by John Ward
…..as bacteria and fossil fuels begin the deconstruction of the most artificial Bull Run in history
“The markets must decide,” said The Grantham Handbag many years ago. Don’t you just lerrv the way financial markets decide?
On Wall Street yesterday, trading was suspended because the Dow Jones index had plummeted further and faster than at any time since 2008. From a peak of 29,430 in recent days, the DJI stood at 23,801.27 by late morning New York time.
Oil wars and a bacterium were to blame, apparently. Ah. Right.
If the markets must decide, why did people who are not the market feel the need to intervene? Does anyone remember anyone interfering in market decisions when QE allowed the Dow to rise from 8,000 at the outset of 2009 to 28,650 at the end of 2019?
The “financial” markets rose 350% during a period when manufacturing, service and industrial sectors saw credit-fuelled volumes at barely plateau level in real terms, profits increased almost entirely by overnight invested money, dividends were frequently paid by cheaply borrowed money, and real citizen incomes fell.
But of course, while it’s just dandy for taxpayer subsidised, fractionally reserve bankrolled and electronically created “money” to let the 3% live high off the hog, woe betide any uppity virus forcing valuations down.
Whatever: there was a pause for coffee and calm yesterday: the index rose to 24,950. And then it fell again to 23,851.
There is always a safety net for the 3%. But for the 97%, there is only a perilous journey on a tightrope high above the Niagara Falls. And reassurance from the Unelected State is less than convincing.
Fed boss Jerome Powell was asked last week during a press conference about “rising concern about credit markets and possible insolvencies and defaults either from businesses or individuals from the [name of virus censored].” Powell replied, “financial markets are functioning in an orderly manner “. At pressers, no journalist ever says – when given such an answer – ‘You are, like, so full of shit”. It would be a healthy sign for We The 97% if somebody did do just that now and then.
Meanwhile, the NYSE has turned from “small local difficulty” in the Repo sector to full-on lack of liquidity. It surely is only a matter of days before one or more major financial entities go waltzing down Lehman Avenue. The situation has not been helped by an oil price war in the light of depressed demand related to [name of virus censored]. Widespread energy defaults could create a tipping point. A great deal of associated debt sits on bank balance sheets.
A new credit crunch – long expected – now looks certain. Wells Fargo, I note, keep cropping up as a name associated with debt toxicity.
Losing his ebullient confidence briefly, the Tangerine Dream in the White House held a press call to announce “a payroll tax cut or relief” to offset the negative impact from [name of virus censored] and Russo-Saudi oil wars. He also signed off on an $8.3 billion stimulus package announced last month. Good luck with that one.
As a result, stock futures turned positive overnight (causing Asian markets to steady) and thus most traders are expecting a rally on the NYSE this morning. So we have another directionalised milking opportunity for the Big Boys’ and their algorithms: anyone who buys it needs his head examined. President Trump failed to invest in the health infrastructure, and now he’s in the frame if Covo the Swathe-Cutter turns unpleasant. Equally, the Russo-Saudi price war has driven Brent crude down to $36 a barrel. Neither factor is going away any time soon.
“Only a combination Of Low Rates and Fiscal Stimulus stands a chance Of working,” opined Standard Chartered last night. So much for normalisation. The [name of virus censored] pandemic is nothing more than an accelerating catalyst: it is not bacteria we see in the dock today, but globalist, monetarist, mercantile, bourse-driven monopolism. The very fact that the only hope seen by SC is more of the same says everything we need to know about the fiscal, economic, social and ethical bankruptcy of neoliberal ideas.
I mourn the loss of the Rule of Law in the West. I despair at the perversion of investigative journalism by State-sponsored bollocks. And I become angry at the ease with which the Unelected States seem able to sell zero return on capital, zero hours contracts and zero State pensions to the electorate.
We have, finally, arrived at the Greco-Roman demos so feared by the ancient scholars: clueless, unthinking, and concerned mainly with pizzas and soccer. Slightly better than bread and circuses….but not much to show for 3000 years of “progress”.