Same Shit, Different Year II

Why do we believe the same shit, year after year?

Each and every year, since the “credit crisis” led to the looting of all things financial, we see a recurring pattern. Each year, beginning with the third quarter and going into the year-end, economic numbers perk up. Why? Because in America we spend the vast majority of our discretionary income in one big slug and in one month, from late November until late December.

The buildup to this orgy of year end holiday spending requires a significant uptick in procurement, production, transportation, hiring and a plethora of other services. And this buildup serves to create a false sense of an economic recovery that is extrapolated forwards. Yet this extrapolation is always wrong.

This past year, even with the hurricane and fiscal bullshit, we’ve spent a ton of money, both cash and credit. And the FED continues to pump a record amount of digi-cash, scaring those inflation hawks. BTW–there can be no Hyper-Inflation when the “money” stays locked in the closed loop of the financial system. Sorry Peter.

This year we’ve got the world printing as fast as they can. America, Europe, Japan, China, busy printing digi-cash to buy bonds to fund governmental spending to keep interest rates low, to bail the banks out of their bad investments and to keep the balls in the air. And it is serving to make everyone believe that everything is “stable”. But more importantly, the pending changes in the tax law and the lack of legitimate low-risk investments is again forcing asset allocators to become even more aggressive as they perform as they are told to. Investment Models that are based on criteria for the “normal world” are still used but reach the incorrect conclusion as to how to allocate assets.

And all the while the world marches on, oblivious to the machinations of the Masters. And market participants just want to find the next 20% trade. And Inauguration Day is just around the corner. Ignorance is bliss.

Have a safe and happy weekend!