House of Cards

house-o-cardsIt takes a long time to build a house of cards. The house of cards collapses at a much faster rate. Since 2011, the market buying has been funded with lies and deception. Efforts to stabilize the market are ongoing. That will continue until panic sets in. It can happen any time.  I have gained a little more confidence that the sell off will continue through mid-October. I have increased my short exposure again to about 40% up from 20%. Be cautious of abrupt short killing bear market rallies. They can be orchestrated of they can happen naturally.

Again, I am the only economist in the world that sees the Federal Reserve policy as totally political. The members are not stellar citizens doing their best to right the economy. Any sane person knows that central economic planning transfers wealth and income only, and guarantees a disastrous outcome. Janet Yellen and her crew have no honest bones in their collective bodies.

The corporate buybacks that supplied orchestrated stock market gains are litterally going to kill the corporations that participated.

When the current round of manipulation began in 2008 and then in 2011, those bear markets were not complete. One of the values of a complete bear market is that a countries assets are very efficiently allocated when it is over. This bear market will probably end at a level lower than was seen in 2009 and certainly lower than what occurred in 2011.  Why? Those bear markets were not complete. Instead, they ended when government started supporting stocks. Reallocate resources is a natural function of falling stock prices. Currently assets are at least as miscalculated as at the top in 2007. This is going to get very bad. It will probably be a mistake to flip long before a considerable amount of time passes.

Folks with stocks in their IRAs will get cleaned out. Most will be unwilling to take penalties and will take bigger losses than they would by paying the penalties and closing the accounts.

These thoughts and opinions are based on sound economic principles on which numbers cannot be attached in the present. That is the nature of free market economics. People cannot be observed behaving in the present in ways that economic principles guarantee that they will. So, most economists ignore these things and look for numbers instead. That is to their disadvantage since the present is where the action is and where the principles apply.

 

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.
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