Where is your money going to go?

To bonds paying 1-2% for years? To commodities that are building up as investment vehicles rather than tied to demand (can you say bubblicious)? To stocks that are looking riskier by the day as ratios rise faster than earnings and sales stay flat or fall?

As some rich people have commented to me, the dollar these days is worthless. You get precious little return even though it devalues over 10% annually. The banks don’t want your money because they have to pay you nominally more than zirp and the TBTF banks couldn’t care less even if they went bankrupt because they can’t. The Treasury doesn’t need it now that the QE machine is printing mad money to rig their own auctions. Companies need it but don’t want to pay the steep bond yields unless the government/Fed somehow backs it meaning basically the taxpayer is floating the issue.

All in all, no one wants it asides from people who are in desperate need for it (people who you probably don’t want to lend it to) or companies trying to issue stock since their prices got lofty because fund managers have determined that gambling on the stock market is the only way that they can justify and keep their job.

When will people realize this and demand an end to the government giveaway that is ruining our economy and encouraging nothing but shamelessly economically senseless bad behavior all around? If you think it’s not costing you just try buying something made overseas that’s not tech. Inflation near zero… what a joke. It’s more than oil that’s rising in price.

The stock market has continued its run this year simply because the money had to go somewhere. This is not a fundamentally solid base to build onto the rally, especially on flat to down revenue. Revenue and consumption needs to rise, and rise faster than real inflation. Paying 20% more for the same groceries and clothes is not really a 20% rise in real consumption as the government may wish you to believe.

Indeed if the government takes away the giveaway the market will be more reflective of reality. But isn’t that the goal of the market in the first place? That’s like saying if we take away the cloudy mirror you will actually see your bad complexion. Nothing gets solved until you face reality.

- Moon Kil Woong

Related Posts:

• I see bears are firing up the BBQ grills.
• As long as you have stops to protect from a big drop and you got in early, you should be ok.
• Uncle Ben and Turbo Tax Timothy are such a disgrace.
• The PPT. (Plunge Protection Team)
• Some things that I cant seem to forget when analysing this downward trend:

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