Quantitative Easing (v2.0) as of June 30th.  Unfortunately, as indicated by the punk job number, the economy is now sliding back into recession, giving lie to the assertion that "Quantitative Easing" did anything other than shaft the Middle Class, further enrich Wall Street, and otherwise propagate the illusion of bank solvency for the past two years.  At this juncture, short of dropping cash from helicopters, monetary policy is essentially out of ammo and more importantly out of credibility, considering that interest rates at 0% for two years straight and two rounds of money printing have culminated in a net 18,000 new jobs for June.  More than any other policy measure, Monetary Policy is the catalyst for renewed economic collapse, following 40 years of monetary expansion, leading to an accumulation of debt to 4xGDP when summed across all constituents in the U.S. economy.  Mission Accomplished.

Over in fiscal policy fantasy land, the Idiocrats of the day continue to rearrange deck chairs on the Titanic as Democrats and Republicans pretend to care about the size of the debt and deficit.  No one is really paying attention to this latest drama, least of all the Treasury market which is holding its own, albeit off recent highs (low interest rates), yet only slightly above historic lows in interest rates.  No one really believes these prostitute politicians will stop borrowing money to pay their special interest groups, much less fuck around with Wall Street by raising the "risk free rate" which would tank the stock market and obliterate mortgage interest rates.   Given that the debt ceiling has been raised 74 times since 1962, one gains some perspective around this latest theater of the absurd.  Obama is toastie toast for 2012, as 18k jobs is his death knell, a la Bush Senior circa 1992.  There are 7 million fewer jobs now than there were in 2007 ! That sets up an any-Republican-who-can-fog-a-mirror scenario, giving the right-wing base full leeway to turf the genteel Mitt Romney's of the field and go with a more "extreme" candidate.  Think about it.

Over in Euroland things only get progressively worse, despite Greece receiving its Bailout v2.0.  Reminiscent of last year, now Portugal is next in line for yet another bailout.  Meanwhile credit insurance (credit default swaps) for all of the debt-impaired Euro zone nations remain at record highs, meaning the market is calling the bluff on Europe's extend and pretend bailout strategy of throwing good money after bad.

Yet, for all that, apparently we are now on the verge of a new "super bubble" .  This article perfectly captures the zeitgeist of the moment, especially for the Greedbots on Wall Street.  Cody admits that the economy is in shambles, current policies will be a disaster in the long run, and the average household is essentially a non-performing asset, yet dammit there is still a ton o'money to be made !  Apparently, these disconnects from reality can go on for quarters, years, ney decades!  (Let's ignore the fact that there has been a disconnect from reality for years already).   So this GenX former hedge fund manager says to the 2% of Americans who still have any discretionary capital available - get out there and take full advantage of this fucked up situation!  Or, in his words, current conditions are "WILDLY BULLISH" for the stock market.  Unfortunately, he does not elaborate on any sort of exit strategy, but that is assumed to be a detail.  Nor does he quite explain how the 5th generation of iPhones will bring about the next Tech bubble a la Nasdaq 2000, but aside from that, one is to assume it's a plausible scenario...?

Unfortunately, the only bubble right now is in greed, stupidity, and denial, and yes it is the Mother of All Bubbles (MOAB).