Stocksplosion By Jim Kunstler

[Jcrowley]

Stocksplosion

By Jim Kunstler

04/24/07 "ICH" -- --- Whenever somebody complains about "the lies that George Bush & Co. told to get us into the Iraq war" (as Frank Rich did in The New York Times on Sunday), I wonder how those lies compare to the lies that the American public tells itself every day -- for example, that we could run America without oil from the Middle East, or that hybrid cars will save Happy Motoring, or that we can have an economy without producing anything of value.

Meanwhile, the Dow Jones index went up over a hundred points the same day that 32 people were massacred on a university campus. And bear in mind that the massacre did not occur late in the day but literally around the same time that the New York Stock Exchange rang its opening bell -- so that as the body counts mounted through mid-day, the stock markets only went higher! They must have liked what they saw. Then, the rest of the week, while the cable news Mommy-Daddies went through the familiar rituals of bewildered hand-wringing, and NBC released the trove of farewell videos sent in by shooter Seung-Hui Cho between killings, the Dow piled on another 250 points to close at an all-time record high just under 13,000.

Could the financial markets be more detached from reality, from life on the ground (or in a free-fire-zone classroom) in this nation?

Doug Noland over at Prudent Bear.com is right: we've entered a euphoric phase of financial arbitrage capitalism with extreme Ponzi overtones, a pyramid scheme of revolving credit rackets and percentage spread plays completely abstracted from any reality of fruitful activity. The reason we don't even call "money" by its former name anymore is precisely because we realize at some semi-conscious level that "liquidity" is not really money. Liquidity is a flow of hallucinated surplus wealth. As long as it flows in one direction, into financial markets, valve-keepers along the pipeline, like Goldman Sachs, Citibank, or the hedge funds, can siphon off billions of buckets of liquidity. The trouble will come when the flow stops -- or reverses! That will be the point where we will rediscover that liquidity really is different from money, and if we are really unlucky we'll discover that our money (the US dollar) is actually different from real wealth.

http://www.informationclearinghouse.info/article17586.htm

[Matariki]

1. You realize the folks at Prudent Bear have an economic interest in the idea the market will fall?

They sell 'bear' funds that make money when the market drops. And the market drops when people panic.

[MADem]

6. It's that "bear" thing in the title!!!! That's the tip-off!! nt

[Warpy]

2. Quick buck money is no longer going into real estate

People with money to invest are going back into stocks.

There could be a bubble there in the not too distant future.

[pampango]

5. If we are not in the bubble now, we will be soon. The stock market

always seems to overcompensate from too optimistic to too pessimistic. From the tech bubble in the 90's to the crash after 9/11 back to the current bubble, the market always seems to go too far in either direction before it reverses course.

[Warpy]

7. We're not in it yet

but we're going to see it, I'm afraid. There is more to pump it up than bring it down, at this point.

[L. Coyote]

3. The NYSE is priced in US dollars. Stocks up = dollar down. Simple enough!

[dmallind]

4. What relevance does a shooting have?

Horrible event of course, but stock prices are based on expectation of future financial performance, and unless the stock in question was for a business that would be significantly affected by a mass shooting (can't think of one) there is no earthly reason why the equities market should feel any impact. Stocks went up because of bullish buyers (misguided or not), not because it somehow "liked" the shooting - that's both irrational and incendiary writing as well as sloppy journalism.