Our new reality

Even the Fed Chairman, Ben Bernanke, now agrees the recovery ‘is slower than policy makers would like’ or had expected. And yet, unconcerned by this admission of fact,  at the same time, US stock markets have shot up by 8-12% in one month.  The most phenomenal September in 50 years.

So the new reality, constructed for us by our leaders and their financial advisers, is this. The broader economy is stuck in a deep rut.  Unemployment has hardly declined at all in any country. The tally of US bank closures is now 127 for the year so far.  Double last years rate of closures.  Yet the stock market is tearing up and away. Two quite separate economies. One pumped full and buoyant with money. Ready to cut free from below, which has been poisoned by debts, dumped there from above.

Even the mainstream press, like this article on Marketwatch, is finally now admitting what those of us on  the ground have been saying for a year or more, the financial and stock-market ‘recovery’ has nothing to do with any improvement at all in the fundamental health of the economy down here – not in the US not in Europe, certainly not in Japan.   There has been no improvement in levels of corporate indebtedness. No improvement in the level of bank bad debts. There has been a dramatic worsening of sovereign indebtedness and risk of default.  The consumer is still in life threatening trouble, with negative equity in housing, and job losses.

And yet none of the basic and important economic facts has made any difference to the upward march of the markets. Not even the fact that for the last 20 weeks there has been a steady withdrawal of traders and their money from all the markets. The rally has just continued without them.  It would now seem that the rally in stock markets does not need investors any more than it needs consumers.

As the MarketWatch article says, such a stock market rally would normally indicate that ‘the market’ thinks all the fundamentals must be in place for a broad economic boom.  And yet everyone is agreed that none of the economic conditions are in anything other than terrible shape.  The simple answer as the article admits, is that the rally, led by the banks and other financial institutions, is based on one thing only –  the endless supply of government liquidity.

As it was in ’09 so it is now.  Every time the market gets a clear signal from the central banks that they are prepared to pump more tax payer or newly printed money into the banking system, the markets rally. And for good reason.  The Central banks hand them, literally, money to spend. They pump this money into the markets like hot air into a balloon.  Of course it inflates.

There is no need for investors nor consumers because the banks have all the money they need to buy up and bid up stocks they own and you don’t, with money from their new sugar daddy – the governments.

This is not a policy it is extortion.

The justification flips between “if we don’t save the banks civilization will end” when anyone voices doubts, and “once the banks recover, they will start lending and the rest of the economy will recover in time”, when a positive spin is needed.

That the latter is a lie becomes clearer the more evident it is that we are not ‘on the road to recovery’, There is no recovery ahead. There isn’t even a road.  We are not headed for anywhere – certainly nowhere better. We are already here – our new home.  This toxic wasteland of discarded and dumped debts is where we now get to live.

Those above us have dumped their freight of bad debts down upon us to lighten their load and are now ready to cast off and leave us behind.

Ask yourself this.  If we were to stop, by some act of popular anger, all the free money flowing from us, to the banks, that they use to bid up stocks that they own and you do not, to prices that do not reflect any ability of those stocks to pay the sort of dividends the stock price indicate, – if we were to stop the money which is enabling this – what would happen?

Has there been a ‘recovery’?  Would the banks, who are ‘making profits’ keep on rallying?  Or are we now at a point where if we don’t keep pumping our money out of our lives into their pockets and hacking off whole limbs of our societies in order to do so, that the banks and their whole ‘recovery’ would consume themselves in one vast Hindenburg conflagration?

The markets rally when the central banks give them the sign that all is well. that the public has been cowed once more, their politicians bought off.  Free money is on its way. Debts can be ignored or dumped over board.

And if any doubts should be raised, just sound the alarms and let the markets sink. Sit back and laugh and watch as the funny little peasants scurry about in anguish and confusion, until they come crawling and cringing back ready once more to accept that the only way everything can be made safe, for those all- important market numbers to go back up to where salvation lies, is for more sacrifices to be made so  the banks can remain safe.

2 thoughts on “Our new reality”

Leave a Comment

Your email address will not be published.