Greece is saved!!! I mean BANKERS are saved!!! The market will celebrate the total capitulation of Greece to the EU bankers. Nothing has been resolved. The debt won’t be repaid. The can has been kicked again. Portugal, Spain, Italy, Ireland and even France are essentially insolvent. It’s all a ponzi scheme. The bankers win and the people lose. Hope is not a strategy. Hussman’s weekly tome shows how a crisis plays out. Bad shit happens and the powers that be react with bad solutions that keep their wealth and power protected. Their bad solutions lead to a worse crisis. More bad solutions. And so on, until complete collapse.
Look back to the 2007-2009 market collapse, and you’ll notice something. Despite repeated monetary and fiscal interventions, a positive shift in market internals didn’t happen until March-April 2009. In hindsight, it was none of those interventions that produced the shift, but instead the change in accounting rule FAS 157 in the second week of March 2009 that finally ended the collapse. That accounting change eliminated the “mark-to-market” rule that had required banks to report the value of their assets at market value, and instead allowed banks considerable discretion to choose the value at which those assets were reported. With the stroke of a pen, banks that were insolvent on a mark-to-market basis became whole on a mark-to-model basis. In hindsight, regulatory authorities used that change to abandon any further action that might have put those insolvent banks and financial institutions into receivership or conservatorship. In the end, it was not monetary easing, nor troubled-asset relief, that ended the collapse. It was a change in accounting rules.
A similar failure of memory seems to prevail when the media incorrectly suggests that the collapse of the market in 2008 began with the Lehman bankruptcy on September 15. The fact is that the market fully recovered to even higher levels the following week as the government banned short selling of financial stocks (much like China is doing more broadly at present). Weeks later, in a wicked case of “sell the news,” the actual collapse started literally 15 seconds after the TARP bailout was passed by Congress. Investors want to tie market outcomes to very specific events or catalysts. But history suggests a different lesson: once extreme valuations are joined by a shift toward risk-aversion among investors, the specific events become irrelevant. One way or another, the market is likely to get hit by a truck.
In October 2008, as the global financial crisis was in full force, Robert Prechter of EWT published a very instructive graphic illustrating how the accumulating market losses were descending along a “slope of hope” (the corollary to bull markets climbing a so-called “wall of worry”) despite repeated official interventions. Notice that aside from very short-term rallies following various interventions, the market kept collapsing. We encourage investors to learn from this now.
The S&P 500 would ultimately plunge below 700 by March 2009. Importantly, investors who “followed the Fed” during the 2007-2009 collapse would have done so through the 55% loss in the S&P 500, because the Fed began easing weeks before the 2007 peak, and kept easing all the way down. As in every other market cycle across history, it was far better to follow the condition of investor risk-preferences directly.
Don’t make the mistake of getting the relationship between monetary interventions and the risk-preferences of investors backwards. Monetary easing and other interventions can be very effective when they occur against a backdrop of risk-seeking investor preferences, but history shows that they regularly fail when they occur against a backdrop of risk-aversion among investors. The best measure of investor risk preferences is the uniformity or divergence of market internals across a broad range of risk-sensitive securities. Prechter describes the prevailing psychology of investors with the term “socioeconomic orientation,” and his observations on this, I think, are exactly correct:
“People keep asking, ‘What effect will the next central-bank plan have on the stock market’s behavior?’ This is the wrong question. The socioeconomic orientation turns the question around: ‘What effect will the next stock market move have on the central bank’s behavior?’ Just study [the chart above] and you can see that the authorities are not pushing the stock market around; the stock market is pushing the authorities around. Sadly, when markets push authorities around, authorities push people around. All it does is make things worse.”
“With the stroke of a pen, banks that were insolvent on a mark-to-market basis became whole on a mark-to-model basis.”
Change ‘mark-to-model’ to ‘mark-to-fantasy’.
My brother in law is very religious, he promised me the collapse comes this September, around the 15th I believe, something to do with a blood moon?
Don’t remember, it was a party and at party’s I tend to drink a lot of Jim Beam. I drink because my bother in law is very religious……
Card , Jesus Christ told me it would be in September. He appeared to me this morning out here in beautiful Tacoma Washington.I usually charge 50 bucks for this kind of information.
Greece is doomed, I mean ow does one get out of debt by adding more debt? Oh, that’s right, it’s the American Way. John
@bb: In September we’re going to get hit with the extinction asteroid.
If people truly understood what has happened across the western world between central banks and the bailout of private banks, they’d be lynching these bastards on lamp posts and clubbing them in the streets with bats like baby harp seals.
The public gets saddled with massive debt covering the bad loans of private banks in a process known as, “privatizing gains, socializing losses.”
Next go round let us pray the public doesn’t fall for it, but I for one think the masses will once again jump when the Treasury goes “Boo!” and give a blank check for bailing out the bastards.
As Gary North wrote this AM:
“Americans may think Europeans are all fools, but this is pretty much what goes on in United States. The Federal Reserve lends money to the Treasury, and the Treasury pays interest on the debt. Then the Federal Reserve hands back virtually all of this money to the Treasury at the beginning of the next calendar year. It is all kabuki theater.
The central banks control the economies of the West, and therefore they control what happens to politicians. But the general public is unaware of this. For over a century, the largest banks have concealed the extent to which the banking cartel controls economics and politics. The Federal Reserve and every other central bank serve as the enforcing agents of the managing directors and owners of the largest domestic banks.”
The government of Greece is going to go bankrupt. The Eurozone is going to go bankrupt. The European Union is going to go bankrupt. The Great Default is going to overwhelm all of the political democracies of the West. That, we can count on.”
Germany’s largest public TV broadcaster’s most popular show explained how, “Greece was assigned to its place…”
Really? As James Kunstler’s article posted here on TBP noted, “I’m betting there will be gasoline bombs flying across Syntagma Square by mid-week.”
Prechter’s thesis boils down to, “(collective) mood governs all.”
I think this is one of the most important hypotheses ever developed. Unfortunately, I have not found it to be particularly helpful for “making money.”
The world is a product of the complex system made up of a digest of people’s mood. As a complex system it spends time in trends (coherence) and passes periodically through periods of incoherence (chaotic periods) where the trend may or MAY NOT change.
Those “nodes” of possible trend change are “V-shaped” or “I-shaped” (reversal or continuous, respectively) and sometimes they are periods of net sideways activity where things appear to not change at all.
I continue to experiment with using common technical analytical tools to assess this “deeper” grasp of Prechter’s work. The jury is still out, to say the least.
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The 1 hour chart (not shown) and the 5 minute chart (also not shown) both are very, very, very consistent with putting in a high for this current couple-day rally.
There are now two (2!) major gap-up opens from the last two trading days.
The daily chart below shows the SPX has, at the end of trading today CLEARLY filled the gap that opened two weeks ago.
What does this mean? We’re at what I call a “node.” The conditions are right for a reversal. The reversal would be potentially one of great significance, since if a larger decline is evolving, the next “wave” down should be (in Elliott Wave terms) a small degree 3rd wave, and thus *very* noticeable. This would occur if this “node” resolves as a small degree trend change from up to down.
It also could mean that, with two melt-up days in a row, with the daily charts showing price came off last week’s oversold condition and now above the 13 and 26 period EMA’s, a new moon-shot to all time highs could be in its early stages (which would mean this “node” resolved as continuation higher.)
Since social mood (and the stock markets that reflect it) follows a patterned complex system, there is (in my view) absolutely no way to know for sure which path lies ahead. The “news” is meaningless, it is a reflection of the recent trend and bears no relationship to the future trend (until we look back and say, “OH, that’s what the news was telling us!”)
I’m carrying a small leveraged short position with the view that I want bragging rights to say, “see, I told you the S was going to HTF.” Of course, if Mr. Market simply continues higher much from here, I’ll have little choice but to close out at a loss and grumble about PPT’s and con artists and buy-and-hold fools.
No one knows the future.
[img]http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=spx&uf=0&type=2&size=2&sid=3377&style=320&freq=1&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=4&rand=584618398&compidx=aaaaa%3a0&ma=5&maval=13&lf=4&lf2=32&lf3=256&height=553&width=579&mocktick=1[/img]
A rally back to this level was never assured, but it was the highest among bearish probabilities. Bear declines tend to be precipitous; the moment they begin to stall, one has to begin looking for overhead resistance and retracement attractors. 2100 on the SPX was such an attractor.
We’ll see what happens tomorrow and the rest of the week.
Jesus just sent me an email. HE didn’t call you bb.
That’s brain damage/retardation telling you HE called.
HE also said to stop using HIS name to justify your stupid comments.
New bumper sticker idea:
“Be a patriot. Kill a banker today!”
The free shit army is the banker fucks that get 0% loans from demonic assholes at the Fed.
Welfare recipients didn’t collapse Greece or start wars that blow trillions. They give welfare to people to keep them quiet & buy their vote. Hush money.
D.C. the charts and technical analysis thumbs up. I think the banks have not transferred their bad loans to enough suckers. Hence, the bail outs continues. I don’t know when but when they have reduced their exposure enough look out. The market is a psychological thing.
bluestem, your name catches my attention. Do yo live in the Flint Hills. Beautiful cattle country especially in spring. There are places there where it is exactly as it was 200 years ago except for the vapor trails in the sky.