Monday, July 16, 2012

The Good News Is The Bad News

Greetings, investors! I have great news! The economy is headed towards a fiscal cliff and economies all over the world are struggling. Isn’t that great? Yes, of course it is. You know what that means?
Here comes the ‘stimulus man’ - here comes the ‘stimulus man’!! Yippee!! We’re saved! Let the buying begin.
Have I lost my mind? Hardly. The ‘market’ is dead and buried. Capitalism has been exterminated. Central bankers now set prices for everything. And, as we now learn from the LIBOR sham, the banksters make all their money on insider trading. Don’t try this at home, kids. They put Martha Stewart in jail for that. But banksters have different rules to follow than the rest of us. Well, actually, they don’t really have any rules other than to cheat the system any way they can and if they get caught, they just request a bailout. 
So here is the deal. The indices are now in the hands of the banksters. Societies, citizens, and formerly sovereign nations have surrendered to this new system else the banksters threaten to drive all indices lower. No stimulus means no rally and most certainly a depression. We wouldn’t want that, would we? No, of course not. So remain prostrate and keep the white flag flying. In the meantime, enjoy the rules of the new indices. The good news is there is a lot of bad news. That means central banker stimulus.
The US economy is sputtering at best. Consumer confidence is waning. Unemployment is still very high. And the Supreme Court just affirmed that the ruling regime has the right to tax its subjects out the wazoo and they can call it ‘health care reform’ or anything else that stupid people are willing to believe. That means there is another round of stimulus around the corner!
The Chinese economy is slowing quickly to something like a 7% growth rate. There is a property meltdown underway. Premier Wen announced that there was no sign of ‘recovery’. That means there is another round of stimulus around the corner!
The situation in Europe is terrible and it will only get worse. Most likely, the EU is in a recession now. Of course, like the US, they will continue to lie about it in hopes that if they tell a big enough lie long enough people will begin to believe it. The fact is, EU nations are broke, insolvent, and totally dependent on perpetually expanding debt. That means there is another round of stimulus around the corner!
The US retirement PONZI scheme known as ‘social security‘ is getting drained like a swamp over an oil field that a poor farmer owns. By law, funds in the system must be invested in US Treasury notes. Those notes currently yield less than 1.5%. As the months and years pass, that yield will move ever more toward zero. So, we are asking citizens to for over money for decades of their work careers to put into an investment that earns nothing at the hands of a central bank who works to devalue currency every day so that the bankster cartel can continue to borrow at zero to no doubt participate in insider trading with their derivatives linked to LIBOR. Even the idiots in Congress will one day realize the nature of the PONZI scheme and they will no doubt do what members of Congress do - they will raise our taxes to pay for the mess! That means there is another round of stimulus around the corner!
Retail sales just contracted for the second month in a row in the US. That means there is another round of stimulus around the corner!
The IMF just cut the emerging market global growth forecast. That means there is another round of stimulus around the corner!
I could go on but you get the picture. Bad news is good news because it raises the probability of more central banker injections. The stock indices are now totally dependent on this action for stock rallies. 
The chart below is a 3-year look at the Dow. We can clearly see the effects of Manipulation Ben as each stimulus/ bailout is announced. In mid-July, 2012, investors are waiting for the next Fed announcement of when the next operation will begin. This is a given. We all know beyond a shadow of a doubt that there will be another manipulative operation. It’s just a matter of when. Interestingly, the chart below is a monthly look at the Dow over these three years. During this span, there have been only 12 negative months. Given where the world is in terms of economic failure, it is both extraordinary and nauseous at the same time.
This tendency to rally on Fed action is extraordinary that assets are purchased on the acceptance that economic conditions that support those assets are disintegrating. Thus, in the new era we get Fed stimulus. The Fed actions trump reality. For those of us who love freedom and capitalism, this is nauseating because we are no longer free to set asset prices ourselves. Nor are we free to exercise investment skills to navigate through difficult economic times.
Nevertheless, we should now be cheering for more bad economic news. Ben will keep blowing the bubble bigger and bigger and bigger. As the chart shows, Ben prefers to blow the bubble in late summer or early fall. Get ready to buy with abandon. Ben will soon be blowing the wind to our backs. Bad news is great. Terrible news is even better! One could only dream of how high the Fed would push the Dow should a full-scale world-wide depression put every worker on the planet out of work and in poverty. Would that be great! Rally ho!!!

3 years - DJIA monthly
Chart courtesy
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.

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