Jim Cramer actually said something that has merit, why are the markets are still going up? A spiral worm hole for the economy, we wonder what our economy is anymore, a consumption society, if people dont spend, the economy falls apart, Wall Street has created the market the way they want it, You get a bizarro world where markets rise despite a crumbling, debt-laden economy.
“We all know it’s going to end badly, but in the meantime we can make some money” - Jim Cramer 3/5/2013: Read that quote folks and burn it into your memory. He didn't say that because he was being smart, he said it in response to Stanley Drukenmiller telling the morning crew on CNBC how bizarre things have gotten. Cramer had no intelligent bullish response and coughed up that line. Funny, it's one of the few honest things he's ever been forced to say.
Why Does It Still Go Up?
I was sitting with my 83 year old mom on Tuesday evening and the 6 pm evening news was just "agog" about the market putting in an all-time new high. My mom is old enough to remember some rough times. She was a depression era baby. She listened to the shouts of joy and turned to me and said "Why is the market going up? A lot of my friends at Bingo say their Grandkids are having a hard time."
In the past week, quite a few people have asked that very same question. Considering that the economic reports are dismal at best and horrid at worst... how and why does the market move up? Well, pull up a chair because there's a lot to chat about, and it all has big time consequences for each of you.
The economy is in a spiral worm hole. If the Fed's do not continually shoot juice into the system, we'll get flushed down the toilet. So they have made it quite clear that they will use "every manner possible, both conventional and non-conventional" to keep the economy from a deflationary depression. So, since they have admitted to us they will pull out all the stops, and do things that are not in their charter, it becomes a bit easier to understand why the market can do things in the short term that defies logic.
The money the Fed prints out of thin air, or the so called profits it makes on CDO's and the Mortgaged backed securities it purchased, is a lifeline. It's a heroin shot. It does not create demand, it does not create fundamental economic soundness. In fact, it "chases away" real investment. This is why after years of bail out's, quantitative easing, and all manner of hokey Fed maneuvers... we still have unemployment hovering at unacceptable levels and wages stagnant. It keeps things afloat, but it's not real growth. The second the money flow stops, the economy stops.
Well, what exactly IS our economy? 45 years ago it was an engineering and manufacturing power house. The biggest, best production in the world. We could churn out more product of higher quality than just about anyone. We exported that product the world over, and our country became rich. Very rich. But unfortunately, there are and always have been those people that hate America, those that think a "global" government is preferable. Those that embrace socialism instead of capitalism. Those that think a one world currency administered by a "federation" such as the UN, or the Trilaterals, or the CFR is the only way to go. So, they "changed things".
It is NOT an accident when the biggest manufacturing powerhouse in the world falls apart. It is NOT an accident when the world’s largest creditor nation is now the world’s biggest debtor. Plans were laid; decisions made, politicians appointed, laws/rules/regulations/treaties etc were passed. All in the name of "advancement" of course.
What they changed us into is something called a consumption society. Instead of becoming richer by exporting tremendous goods around the globe and taking in the profits, now we cut each others lawns, as we are a "service" society. The money goes back and forth inside the borders, and we lose a percentage of it each day to taxes and inflation. Now that their 45 year experiment in completely fiat money has been shown to be a tremendous failure, they have absolutely no choice but to continue to print, monetize and debase our currency. The Feds have told us that in no uncertain terms they have "tools" they can use to keep the economy moving forward. Just last week the Fed Head had to calm Congress and reassure them that he has no intention of pulling back the punch bowl. That statement alone pushed us right on up and over the "all time highs".
Another one of the tools they use is propaganda. We see it each and every day via the financial stations. The idea being very simple... since we are a consumption society, we need people to consume. But if they think the economy is crumbling, they don't spend their money, they try and save it. That is exactly what they should do… but because the elites have created an absurd economy, if people don't spend…the economy falls apart. So everything you hear out of the White House, or the media is whitewashed. Twisted. Distorted. Or, simply a flat out lie.
No matter what the truth is, they have to continue the illusion that things are just lovely so the dolts go out and spend money they really don't have, on things they really don't need. This is why they hide 95% of the bad news, while trying to make mediocre news sound marvelous. But... there is a much more powerful way to get people feeling better. All you need to do is make rules, laws and provisions that force the stock markets to rise. Most people think the stock market is the "strength gauge" of the economy. Nothing could be further from the truth of course, but the masses don't know that. They're way too busy watching American Idol and picking their fantasy football players.
It gets even more interesting however. If a rising stock market makes people feel better ( and it does, study after study shows it) AND if a rising market makes powerful people lots of money at the same time... doesn't it make sense that "job one" would be to make the market either go up, or at least... hold steady? You bet it does. That is the WHOLE POINT of this operation. Think of the way it's rigged. In a "free" market, you'd have longs and shorts battling over the direction of stocks. Yet most Americans have their stocks in 401K plans. Did you know that 97% of all 401K's have NO PROVISION to go short? That's trillions of dollars that pours into "the market" and it has to be employed on the long side. Do you think that's by accident? Consider the interest rates. Do any of you really think he's keeping rates at almost zero so people buy houses? Of course not. He's keeping rates down so that the "savers" are "forced" into risk assets. It is sickening that folks saved all their lives and built positions of cash that should be returning them 6+%. Instead they get 1%. Inflation eats them alive. Even foreign governments that used to be happy getting 4 or 5% in our Treasuries are now forced to buy dividend paying stocks. Pension funds too.
Then, whenever the market finally does roll over and fall, instantly the "guru's" start calling for a ban on shorting! How criminal is that? Aren't markets supposed to go up and down? Of course they are. But Wall Street and the politicians have crafted the market the way they want it, and thus "up" is better than down. Therefore all measure and manner of fraud, manipulation, rules and regulations must be aligned to "make' the market go up. It's not an accident that you're 401K can't go short. It's not an accident that in the past they've banned short sales. It's not an accident that corporations are given more and more leeway each year to produce earnings via accounting tricks ( read fraud) It's not an accident that the major banks can ruin the economy, and then get bailed out with taxpayer money, while the CEO's make hundreds of millions. It's not an accident that Corzine could comingle your money and he walks free.
After the market crash of 87, President Reagan created the "Presidents Working Group on Capital Markets". These guys are the big wheels of finance such as the treasury secretary, and the heads of the major investment banks. Their "charter" says that they get together when things look shaky, and try and figure ways to improve the economy. Well that's all fine chatter.. but that's not what they do now. For the past several years especially, this band of mutants which we call the plunge protection team...simply buys tens of billions of dollars’ worth of market futures whenever they want the market to rise. Over the past few years we've seen absolute empirical evidence of it....yet no one questions it. I remember one afternoon in particular in 2010 where the market was set to really break down. The economic report of the morning was horrid and there was evidence the market was about to really take a beating. Then out of the blue, someone bought 200 thousand S&P contracts just two minutes ahead of the close. Instead of crashing, the market roared for 250 points the next day. Coincidence? Give me a break. Who's big enough to buy up 200K contracts? Uncle Sam's boys.
Add it all up folks and what do you get? You get a bizarro world where markets rise despite a crumbling, debt-laden economy. We are witness to the single largest "fraud" ever seen in world history. This is the single largest transfer of wealth this planet has ever encountered. Bernanke's trillions are stealing the accumulated wealth of millions upon millions of hard working savers and forcing them to buy risk assets. Do you all think that this ends well? Well color me crazy because I don't. I know that I harp on Gold and Silver as our only savior during this and it gets old hearing it. But I cannot for the life of me find anything else that will survive well when all this comes to an end, and end it will. Remember, even Jim Cramer Himself said so.