Stocks and Precious Metals Charts - Cycles of Folly: Bubble and Bust, Wash and Rinse - Spin Cycle

 

"That the rate of interest will be lower when commerce languishes and when there is little demand for money, than when the energies of commerce are in full play and there is an active demand for money, is indisputable; but it is equally beyond doubt, that every speculative mania which has run its course of folly and disaster in this country has derived its original impulse from cheap money." 

The Economist, 1858


"In their heavily self-biased opinion, if they want something, by rights it should be theirs.  So, nothing if not opportunistic, they take from public and private coffers alike whatever they think they can get away with.  And given their grandiose sense of self, they're inclined to believe they can get away with most anything."

Leon F. Seltzer


"The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal."

Joseph E. Stiglitz, Capitalist Fools, January 2009


"Folly is found in every age we know,
Even the most careful fools differ, but only in their ebb and flow."

Nicolas Boileau-Despréaux, Satires, 1666 tr. by Jesse


The spokesmodels were agape with wonder as the markets tanked hard today.

"Could this be a delayed reaction to the FOMC?"   

LOL

Stocks got hit hard and went out on the lows.

Gold and silver were body-slammed back down to support.

The VIX rose.

The Dollar DX rallied back from its recent low.

Tomorrow is the last big index option expiration of the year.

Duh.

The oligarchy is audacious.

Have a pleasant evening.

Stocks and Precious Metals Charts - Malevolent Mediocrity - And There's the Rinse

 

"The problem with movies and books is they make evil look glamorous, exciting, when it's no such thing.  It's boring and it's depressing and it's stupid.  Criminals are all after cheap thrills and easy money, and when they get them, all they want is more of the same, over and over. 

They're shallow, empty, boring people who couldn't give you five minutes of interesting conversation if you had the poor luck to be at a party full of them.  Maybe some can be monkey-clever, some of the time, but they aren't hardly ever smart."

Dean Koontz

"The secret of great returns which are difficult to explain is a crime that has not yet been discovered because it has been carefully executed."

Honoré de Balzac, Pere Goriot

"At worst perhaps it was malevolent mediocrity."

John Ralson Saul, The Unconscious Civilization

"The crash has laid bare many unpleasant truths about the United States. vOne of the most alarming, says a chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government - a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.  If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation; recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, Quiet Coup, The Atlantic Monthly, May 2009

Dollar moved lower.

VIX fell back down to the start of this latest wash-rinse cycle.

Gold and silver took a hit.

Stocks swung up and then fell down, bouncing off the lows.

Option expiration on Friday.

Big wheel keep on churning, main street keep on burning.

Have a pleasant evening.

Stocks and Precious Metals Charts - We Learn Nothing because We Remember Nothing - Express Wash

 

"I thought of this upside down debt pyramid when I was at Citibank in the early ‘60s.  I first gave talks on it inside the bank, trying to influence the bank because I saw too much borrowing short term and lending long term.  It was just awful!  I kept on warning the bank, but was just brushed aside.   When Nixon closed the gold window I said, 'This is my chance to get out,' so I took it.  It was a great move on my part because I could buy gold and gold mining shares when gold was $50 an ounce or less."

John Exter, 1991

(As late as 2001 gold was trading between $272-$292.  The sea change came in 2008 when central banks became net buyers of bullion, although the signs of change were there in 2006.)

"Moral hazard is the probability that a party insulated from risk will behave differently from the way they would behave if fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act with increasing recklessness, literally 'without reckoning.'  It also encourages the rise to power of the sociopaths in the affected organizations.

It is difficult to explain moral hazard to tenured professors or the pampered princes of bureaucracy, who beat the drum with their silver spoons in support of shifting the risk of loss to the public every time that Wall Street falls into one of its own schemes and blows itself up."

Jesse, Moral Hazard, 22 March 2008


"Over and over we fall into the same trap.  Ten years from now we will have forgotten."

Eliot Spitzer, July 14, 2009


“One reason we rush so quickly to the vulgar satisfactions of judgement, and love to revel in our righteous outrage, is that it spares us from the impotent pain of empathy, and the harder, messier work of understanding.”

Tim Kreider


“We are the United States of Amnesia, which is encouraged by a media that has no desire to tell us the truth about anything, serving their corporate masters who have other plans to dominate us. We learn nothing because we remember nothing.”

Gore Vidal

Most of us learn nothing because we are disinclined and even encouraged to forget things, and instead burn with borrowed rage.  It is not that we are incapable of thinking, but are generally more inclined towards self-indulgent and complacent behaviour.   Our values are shallow and selfish.

Many forget or even dismiss and distort the facts willingly, since it is the easiest way to get along without the effort and risk of thinking independently, choosing instead to mouth slogans and half truths.

And then there are those 'very serious people' from among the self-appointed elite, whose forgetfulness though carefully rationalized is conscious, mandated by their paychecks, positions and pride. 

We deal away our sovereign souls for trifles and vanities.  

Stocks delivered an express wash and rinse, as a slightly better than expected CPI number triggered a s rocket rally.

This was the shenanigan that I had been expecting, although it happened more quickly than the usual CPI headfake wash and rinse.

I thought the rinse cycle would be coming with the FOMC tomorrow.

But we had a change of pace.   The wiseguys have no shame or fear of consequences.

Gold and silver also rocketed higher and both managed to hold on to some of those gains, short of a real breakout.

The Dollar dumped.

More opportunities for hijinks in the rest of the week.

The oligarchy is audacious.

Have a pleasant evening.

Stocks and Precious Metals Charts - Cloudy With a Chance of Shenanigans

 

"Why is surprise the permanent condition of the U.S. political and economic elite?  In 2007-8, when the global financial system imploded, the cry that no one could have seen this coming was heard everywhere, despite the existence of numerous analyses showing that a crisis was unavoidable.

Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks.  In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface.

Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite.  These artificially constrained systems become prone to 'Black Swans' — that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.

Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state.  Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems."

Nassim Taleb, The Black Swan of Cairo, Foreign Affairs, May 2011

Stocks rallied today, on surprisingly light volume

The VIX rose sharply.

The Dollar chopped sideways.

Gold and silver declined.

This is an interesting week.

Tomorrow we get the CPI reading.

Wednesday there will be an FOMC rate decision.

And Friday there will be the last index option expiration of the year.

Wash-rinse-repeat.

The stars of financial shenaniganza are in alignment.

Have a pleasant evening.