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Wednesday, June 6, 2012

"You Spin Me Round Round...Like a Record"

Finance & stock markets..  Its a boring, dull topic.  It really is.

To read about.. To write about.

We don't mind saying it..  Be much funner to write on silly, stupid topics like celebrity gossip.

We here at A&G try to make the information as digestible and interesting as possible to readers-- we're not always successful but we make the yeoman effort.

The thousands of you worldwide.. your continued readership is reward in itself.

Finance and markets is a dreary, tedious topic, even when global economies are thriving and all news to report is genuinely positive.  Mainly because there's never any end point or 'reset'.

We love Sports  because its like that.. a season ends.. another begins though not immediately.  There's some space in-between so everyone knows and accepts the previous season's finality.

The stock market.. goes up, goes down.. Up Up.. Down Down.. Yawn~

And even if it dropped 2500 pts in one day and all the greedy investors and banks got their much-deserved comeuppance, unfortunately one could not claim 'Game Over'.  Likely, the next trading day would find a 3000 spike as rats buy stocks 'on the dip'.

And unlike watching sports where a particular game/match result makes sense i.e Team A lost because they played bad defense or so forth, the stock market mostly goes up or down without any real rhyme or reason.

Investors, the rats that they are, invest simply on greed and fear.

Lately though, we can add too more words: hope and expectation.

Market is up +221 pts today as of 3p..    Why?

Central Bank Rescue Hopes Fuel Strong Market Rally -- Yahoo! Financial

Let's see.. A Strong market rally.. not just any rally mind you... a Strong one is based on Central Bank rescue hopes..  Not an actual rescue..  Not a released plan of rescue..

Hopes of one.
~ 'I Can't wait to open this present.. I Hope its a Pony!!'

Hope based on expectation.. Governments and Banks have magically come to the rescue of dying quails (financially bankrupt nations) and Investors/bond holders before...  Quite often in fact.  So admittedly its hard to blame the rats for expecting everything to continue going their way for their benefit.

Its simple behavioral psychology really.

Person A shakes Person B's hand.. 'A' receives $20 for it.   Person A is surprised & doesn't know how to react..  Next day 'A' shakes the hand of 'B'... another $20.  Every day-- Hand shake -- $20   So now 'A' is planning how to spend that $20 before even receiving it because the expectation is there of receiving it; a reward truly undeserved.

This is what those horrible wretched people known as the global banking and political elite have done-- set up expectations that everyone will be saved at all times in all circumstances.

But can they?

"I'm leery of any rescue operation...  Central banks can really only do one thing, and that is buffer the collapse. They don't engender risk taking but they can keep the system from failing completely for an extended period of time...each rescue seems to have a lower and lower half-life" -- Charlie Smith, Chief Investment Officer at Fort Pitt Capital (Yahoo! Financial)

In other words, the past few efforts to contain the European debt and bank crisis have lost their oomph rather quickly.
~ Ahh, just enough for some milk, bread & cheese at the local grocer..'

If the ECB and the governments of the world were successful in coming to an agreement and equally so in putting their plan into motion, it would cost tens upon tens of Trillions of dollars/Euros and still that would not eliminate future market risks or possibility of sovereign default.

It would simply be a very expensive, Treasury-draining can kick followed by global austerity so severe, the last few years in the Latin Bloc of Europe would look like child's play and provoking social unrest and in some situations, outright revolt.

We don't need a crystal ball or magic powers to see all this come to fruition.  The 1930s is an accurate enough guide...

So in closing, the market is Up, Up, Up.. based on cotton candy fluff called 'Hope' which becomes arrogant 'Expectation'.

Will the Elite step in to save the day?  Possibly.  After all, its those in charge of the System who are most determined to save it at all costs.
But we just sense things are different this time around.  Its no different than drugs-- the first hit or 'fix' always the most powerful.  Subsequent uses don't carry the same punch which is why addicts tend to increase their usage...

And a trillion dollars or Euros just doesn't provide the 'Kick' it once did...