This Is A Very Sick Market Made Sicker By Endlessly Incompetent Bureaucrats And Their Wall Street Masters

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The same dynamic is building today that existed in 2008. A few of these same supposedly brilliant Wall Street bureaucrats who are perpetual deer in the headlights came out this past week and warned that we should worry about all of Federal Reserve's cheap money in lieu of worrying about a double dip or deflation. Similarly, as it pertains to this topic, nearly everyone in the financial world is now focused on "quantitative easing 2.0" and how the Fed is going to unleash its cannons again to save all of humanity. Just like they saved the 40 million Americans on food stamps. Just like they saved 15-20 million who are unemployed or marginally employed. Just like they saved the millions of homeowners who lost their homes. Just like they saved the millions of citizens who declared bankruptcy. Mind you, their last "saving" strategy directed towards Wall Street involved the greatest criminal act in the history of the United States - transferring trillions of dollars of criminally-fraudulent toxic trash created by the morally-bankrupt uber wealthy to the burdened backs of poor and average Americans. An act of pure thievery.

We hear the same pathetic incompetence from the same pathetic incompetents today that we heard before the 2008 crash. The Fed was going to save the world as we meandered through the first half of 2008. And just as I am typing this and other similar posts this year, before the crash in 2008 we wrote then that the Fed wasn't going to save anything. Let's be frank. The Fed has been in quantitative easing mode for thirty years. The status quo can't quite understand this fact.

So here we are again in 2010. What has really changed in this world other than the global economy is so much worse than it was before the crash in 2008? One thing that surely hasn't changed is Wall Street's systemic incompetence.

So let's take a counter position to the ignorant remarks out of Wall Street this past week regarding the fear of cheap money. There are a few basic ways I analyze advance-decline data. In other words, rather than just relying on exchange data as is generally done, I ask the market to tell me what it actually sees. One of those algorithms is shown above overlaid on the S&P 500. I think the market is sharing a very clear picture of what it is going on. How is the cheap money that Wall Street opinionators are worried about translating into their expected outcomes? It isn't. And that is exactly what we would expect in a deflationary environment. ie, The political idiots and central bankers borrow money to arrest the crisis. The market or the economy in return burns through that money like a hot knife through butter. Eventually, the economy needs another massive injection of money from the political idiots. And again, the economy burns through that money. The dynamic repeats itself ad infinitum as the ever-increasing burden of more and more government taxes to pay for this dynamic recursively reinforces and actually accelerates the burn rate of money in the economy.

Remember our posts last fall commenting that the market behavior had changed? This graphic is one visual representation of that change.

Opinions from economists, politicians, Wall Street and other bureaucrats are really senseless. They created the problem. Do you really believe they have any idea what they are doing? Wtf does Bill Clinton, George Bush, Hank Paulson, Barack Obama, Christina Romer or Timothy Geithner know about economics? I mean seriously.

The data is telling us without some constructive and sustainable exogenous factors that are a result of new government or Federal Reserve ideas or policies, the stimulus of free money has worn off and is no longer having an impact. This is exactly what we would expect to happen from the market dynamic (comparative to a poker game) we said would eventually come to pass in our posts on this topic we've put up since the 2009 market low.

This is a very sick market made sicker by the endless incompetence of political bureaucrats and their Wall Street masters. We need new answers. They are out there. Many are simple but take tremendous political will and leadership. And they would make our economy roar once again. But it's obvious these new ideas and answers won't come from President Obama, Treasury Secretary Geithner or Wall Street.

Quantitative easing 2.0, 3.0, 8.0, 2012.0 and beyond are all a joke. Politicians and the Federal Reserve trying to save a corrupt system are an even bigger joke.