Imagine the U.S. Dollar is a mountaineer on a steep ice sheet, hanging on by the fingernails of one hand, and the Euro is this guy that had climbed past him but then slipped and is now sliding back down towards the edge at nearly terminal velocity.
Well, the Dollar just threw the Euro a rope with its free hand, which only works well when using Hollywood physics, but in real life means that both climbers are going over the edge together. I mean, there are a growing number of people now seriously wondering if the Euro will have gone the way of the Confederate Dollar by this time next year
On receiving this news, Wall Street went crazy, proving that the stock market is no longer coupled in any meaningful way to goings-on in the real world.
"The stock market is no longer coupled in any meaningful way to goings-on in the real world." has been a true statement for some time. It is peopled with spineless little weenies who panic and sell all if Bernanke sneezes into his left hand instead of his right.
ReplyDeleteI'm thinking of all those smug bastards from various forums who were dumping their savings into the Euro because the dollar was over about six years back.
ReplyDeleteThe dollar us not better, but I'm pretty sure jumping currencies isn't free.
Ten years ago people suggesting that you buy gold, bullets, and food were likely given sideways glances, and joked about after parting company that they likely had lined their headgear with foil so the (insert alphabet agency) couldn't read or control their mind.
ReplyDeleteWell, in some cases, anyways. At that point I believe I only had my head inserted to my eyebrows in the part of the body normally used to occupy a chair so my "future plans" consisted of what blaster I was putting on the Vance rotating credit line next month.
The good news is that all my limit sells hit yesterday.
ReplyDeleteCan't blame Wall Street; they found out with the mortgage debacle that when you can't fail, there's buttloads of cash to be made in the short run, and this is the bailout to end all bailouts.
ReplyDeleteAnd hey, this way there will at least be parity; if all world economies are in a pile at the bottom, the next logical move would be one world economy. Make no mistake, that's the five-year plan...and we're about to give 'em that five years.
Right now bailing out sounds pretty good. And if the 'chute doesn't open, that'd beat voting in Election '17 for President of the World and having to learn to read and write with all those weird little Chinese characters.
Now where'd I put that box of Confederate scrip...
"In confusion there is profit."
ReplyDeleteLT(jg) Nick Holden, USN (attributed)
"Operation Petticoat" (1959)
dir: Blake Edwards
spoken by Robert Gist
I was looking for a way to describe what the Fed did...but you did it better.
ReplyDeleteI need to start a "Tam did it better" tag for my blog...
The Stock Market is coupled to the real world. Their portion of it actually. Since S+P downgraded 37 major World Banks, all the Gooberment Central Banks went into "DefCon 3", and allowed them to have Free Dollars to cover their butts because they had too many Euros. This, in turn, allowed those same Banks to stay Afloat, thus allowing the next guy in the Food Chain to NOT have to worry about those Banks calling their Loans in. Same thing happened back in '08, except it was Bad Mortgages.
ReplyDeleteThink of being in Vegas, losing all your cash at the Roulette Wheel on Black 17, then being given a Marker by the House to keep playing. Why give out Markers to those who are broke? Because if everyone walks away from the Table and out the door due to being broke, how's the Casino supposed to stay in Business? You gotta have people with Cash willing to come into the Casino in the first place. That's how you start a Ponzi Scheme, BTW. Honest Casinos will ALWAYS have more than enough Cash on Hand.
One guy said yesterday that "It's like telling all the Alcoholics that they no longer have to pay a Cover Charge to get into the Bar, thus letting them spend more money on Booze, which keeps the Distillery Happy. But eventually the Alcoholics will keel over, and then what does the Distillery do?"
Yeah, it's the Real World. That's why Smart People are Investing in "Beans, Bullets, and BandAids" because of this Reality.
Oh, and it makes perfect sense that it looks like the market is going up. It's not. The price of a stock is rising. Stocks are just like any other good that is denominated in dollars. When the dollar weakens, it takes more of them to buy the good. It's an inflation signal, not an expression of confidence.
ReplyDeleteLessee now: If you don't have enough income to pay your debt, how do you get out of debt by borrowing more money?
ReplyDeleteRhetorical question, of course...
Seems like the first priority of government is its own preservation, regardless of the negative effect on the public at large. Oh, and protecting its friends, which means that the public isn't in that category.
I've been trying to convince myself since yesterday that maybe, just maybe, I'm missing some important economic rule I should have learned in the economics class I slept through in high school, and that Wall Street really wasn't peopled by insane, crazed, zombies.
ReplyDeleteThanks, Tam, for ruining it all for me. I'll be in the car taking in sweet sweet lungfuls of CO.
jf
The stock market didn't go up. It was repriced in NewDollars.
ReplyDeleteExpect more of the same.
Sucker Rally...
ReplyDeleteOptimists buy gold. Pessimists buy brass and lead.
Fear and greed, fear and greed my friends.
ReplyDeleteThe thing to remember is there is money to be made by somebody when there is change, up or down, in the market. A market that is stable feeds no one and is avoided by the wolves that prey there.
When Dude and Dudette were told they could get rich feeding on the green grass of mutual funds, thier broker forgot to tell them about the wolves.
Gerry
Not only do I have Confederate script it is actually approaching face value parity with Federal Reserve Notes.
ReplyDeleteAlso have a fair amount of pre-'64 silver coins and LOTS of copper, lead, powder and primers.
Somewhere there was a quote that went: "What's a box of .22s going to be worth in 10 years? A 16 year old virgin."
Heinlein's Crazy Years may have arrived a little late but will make up for that by lasting longer.
I just figured it was everyone saying "Buy now while it's still cheap, so we can sell after it goes up but just before it crashes in a few weeks/months."
ReplyDeleteIOW, everyone scrambling to make a short term profit off of this insanity.
On the Washington Post page there was an ad for a movie called "The Debt". I couldn't figure out whether it was for real, or someone being funny.
ReplyDeletethe Stock Market has been a casino for most of my adult life. It's as related to real life as Survivor is, with the disadvantage that the Stock Market's brand of unreality can seriously crimp everone around, but Survivor's can't.
ReplyDeleteThe theory of the Stock Market is that shares are priced according to the value of the company that issues them.
The practice is that shares are priced according to what investors think the value of the company will be at some future date. And not all of them use the same date: some look to next week, some to next month, some to next year, and increasingly, many simply look to "tomorrow" or "this afternoon".
So everyone is hyping and guessing what company X is doing, and hyping and guessing what other investors will think about what company X is doing if it does it, and when they'll think it. Which means that sometimes companies with good value will be selling low, and companies with low value will be selling high, and sometimes everyone will be selling low or high at the same time.
the accumulated crises of the last few years are exposing the unreality of the stock market; the Euro crisis is simply another step in that chain. But right now the market is a hyperbubble, and eventually will pop no matter what governments and banks try to do, and woe to them that are alive in those days...
What bothers me the most about this is when i bring it up in discussion with people, my age, older than me ( I am almost 50) and the 20 something generation i get blank looks from all of them. The young the old and the average. None not a one knows what I am talking about, the blinders have been in place for too long in most cases or as in the younger group, for all thier lives.
ReplyDeleteThe part that scares me the most however is that when I try to calmly and with intelegence explain I see eyes gloss over and find I have now turned them into Zombies of the first order, There is NOTHING in there, nothing.
My oldest fall in that catagory sad to say but then again she lives 2,000 miles away going to colege and does not watch TV. i consider not watching TV to be a good thing, but being uninformed unforgivable so i try to send her News, Blogs and well needles to say, not there yet.
My youngest has now opened her eyes but askes the best question:"What can we do"? Good question other than writting and calling the congress critters to fix the problem that they jumped into with both feet seems to be ineffective but is our only choice at the moment.
The other choice is anarchy and we have already had a taste of that with Obamas miniuns of OWS. I think we are better than that and I think we can make a difference but we NEED a presidential candidate that is a member of US A real American not a certified died in the wool poletician.
What is the answer, well so far all i have is "None Of The Above".
Help me out here, I need to answer that question "What can we do"?