Financial topics

[John]

I've updated my P/E ratio graph:



If you look at the historic flow, it looks like we're about to fall
over a "P/E ratio cliff".

What will trigger this plunge over the cliff? Your guess is as good
as mine, but I watched the discussions about the fiscal cliff
negotiations on the Sunday morning talk shows today, as much as I
could stand, and it's hard to overemphasize how pathetic and sickening
all of these people are -- President Obama, the Republicans in
Congress, the Democrats in Congress. All they want to do is cover
their asses. None of them gives a shit about what they're doing to
everyone else. They're a disgrace to the country.

[John]

The clown negotiations in Washington have collapsed for now,
apparently because the Republican proposal includes the "Chained CPI"
proposal that I wrote about two weeks ago, and which cuts Social
Security benefits by 0.3%, thus hammering 95 year old women, throwing
grandma under the bus:

** 19-Dec-12 World View -- 'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations
** http://www.generationaldynamics.com/cgi ... 19#e121219

It would be kinda funny if these people weren't so pathetic.

[aedens]

http://pathocracy.wordpress.com/definition/

Also: http://topdocumentaryfilms.com/money-sp ... black-box/

Alfred Marshall: I admit, because they have been biased by the traditions of the subject, they have begun by assuming a state of affairs where the ideal distribution of productive resources can be brought about through individuals acting independently by the method of trial and error in such a way that those individuals who move in the right direction will destroy by competition those who move in the wrong direction.

Keynes: Nevertheless, I may do well to remind you, in conclusion, that the fiercest contests and the most deeply felt divisions of opinion are likely to be waged in the coming years not round technical questions, where the arguments on either side are mainly economic, but round those which, for want of better words, may be called psychological or, perhaps, moral.

Recall Keynes's erroneous prediction that within a century people's material wants would be satiated. When that happened, the demand for capital (to finance consumption) would plummet and rentiers (people who live on income from passive investments, such as stocks or bonds, and thus are hoarders) would be wiped out, a prospect that delighted Keynes, who looked forward to the euthanasia of the rentier.

[aedens]

The bears are in control and the dialog is totaly out of control on local and metro issues.
"The Liberal Mind: The Psychological Causes of Political Madness."
"Psychopathology of the Liberal Mind: The adult drive toward omnipotent control of others, in any arena whatever, is rooted in fears of separation, abandonment loss or abuse--the residual effects of early attachment gone wrong. The need to dominate others arises from the tyrant's need for absolute assurance that the catastrophic loss of dependency or the pain of abuse so devastating to him in his earliest years will not be repeated."
"Like spoiled, angry children, they rebel against the normal responsibilities of adulthood and demand that a parental government meet their needs from cradle to grave."
Dr. Lyle Rossiter has 37 years experience with more than 1,500 patients as a board certified clinical psychiatrist. He is also a board certified forensic psychiatrist who has examined more than 2,700 civil and criminal cases. He was educated at the University of Chicago.

As you noted correctly H - In a sense the aggregate economic numbers are meaningless because they have been temporarily achieved by a wasting or extraction process from the middle class. I saw that middle class net worths are at a 43 year low, the lowest since 1969. This low in net worths coincides with a rebound high in the stock market. This is true class warfare that is being waged on the average American. How the average American can be so braindead and stupid to allow this theft to happen over the past 3 years in broad daylight is beyond me. That's the part I could not have predicted.

[Trevor]

Yes, I've heard plenty of medical personnel stating that they will retire once Obamacare is implemented, and that's not taking into account what effect it could have on students entering the profession.

[aedens]

http://ghostexchangemovie.com/videos/watch-the-trailer/

data strips - over three years to listen to the grass roots - malinvestment defined before our eyes - master builder dilema truly defined -

http://www.youtube.com/watch?v=VmPT24fC6wY

Meekness is one of the fruits of the Holy Spirit. Galatians 5:22-23 states: "But the fruit of the Spirit is love, joy, peace, longsuffering, gentleness, goodness, faith, meekness, temperance; against such there is no law.

I wish I had more...

[Reality Check]

A Last minute "kick the can down the road" compromise is being negotiated for year end.

Additional defense cuts of over 500 Million will not be reduced by the compromise. Sequester for U.S. Defense Department will remain in place bringing total cuts for the Defe3nse Department that will begin tomorrow to the tune of more than 1,000 Billion dollars.

Obama is, again, not leading, and is not negotiating. When he signs the compromise he will simply blame it on Congress when it does not work.

Budget projections for that last several years have included huge tax increases for the working poor, lower middle class, upper middle c.ass and the wealthy. Not just the small fraction Obama's promise to only raise taxes on the rich would have delivered only a small percentage of what had already been projected and promised by Obama.

It is unclear how much, if any of the government domestic spending sequester will remain in place, Democrats are still holding out to both cancel the domestic sequester and also raise government spending to stimulate the economy.

[Higgenbotham]

There was another mini panic in the futures this afternoon after the cash close and I exited 75% shorts and went 5% long. I have to bet some kind of "deal" or promise of a "deal" gets cobbled together over the weekend or early next week and the market will rally for about 3 days on that. If that happens I will probably reverse to 100% short at that time. There is no reason for me to disbelieve there can't be some carry over towards your target in this bizarre carnival that has no modern historical context.

The S&P futures are up about 35 points from the panic low on Friday. Not sure this "deal" is worth any more than that, so I went back to 75% short.

[OLD1953]

The ball has dropped in Baghdad, so Happy New Year everyone.

I just had a fellow tell me I was a fool to expect a vote to pass on the "fiscal cliff" meeting before midnight, and I had to agree with him. What he said was that before we run off the cliff, a vote on any of the proposed bills will be a vote to raise taxes, and too many people in the House pledged not to raise taxes. After midnight, the bills will be LOWERING taxes, so they can vote yes on them and say they kept their pledges. I never thought of that, he's right, I'm an idiot. (kicking self)

[Higgenbotham]

The activity in the stock market today reminded me of what was seen 3 days before the flash crash of May 6, 2010. Over the weekend I mentioned the 2 flushes and 3 rebounds pattern that preceded the flash crash and a couple other recent stock market tops. I think one reason this is happening is we have been seeing the stock index futures act as an interest paying currency, where the carry trade is in margined debased zero percent interest paying US dollars, which is due to the positive carry of rolling over long stock index futures positions. Thus, these patterns have only become evident since 2010. This looks like a stratification effect between the stock index futures and the stock shares where there has been created a fundamental difference in their function, but they must be arbitraged to the same price at expiration. This I think is similar to the problem of having various classes of US dollars where the values can dislocate from each other. This was manifested back in September 2008 with the divergence of some of the money market funds from the buck, and now we are seeing the dislocations in the stock index futures during off hours, twice in the past 2 weeks. I believe it was the faux carry trade that helped build this most recent bubble, the evidence being that on the way up almost all of the advance in the stock indices was accomplished during off hours. The reverse seems to be happening recently on the way down, with the counter trend moves occurring during the day.

PS The futures are finishing the day up about 41 points from the panic low Friday.