Bulls Are Running

I have repeatedly said "has nothing fundamental has changed" since the Lehman brothers collapse and the subsequent recession and bailouts.

That was not entirely true. Obviously, Government involvement with the large investment and commercial banks is at an all time high. Our government is lending their wealthy players your tax money at nearly 0%, and encouraging them to gamble with it in the stock market. This is a change; not for the better.

Where is all that liquidity, that money, the Fed has pumped into the system? I'll tell you where: in the stock market and the bond market. Both of these markets are bubbles. Stocks are valued as if we are not only going to have a HUGE recovery, but as if growth going forward will be 4-8%. This is ridiculous. Corporate profits are reflecting massive cost cuts during the recession combined with price stability or inflation. This is not sustainable.

Have you seen the rise of the thrift store? Have you notices how average Americans are sick of paying too much for their food and clothing? I know I am. I run in middle to upper middle class circles and nearly everyone I know is either under a great deal of financial stress, or they are extremely cash strapped trying to pay off debt accumulated during the boom.

And don't give me the story that the Chinese consumer is going to save the world. This is just another illusion fat cats on Wall Street float so they can get richer trading overvalued stocks with your tax money. What a load! Really?

What is the primary driver of Chinese growth? Western consumption! They are growing because we have an insatiable appetite for loads of plastic crap and cheap clothing that looks expensive. Chinese per capita GDP in 2009 was $3,700 according to CIA World Factbook.
$3,700. The U.S. per capita GDP was $46,300 (same source). China ranked lower than Iran and Algeria. I know...they have soooo many people.

So let's see...the West is going to pull out of this mess by growing industry and exporting to the rest of the world. By that logic, we would have to be able to manufacture stuff that Chinese people could afford. Too be competitive, we would have to make our products cheaper than theirs! Can you imagine all the high paying jobs this will create?

So, the China story is fiction. Pure fiction, designed to line the pockets of Wall Street bankers with your money. They will once again destroy the value of your 401 (k) with their arrogant government subsidized irresponsible speculation.

So sad. This is what happens when you have a corrupt central banking system. We need nothing short of a financial revolution to save this country.

But the market is up today! NFLX is trading at 75.5X earnings. Green Mountain Coffee Roasters (still under investigation for irregular accounting practices) is trading at 58X earnings and a Goldman Sachs party boy got kicked out of his $30,000/mo Manhattan apartment complex for partying too hard. It's a MAD MAD world we live in.

PBS had a great special about the recession the other day:


Did you see that guys flat screen? Did you see the booze stash behind him while he was sitting on this leather couch? No seriously, I feel bad for the guy. I would rather see unemployment benefits extended and mortgage debt forgiven for the middle class than slick Wall Street traders profiting from government favors. But you know, our government has to have its priorities.

All I can say is: if the Fed keeps up this kind of behavior and the public ever catches on, there will be a revolution in this country.