Sunday, December 11, 2016
Read Scott here on iBankCoin and also at
Joined Jan 19, 2010
717 Blog Posts

Dissociative Collapse

As I sit in my underground bunker and take stock of the survival supplies and the mountain of uncut diamonds stored here, I can’t help but notice a few varietal market observations:

  • The S&P 500 is up 130% since Obama’s seventh week in Office
  • QEI cost at least $1.75T and bought 500 SPX points or 70%
  • QEII cost at least $600B and bought 350 SPX points or 35%
  • Operation Twist cost another $600B and bought 350 SPX points or 35%
  • QEIII better know as QE Infinity is open-ended with the promise of $85B per month and has bought 250 SPX points or 20% so far
  • This year has not had a down week yet and the SPX is up almost 10%

As the late Marty Zweig used to say, “Don’t fight the Fed”. But what he didn’t take into account is the absolute falsehood that must be realized to participate in this, the final phase of the Fed-induced somnambulant market gains. The stock market was, is and will continue to be the primary tool of economic policy, manipulated higher at any cost. The Bernanke Plan has been the most successful government policy since the Marshal Plan.

Everyone just loves to sight the “Discount Model” or some other such nonsense. Things that might work for a time in a “normal” economy, one that doesn’t need “rescue” through the manipulation of interest rates and the outright printing of high-velocity money. Especially since that “money” never leaves the tightly closed loop of financial assets in the financial system. Every bullish market participant is fooling himself as to why they and their clients need to buy.

It is not about fundamentals as only twenty worldwide conglomerates make up the vast majority of “earnings”. It is not about techinicals as all that matters is the uptrend. It is not about sentiment as professional investors are paid to be constantly bullish and individual investors are always long. Its not about any of the things that are supposed to mean something to the investment landscape.

It is all about the free money printed by Central Bankers in Europe who buy the debt of bankrupt countries hand over fist. It is about the Japanese “directing” their markets to a target and printing the trillions of yen needed to get there. It is about the Federal Reserve that has directed there be no criminal prosecutions in the greatest mishandling of capital since forever. It is the Federal Reserve that instructs the Primary Dealers to buy every bond that is issued by the government thereby funding its deficit spending and then buying those bonds directly from those Primary Dealers at a profit to said dealers. It is the Federal Reserve that is buying the failed Mortgage Investments from banks that the banks cannot sell, at face value, and allowing those said banks to buy fresh financial investments with that fresh cash.

Normally, when governments prints massive amounts of currency, there is hyperinflation and massive devaluation. But as long as the capital stays LOCKED in the markets NEVER to leave, there will only be the inflation brought by the higher prices of financial assets, including commodities used by producers and consumers alike.

You’ve been told that it is a great financial experiment and these efforts are designed to stimulate the economy and create jobs. That is a lie. It will not create jobs and only stimulate the investment economy, nothing more. And now, with this new year of 2013, everyone who has doubted or missed out, professional or layman, feels like they must play catch up because its been guaranteed through past gains and promised of “doing whatever it takes”. And we’ve seen the reality of a strong second half of the year followed by a slow first half. So dissapointments are sure to come.

We’ve reached the point in the market cycle where nothing, no economic reality, no news, no natural or man made disaster, no conflict, no event, no price, virtually nothing you can imagine will interfere with the need to get that money into the markets.

This is the beginning of the euphoric phase where markets and policy makers can do no wrong, even if it is economically wrong. And having learned from the “Fiscal Cliff”, that any weakness is just another buying opportunity.  It is the phase, several years into a “recovery” where the only end is a parabolic blow off to new all time highs in most of the world’s market or if the system completely breaks. I don’t know how that break will happen or exactly what it will look like, but if it happens you won’t have to worry too much about your portfolio.


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  1. jimmy_two_times

    Scott, you thinking srping time?

  2. lulusteel

    This is great Scott. Thanks…

  3. Mr. Cain Thaler

    The Scott Bleier theory of 401K contributions is in full effect

  4. john

    Very good post

  5. Cascadian

    Euro is actually cutting gov’t spending in some areas, unlike the US. Can you imagine us cuitting any area like is happening to Greece and Spain? Different dynamics of course, but some actuall gov’t cutbacks going on. Not just reductions in the rate of increase as cuts are defined in the US.

  6. Peaches

    Can’t get enough of Mr. Bleier. Does anyone know of any other blogs out side this website of this quality??

  7. ThePragmatist

    The ECB’s balance sheet is contracting. Different policy over there.

    Time is running out to buy physical gold at these sub-$2,000 prices. Rocket-fuelled price advances await.