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The day the Plunge Protection Team slept in: February 5, 2018, the worst day in stock market history.
You and I are not among those who think the soaring American stock market, whose Dow Jones Industrial Index just reached a new all-time high, signifies a soaring American economy. Like everything else Trump says, that is clearly a lie. You and I are aware that the stock market has become the favored casino of the One Percent, where they gamble with their unearned wealth, intent on getting more.
Meanwhile back in the real world:
- When you add up all the profits of all the corporations in America for the past year, there aren’t any. As a group, they have been losing money for over a year;
- retail store closings are expected to hit 12,000 by the end of this year, 50 per cent more than the previous record set two years ago;
- global trade is slowing precipitously, while global debt is rising calamitously;
- the stock-trading desks at the global mega-banks have had their worst half-year in a decade (and that is much of what banks do to make money these days — roll the dice in the Big Casino. Making loans to productive businesses is, like paying taxes, for the little people);
- stocks are, by any rational measure, hideously over-priced and are being bought primarily by companies buying their own stock so that their earnings per share continue to rise even as their earnings continue to fall.
Still, the country is pretty much in thrall to Trump’s ranting and the media’s obedient stenography about the greatest economy in the history of everything, which — he said last night at a rally — he created. (I thought he was going for king. But no, he appears to believe he is God.) When we see a great illusion created for our mystification, whether by Penn and Teller or David Copperfield or Wall Street, even we who know it to be an illusion and not real magic are curious about how they pulled it off.
Well, there’s new evidence. It’s called “painting the tape,” and it’s akin to putting lipstick on a pig. It appeared on radar, in the dank depths of the stock market slough, on July 11, the day the Dow hit its historic high of 27,000+. It was described the next day by two writers for the Wall Street Parade.
The news that day was about ugly earnings forecasts and the slowing global economy, the market was not happy. But the final 15 minutes of trading saw a powerful surge of buying of just four stocks that are among the 30 that comprise the Dow Jones Industrial Average: Microsoft, Visa, Walmart and Verizon. Although Verizon and eight other Dow stocks ended the day in the red, the 15-minute injection was enough to loft the Dow average over the magic number of 27,000.
Nobody knows who did it. But the technique is well known, it is even defined as “painting the tape” by the website Investopedia.
The suspect that comes to mind, of course, is the shadowy “Plunge Protection Team” that has (allegedly) been created by the Federal Reserve Bank to (allegedly) intervene when the market pig needs more lipstick. [See “Investors Do It With Protection,” The Daily Impact May 18, 2018.] But who actually paints the tape or stops the plunge is unknown, and given the secrecy of the Fed and the deliberate obscurity of the stock market, unknowable.
So we have to choose what to believe on incomplete evidence, using such things as logic and common sense. Should we believe in an organized group of One-Percenters who regularly and powerfully intervene in what is supposed to be a free market to preserve the wealth of the wealthy and the health of a zombie economy? Or should we join the folks who are swooning over the ageless beauty of that artfully made-up pig?
“Worst day in stock market history 2/5/2018” by MarkGregory007 is licensed under CC BY-NC-SA 2.0
The ultimate tragedy here will befall those poor unfortunates who have their retirements and pensions tied up in this Snake Oil type stock market. They have believed the seagulls-following-the-ship Pied Pipers called Financial Planners/Advisers, both the same actually, who have taken the retirees nest egg cash, charged an exorbitant commission for doing so, as well as claiming endless ‘admin’ fees and ‘invested’ that money on a make it up as you go along FANTASY or mirage of future hopes stock market. What the FP’s do not tell their gullible pensioners is that those shares or ‘instruments’ will only show their true WORTH in the future when they come to be SOLD! What you are seeing on the Dow at the moment is worthless BS! It might as well be a bloody App for all it is worth in reality good folks, but the ‘advisers’ and institutions just did not let on to that sad fact. Finally, institutions such as pension funds HAVE to remain FULLY invested, whatever the stock market does, they CANNOT go to cash. This is scary stuff, it truly is.
It is fascinating to read about the good and bad decisions made by people and measure proposed to ease the impact on the masses. The reality, however, is that the systems of industrialized civilization are irreversibly using up the limited natural material resources for energy flow to do positive work while the associated friction does negative work that produces waste in an unsustainable process.
Nailed it, Denis!
Pray for miracles—the only thing that will save the world’s ass.
When you’re ugly as a pig and know it, one way to live with this inconvenient truth is to engage in a game of self-deception by putting on lipstick.
This is what many if not most of the most callous superpigs of history have done: seek to whitewash the sorry historical legacies they left behind (or would leave behind). The tragedy here is how many of us allow ourselves to be fooled by all those narrative cosmetics.
Yes.
I hope the “plunge protection team” has a very good game plan for the bubble-laden 1.5 quadrillion dollar derivaties market, because I believe should even a portion of it become unstable, the intertwined global economy won’t so much as crash at the first signs of trouble, as be blown to smithereens.
The last time I checked, yearly world GDP was in the neighborhood of $70 trillion. What a puny figure that is, really, especially in comparison to a highly threatening monetary entity that is measured in quadrillions.
The “economy” of this planet is nothing more than an egg, sitting on an anvil, with a 1.5 ton sledgehammer hanging tenuously above it.
At least that’s the way I see it. But then again, what do I know. I got out of the market 2010, sold my whole portfolio, pathetic little thing that was, thinking that the ultimate crash was right around the next bend. Missed the biggest bull-market in history, way bigger even in a relative sense than the mighty Tulip Bubble of the early to mid 1600s.
It did eventually pop, however, that infamous Tulip Bubble, and it left an entire generation of deeply invested European speculators holding on to nothing nothing more than wilted flowers.
Luckily, there were no supercomputers back then, shorting all things tulip at the speed-of-light. Otherwise, the Age of Reason might’ve ended right there, before it had really begun.
The economy is a Ponzi scheme constructed on debt, a most febrile and psychotic foundation. But the salient argument today it is impossible to have both a healthy economy and thriving ecosphere. Add tens of millions of new consumers each year as we say goodbye to the Amazon rainforest. Perhaps goods manufactured by the felled trees will in end up in Amazon warehouses someday. How tragically ironic. There are days now when I hope Guy is right about 2026s expiration date. At least I still have my Shaudenfreund to keep me warm at night.
Amazon to Amazon. “How tragically ironic.” Yup.
The largest carbon sink on the planet flipped in less than a decade, and now the Amazon jungle is a carbon emitter of the highest order. Ranks right up there with the worst of them.
Undoubtedly Guy is right. He might be off on his timeline a touch, it remains to be seen, but he understands full well, that in matters related to the termination of our biosphere, all human introduced feedback loops are exponential forces of destruction, whether they considered “positive” or “negative” in their description.