"America is caught in a confidence or credibility trap, in which the changes, investigations, and reforms necessary to restore trust to an economy or market are rendered unlikely because doing so would expose a pervasive corruption that the principals fear would destroy any remaining trust. It could also endanger the careers of politicians and business people who may have permitted and even appeared to facilitate the control fraud that caused the financial crisis in the first place. Personal risk trumps public stewardship.
The fraudulent activity is covered up and therefore continues or at the very least appears to continue, crowding out most productive business investment and activity which cannot possibly hope to compete with the highly profitable fraudulent activity and asset bubbles under such opaque and uncertain circumstances. Informed market participants are unwilling to invest their liquid assets in a system which they suspect is riddled with accounting fraud, insider trading, and regulatory weaknesses, except of course in a few situations and somewhat ironically in some existing frauds which they think they understand."
Jesse, America Is Caught in a Credibility Trap, 22 January 2011
"Those who plot impossible upheavals among us are either young and do not know our people, or are hard-hearted men who do not care a bit about their own lives or those of others.”
Alexander Pushkin
“Sometimes people hold a core belief that is very strong. When they are presented with evidence that works against that belief, the new evidence cannot be accepted. It would create a feeling that is extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they will rationalize, ignore and even deny anything that doesn't fit in with the core belief.”
Frantz Fanon
“'Is it lawful to do good on the sabbath rather than to do evil, to save life rather than to destroy it?', he asked. But they remained silent. Looking at them with anger, and saddened by the hardness of their hearts, he said to the man, 'Stretch out your hand.' The man stretched out his hand and was healed. The Pharisees went out and that same day began to plot with the Herodians to put him to death."
Mark 3:4-6
A week ago the risk markets were rallying heedless and hard on storied expectations of an 'immaculate disinflation.'
The Wall Street storytellers were spreading this fantasy aggressively. For that is what they do.
But alas, this week the belief in a painless soft landing has dissipated, and the markets fell, hard.
And so rinse follows wash. And the capital of a nation continues to be transferred.
It's just how things are. And questioning the narrative is disloyal to the status quo, the privileged few, and their cadres of sock puppets, breathless boobs, political Pharisees, and compromised deniers.
This is how entire nations have been transformed into war-scarred wastelands.
And the Lord looks on in anger.
So stocks fell, hard, and went out near the lows.
Gold and silver even moreso were hit a bit, as risk perceptions reverted to the mean.
The Dollar chopped sideways.
There will be a stock index option expiration on Friday.
Have a pleasant evening.
