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The Managed Economy


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#1 wndysrf

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Posted 07 January 2004 - 04:46 PM

We are currently running The Managed Economy.

Where The Stock Market can be "managed" and create a self-fulfilling prophesy.

A self-validating Economic and Speculative Meltup.

All economies across the globe have finally figured it out. Print, jam, and manipulate. Any and all economic ills can be inflated away or blown away by the leafblower of Rampant Financial Excess and Runaway Speculation in Paper Assets.

The "Officials" must be totally giddy. The Economic Cycle has been invalidated. Each and every attempt to produce the necessary results have succeeded.

Some quotes posted by FeedFool today pretty much sums it up:

The time has come for the Fed and the U.S. Treasury to join forces, with Alan Greenspan cutting short rates and Paul O’Neill explicitly declaring that a strong dollar is not in America’s interest. It is also time for America to announce to its G-3 partners that a weaker dollar is not a problem to be solved, but an opportunity to be seized by Euroland and Japan to aggressively ease monetary policy, using all available means, including non-sterilized currency intervention to temper the dollar’s fall, and monetization of private sector assets. Yes, my friends, it is time for G-3 Keynesianism, in an all-out preemptive war against deflation.”

Nice call, Morgan: Mr. Greenspan did indeed cut rates two more times after you wrote that – 50 basis points in November and 25 more in June of this year – and President Bush found it in his best interest to fire Mr. O’Neill and hire a fellow named Mr. Snow, who cleverly re-defined a “strong” dollar as one that is difficult to counterfeit. And a chap named Bernanke, who you fondly call Gentle Ben, explained to both his FOMC colleagues and the world at large that the Fed has a printing press that can kick out dollars like your species kicks out babies, requiring more and more dollars to buy the same amount of stuff.

If the war against inflation was started with the Fed flogging the gold speculators, then the war against deflation risk should logically commence with a Fed embrace of the gold speculators. The simple fact of the matter is that America, and the world, needs a devaluation of paper versus ‘stuff’ – the exact opposite of twenty-odd years ago. And gold is the global symbol for ‘stuff.

Money is indeed the glue of contracts between the present and the future, notably contracts involving exchanges of goods and services. Money itself is nothing but what sovereigns say it is, and is worthless unless economic agents are willing to use it as a means of exchange. And since the dollar fits that bill, it is “strong,” as Mr. Snow lectures us. Indeed, the dollar is so strong that China links the Renminbi to the dollar, de facto hiring the Fed to run Chinese monetary policy. And since the other countries in Asia don’t want to see their currencies appreciate against the Renminbi, they shadow the dollar, too, de facto importing monetary policy from the Fed.

America was able to easily stack up dollars in foreign hands for a long time before that De Gaulle fellow, a true Frenchman if there was one, called America’s bluff, demanding that we ship all the gold in Fort Knox to Paris. And then we called his bluff and changed the rules, telling him that the dollar was worth the paper it was printed on, and not an ounce more. It still is, and Asian central banks can buy it up by printing their own fiat money, if that is in their own best interest. It is right now, and I think it will continue to be so for a extended period, which is much longer than a considerable period. In the end, Morgan, money in a fiat currency world ain’t nothing but a state of mind.

..........................

The current state of mind is financial bliss, obtained from Riverboating all risk assets, knowing that the Greenman Put is permanent.

Nothing will alter the market's trajectory until the state of mind is altered or changed.

Today, as usual, was Wild Wolanchuk Wednesday, where the move at the beginning of the day usually should be faded. As usual, the morning "scare" morphed into the perennial End of Session Meltup, which has occurred day after day......
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#2 machinehead

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Posted 07 January 2004 - 05:02 PM

* SIGH *

As Ronald Reagan used to say,

"Well, there they go again."

Or as the Grateful Dead put it,

Set up like a bowling pin
Knocked down, it gets to wearing thin
They just won't let you be.


Forensic investing implies that Scam Week should be down, now that "everybody's" on board.
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#3 DrStool

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Posted 07 January 2004 - 05:07 PM

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#4 soup

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Posted 07 January 2004 - 05:08 PM

machine: the only down we will ever see will be massive 1500-2000 dow points, that is unless they close the mkts first. It is out of control, the situation is so dire that no declines can be tolerated. /// Mark, today had nothing to do with options, this is all the plan, corrdinated and engineered by the fed, all buying is donw in collusion , every dollar must me maximise price gains. It truly is ugly. Never could anyone imagine the two biggest bubbles known to man happening w/in 4 years. The world as we know it is over. We just do not know it yet. This is armagedeon.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#5 MrHanky

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Posted 07 January 2004 - 05:10 PM

It was 2 years ago when we went parabolic until jan 11th 2002,then went straight down the rest of the year.everyone was big time long and got crushed


I am expecting nascrap 2100 tomorrow then down for a few days.




by the way....we hit 2100 on that very jan 11th.could have a repeat for this year.

Nothing


#6 soup

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Posted 07 January 2004 - 05:12 PM

Never in the history of the world have suck risks been taken by the central banks. Might as well go pick your burial plot or you urn now and avoid the rush. The last act of western civilization is being played out in front of our eyes.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#7 BarBu

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Posted 07 January 2004 - 05:13 PM

Bullie has my salute; the wave C of Nutsduck breaches 2X length of A, 2078-2080.

I am in the sideline, stock wise, hold some ASYT & KLIC short ( less than 5% ) and DROOY, GSS.

#8 soup

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Posted 07 January 2004 - 05:13 PM

I would love it if somebody would tell me, after witnessing the mkt action for the last year, given the economic and debt backdrop, why I should mnot be scared to death?
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#9 soup

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Posted 07 January 2004 - 05:16 PM

we are at the point were no one, shorts and paticulary longs will profit. They have been running a scorched earth policy and the flames are pretty damn close. Do the longs really think they can get out? For what dollars? It is over. Might as well mgt everything , take an exocitic trip,buy a mansion, whatever, Life as we know it is just about over.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#10 agent.5

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Posted 07 January 2004 - 05:17 PM

I would love it if somebody would tell me, after witnessing the mkt action for the last year, given the economic and debt backdrop,  why I should mnot be scared to death?

Because what good is that going to do? We will all be dead soon enough. Just realize that we do not live in a democracy instead we live in a pseudo Red Communism China, in which every bit of daily life is centrally planned.

You are supposed to "invest" in the stock market, cheer for your local baseball team, surprise that Britney Spear got married, and download porns from the Internet.

#11 Bearbones

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Posted 07 January 2004 - 05:19 PM

FYI.
Today''s close of 1126 should seal the bear coffin for Paul Ruddleston, Morgan Stanley's global strategist. Paul is a good technician whose work has been accurate for years. In his last piece he said that a close above 1123 would signify that he was wrong to warn of weakness.
My guess is that the numbers are skewed by currency weakness. We currently have an S&P worth about 890 in euro terms. The bull only exists with dollar glasses on, a fact that will become obvious in due time.

#12 Short'em High

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Posted 07 January 2004 - 05:19 PM

We are currently running The Managed Economy.

Where The Stock Market can be "managed" and create a self-fulfilling prophesy.

A self-validating Economic and Speculative Meltup.

That is exactly it wndy

A self-validating Economic and Speculative Meltup!

Inflation occuring primarily in financial assets and commodities.

In the past this would have translated into higher general inflation.

However, modern more efficient means of production and deflating labor costs
have resulted in a lower per unit cost for labor, energy and raw materials.

Global production efficiencies and decreasing labor costs are keeping the price
of finished goods down, in spite of decent consumer demand.

Excess dollars are chasing financial assets, not everyday items like in the 70's.
Wage inflation is unlikely in this labor arbitraged environment.

Fiat currency devaluing will continue to inflate financial assets.
More dollars, yen, yuan ... chasing finite supply of assets = rising assets prices.

Only when the global money supply expansion stops do we get a respite from this
mad run on financial assets.

SEH

#13 Ags Nightmare

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Posted 07 January 2004 - 05:19 PM

PG bonering after hours. Tomorrows DOW prop has been determined. There will be no gap downs in the Goodfellas rally.

Ag
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Posted 07 January 2004 - 05:19 PM

If I'm reading today properly, my guess is that the employment report due friday before the open is going to be worse than expected. Ten year yields will collapse, home builders and mortgage lenders will ramp, gold will collapse, shorts will load up in the morning, only to be blown out in the afternoon.

HOV is at support and NCEN was whip sawed and ramped today (glad I covered yesterday) and waiting at the starting gate for the gap and run on Friday morning.

#15 Ned38

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Posted 07 January 2004 - 05:20 PM

Boner of the day award goes to...........................

Drum roll please.................................................


EMRG

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