Friday, May 15, 2009

A Shift in Sentiment

Today I smelled a whiff of fear in the air. Stocks retraced today as the DOW had its worst week since the "green shoot" movement began a little over 2 months ago.

So what are investors afraid of? Oh my, Where do you begin?....Lets let Howard Davidowitz, chairman of Davidowitz & Associates explain why:

"The debt doesn't go away!":






I really don't have much to add here. I have been preaching the same thing on here for over a year now. The consumer will never reach the heights that it did in the early 2000's. The housing ATM is gone, and its time to pay the bill.

More "green shoots"

Since the consumer has been replaced by the governments balance sheet in the form of bailouts, one might expect to see corporate earnings swirl right down the toilet. I mean after all, the government isn't fueling any growth in the economy with their spending binge.

The're too busy using it to bailout their corrupt banking buddies. If they aren't throwing money at Wall St, they are throwing it into every company that has failed. Chrysler/GM ring a bell?

Regardless of who gets it, the money is not ending up in the real economy. The handouts usually just evaporate as they are used to mop up massive debts on corporate balance sheets. If the money isn't being used to mop up debt, its hoarded by the banks as they attempt to survive the oncoming depression that they all know is heading right towards us.

If the banks aren't hoarding the cash, they are sending it to their trading desks where it's used to manipulate our corrupt stock market. After they rake in a nice trading profit at our expense, it goes right back in the safe never to be seen again.

You didn't think they were actually going to lend that money to us did you? HA! The bankers are laughing all the way too the bank(no pun intended) after stealing $700 billion in TARP funds from the taxpayer..

Since none of the government stimulus is getting into the real economy, corporate earnings are COLLAPSING.

Sit down before you take a look at S&P earnings chart below:







Stunning isn't it? I thought those assclowns on CNBC said that stocks were cheap? HA! Your kidding me right?

Folks, I am not exaggerating when I tell you the economy is being destroyed right before our very eyes. All you need to do is look at the numbers. The real economy is crashing because the government stimulus is being thrown at the bankers and other corporate oligarch's instead of "we the people".

You think its bad now? You haven't seen anything yet.

A few questions for the powers that be:

Why didn't the Fed take their trillions of dollars and use it to create jobs versus bailing out crooks? Why didn't they at least use it to shore up social programs that are going to be desperately needed when this debt bubble collapses?

WHY IS THE MONEY BEING THROWN TO THE WALL ST THIEVES?

WHY ARE WE WASTING THE REST OF THE MONEY ON COMPANIES THAT DESERVE TO FAIL?

Remember the good ol' days where companies that failed went out of business? History has shown us that it's wasn't the end of the world when a bank or a company failed. Wall St would like for you to think that. They want you believe that if they fail the economy collapses and we all go down with it.

Funny, I don't ever recall seeing this happen before. We survived The Great Depression when thousands of banks failed. Guess what? New banks with healthy balance sheets would most assuredly take their place. This is how capitalism works!. The reality here is this is nothing but a mirage that Wall St has created in order to save their own asses via government bailouts.

The same goes for non financial companies that have failed. Has everyone all of the sudden forgotten that new companies can arise from the ashes of failures that have actually have a chance to make a profit? Perhaps if GM failed a smaller stronger car company would replace it that actually has a chance to grow and create new jobs! If AIG failed I am sure there are plenty of other insurance companies that could replace AIG.

I mean Christ: We have thrown $170 BILLION into AIG and what in the hell do we have to show for it? NOTHING! If they failed tomorrow are we all going to die? Doubt it.

That's it for me today folks. Its time to throw back a few beers and escape reality.

Depressions are much easier to tolerate after a few cocktails.

Until tomorrow!

14 comments:

Jeff said...

Back to the usual comments.

Couldn't get Disqus to work right.

Have a great weekend!

Anonymous said...

Jeff,

As further proof of the economy meltdown, the "recession proof" gaming sale felt again in April.

http://www.tomsguide.com/us/Gaming-Industry-Loss-Recession,news-3937.html

Even Sony reported the 1st annual loss in 14 years.

http://news.smh.com.au/breaking-news-technology/sony-reports-1-bln-annual-loss-first-in-14-years-20090514-b4ss.html

It is ugly out there. Corporate earning has no where to go but down because the consumers are firing blank from their pockets!

Minton Mckarkquey said...

Two interesting comments today, both on NPR...

- "The green shoots have turned a little brown."

- "The level of employment among white-collar professionals is unparalleled in history".

Definitely, we're on the next slide down. Fun to have a break for two weeks though.

Jeff said...

Anon

Wow! Down 30% that's ugly. I love to gamble and I know I have cut way back.

My guess is people are loading up on Nintendo's because they look at it as a solid investment long term. They are now realizing that they can't go to TGI Friday's etc. with the kids 2-3 nights a week and spend $100 each time in the process.

Jeff said...

Minton

Yeah

The rally did lighten everyone up didn't it? People were getting flat out grumpy when the market sat at 6400.

I suspect the torches may come out when we retrace.

The price action and lack of follow through on the recent rally took a lot of air out of the bulls.

Next week should be interesting. I wanna see these financials sell of of this new stock. Something tells me thats not going to be as easy as Wall St. thinks.

Who wants to invest in insolvent companies?

CT-Hilltopper said...

I love what you came up with from the link I left on your site earlier, you are truly talented. I posted on another thread as "Ich bin ein "whatever"", but I can't use that nick since you decided to leave Disqus.

What is low about the whole thing is how they are trying to sucker so many innocent people into this shell game, Ponzi scheme, whatever you want to call it. It's a complete set up. They let you win a little while to completely sucker you in, then pull the rug out from under your feet.

The poor rubes never see it coming.

As I told you in my previous post, I spend a lot of time reading the Market Ticker and the Ticker Forum, so I know that Karl D. is pushing hard for indictments from the ground up for all of the lawbreaking and fraud that has been going on since the beginning of this thing. I just don't see it happening. There may be a token arrest, if that, and I don't even think that will happen. This, on top of all of the unemployment and the foreclosures will be what makes TSHTF. I don't know when it will happen, I don't have a crystal ball, but I do think it's going to be on O's watch, and it's just as much his fault as it was Bush's so I have zero sympathy for him.

Jeff said...

CT

Thanks a lot. I really appreciate the kind words.

Thanks for bearing with me on the comments. Disqus was an experiment for a day that failed. Wow something finally failed in the USA? Better call the TARP Disqus. I am sure they have some bailiout money for you!

LOL...I am sure they will survive without my little blog.

CT

Karl Denninger is awesome. I am a frequent visitor to the Ticker forum and I support everything that he does.

Hopefully with enough noise we can all make a difference. This fraud sickens me everyday and I won't sleep well until we have put it behind us!

Best

J

BAM said...

Jeff,

I am at a loss here. I am hoping you can explain this whole mess for me. Couple of days, a memo is released saying that the banks (GS, BoA, etc) were forced accept government help. While media is coming up all sorts of articles on how wrong this is, I don't think none of address the central question of why? Why was government threatening to accept the money? Were the banks not in need of capital? If so, why would they be forced? I would think they would happy to accept the free loan available from government. There is no question that most of big banks are in fact insolvent. Why would they have to be threatened? I think there is more to the story than it appeals....

Loved your article today as usual. You think this is the start of a major downward break? If so, what's your guess on the final bottom? My guess is SPX in the mid 500's.

Cheers!

BAM said...

Missing few articles in my previous comment. Sorry, I am in a hurry. Hopefully you won't have problems understanding it.

Cheers
!

Anonymous said...

enjoy your beers!

Jeff said...

BAM

Thanks!

OK, the banks all had to take the TARP funds because the Treasury didn't want to cause bank runs.

IF 8 ignored the TARP and 2 Didn't the ones that took it would have accepted it been vulnerable to bank runs.

All of the banks need capital, the ones paying it back shouldn't be.

The only reason they are paying it back is so they can pay huge bonuses to the pigmen that wouldn't be be acceptable if they were government owned via the TARP.

The whole thing is a farce. Every one of them will end up insolvent IMO.

Maybe GS and MS are solvent. I don't believe it until I can read a balance sheet.

Hope this helps!

CT-Hilltopper said...

Hi Jeff:

Screw Disqus. Any comment section is a comment section. Correct? This one serves it's purpose.

As far as the conversation regarding the solvency of the banks goes, I don't trust the books of any of the banks. I don't believe any of them are technically solvent anymore. I think with the new wave of foreclosures in the commercial real estate market...they can tell us what they want, but it's like PT Barnum said, you can fool some of the people all of the time (paraphrasing, kinda), and with the amount of sheeple we have in this country, we are screwed, my friend.

I honestly don't know what it will take at this point to wake the sheeple up. Have O keep pre-empting "American Idol" and "Dancing with the Stars" maybe. That will annoy them - it might not wake them up.

And these asshats will be looking for everyone else to take care of them when TSHTF. That's what really pisses me off. That sense of combined helplessness and entitlement coming from years of sitting in front of their television doing nothing.

Jeff said...

CT

Well said!

I totally agree.

There will come a time where there is no money left and the country will start asking "where did all of the money go?".

I was interviewed a few months ago by CNN and the reporter recalled being constantly asked about where all of the money went.

Its an easy answer: It went to the bankers!

Jeff said...

post up around 4:30!