Volume was downright anemic today after shorts were done covering at the open. Few were touching the market on the high plateau that formed. Look at DIA (Dow Diamonds Trust) volume:
Click image for sharper view. Source: Bigcharts.com
Isn’t that creepy? I heard a Bloomberg reporter say that the NYSE floor had an atmosphere of exhaustion this afternoon. There doesn’t seem to be any enthusiasm for stocks are these prices, save from the cheerleaders on TV. I would be very surprised if this were a lasting rally.
Where are we headed? History leads the way.
Our collective reality is going through a huge phase shift this fall. This is one of those events that sets the stage for drastic social changes. This would be a great catharsis if only the West had not lost its moral compass and embraced collectivism. Instead, our oligarchy is ensuring that the foreseeable future will be a never ending nightmare.
Collectivism always leads to economic and political horrors. Apparently Americans have learned no lessons from Russia and China’s experiences in the 20th Century, nor innumerable smaller failures at home (the Fed, FDIC, entitlements) so they are doomed to repeat their worst mistakes.
Those looking for a bottom should be prepared to wait at least two generations. The USSR lasted from 1917 to 1989. China was only communist from the 1940s to the early 1980s. Argentina’s economy collapsed in the 1930s and has never recovered. There, kleptocracy replaces kleptocracy, because the people fail to understand that they do not need this giant racket they call a government.
Freedom is a very, very rare human condition. Those of us who experienced a relatively high degree of it in the US prior to 2001 are lucky to have those memories.
Almost by definition, not many people are likely to accept my view of affairs at this stage of history. In Russia, the government was not accepted as the big joke it was until the 1980s, when everyone had finally learned their lesson. In Stalin’s day, one did not dare laugh. The whole nation had the air of a US airport security checkpoint: very serious business, these sacrifices for the collective good.
People do not want to accept that their reality is this horrible, so most simply don’t. Willfully blind to the danger, they don’t stand up to the outrages (fight), nor do they flee (fright). So the horrors progress with no resistance, even though this is still the phase where they might be stopped, if only people had more faith in themselves and less in their government.
History is full of the futile and fatal enterprises of collectivism, and once on a path to ruin, nations seem to stay the course. Why did the French and later the Germans march all the way to Moscow? Why did Macedonia under Alexander try to conquer India? Couldn’t they see that it was madness?
Well said. Like sheep to the slaughter. I am old enough to remember what freedom felt like. I detest what I am seeing happen to the citizenry of this country. In a sane society, these crooks would be rounded up and hung.
Great post! Having lived through the fall of communism, I remember well the people who worked and the mass that didn’t work, but everyone had to split up the fruits of the labors evenly. The culture remains: people have trained themselves to be freeloaders – who try to stick around those who do work, but don’t pull equal weight. And the general spirit is that of expecting the government to take care of everything while ridiculing it.
In the US, I think people have seen many good people who didn’t get the opportunity. And this is turning them away from capitalism. The flaw of capitalism has been to neglect merit and to create an aristocracy out of professionals. This is now backfiring. People, especially simple people, like to generalize – they will blame the group for the misdeeds of the few. And any group has to protect its honor by taking internal discipline and punish those who are responsible for the excess (rather than bailing them out).
Thanks Alex.
It’s important to distinguish what we have had in the US from true free market capitalism. This crisis is no ‘market failure,’ but precisely the opposite: a collectivist failure, thanks to socialist mechanisms like deposit insurance and a central bank which induce bankers to take risks that a free market would not tolerate.
In a free banking market, depositors would keep bankers honest and conservative by selecting only those with sound lending standards. The fear of runs on the bank prevents bankers from getting punch drunk.
Also, a free currency market (like the US had in the 1800s, with no legal tender laws and no monopoly in money issuance) has always converged on gold and silver as money, since their value is universal and not determined by government edict or bankers’ schemes.
Zulu – Good to have you here.
Mike
the action in US was very different from europe and asia
although there was no reversal we finished well below day highs
Dima — Most of the reason for that is that the first 3/5 of the US move (600+ Dow points) came in the last 90 minutes of trading on Thursday when the markets were closed in Europe and Asia. Our move (1000 Dow points in only 3 trading hours!) was spread over 2 trading days whereas theirs was all in one day.
Mike, yes, I agree about the causes. I understand how the government might seek to implement things that the market wouldn’t, but I’d prefer this to happen at the level of information sharing rather than at the level of insurance policies.
But let’s be realistic: a democracy expects things from the government if the market doesn’t provide them. So, if you’re a free market enthusiast, you need to solve problems so that the government doesn’t have to. The free-market-preservation society has to be entrepreneurial and preemptive, outcompeting the government.
Alex, the government has guns. This is not a free competition.
“Government is not reason; it is not eloquent; it is force.”
–George Washington
I think I have made the point many times over that this is not a market failure. This is a government failure, a socialist failure. Markets provide everything that government allows them to and lots that it doesn’t.
Yes.
“God, give us grace to accept with serenity
the things that cannot be changed,
courage to change the things that should be changed
and the wisdom to distinguish the one from the other.”
- Dr. Reinhold Niebuhr
I am so tired of even just living right now. Feels like a darkness is descending upon humanity. I would rather be born when there is more freedom in the world.
I’ve always felt as if I would have enjoyed life a great deal more if I were born 100 years sooner, before everything productive or fun was outlawed.