I have talked a lot about the conspiratorial tone of frustrated bears lately, and how I take it as a sign that traders are resigned to the market marching ever higher despite the depression grinding on. Much of that anger and awe is directed at Goldman Sachs, which rightly or wrongly is perceived as the all-seeing, all-profiting eye at the top of America’s Ponzi economy. With their men in high places and their high frequency trading bots, they are invincible, or so says their stock price:

Source: Yahoo! Finance

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I am prone to fading consensus wherever I find it, and here I see the chart of a financial behemoth trading at the same level as at the very height of the credit expansion, 2006, back when it was churning out toxic bundles of AAA debt on houses and malls that are today being abandoned. In 2006, the company earned over $9 billion a year with 20% fewer shares and 20% less debt, and the mood in the stock market was of total euphoria: smooth sailing as far as the eye could see, Goldilocks time.

As far as I’m concerned, the rally from $47 to $165 has been one of the greatest short squeezes and dead cat bounces in history. For this stock to have a market cap over 20% greater than at the height of the bubble is absurd. Yes, they earned a record $3.4 billion last quarter, but trading profits come and go, and it’s not as though any of that is doled out to common shareholders: the company pays no dividend.

Expect their political racket to come back to bite them, and hard, as regulations tighten on all kinds of trading and the skeletons start to fall out of the closet. The heyday of finance is over for America, and political power follows economic power.

I suspect that the lows are not in for this pig, and that in fact it may face a crisis of existence at some point in the coming years. Besides, did you ever see a better chart from a short perspective? Its got a ready-made stop, too, in case there is more steam here than I think.

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