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Soup, what has changed?


Well, for starters, there is now a Republican-controlled congress.


For another, they may be a lot more desperate now -- people may have been appalled and chagrined to see their brokerage statements, but very few have been panicked. People still think it's going to come back. So, we may be experiencing the next level of news/statistic manipulation, government "investor" incentives, secret bailouts of JPM-type crap....


Which is not to say that I think they'll necessarily succeed. But has the government done everything is could? I doubt it. Don't forget the psychological value (to individual investors) of government feel-good announcements.


My own opinion is that there is currently zero event risk factored into the market. Even disregarding cycles etc. that's just plain stupid.

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soup- that's the way it has been working the last few years. At the markegin a few hedgies sell stocks to buy bonds and vice versa. But as yields rise the relationship will flipflop. Just don't know when. There is a tip point somewhere. Be interesting to come up with a theoretical model for where it might be. Probably where bond yields are more than x% of perceived future earnings yield on S&P.

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I have no doubt that desperate men in control of the biggest economy on earth can reflate financial assets and end up in some sort of profitless/jobless stagflation. But how long does the rest of the world continue to take worthless paper in exchange for real goods. I understand foreigners have a vested interest in continuing the game, but not forever! What happens when the 38 billion dollar trade deficit becomes 50 or 100 billion each month.


Point is, they can do it, but surely they see the endgame as coming quicker if they do. I guess the answer is they don't care about tomorrow if they can get away with it today. The inevitable result of an amoral faithless self absorbed culture.

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drano: the point is the govt/fed can not continue to bail folks out for making iditioc investments. Liquidation of the malinvestment and the debt has to take place. Unless of course either it is different this time, or I need a lobotomy.

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drano: the fact of the matter the gig was up when the fed facilitated the asset and credit bubble. Never the less they have pulled out all the stops trying to bail out the masses, it has not worked and it will not work. To every thing there is a season. We are presently in Winter, and it is going to get a hell of lot colder.

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