SP 500 and NDX March Futures

Thin volume melt up.

Get the big picture yet?

Wall Street and the Financial Crisis: Nobody Goes to Jail - And Therein Lies the Problem

It all comes back to the credibility trap, much more intractable than a liquidity trap. The US government cannot perform effective change without admitting the corruption and placing the powerful status quo at risk. So this malaise and period of selective recovery will continue until there is a another, more destructive crisis.

In a partnership of Wall Street and Government, justice is a scarce commodity. As Jeffrey Sachs of Columbia said, both political parties are on the take, and the political process is horribly compromised.

Unfortunately this prevents the discovery of root cause, and the necessary systemic reform and reconstruction that would allow for a sustainable recovery.

As all reform efforts are co-opted by Big Money, the lies are coming thick and fast, often modulated only by people's specific self-interests in a continual drumbeat of slogans and propaganda. This is a fairly accurate description of a social system in decline. There will be a bull market in hysteria and demagoguery, a very bad time to be weak or a minority. 

And if the people rise en masse, the very powerful will throw their lesser fellows to the wolves.  This is why it is important to understand your real place in the hierarchy.  If you have less than five millions per year in net income, there is little difference between you and a day worker in the eyes of the truly rich and powerful, except for your value as a useful idiot, cannon fodder, and finally as prey.  A cow is only valuable while it provides milk. You do not understand the will to power if you think otherwise.

I am no longer surprised that some people are willing to give themselves over to the power of this world, and to sell their honor and sometimes even their souls to its cause.  The recent cases of the politicians, economists, regulators, and rating agencies is a fairly good example.  The real surprise is how readily they do it, and so cheaply. And the pretenses they are willing to suffer to hide their complicity.

"Why Richard, it profits a man nothing to give his soul for the whole world--

But for Wales."

Thomas More, on the occasion of the perjury at his trial of Sir Richard Rich

Nice piece from Taibbi worth reading.

Why Isn't Wall Street in Jail?
By Matt Taibbi

...Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people...

Read the rest here.

The Next Two Years in the Financial Asset Markets - Emperadores en Fuego

As Ozzie Osbourne says, "All Aboard!" lol

The good news is that it will not be as straight down as this.

Joe Saluzzi gave a very good description of the character of this market today on Bloomberg.

Keep your hands and head inside the train at all times.

Don't worry. Trust in Ben and Tim.

And meanwhile in the Mideast...

Note:  Most people think of stocks as the be all and end all of dollar financial assets.  In the case of a burst of inflation or a hyperinflation, the equity market will soar for a time, although its gains will be illusory. So stocks are an insurance but not so much as you might expect if that is the outcome.  Try not to get in front of it, as phony as you might think it may be. But the stock market is of much less consequence as compared to the bonds and currency markets.   It is the three card monte to the bond and currency numbers rackets. The stock markets are the pretty lights and buildings that the tourists stare at while the carnies pick their pockets.



"Higher and Higher. What Could Go Wrong?"

 


"What a Beautiful View At the Top. We're the King of the World."





"Who Could Have Foreseen This?  Remain Calm.  All Is Well."



"Mommy!"

And if the Fed should make a mistake, the efficient electronic trading markets are designed to be self-correcting.

US Budget Expenditures - CBO Long Term Outlook

Obviously one can question their growth assumptions, and therefore tax revenue assumptions.

However bear in mind that this chart is for the expenditures as a percentage of GDP, and is therefore tied to the growth.

Personally I would think that they would lowball the interest payments, which are not so tied to the CPI as COLA increases in things like Social Security.  Bondholders are not as captive an audience as your old people.  

But as I always say, until the financial system is reformed and the economy is brought back into balance, nothing will 'work,'  whatever combination of austerity, stimulation, growth, and tax changes it may include.  This discussion is the misdirection and distraction, the financial magician's tools, from the actual transfers of wealth being conducted, those transfers being a nice way of saying 'looting.' 

The US resembles post Soviet Russia just prior to its currency collapse and the rise of the oligarchs who sought to monopolize productive assets which they bought with paper and financial manipulation.    Communism died, and it ended in oligarchy.  Democracy is dying, and it too will end in oligarchy, unless something is done to change the outcome.