Addiction
JHoward
John Markman, Market Watch:
The stock market loves President Barack Obama. With all its cheating heart, and all its mercenary soul.
Despite his threats to soak the wealthy for more taxes, despite Fed Chairman’s attack on savers, despite even his threat to kill special treatment for dividends, institutional investors have thrown themselves at Obama’s feet as they have not done in the first term of any president in the past century.
You could look it up. The S&P 500 has gained 76% since his inauguration in January 2009, while the Nasdaq 100 is up 128%.
Compare that to the S&P 500’s 13% decline and the Nasdaq 100’s 45% wipeout in the first term of his predecessor, George W. Bush; or the mere 25% gain in the first term of conservative icon Ronald Reagan; or even the 60% gain in the halcyon early 1990s in the first term of Bill Clinton.
The staggering advance of the market is probably one of Obama’s greatest accomplishments, and yet, in a rich irony, political sensitivities prevent him from bragging about it.
The beauty part is that this was not a coincidence, beginner’s luck or a historical fluke.
The administration and the Federal Reserve run by his appointed chairman, Ben Bernanke, have systematically stuffed big banks’ pockets with cash in an unending rescue effort, slashed interest rates to the lowest levels of the past 300 years, diverted senior citizens’ savings to revive the moribund residential construction industry and showered drug makers and insurers with fresh sources of revenue from his health care overhaul.
In other words, yeah. And you know what? All the protections in the system won’t protect Heroin Nation from endgame.
Are you listening now pragmatic Republican progressives? Adaptability may be the human race’s most valuable asset but clearly it’s also it’s most delusional liability.
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I really wish that someone would explain this in terms I can understand. Finance and economics are not my business, so I read all of the financial news with frustration and fear.
I understand the fact that prices on everything from gas to milk are rising. Nobody can sell their house. And layoffs. And printing money.
Other than that, I wish there was a “finance for dummies” blog
Fighting free candy with sensible, sugar-free toothpaste and brushes has always worked, though!
Ah, well. Turns out not teaching people principles in our schools, families, stories, newspapers, and corporations couldn’t squeak out a victory for us.
Who knew?
They know they can no longer service the debt, so they are deliberately working the market to keep the debt checks from ever becoming due. This is done mostly in the hope that cooperation will somehow magically start performing better, and other wishcasting.
Corporations. Though “Cooperation” too. That we still just don’t understand the concept of “Hand Outs = Hand Ups” and other modern American idiocy.
Clearly, we don’t care. We have the Greek example before us and it means nothing to us to charge down the same path. People will look at Greece and argue that it proves austerity, not spending, is the problem, and people actually believe it. We’re actively breeding in idiocy.
We’re going to evolve ourselves out of existence. FORWARD!
missfixit, it’s not about economics and it’s not even primarily fiscal. It’s a monetary problem believed to be guaranteed by all debt money — “fiat”, printed money in a single closed reserve system where money is literally debt by policy — as such debt money inherently passes a no-return point and goes belly up.
Before which, of course, it makes the perfect tool for rampant socialist spending, the two being rather compatible.
It’s said that as each dollar is lent into that single closed system, it incurs debt (which today you see being lowered as the scheme matures and approaches lock-up) which obviously cannot be repaid from that same currency source — the interest debt stands apart from the original notes that create it and so debt balances increase.
You get inflation and the need to inflate. But as the interest debt increases and the system contracts, you get rampant debt-money creation and a natural transfer of wealth to the creditor.
It appears we crossed the no-return point in 2005. This piece tells you what you need to know.
missfixit, look up Austrian Economics. Here is a link that is worth your while to help you out in your studies:
http://www.mises.org
Read as much Mises and Rothbard as you can.
Progressive systems — systems divorced from reality and believed to be instead subject to policy — are inherently prone to positive feedback, that being where the system’s net effect drives its managers to double down. Public education is one, the welfare state is one, and this money is one.
That’s the “heroin”. Withdrawl is just too painful to contemplate and so we’ll just remain addicted until we croak.
an Obama voter said that to me last night. That the “slightly troubling times” that Greece was experiencing are due to austerity and Greeks not paying their taxes!!
what is the end game of all this, and how quickly does it come crashing down, is what i want to know
We aren’t an island nation. When we go down, we’re going to go down explosively, like New Jersey and it’s complete failure to help those people. Go back to basics: surround yourself with people you can trust and a local government with as much sanity crammed in as possible.
Save goods, not money. New York’s only option left is to lie to you, don’t let them. Remove as many obviously taxable things as you can in your life that won’t cause serious suffering, especially if you aren’t sure you can defend them against an “Occupy Wall Street” mentality.
Above all: Obamabots are going to get very smirky and stupid. Remember how the Ant and the Grasshopper worked out, and at least there’s not that much blood in the streets yet.
from the above linked article:
“The Fed has only two options: institute a new monetary system with a new currency or return monetary authority to the market and shut down.”
but what does this MEAN?
Welcome back to the age of ” stick ‘em up politics”. Have your danegeld and/or jizya ready as you pass the hoard. Please be civil and compliant. Resistance will not be tolerated. Suspected violators will be crucified. Some token non-resisters may be crucified anyway or selected to try our new “brass bull: process. We regret any inconvenience this may cause you racist. Rejoice my people! For we will fill your mouths with sweet free Peronista bananas. Just sign up for the waiting list over there.
No idea, missfixit, but in this sort of global climate I’m guessing monetary crisis > a period of street panic and looking to “leaders” > them responding with global currency > enormous public relief > cashless economy > a new order > denial about the whole sordid mess.
I don’t know, JHoward. Would Zimbabwe have crashed if they had credit cards? Not the idea of credit, but the ability for everyone to carry wildly fluctuating amounts of cash in their pocket?
New world order is certainly a possibility, though. But, even though I’m Catholic, hell to that.
Heh, JHoward nails it. The fed ain’t going nowhere. The government needs it.
rnabs, I too am a fan of the Austrian School. Von Mises was a genius.
Missfixit, Milton Friedman’s Road to Serfdom and Freedom to Choose help explain supply and demand and how government interferance deforms the system and leads to the problems we have today.
Milton Friedman has gone to his reward and is yelling at us. “I told you so!”
It means PAIN like you can’t possibly imagine, because the West hasn’t experienced anything like it since it became the West.
It means our descendants (for those of us who get to have descendants) will look back upon our times as a fairytale age of very silly people who frittered away their lives in useless inane frivolities.
Hayek is Road to Serfdom
also Consitution of Liberty
missfixit, I also have to recommend two books by the great Henry Hazlitt. They are Economics in One Lesson and The Failure of the New Economics. The first book is about the best primer on Austrian Economics I have ever come across written in a very colloquial way so it is a very easy read. The second book is a scathing rebuke of Keynesianism. Also a very easy read. Hazlitt’s style was great for the layman to understand. They should be both easy to find on the mises.org site.
After those two, immerse yourself in anything by Rothbard and Mises. Mises’ grand tract is called Human Action and is about the single greatest book written explaining economics and how it pertains to well, human action. Rothbard’s best work, or at least my favorite as it pertains to economics, is Man, Economy and the State. Happy Reading.