Wednesday, November 17, 2010

So Now What?

I don't know what else to call it.

The market looks tired.  I know I am tired. 

The way I see it:  Everyone seems fatigued in all facets of their lives.  They are tired of being stressed out at work.  They are tired of being fleeced by the banks and the Fed on a daily basis. 

They are tired of not being able to trust anyone.  They are tired of feeling that the economic system could blowup on any given day  One day they worry about the bond market blowing up the system, the next day it's Ireland, the following day it's inflation via the Fed's QE program.

I think most people at this point people have just had enough. 

Like a child, the world is dying for some security and someone they can count on to protect them.  They currently believe nothing like this exists. 

Obama and CONgress look like a deer in the headlights and appear completely lost.  Their policy ideas change by the second, and the public has clearly lost confidence.

Wall St has no answers for the economy either.  They appear to only want to fleece anyone they can in order to keep the bonuses rolling in. 

In the old days, Wall St were deal makers.  They helped build America into what it is today.  Wait, let me change that, they helped build America into what it was.   Wall St used to be a productive part of our society for many decades. 

They would match Entrepreneurs with investors who were willing to take risk and the result was spectacular.  This nation became the most powerful one on earth in less than a century.

Like all great empires that fall, we fell victims to our own success.  We became fat, greedy, and lazy.  We decided as a nation that we would drive our economy on consuming instead of producing. 

This was all well and good as long as we were still productive and innovative.  For awhile it worked.  The baby boomers drove our economic engine as they consumed and innovated for most of their lives. 

At first, during the 1940's to the late 1970's, the growth was slow as the boomers grew from children to adults.  Our stock market reflected this.  The DOW moved higher but flattened out at around 1000 for the majority of the 1970's.

This all ended in the early 1980's as the boomers moved into their prime earning years.  As the economic recession ended in the early 1980's we created the perfect setup for prosperity. 

The following three decades were spectacular.  Wall St prospered in the 1980's when the financial engineering got started.  Junk bonds became all the rage until the regulators stepped in and put an end to it.  1000's of banks went under but the system was saved.  Thank god we had guys like Bill Black back then.  If we hadn't we would probably still be feeling the effects of that economic crisis today. 

The engineering continued in the 1990's as the tech bubble took this country to new highs.  We were innovating via technology and consuming like animals as the stock market roared higher.  Wall St rode the wave and made billions on .com IPO's.

The music stopped briefly during the popping of the tech bubble and 9/11 but it didn't last long.

Greenspan lowered rates, Bush instructed everyone to buy like drunken sailors, and before you knew it we were off to the races as the housing bubble took us back to the stock market highs.

The music then stopped for a second time in less than a decade as the housing bubble popped.  In the end, the financial engineering that gave us 30 years of prosperity ironically turned out to be the same thing that destroyed us.

So now what?

The whole country is all asking themselves the same question.  The financial engineering that has proved so reliable for 30 years hasn't worked this time.

We have spent $13 trillion on it this go around and it's gotten us nowhere.

The "innovators" have bailed out everyone, manipulated our markets, and taken interest rates to zero and nothing has happened. 

The financial tools that were so reliable on the way up have now failed us.

So now what?

The world has yet to find the answer, and the lack of answers has exhausted everyone in the process.

I think the world is finally realizing that there are no easy answers to our problems this go around.  This is a pretty depressing realization for everyone involved.

The world has been filled with hope since March of 2009 when the banks told us that things were getting better.

In reality they were not.  The only thing that was growing during this time was the fraud and the losses that accompanied it.  We were able to blow a few mini bubbles via stimulus during this period but nothing more. 

After a multiple trillion dollar spending spree the economy continues to barely have a pulse.

So now what?

Both the bond market and the people are demanding an answer to this question.  Washington is scrambling to find an answer, and it's becoming more and more obvious that they don't have the medicine to cure what ails us.

The only way this nightmare will end is exposing the truth no matter how painful it is.  The longer we avoid this the worse things are going to get.

5 comments:

getyourselfconnected said...

Great post Jeff.

Jeff said...

Thanks get!

Anonymous said...

it's almost like a pot of boiling water, where all the hot air ripples from one bubble to another, almost simultaneoulsy, a ripple effect, then boiling, then steam.... steam being the evaporation of equity.

Anonymous said...

problem is, they are not taking thepath of truth, but the path of containment.. we are seeing it now; the grip of government on our lives, and we are squeezed into a zombie state of staring bleary eyed into a computer screen... and when we're not doing that we're yapping or texting with the same brain dead expression.

we're in a prison, and without economic freedom, all we have are our diversions.

Jeff said...

Agreed

I am tired of being a zombie. The whole thing is so fricking ridiculous.

Gold and futures are now soaring. It's almost impossible to trade this casino. Nothing makes sense.

So sad.