Tuesday, January 30, 2018

Robert Shiller–The Stock Market Is Right Where It Was Before The Start Of The Great Depression

This country is a f*cking disaster. Entire swaths of the country look like post-apocalyptic war zones. Most people don’t have enough money to survive more than a week without a job. Even if that job is nothing more than slavery by another name. Don’t buy the nonsense that things are going great. The reason why the stock market is in a massive bubble is that there is no demand for capital; something noted on here many times before the 2008 collapse as an apocalyptic future omen.  In other words, because industrial capitalism is already in systemic failure, all of the money printing done by the Federal Reserve and other central banks is rolling into renter capitalism assets like stocks, bonds and real estate and just blowing prices through the roof.  Every new dollar created just makes the disaster larger. 

The number of people that have dropped out of the labor force is over 100 million. The amount of government transfer payments (welfare, SSDI, people who have fallen out of society, etc) has shot up over 800% adjusted for inflation since 1980. The amount of people doing unproductive work or jobs that create zero wealth for our nation is more than half of all working people. And, if you really understand the concept of social credit, which you should because this is a democracy, you understand that the military-industrial complex actually is a drag on the wealth of our society.  So, all of the people making weapons and spying on people are in employment that is destroying our nation’s wealth.  That is, unless you are going to use those bombs to force the rest of the world into economic servitude as the U.S. does under the guise of dollar hegemony and the IMF and World Bank voting rights control.  Then rather than creating your own wealth, you can overconsume the wealth you are stealing from the rest of the world as the British and Roman Empires did. And, of course, we do today.

Ditto with financial employment.  The blood-sucking pigmen on Wall Street are just a wealth-shifting scheme from democracy to a ruling class of pathological predators. It creates absolutely zero wealth. Financial employment destroys wealth. It may make the CEO of Goldman Sachs wildly rich but that is more than offset by the debtors it creates in society. 

Again, to rant time and again, people are going to learn the difference between money (of absolutely zero worth) and wealth (which money is nothing more than a conduit to facilitate.).  For all of the gold dunces, you can take all of your gold to an island and sleep on it, eat it, talk to it, pray to it, or do as you wish. Ditto with those who have accumulated a lot of money but have zero skills beyond financial paper pushing or an MBA or whatnot.  I’ll take the scientists, skilled tradesmen and inventors who know how to create and produce wealth for society.  And, I’ll take all of the hippies that know how to grow food sustainably.  And, I’ll take all of the artists, philosophers, writers and liberal artists to make that a society worth living in.

To re-employ 170 million, 200 million, or whatever the number is,  people in new, productive, wealth-creating jobs is never going to happen. Ever. There is no recovery. There never will be until this system is reformed or until it systemically-fails to the point of disaster and democracy rises up and fixes the mess that class and hierarchy have made of this nation and the world.  I noted that on here endlessly.  What you see today is a wall of dirty money papering over the massive blight of a failed economic system of class.  The only recovery is with the restoration of some modicum of democratic economics and local, self-rule-directed economies.

I swear to God that I haven’t seen anyone in the financial community that knows how to read a balance sheet and understand the myriad of manipulative and deceiving footnotes that define financial reporting today. Balance sheets are a disaster whether that is for cities, states or corporations. Or, for that matter the federal government.  Do you know how many AAA rated companies that are left in a nation that used to mint them so often it wasn’t even considered a big deal?  Two.  Two in the entire United States. How many AAA rated cities and states are there? I’ll let you answer that one. 

Once again, as one well-known financial publication did leading into the 2000 collapse, they are lying about the PE ratios of some major indices. They simply don’t include the firms with negative earnings. Astonishing, but we are back to that nonsense. (By the way, news has always been fake news. Mark Twain and others have made these remarks time and again for more than two hundred years.)

The Dow Jones Industrials isn’t even composed of industrial companies. Nike, Goldman Sachs, JPMC, McDonald’s, Verizon, Travelers, Wal-Mart, Disney, etc. What do they make in this country? What wealth do they create? Not money that they pay people but wealth? 

In other words, take out finance, the military and other service-related (doing each other’s laundry) companies, and what’s left for corporate earnings? It’s a f*cking disaster thanks to Harvard MBAs, corporate CEOs and Washington politicians; the three-headed monster of the dreaded Cerberus. 

Half a century ago most S&P firms produced wealth. Now, most firms destroy wealth re the comments above. If one actually understands what has happened to our economy and how corporations have turned us into slaves, and if one backs out the earnings impact of the dollar being the world’s currency, and one backs out these other earnings variables of unsustainability mentioned above, the PE on the S&P is waaay into the triple digits. I mean waaay.  And this stock market is magnitudes more expensive than any in history. Ever. I mean since the beginning of human civilization.  The Russell 2000 is already into triple digits without doing any of that. Amazon? I’ve talked about how Amazon is discounting earnings back to the fall of the Roman Empire. Guarantee you Amazon will be one of the first casualties of any crisis given the working capital Ponzi scheme they run.  I have said it a thousand times on here over the last dozen years but we are in the biggest financial bubble in history and the stock market is headed for disaster, if not disappearance.  It’s just a matter of when. But, we are in that moment right now. It’s not 100 years from now or 50 years from now. It’s in this cycle. Will it be that we wake up one day and it’s over as happened in the Soviet Union? Or will it be a series of crises over years or decades as we devolve into nothingness?  Who knows. But astrologically I do think there is a possibility U.S. empire will be finished by 2022 as noted on here many times.  The insanity of our society is what I can only imagine Rome was like in its final days. Or, what France was like before the Reign of Terror.

I noted a few posts ago that the Shiller earnings index was reaching the disaster zone. (Not that it can’t go catastrophically higher.)  I’m not sure how Shiller calculates his historical earnings numbers but the ones I have leading up to the Great Depression show today is massively more overvalued than in 1929. Who knows, maybe it goes wildly higher than today. But, we have gone parabolic recently and that is a reason for concern.  There is no date or external factors that determines any change in my downside projection. As noted on here repeatedly, my downside target for the S&P 500 is 250-400. When will that happen? That’s the interesting question. Getting the timing right is something that we all use divining rods, astrology, numerology, Elliott Waves and the like to try to figure out. All anyone can really do is guess. Sometimes it makes you look like a genius and sometimes a fool. 

Regardless, Robert Shiller is one of the few economists I respect. Actually, there are probably about three. Economics is the state religion. Economists are the high priests of that religion. Most economists are brainwashed to the ideological drivel of the day; free markets, free trade and the neoliberal deregulation of private capital across state borders that the pathological Reagan and Clinton administrations fathered. (Remember more Reagan officials were indicted or resigned out of wrong-doing than any in history. And, Bill Clinton’s Whitehouse is substantially responsible for the disaster we are witnessing today with the signing of NAFTA, the entry of China’s slave labor pool into free trade agreements with us, the deregulation of financial markets, the repeal of Glass-Steagall, the deregulation of commodities futures markets, the dismantling of oversight in shady financial instruments and on and on.  If most people really understood what Bill Clinton did as president, let alone how the Clinton Foundation was used to sell out this nation, he’d be in prison. And so would his wife.  While that seems implausible, we can all hope there is a remote chance that may still happen.

While Shiller compares this to 1928, there is another parallel I have drawn. It’s to the Great Depression in reverse.  2008 was the front end of the hurricane. We are in the eye of the storm today and the ruling elites are impressed with their brilliance once again.  But, the back end of the storm is coming and it’ll be far worse than ever imagined. In 2006 one of the first posts I wrote on here is that the earth would literally shudder and shake when this cycle ends.  I’m going to dust the perspective that this may be a Greater Depression or maybe the last depression of capitalism in reverse if I find the time in coming weeks.

But, in closing, let me say all of the stooges seem to be wildly enthusiastic right now. That should be very disconcerting. As I’ve remarked repeatedly, the people that are the most successful in this system are the most ignorant. I realize people like laughing at the people who can’t tell you who our first president was or when World War II was fought or who mob each other at Wal-Mart, but think about something else.  How ignorant is someone who would turn so many decent people in our society into something like that?  Those are the people who are the most successful in our society.  And, it is they who are the most ignorant. Exploititively so. Godlessly so.

Trump claims success for things he has nothing to do with. Manufacturing losses were stopping before he became president.  Anyone who understands lean methods, lean manufacturing and lean supply chains (which I have written about on here long ago) knows that in order to maximize cost savings and efficiency, supply chains need to be as short as possible and manufacturing has to be done at the point of consumption to be competitive.  Why do you think the Japanese car companies make so many cars here?  It wasn’t because Reagan forced them with rhetoric as is so ignorantly remarked by his apologists.  It’s because the Japanese are lean gods and they knew they had to invest at the point of consumption and shorten their supply chains or when the American firms got their act together, they’d lose their advantage. 

Trumps tax cuts won’t do jack shit to create jobs in this nation because they weren’t targeted at capital formation. Just more handouts for the economic aristocracy funded by working dunces like us.  Dimon and Blankfein on Wall Street are bloviating about how wonderful Trump’s economic plans are. (For them), CEO surveys are very enthusiastic. (If you recall, leading into the 2008 collapse, which I called just days before it happened, I noted how enthusiastic CEOs were. And, thus how ignorant they really are and should be used as a contrary indicator of impending doom.) And, Davos, the meeting of the world’s neoliberal elite dunces, is wildly bullish today as well.  All of the idiots (class & hierarchy) are wildly optimistic right now. That’s generally a very contrary sign given their pathological ignorance.  Doesn’t mean we are headed into a new dystopian Walking Dead tomorrow. But, the seeds are being set with stupid behavior by the wildly and pathologically ignorant ruling class of capitalism.

Link to the Schiller interview here.

posted by TimingLogic at 7:37 PM