SP 500 and NDX Futures Daily Charts - 'Reconsidering' the ECB's Recent Action

According to the official spin, traders 'reconsidered' what the ECB did this week, and what Draghi had subsequently said, and gleefully cast off all doubts and concerns about risks and started buying equities.

Yes, I am sure that this is what happened.

Just as I am sure that all the lying, manipulating, and looting will also continue, until morale improves and confidence in our glorious central banks returns.

The SP futures were leading the charge higher, in a familiar pattern we tend to see whenever the Fed and the financial powers that be wish to instill confidence in their mighty judgements.

Next week we will have quite a bit more macroeconomic data as indicated in the advance chart below.  There will aslo be the March FOMC meeting.

Will they or won't they?

Have a pleasant weekend.

They Thought They Were Free

"You see," my colleague went on, "one doesn’t see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don’t want to act, or even talk, alone; you don’t want to ‘go out of your way to make trouble.’ Why not?—Well, you are not in the habit of doing it. And it is not just fear, fear of standing alone, that restrains you; it is also genuine uncertainty.

"Uncertainty is a very important factor, and, instead of decreasing as time goes on, it grows. Outside, in the streets, in the general community, ‘everyone’ is happy. One hears no protest, and certainly sees none. You know, in France or Italy there would be slogans against the government painted on walls and fences; in Germany, outside the great cities, perhaps, there is not even this. In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, ‘It’s not so bad’ or ‘You’re seeing things’ or ‘You’re an alarmist.’

"And you are an alarmist. You are saying that this must lead to this, and you can’t prove it. These are the beginnings, yes; but how do you know for sure when you don’t know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic. You are left with your close friends, who are, naturally, people who have always thought as you have.

"But your friends are fewer now. Some have drifted off somewhere or submerged themselves in their work. You no longer see as many as you did at meetings or gatherings. Informal groups become smaller; attendance drops off in little organizations, and the organizations themselves wither. Now, in small gatherings of your oldest friends, you feel that you are talking to yourselves, that you are isolated from the reality of things. This weakens your confidence still further and serves as a further deterrent to—to what? It is clearer all the time that, if you are going to do anything, you must make an occasion to do it, and then you are obviously a troublemaker. So you wait, and you wait.

"But the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That’s the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked—if, let us say, the gassing of the Jews in ’43 had come immediately after the ‘German Firm’ stickers on the windows of non-Jewish shops in ’33. But of course this isn’t the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C? And so on to Step D.

"And one day, too late, your principles, if you were ever sensible of them, all rush in upon you. The burden of self-deception has grown too heavy, and some minor incident, in my case my little boy, hardly more than a baby, saying ‘Jewish swine,’ collapses it all at once, and you see that everything, everything, has changed and changed completely under your nose. The world you live in—your nation, your people—is not the world you were born in at all. The forms are all there, all untouched, all reassuring, the houses, the shops, the jobs, the mealtimes, the visits, the concerts, the cinema, the holidays. But the spirit, which you never noticed because you made the lifelong mistake of identifying it with the forms, is changed. Now you live in a world of hate and fear, and the people who hate and fear do not even know it themselves; when everyone is transformed, no one is transformed. Now you live in a system which rules without responsibility even to God. The system itself could not have intended this in the beginning, but in order to sustain itself it was compelled to go all the way.

"You have gone almost all the way yourself. Life is a continuing process, a flow, not a succession of acts and events at all. It has flowed to a new level, carrying you with it, without any effort on your part. On this new level you live, you have been living more comfortably every day, with new morals, new principles. You have accepted things you would not have accepted five years ago, a year ago, things that your father, even in Germany, could not have imagined.

"Suddenly it all comes down, all at once. You see what you are, what you have done, or, more accurately, what you haven’t done (for that was all that was required of most of us: that we do nothing). You remember those early meetings of your department in the university when, if one had stood, others would have stood, perhaps, but no one stood. A small matter, a matter of hiring this man or that, and you hired this one rather than that. You remember everything now, and your heart breaks. Too late. You are compromised beyond repair.

"What then? You must then shoot yourself. A few did. Or ‘adjust’ your principles. Many tried, and some, I suppose, succeeded; not I, however. Or learn to live the rest of your life with your shame. This last is the nearest there is, under the circumstances, to heroism: shame. Many Germans became this poor kind of hero, many more, I think, than the world knows or cares to know."


Milton Mayer, They Thought They Were Free: The Germans, 1933-45

Gold Daily and Silver Weekly Charts - Credibility Trapped

"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car."

Neil Barofsky


"The people who designed the [bailout] plans are either in the pocket of the banks or they’re incompetent."

Joseph Stiglitz


“In poor countries, officials receive explicit bribes; in D.C. they get the sophisticated, implicit, unspoken promise to work for large corporations.”

Nassim Taleb, The Bed of Procrustes


"...the biggest risk we can take is to try the same old politics with the same old players and expect a different result."

Barack Obama, Democratic National Convention 2008


"But at some point the Obama Administration should acknowledge that this particular former CEO of Goldman Sachs is still driving the policy bus.  If the Republicans are in control of the Congress come next January, maybe they should subpoena [Robert] Rubin to appear periodically. At least then we all can hear directly to the person who is actually making national economic policy."

Chris Whalen, The World According to Robert Rubin


"On Sunday afternoon, facing a revolt by his own party’s senators, Obama dumped Larry [Summers] as likely replacement for Ben Bernanke as Chairman of the Federal Reserve Board.

But the fact that Obama even tried to shove Summers down the planet’s throat tells us more about Obama than Summers—and whom Obama works for. Hint: You aren’t one of them."

Greg Palast, Larry Summers: Goldman Sacked


"After dinner, Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them.

Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders."

Elizabeth Warren

Here is my end of an exchange today, with some editing for clarity completeness, between myself and my Samoan attorney, while exchanging some anecdotes about the current climate of corruption within the Beltway and the NYC metropolitan area.  He is well informed of the doings in the halls of officialdom.

This gets to the heart of my theory of 'the credibility trap' which you may have seen on my site.

These professional bureaucrats and financiers are so intricately complicit in, and so benefited by, the broken system that we have now that they cannot talk about the real problems. They are very much a part of the problem.

They cannot engage in effective reforms because in doing so they would:
a) indict themselves and their predecessors and colleagues, and impugn their reputation for competency and/or integrity, and
b) would hamper their very lucrative careers in a system that they cannot afford to change or meaningfully reform.

There are very serious consequences for speaking the truth these days. This explains much of our current problems.  They are incapable of fixing things without the cover/incentive of a very serious event, either financial or something more exogenous..

Perhaps the slogan for these pampered princes should be 'in for a penny, in for a trillion dollars, because it's all Other People's Money, and I am doing just fine.'

So when I identify various politicians, regulators, and pundits as 'caught in a credibility trap' this is what I mean.

The people are starting to 'get this' even if they cannot describe it eloquently.   And they are therefore seeking to use their votes to toss out the insiders and bring in what they hope will be real change.

Here is my more 'formal' definition of the credibility trap.

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy."

Gold and silver rocketed higher today after the ECB pulled out the bazooka loaded with some unconventional weapons, largely designed to benefit the European Banks.

Never have so many suffered so much for such an unworthy few.

There was little real activity in The Bucket Shop. The scorecards are below.

Now at least we know why the silly whacking of gold was the thing to do the past couple days. They knew it would run when Draghi dropped the hammer, and did not want it to take out key overhead resistance with a lot of momentum.

They 'have to control the price of gold, manage it.'   Because otherwise it might tell the truth.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wide-Ranging and Wobbly

The markets seem to be trading with the same kind of edginess as if they were playing Russian roulette.

Have a pleasant evening.