Feldstein smiles at one of his star pupils

One of the “elite,” conomist Martin Feldstein was once considered one of the finalists for Greenspan’s spot, before a true sycophant, the Bernank, was appointed.  The rest is history but seems Feldstein is having an Atlas Shrugged, John Galt moment about what has transpired.

“The stock market is, I think, responding to the Fed. I think the real danger is that this is a bubble in the stock market created by low long-term interest rates that the Fed has engineered….The danger is, like all bubbles, they burst at some point”

Other John Galt moments include the veteran investor space as another hedge fund titan,  John Arnold closes shop in the energy arena.  Rejection of the liquidity only theorem at work here? How long would any entity, let alone the balls to the walls moral hazard types survive in even a slightly more normalized world?

Another sign that John Galt Investor has about had it with central planned ‘conomies and markets combined with Ministry of Truth black propaganda are CNBC’s ratings. They are falling off a cliff. Some point the finger at Andrew Soskin, but he is merely a symptom. I see it as more disgust and disinterest in Fed Bubbles, TBTF rigged, manipulated markets.   Another -$1.6 billion outflow from domestic equities, marking 10th consecutive weeks.   This results in more vaccum tube trading, no depth,  algo addled markets,  with the few remaining participants drinking heavily of the spiked Kool Aid.

Tuesday ISM release and subsequent vacuum tube rally took the cake. It was an contradiction among a half dozen other data points pointing to ‘conomic rollover.  We see a repeat of katie bar the door run ups, followed by reversals, wash, rinse, repeats.

Frankly how does anybody plan or do forecasts in a central bank bubble world. Clearly the quick buck artists aren’t even trying, but are merely gambling away. Memories about Worldcom, Enron, LTCM, and Lehman Brothers seem short. The Chesapeake Energy story shows that there are land mines out there galore. One has to ask, how long would some of these entities last without ZIRP, and the too big the fail crackpot theory?  Only days would be my prediction. These implosions will take their governments with them.

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I like Obie, but he has drunk the Kool Aid. We are doomed. He’s listening to the advice of those very same world renowned egonomists who never saw the current mess coming. How could those who never saw it coming in the first place, and didn’t recognize it after it had already begun have any clue how to get us out of this mess? It makes no sense. But Obie is obviously listening to them. So we are doomed.

Doomed, I say.

What’s my advice? After all, I was one of those non-economist types–called bears– and we are multitude–who did see this coming. People like Bill Outada Poole, Big Dick Cheney and others say that nobody saw this coming. Well, the government bigshots and mainstream egonomists didn’t see it because they were the problem. It was their system. Greenspan built it and he was their maestro. Those of us malcontents on the outside looking in–we saw it and we screamed and yelled and ranted and raved, but nobody on the inside wanted to hear it. They were having too much fun sucking on the teat of the Ponzi scheme they had created.

But that’s for another time. The question is what I think “they” should do now.

Nothing. Because contrary to their conventional wisdom, doing nothing is actually much more likely to help the situation than following the advice of those who caused the problem.

That’s right, nothing. Oh, we definitely should have a little trickle up economics–some programs to allow the unemployed to subsist. We need to spend a lot less money on guns and more on butter for sure. And I guess we’ll have to raise the age for Social Security to 70, and roll back government fat cat pensions.

As for bailing out the bankers and brokers and corporate CEOs and all the friends of the politicians, I say let ‘em fail. Too late, I know. Bailing out the rich bankers and brokers will not save the system, it only puts the US taxpayer, instead of the investors who assumed the risk in the first place, in the position of bagholder of last resort. Why should we be the victims just to bail out the irresponsible self aggrandizing bankers, financiers, and economists, the thieving corporate CEOs and CFOs, and the lazy, irresponsible, and crooked investment managers who caused this mess? These spending programs are burdening US from now till kingdom come with a problem that those people caused. Yet we are bailing THEM out. WHY? Because they have the power. We don’t.

Take for instance Senator Scummer thanking Citibank today for throwing its support behind the bankruptcy proposal to allow judges to force mortgages to be crammed down. What the hell does Citicorp have to do with the legislative process? Why should the Congress need that company’s support to pass any legislation? Why are OUR representatives THANKING THE CRIMINALS? Whatever happened to government of the people? The extent to which the corporations have taken over this government is shocking. The politicians don’t even pretend any more. They thank their corporate bosses publicly for giving the OK to legislation.

It’s an outrage.

OK, just another outrage. After a while you get numb to it. That’s how they get you to play the game and turn over the fruits of your labor. They slowly and surely wear you down and numb you to the pain. Orwell wrote the manual 60 some years ago. Did he suspect, did he know, that he was predicting the future of the United States of America?

They’ve already done this business of borrow and bail twice and the result is as obvious as the finger up your nose. Just look at what happened to the markets the previous two times where the federales engaged in massive public borrowing over a short period of time, last May and last October. The outcome will be no different this time.

The borrowing for “The Stimpack” as currently envisioned will crush the stock market and destroy whatever is left of confidence world wide. It will cause an even greater crisis by potentially destroying the world’s perception of the creditworthiness of the US Gummit itself. We will ultimately be at the mercy of our creditors, and they at ours.

Unless they scale this Stimpack thing down to next to nothing, or by some other miracle they don’t try to raise the money, we are doomed. I think our best hope is that when they begin to implement this monster and things start to go over the cliff they will, like Wily Coyote, somehow grab a branch, pull themselves back up, reverse course, and stop all the damn borrowing.

As so many bears have pointed out, we cannot cure the disease by giving the patient more of the same poison that caused it in the first place.

Furthermore, substituting the US Gummit in the sick bed of the financial system as the dying patient of last resort is the height of folly and irresponsibility. We will now all pay the price, doomed to a pitiful, sickly existence for generations to come.

If Shakespeare lived today, he would not have suggested that they should “kill all the lawyers” because he would have had economists as his foils instead.

Polonius’s advice would still hold, however.

Neither borrower nor lender be.

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