Thursday, September 3, 2009

Don't Pull the Plug Yet!!

Treasury Secretary, Timothy Geitner, said that it's still too early to withdraw stimulus packages at this time. Markets reversed their early morning gains and appear to be headed lower.

I don't know if this is the top but I do feel very uncomfortable about the whole rally thing. It all appears to be manipulated by the government. It's pretty obvious to see that the market is all about perceptions. There is nothing new today or yesterday, last month or last year. How we are manipulated to react to the daily news is the only variable.

Unemployment continues to be a drag on the economy and retail sales continue to weaken. All of these "green shoots" that have been manufactured have only caused more money to flood the market and boost stock prices. But there is no real support. Businesses continue to slash jobs at an alarming rate and this is nothing new. Even in 2005 when I was writing the marketrealities blog, job losses were mounting. How can an economy grow when people are continually losing their jobs? Our government has actively sought to export our jobs for what purpose other than making the elite rich even richer is beyond my understanding.

When I worked at MetLife some years ago, there was a big push for diversity and I was a member of the committee. Growth was predicted at an unimaginable level. We don't have enough people here in the US to fill the expected job growth! Now, even the illegals are exodusing en masse as there are even no jobs for them.

There is no doubt in my mind that we will have still another crash. All of this TARP and other bail out measures have done nothing to solve the housing crisis that we face. Wouldn't have it been more effective to give the trillions of dollars to us little people who are drowning in debt and being overwhelmed by increasing taxes (I currently am living in Cook County, Illinois!! but higher taxes are going to drive me out).

Sure, the bankers and politicians continue to get raises and perks. Seems like we are in South Africa some years ago. It is not getting better and Obama's socialist ideas are just causing more turmoil. Nothing will ever happen here except more money being funneled to the elite, tapping the middle class as always.

There will be a washout in the markets. All markets as the rich will not be able to sustain the game. It will collapse and prices will be so cheap that you will be kicking yourself if you don't have any cash to pick up the bargains. I have been continuing to accumulate SDS and DXD, ultra short market positions and have a high level of cash.

I can't call tops or bottoms as the markets tend to be well beyond any level of rationality. Fundamentals, while important, are no longer realistic measures of what is happening. Companies can hide risk offshore in special entities and other accounting gimicks and consolidated financial reporting mask realities. As I have been saying over and over again, it seems to me that real, long-term investing is dead. The market is just a casino now. It's a game of the big boys with billions of dollars to play with. Long-term growth is a joke as over the past ten years, it doesn't exist anymore. Whether it is the markets that are a joke or the corporate system of greed or governments of incompetence, I can't say. All I can say is that if you are not protecting yourself against a total economic collapse then you could be in for a big rude awakening.

But fear not. If Obama gets his way, you will benefit much more from the system from being a penniless indigent than being a productive capitalist.

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