I know I was surprisingly quiet today. I gotta admit, the $24 trillion TARP failure really bummed me out today.
The market continues to climb the wall of worry as Wall St cheers the earnings beats announced by many corporations in the 2nd quarter. Most of these beats are hogwash because they have been revised down so sharply. Lets also keep in mind that most of the companies are beating on the bottom line not the top line.
All this means is companies are job cutting their way to prosperity. How else do you think u6 unemployment has soared to over 16% in the span of a year? We all know that you can only cut costs for so long. You can't bring expenditures down to ZERO for Christ sake.
As the consumer continues to suffocate as a result of massive debt loads and job losses, earnings at our corporations will once again begin to sag.
I have to give the pigmen credit:
Wall St has somehow successfully turned the stock market into a feeding frenzy once again with all of their spin and lies. The problem here is we all know this all ends folks. Remember the last two feeding frenzies on Wall St? The tech bubble and the housing bubble? Stock holders ended up in tears by the time fundamentals came back to each of these markets.
I am going to call this current mania the "Recovery Bubble". I mean in reality that's what this is. I mean think about it: What is a bubble? Its an unsustainable Ponzi style feeding frenzy that's dominated by massive speculating and eventually ends with prices that are both unafforable and unsustainable.
We all know this is the case right now. The P/E's ratios are more insane today then they were during the tech bubble. Many companies don't even have any earnings in this current cycle.
Eventually, when the fundamentals come back like they always do, Wall St and the rest of the investors that bid these worthless stocks up to Ponzi style levels will end up getting their asses handed to them once again.
The stock market has become nothing more than a speculative bubble making machine. The "Recovery Bubble" will end the way all bubbles do: It will come crashing down slaughtering anything that gets in its path.
The Bottom Line:
Bubbles can sometimes last a lot longer then you think. Especially when the government has doled out hundreds of billions in free money to the banks. This financial firepower has allowed them to wreak havoc in a lightly traded market using computer trading programs.
I mean think about what the banks have going for them right now:
The banks are stuffed to the gills with cash. How? Well for starters, they have been stuffed with tens of billions in taxpayer dollars.
They are also able to make a killing on any new loans as a result of the steep yield curve. Any banker can make money with these types of favorable lending terms.
Finally, the pigmen have the benefit of a fed funds rate at near 0% which means they can rape the savers of this country by paying them almost 0% interest on their deposits.
This gives them a lot of financial bullets to fire at the S&P in the form of buy orders. Lets also not forget that their cash positions have been even further strengthened by the fact that they don't have to set aside as much money for their toxic assets anymore because there is basically is no more mark to market accounting.
In a nutshell folks: THE BANKS ARE LOADED WITH CASH at our expense. I wouldn't be surprised to see the S&P climb over 1000 before this thing all comes tumbling down.
I guess what saddens me most here is I am slowly beginning to realize that its not the banks that have failed this nation. We are the ones that have failed. Yes they created the mess, but we as a country never stopped them once we knew what was going on. I think perhaps we all need to look in the mirror when we are looking for someone to blame.
In fact, not only did we not stop them, we actually reinforced their terrible actions by giving them billions of dollars in TARP funds that allowed them to make even more money at our expense.
I will never understand why we reinforced such fraudelent actions. The TARP will go down as being one of the worst pieces of legislation in history.
Sadly, we only have ourselves to blame. We are the real failures because we sat here and let the banks rob us all blind without doing anything to stop them.
With $24 trillion in debt I don't think it even matters anymore. There is no way we can ever pay this back. Our total GDP is only $14 trillion annually. The debt numbers are only going to get worse as the economy continues to deteriorate.
I am starting to think its too late to save ourselves from total destruction when I see such staggering numbers.
Sorry I couldn't be a little more cheerier tonight. Its time to start making different arrangements in order to survive this nightmare. More on that later.