Friday, March 8, 2013

Greed and Kapitalism

Why is it that when the market was at its low after Lehman in March 2009, no one wanted to own stocks. Yet, now four years later, no one can think of a reason not to own them, even though today's rumour was that North Korea is now preparing for war with the South...The Dow was up 67 points on the news - yet another all time high (yes, we also got news of fewer jobs outsourced this month than last month...). 

Pure blinding greed, that's all. Nothing more, nothing less. So if people are not acting particularly rationally at this juncture, we have to take into account the fact that they are guzzling the Kool-Aid by the barrel full...

Apologists for the status quo, tell us that greed is a side effect of capitalism, indeed that greed is what fuels capitalism. I am not going to make a political statement about that assertion, only that periods driven by blind greed such as we saw in 2000, 2007, and this current one, always end badly. The indicators are now all eerily lined up the way they were leading up to the two prior collapses. More to the point, one could argue that the Central Bank programs which have pumped trillions into markets were intended to artificially fuel the "animal spirits" (aka. greed) in the face of the overwhelming fear that emanated from 2009. That's all well and good, except avarice is not an emotion that can be controlled by a bureaucrat - once it gets going it takes on a life of its own, as we are now witnessing in real time. It makes people take risks they otherwise would deem foolish and reckless.

So here we are with a phony and manipulated market, wedging to a very narrow top on low volume in the face of extreme event risk and overwhelming complacency. We know one thing for sure, the middle class can't take another bludgeoning at the hands of the markets, and yet that's exactly what they are buying tickets for now.

The bottom line is that I don't know if greed will kill capitalism, but it's going to take its best shot. What happens on the other side of this inevitable "unwinding" will determine the fate of capitalism in many corners of the world. I suspect it will survive in some form or another in some places or another. Globalization on the other hand, will be a burnt offering to the gods of rage.

All In - One...More...Time...
The definition of insanity is doing the same thing over and over again, yet each time expecting a different result. On the other side of 2008, the shell-shocked Idiocracy sold its soul to get retirement back on track, demanding no reforms from Wall Street. Even after the 2011 meltdown, the comfort seekers at large ridiculed Occupy Wall Street for even suggesting reform. Of course that same fear gave Central Banks license to manufacture a bogus recovery based soley upon an expansion of the money supply. Meanwhile, the corporate sector took the opportunity to outsource what was left of the economy. Therefore, there is no reason to expect this liquidity-driven bubble will end any differently than the last two credit inflated bubbles that brought us to these levels. The Elliot Wave Types are now labeling this a "b" retracement wave, meaning it's a phony, low volume,  speculative rally premised upon a pseudo-economy that is financed by pillaging the grandchildren and printing money. A phony rally for a phony society...

S&P 500: Got Volume?