I am reminded over the weekend of numerous reasons why the stock market is rising
the latest reason is real, but will likely backfire
institutionals are rebalancing with some movement of money from bonds to stocks
this is only natural, as they prefer certain weighting
but it points out their preference 100% for stocks OR bonds
for over 20 years, when stocks rose, bonds fell
or when bonds rose, stocks fell
the only exception since 1980 has been in the late 1990's when stocks and bonds rose, courtesy of the Gold Cartel which used leased gold to subsidize TrezBonds, ushering in the Virtuous Cycle
they explained it away improperly and corruptly as the Productivity Miracle
now that Virtuous Cycle invites a correction, ushering in the Vicious Cycle with a declining dollar and rising rates (soon)
now we are soon to enter a period where both stocks AND bonds lose
such institutional managers will be forced to sit in cash, or else pursue something unconventional, like gold
this will require homework, research, and courage
in the last era, Trez debt pushed out Gold, since it offered a return interest rate yield
this was the suckers temptation of all time !!!
now the excessive debt will be written down during an unprecedented debt liquidation
in time, the writedown will include the USdollar
and entire national banking systems and economies will be put at risk for making a deadly transition from safe hard reserve assets to indebted assets subject to writedowns
what is the return yield on TBonds when rates are rising???
negative
in such an environment, gold will rise
then you have all these Wall Street cheerleaders whores who like to blame Enron and WorldCom as 95% of the problem
this is extremely shallow thinking
Enron and WCom represented "the canary in the financial coal mine"
they are not the exception, but rather the rule for fraudulent accounting, hidden debt, colluded recommendations, bribery, other criminal enterprise
they indicate endemic problems laced throughout the entire financial system
the problems are many, and they apparently dont focus on them
- strong dollar decimated US mfg, resulted in historic trade gaps
- long bull had govt covert gold/dollar operations behind it
- fraudulent accounting is pervasive
- stock options are not expensed, still an issue
- pension underfunding removed all 2001 S&P earnings, still an issue
- 1990's monetary expansion is unprecedented, invites US$ write-downs
- capex spending now an extinct species
- excess mfg capacity at a 40-yr high
- speed enhancements now irrelevant to PC's
- security threats inhibit travel
- household debts at crippling levels, just as unemploymt picks up
- debt collapse the worst in 70 years
- broken asset bubbles left and right, with more coming over horizon
these guys might be smart, but they are truly shallow
Enron and WCom have nothing to do with most of the above
Cisco accounting and IBM accounting are both fallacious
Enron and WCom are oft-tossed "excuses" for the financial markets to ignore the deteriorating realities of today
I suppose Enron was the villain behind the security threats and 10-yr buildup in Asian mfg capacity !!!
I laugh at these shallow pointed fingers
but the public will often believe them, since largely illiterate
when Dow/S&P is 30% lower, they will find a similar off-mark excuse
remember the claim in early 2000 about "Soft Landing" ???
it is good to remember the past bullshit mantras for refreshment
I dont swallow bullshit easily
I suspect you dont either
we have entered the time period of Profits Depression
whether that is coupled with endless recession, we will see
/ jim |
