Lessons for us here in Ireland ??
Archive for February, 2011
Afternoon calm in the well-scrubbed north Dublin suburb of Glasnevin was broken by a slanging match between rival campaigns. It happens in elections everywhere. Yet to no one’s surprise, this pavement squabble in Ireland‘s tense 2011 election was between supporters of the same party.
Fighting for vital second preferences in the country’s single transferable vote (STV) system can pit colleagues against each other when support is collapsing, as it is for Fianna Fáil, the governing party of the great banking crash of 2008.
“Why are you canvassing so close to the polling station when it’s illegal?” a supporter of Fianna Fáil’s Mary Fitzpatrick shouted at two younger men clutching leaflets for the party’s Cyprian Brady in their hands. As the pair half-heartedly protested innocence, he screamed: “Fianna Fáil could be wiped out in Dublin and we have a chance in this seat.”
“Calm down, we all have Fianna Fáil’s best interests at heart,” replied the Brady bunch. “No you don’t, or you wouldn’t be doing this,” countered the Fitzpatrick activist, who then called the police on his mobile. The Garda arrived within minutes and calmed both sides down. Such are the dynamics of STV, which gives voters a more sophisticated range of options than Britain’s proposed AV reform.
As disaffected Fianna Fáil voters in Glasniven were deciding whether to spare either – or neither – local Fianna Fáil candidate, the Fine Gael leader and taoiseach-in-waiting, Enda Kenny, was urging supporters to vote tactically too. After a quietly competent campaign (no disasters) and a late surge to 40% (Fianna Fáil is on 15%; Labour 18%; Sinn Féin 10%), ex-teacher Kenny is within reach of a clear 83-seat majority in the Dáil – though not quite there.
Wise heads are telling him that another coalition with “high tax” Labour, always uneasy bedfellows, would be the best option given Ireland’s economic troubles. The arguments are familiar to Lib-Con coalition Britain and the two parties’ attacks have softened as the vote counting looms.
But in a real sense, incestuous political feuding like the spat in Glasnevin has long been a wider problem with mainstream Irish politics. Fianna Fáil and Fine Gael are both parties of the right, nursing old historic quarrels but not offering voters sufficient choice, even after the disastrous bank bust of 2008.
Across Ireland yesterday, up to 3.2 million voters in 43 multi-member constituencies were picking 165 TDs (MPs) from among 566 candidates. But if voters emerging from St Columbia’s school polling station, Glasnevin – or down the road in poorer Phibsborough – are any guide, they were doing so without much enthusiasm.
“I voted for leftwing independents,” said Róisín Beirne, 24, a sculptor who lives in working-class-but-gentrifying Phibsborough. In 2007, when Fianna Fáil’s Bertie Ahern unexpectedly beat Kenny just before the Celtic Tiger boom exploded, Beirne included Greens and Fine Gael candidates in the mix. No longer. “Voting for Fine Gael or Labour isn’t change, it’s the same. I’m not sure I have any faith in their ability to run the economy.”
Older people were more likely to stick with old loyalties. “I’ve always voted Fianna Fáil and I did again. I don’t like Enda Kenny, he’s not honest, and they’re all to blame. Someone should have told the banks to stop lending,” said Kathleen Duignan, 82 outside All Saints Presbyterian church polling station.
In Glasniven, 83-year-old Ann Watters says much the same, except she’s a life-long Fine Gael voter. “The banks and the politicians were hand in hand.”
But the old fear for their country and the burden the crisis has bequeathed to Ireland’s young. When the Fianna Fáil government, led by Brian Cowen, rashly underwrote all the debts of tottering Irish banks after Lehman Brothers crashed, it turned a financial crisis into a sovereign debt crisis and Ireland into what its media routinely calls “a colony of Brussels”. Some voters have decided they prefer Europe to the crony government at home.
Though the campaign has shed disappointingly little light on realistic options ahead, the financial numbers are scary. After 2000 the early Celtic Tiger years became a property-led speculative bubble, made worse by weak planning laws and 300,000 too many new homes. The crash saw GDP collapse by 11%, unemployment triple to 13.3% and government debt quadruple to 95%, which will rise to 125% by 2014 on IMF estimates.
Labour’s leader Eamon Gilmore, likely deputy PM next week, has been criticised for saying that the EU/IMF renegotiation, which all parties agree must follow the election, must be on “Ireland’s terms, not Frankfurt’s”. But even the austere Financial Times argues that, if Germany wants to prevent an Irish default on its debts (for fear of wider eurozone contagion), it should share Ireland’s burden; Dublin’s debt disaster is also the fault of European lenders.
In busy Phibsborough Road, in sight of idle cranes and boarded-up shops, unemployed electrician, Michael Maher, 24, and his fiancee, Emma Mullen, can’t wait for the EU summits. They voted for independents and Sinn Féin, protest votes for individual candidates they admire. But the couple are already planning to follow an old Irish tradition by emigrating to Canada or Australia.
As the polls closed , Dublin’s recycling centre publicly crushed a BMW that once belonged to a banker who helped wreck the economy. It may make voters feel better – but for how long?
Irish polling stations were expected to record one of the highest turnouts in recent history, with voters intent on punishing the government for its mismanagement of the financial crisis.
By mid-afternoon in Dublin, nearly a third of the electorate had already voted, with most constituencies elsewhere reporting that up to 30% of those eligible to vote had turned up.
Just over 3.2 million people are entitled to vote in the Republic. They make up 43 constituencies voting to elect 165 of the 166 MPs (the chairman, Seamus Kirk, is automatically returned to the chamber without having to stand for election). Fine Gael needs 83 seats to secure an overall majority, but opinion polls suggest it will just fall short.
As has been noted on CrisisJam before, failure is no barrier to success in the thin air that prevails in the offices off the topmost corridors of power. The IMF’s dismal record in evaluating and forecasting economic performance – and its tenured poistion as arbiter of same – bespeaks a very special kind of insulation from the consequences of stupidity and failure. But, writes Andy Storey, the degree of the Fund’s stupidity is less important than the political uses of its idiocy, for both supporters and opponents of its practices.
The Independent Evaluation Office (IEO) of the International Monetary Fund (IMF) has recently reviewed the Fund’s performance between 2004 and 2007 and concluded that, far from spotting the crisis coming, the IMF helped bring it on, especially through its advocacy of ‘light-touch regulation’. According to the IEO, as reported by the Bretton Woods Project, “the IMF missed key elements that underlay the developing crisis”, especially the disastrous evolution of the US financial system, of which IMF staff were “in awe”. The IEO documents how “the IMF praised the US for its light-touch regulation and supervision that permitted the rapid financial innovation that ultimately contributed to the problems in the financial system. Moreover, the IMF recommended to other advanced countries to follow the US/UK approaches to the financial sector.”
So is the IMF stupid? The IEO seems to think that, institutionally, it is indeed rather dumb, suffering as it does from an “insular culture” and “silo behaviour and mentality”. And this may be partly true. Brazilian economist Fernando Carvalho notes that ‘by both training and experience the Fund staff has always shared the view that the Anglo Saxon model of capitalism is superior to all its alternatives’ and that financial globalisation is an unambiguously good thing – despite the absence of evidence for any such claim. But apparent stupidity typically serves some interests over others.
For example, the IMF approach to Eastern Europe is to insist that governments’ fiscal policies caused the problem there, rather than the decisions of private banks. At one level, this can be read as just plain wrong. But, as Daniela Gabor has documented, this approach “legitimises policy advice that imposes ‘antisocial’ measures (wage cuts, public sector layoffs, taxes on consumption) in order to protect financial sector returns”. So, not so stupid from the point of view of the financial sector.
Something similar holds true for Egypt, where an April 2010 IMF report noted that ‘Sustained and wide-ranging reforms since 2004 had reduced fiscal, monetary and external vulnerabilities, and improved the investment climate. These bolstered the economy’s durability, and provided breathing space for appropriate policy responses.’ Commenting on this rather optimistic assessment, John Dizard of the Financial Times draws the following conclusion:
These aren’t quibbles about minor inaccuracies, or arguable ideological differences. There were imminent, overwhelming problems that either evaded the IMF’s attention, or that it chose not to report. So European leaders might want to reconsider whether they can depend on the IMF to act as a monitor, let alone arbiter, of good macroeconomic policy for member states.
As Dizard notes, even if some IMF economists had spotted the economic powder keg in Egypt, they might have chosen not to report it – mainly because the Mubarak regime was a favoured ally of the IMF’s main patron, the United States. Again, willful blindness can make perfect political sense.
It is important to emphasise that this is not a crude conspiracy theory. Certainly, senior IMF officials would be alert to US sensitivities regarding Egypt and to the priorities of Western banks in Eastern Europe, and would help ensure that those interests are served. But the rigid, if empirically destitute, worldview of IMF economists may be genuinely held – inculcated through the brainwashing that passes for an economics education in the US and UK and advanced by the promotion and in-house editing practices of the Fund (and those of other institutions, such as the World Bank). The question is less about how many people are stupid, and exactly how stupid they are, it is more about the economic and political functions apparent stupidity serves.
But two can play at that game, and glaring examples of the IMF getting it wrong can serve a useful political function for resistance in Ireland and elsewhere. Every time a mainstream commentator says something like ‘the IMF are the experts on this’, we can say ‘that would be the guys who helped cause the crisis in the first place’, or ‘are we talking about the same people who said the Middle East and North Africa was really stable’?
There have been a number of controversial reports available that provide link between cell phone use and its harmful effect on your brain. Cell phone industry continues to claim that their products are safe; there is still no scientific data available to prove this. A recent study published in the Journal of the American Medical Association, considered the most prominent, to offer scientific evidence that cell phones affect brain metabolism. The study was conducted by the National Institutes of Health.
About the Study
Researchers followed 47 participants who underwent two brain scans. During the study, cell phones were placed next to both ears while the participants underwent brain imaging using positron emission tomography (PET scans). Participants were given an injection of glucose to measure brain activity; brain cells use glucose as a source of energy.
During one scan, a cell phone connected to a muted call was attached to participants’ right ear; during the other, they were with turned off phone. Neither the participants nor the researchers knew when the cell phones were off or on.
When the phone was turned on, glucose metabolism in the section of the brain nearest the antenna was about 7% higher than when the phone was off.
“This study shows thatthe human brain is sensitive to this electromagnetic radiation,” said Dr. Nora Volkow, a director with the National Institutes of Health and lead researcher for the study. “Whether this electromagnetic radiation has any negative…
consequences, that is something that needs to be properly evaluated.”
In essence, cell phone is like a radio. When you talk on your cell phone, your voice is transmitted from the antenna as radio frequency radiation (RFR). Depending on how close the cell phone antenna is to your head, between 20% and 60% of the radiation emitted by your cell phone is transferred into your head.
Well! Phone is the one of the basic necessity of human life. The best way to avoid these radiations is to have a cell phone that can work on speakerphone. Doing so, you can greatly decrease your exposure to harmful radio frequencies (RF).
The threat of a stock-market selloff is particularly relevant today. The flagship S&P 500 stock index (SPX) is extremely overbought technically, and sentiment is wildly complacent and bullish. Key indicators reflecting traders’ collective psychology are pegged near dangerous levels from where past major SPX selloffs started. Right now the stock markets are as ripe for a major correction as they’ve ever been.
Meanwhile the Continuous Commodity Index (CCI) continues to achieve new all-time record highs, reflecting similar exuberance in the commodities realm. And the benchmark US Dollar Index (USDX, the best proxy for this currency) is relatively low with lots of room to soar. I can’t imagine a more-perfect scenario for an SPX selloff igniting a USDX rally that temporarily crushes commodities prices!
This effective double jeopardy that SPX selloffs exert on commodities stocks offers great opportunity to speculators and investors who understand it. When the risks of an SPX selloff wax high, speculators can realize profits and raise cash to ride out the coming carnage. Then once the SPX selloff passes, both speculators and investors can snatch up the resulting commodities-stock bargains.
The inverse relationship between the US stock markets and US dollar, at least at its present potency, flared up during 2008’s once-in-a-century stock panic. That epic event, far more than anything else in our lifetimes, galvanized traders’ sentiment during stock-market selloffs. Its echoes have been strongly felt in the last couple years, and will continue to reverberate for years to come (with decreasing intensity).
In order to understand how SPX selloffs ignite USDX rallies today, we have to start during that crazy panic episode. This first chart superimposes the USDX (blue) over the SPX (red) for comparison. The inverse correlation between these two datasets is visually-astounding. Major SPX selling episodes are highlighted in red so we can easily see what the US dollar did over these particular spans.
Before the panic, the US Dollar Index hit an all-time closing low back in April 2008. It had fallen a mind-blowing 41% since its secular bear started in July 2001! It is crucial to realize that the dollar started off a very low base before that autumn’s stock panic erupted. By mid-July 2008, the USDX was scraping along just 0.5% above its all-time low. You could hardly even give US dollars away, global investors rightfully spurned them after their long bear.
That month though, a bond panic started brewing. After their stocks plummeted 72% and 78% in a single month, US mortgage giants Fannie Mae and Freddie Mac teetered on the edge of bankruptcy. Large investors around the world who owned trillions of dollars worth of these GSEs’ bonds watched nervously. Would they get their principal back if the GSEs failed? Rather than holding and hoping, they rushed to sell GSE bonds. Some of this capital flooded into US dollars (cash), and some parked in US Treasuries.
As these fears accelerated into a full-blown bond panic, the USDX shot up rapidly. Then just when the dollar peaked and started to roll over in August, the stock panic ignited. This is shaded in red above. Between late August and late November 2008, just 3 months, the flagship S&P 500 stock index plummeted 42.2%! It was an utter bloodbath, unlike anything seen since the Panic of 1907.
As terrified traders worldwide rushed to dump their stocks, they moved their capital into cash. There is nothing better to own in a rapidly-falling market, it preserves purchasing power to buy the resulting bargains after the intense selling burns itself out. Countless foreign traders, seeing their local currencies plunging with stocks, sold their own money to buy US dollars. Thus the US dollar skyrocketed, as you can see above.
The USDX itself, a measure of the US dollar versus six other major currencies (mostly the euro at 57.6% of its weight), blasted 22.6% higher in just 4 months! Realize that currencies usually move with all the sound and fury of a glacier, so this was a breathtaking extreme for the world’s reserve currency. This particular USDX rally was actually its biggest and fastest ever witnessed over such a short span!
The SPX and USDX inverse correlation over that red panic span is readily evident visually in this chart. This relationship holds up statistically too, sporting a very high 81.7% r-square. Nearly 82% of the daily USDX price action over that stock-panic span was directly explainable mathematically by the SPX’s own. The USDX even hit new highs on the same days the SPX hit new lows, both at the original October panic low and the secondary deeper November one. The dollar was slaved to the stock markets’ fortunes.
And then when the SPX finally started stabilizing in December, the USDX plummeted. There was no need for the safe-haven refuge of US-dollar-denominated cash with the stock markets clawing higher again. But then in January 2009, the stock markets inexorably started sliding lower again. This trend accelerated in February as the new Obama Administration haughtily asserted that American investors were undertaxed and the federal government was too small. The SPX spiraled lower in despair.
Once again the USDX soared as the SPX plunged, even exceeding its earlier panic highs. But as soon as the stock markets finally managed to bottom in March 2009 (I called this in real-time), the USDX started selling off again. The Fed’s announcement that it was starting to monetize US debt, its original gigantic quantitative easing, accelerated this plunge. Once again rallying stock markets negated the need for a safe-haven refuge in the US dollar, capital left to return to stocks.
Note that during that wildly-crazy stock-panic span, the only time the USDX rallied materially was when the stock markets were selling off. Then as soon as the SPX started rallying again, the dollar sold off. At the time, Wall Street argued that this USDX strength was due to the fundamental superiority of the dollar to other fiat currencies. Nonsense! The dollar only rallied when stocks sold off, it was a pure safe-haven play. There was nowhere else to go so traders nervously parked capital in zero-yielding cash.
Even though holding cash is very wise when stock markets are falling, that doesn’t mean the US dollar is either fundamentally-sound or a worthy long-term investment. It was a convenient shelter in an epic storm, nothing more. This surging dollar behavior during the panic conditioned traders to flee into the USDX whenever the SPX started selling off in the couple of years since.
A month ago I wrote an essay examining the extreme complacency and apathy in the stock markets today that guarantees a major SPX correction looms. In it I highlighted the pullbacks and corrections the SPX has weathered so far in its cyclical bull to date. These same seven SPX selloffs are highlighted below in red. Note what the US dollar did during each one. The panic-spawned phenomenon of rushing into this currency whenever stocks are weak is very much alive and well.
The initial several pullbacks in this stock bull were fairly small and short, and they happened early in the post-panic recovery when the stock markets were rebounding rapidly. So their resulting impact on the US dollar was minor. Yet note that this currency still rallied sharply in each of those initial SPX pullbacks. Then this SPX-driven dollar-rally model appeared to break in December 2009 when the dollar surged on its own accord.
Even though the dollar has been heavily influenced by the stock markets in recent years, it still has its own inherent technicals and sentiment. Occasionally they get extreme enough to overpower the stock markets’ dominating influence. And in late November 2009, the dollar was simply getting too oversold. Traders were too bearish on it and one of its periodic bear-market rallies was due. So one indeed erupted, but it soon petered out. Again the stock markets surged in early January 2010 and pushed dollar demand lower.
But then in mid-January last year, what would eventually grow into the largest pullback (less than 10% selloff) in this entire cyclical bull emerged. The USDX shot up sharply, topping the exact day the SPX bottomed just like we had seen during the stock panic. Traders were once again flooding into this currency for a safe-haven refuge during fast stock-market selloffs. Due to the irrational euro panic the dollar kept grinding higher in the subsequent months despite a stronger SPX, but its rally was very anemic.
Then late last April, the SPX started on what would prove to be its only full-blown correction (greater than 10% selloff) of this bull. What did the dollar do as capital fled overbought and complacent stock markets? It rocketed higher so vigorously that it actually neared its old panic highs despite a vastly higher SPX! And then literally the very day the SPX initially bounced in early June, the USDX topped. It started plunging until the next SPX pullback in August, when it again surged sharply.
Beginning in early September when the stock markets recommenced rallying, global traders again pulled their capital out of this safe-haven-currency parking spot and the USDX collapsed. It couldn’t manage another rally until the most recent SPX pullback erupted in November. Then of course right on cue, the US Dollar Index rocketed higher until the stock markets stabilized again. See the crystal-clear pattern here?
Nearly without exception, the only times the US dollar has rallied materially in the past few years was exactly during stock-market selloffs. With the Fed relentlessly creating new fiat dollars out of thin air like there is no tomorrow, and interest rates at zero, and Washington spending like drunken sailors, there is literally no fundamental reason to own the US dollar today. Traders only want it in one specific situation, when stock markets are falling fast so cash temporarily becomes king.
The entire dollar gains during the stock panic, which sparked its biggest and fastest rally ever, happened only when the SPX was plunging. At all other times, the USDX was generally sold off. And over the couple of years since that panic ended, the only times we’ve seen large and sharp USDX rallies (with the single exception of that dollar-oversold episode) was when the SPX was pulling back or correcting.
There is no reason why this behavior shouldn’t continue. Since stock-market selloffs drag all sectors lower, none escape, the best trade to own during these events is cash. It preserves your capital while your effective stock purchasing power grows as share prices decline. Demand for cash will always surge during a major stock-market selloff, and this will continue to drive major dollar rallies. I have no doubt that the US Dollar Index will again surge when this next overdue SPX correction finally arrives.
Now if you own stocks in most sectors, the dollar’s action is largely irrelevant. Apple is going to keep selling iPhones and iPads like hotcakes regardless of which way the dollar meanders. But if you own commodities stocks, these SPX-driven dollar surges are huge deals. Your commodities producers’ profits are driven by the prices of their underlying commodities, and these prices take a hit whenever the dollar rallies. When traders bid the USDX higher, it takes fewer dollars to buy any given unit of commodities.
So commodities stocks are hammered from multiple fronts during stock-market selloffs. Like all sectors, they are sold off simply because the general stock markets are falling. And since professional traders still consider commodities stocks riskier than many other sectors, they tend to leverage the declines in the stock markets. Larger commodities stocks often double whatever the SPX decline happens to be.
And a stock-market selloff’s parallel impact on the dollar compounds this selling pressure on commodities stocks. As traders see the commodities prices critical to producers’ profits drifting lower, they start to fear for this sector’s core fundamentals. So they accelerate their selling even beyond what the stock markets would suggest is reasonable. A rising dollar alone weighs on commodities prices and hence commodities stocks, but coupled with an SPX selloff the resulting impact is freight-train hard.
The natural reaction of traders to any stock-market selloff is to assume the economy must be deteriorating if stocks are down. Usually this is incorrect, as periodic selloffs within ongoing bulls are usually simply driven by technicals (prices rallied too far too fast) and sentiment (consensus is too bullish). They have nothing to do with fundamentals at all. But when a fast dollar rally drives falling commodities prices in concert with an SPX selloff, this bearish economic psychology metastasizes into fundamental concerns.
So when the stock markets are falling, the dollar is surging, and commodities prices are weakening, Wall Street endlessly declares that commodities stocks are falling for fundamental reasons. With lower commodities prices, their profits will deteriorate. Provocatively, you usually hear bold declarations that the secular commodities bulls (or “bubbles”) are finished during these SPX-selloff events. This naturally leads to a really-negative environment for commodities stocks. They are often beaten to a pulp.
This probably sounds depressing at this point, but it really isn’t at all. Our goal as speculators and investors is simple, to buy low and sell high. In order to buy low, we need selloffs periodically to drive commodities-stock prices low enough to be relatively-cheap bargains. SPX selloffs, which are inevitable, healthy, and necessary to keep sentiment balanced, drive the best buying opportunities ever seen in this entire commodities-stock bull. These selling events should be gleefully anticipated!
They certainly are here at Zeal. As lifelong speculators ourselves, we zealously study the markets to uncover high-probability-for-success trading opportunities for our own capital. By selling commodities-stock trading positions just before stock-market corrections and buying back in just after they’ve run their courses, we’ve amassed an amazing record of success over this past decade. Our subscribers have made fortunes by heeding our famous contrarian research and mirroring our trades.
All 235 stock trades made in our flagship Zeal Intelligence monthly newsletter since 2001 have averaged annualized realized gains of +52.4%! Lately with the stock markets so overbought, we’ve been realizing our many large gains from the autumn rally and amassing cash. Then once this overdue stock-market correction arrives and hammers commodities stocks, we’ll be ready to buy the resulting oversold bargains which will subsequently multiply our capital again. Subscribe today to our acclaimed monthly or weekly newsletters and be ready to seize the fantastic buying opportunities that are approaching!
The bottom line is stock-market selloffs ignite major US dollar rallies. And these are almost the only times the dollar surges, as the vast majority of its rallies in the last few years coincided perfectly with stock selloffs. Cash is the natural and prudent refuge in times of falling stocks, as it preserves capital while its purchasing power increases. But the resulting dollar surges weigh heavily on commodities prices.
This is a problem for commodities stocks, especially if they produce commodities with prices particularly sensitive to dollar action. These weaker commodities prices combine with the general bearishness of falling stocks to lead to outsized losses in this sector. While tough on traders not expecting this behavior, it is a huge boon for those who do. It leads to the best commodities-stock buying opportunities ever seen in their ongoing bull markets.
Adam Hamilton, CPA
So how can you profit from this information? We publish an acclaimed monthly newsletter, Zeal Intelligence , that details exactly what we are doing in terms of actual stock and options trading based on all the lessons we have learned in our market research. Please consider joining us each month for tactical trading details and more in our premium Zeal Intelligence service at … www.zealllc.com/subscribe.htm
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Thoughts, comments, or flames? Fire away at email@example.com . Due to my staggering and perpetually increasing e-mail load, I regret that I am not able to respond to comments personally. I will read all messages though and really appreciate your feedback!
Copyright 2000 – 2011 Zeal Research ( www.ZealLLC.com )
Gerald Celente with Bob Conners January 27Gerald Celente : this journalism 2.0 is big no one is in control anymore but on the other hand you gonna see more crack down on the internet , there is no recovery you cannot create jobs by printing money , unless there is a productive capacity we gonna see the great depression , the internet revolution got us out the recession in the 1980s ,
SAN LUIS OBISPO, Calif. (MarketWatch) — Politicians lie. Bankers lie. Yes, they’re liars. But they’re not bad, it’s in their genes, inherited. Their brains are wired that way, warn scientists. Like addicts, they can’t help themselves. They want to sell stuff, get rich.
We want to believe they’re telling us the truth. Silly, huh? Both trapped in this eternal “dance of death” controlled by programs hidden deep in our brains, telling us what to do, telling us to ignore facts to the contrary — till it’s too late, till a new crisis crushes all of us.
Dow ends at 2 1/2-year high
Joe Bel Bruno explains why stocks climbed to 21/2-year highs and extended their winning streak to a third consecutive week.
Psychology offers us a powerful lesson: Our collective brain is destined to trigger a crash before Christmas 2011. Why? We’re gullible, keep searching for a truth-teller in a world of liars. And they’re so clever, we let them manipulate us into acting against our best interests.
In fact, behavioral science tells us that bankers and politicians are lying to us 93% of the time. It’s 13 times more likely Wall Street is telling you a lie than the truth. That’s why they win. Why we lose. Because our brains are preprogrammed to cooperate in their con game. Yes, we believe most of their lies.
One of America’s leading behavioral finance gurus, University of Chicago Prof. Richard Thaler, explains: “Think of the human brain as a personal computer with a very slow processor and a memory system that is small and unreliable.” Thaler even admits: “The PC I carry between my ears has more disk failures than I care to think about.” Easy to manipulate.
Eternal love story: Your brain’s in love with Wall Street’s brain
Thaler’s a quant, speaks mostly in cryptic algorithmics. So if you really want to know how Wall Street’s con game works on you, Barry Ritholtz, the financial genius behind “Bailout Nation,” recently summarized it in the Washington Post: “Humans make all the same mistakes, over and over again. It’s how we are wired, the net result of evolution. That flight-or-fight response might have helped your ancestors deal with hungry saber-toothed tigers and territorial Cro Magnons, but it drives investors to make costly emotional decisions.”
Humans have something “akin to brain damage,” says Ritholtz. “To neurophysiologists, who research cognitive functions, the emotionally driven appear to suffer from cognitive deficits that mimic certain types of brain injuries. … Anyone with an intense emotional interest in a subject loses the ability to observe it objectively: You selectively perceive events. You ignore data and facts that disagree with your main philosophy. Even your memory works to fool you, as you selectively retain what you believe in, and subtly mask any memories that might conflict.”
Worse, there’s no cure.
Your brain needs to believe lies; Wall Street loves telling lies
(So do Irish politicians )
Examples: USA Today headline: “Average Bull is 3.8 years: We’re not at 2 yet.” More upside. Wall Street loves it. The Wall Street Journal: “Stock recovery in high gear … S&P500 now speeding toward its next landmark,” double its March 2009 bottom.
Other lies: Inflation and rate rises won’t push China and America over the edge into a new bear recession. That one’s real popular in Wall Street’s echo chamber. Wall Street also cheers every time cable pundits and journalists repeat their favorite statistic: That stocks rally in the third year of a presidency, often more than 20%. Yes, Wall Street loves those 93% lies.
Biggest lie? Wharton’s perennial bull, Jeremy Siegel, of “Stocks for the Long Run” fame, recently told a TD Ameritrade Institutional Conference, “There’s nothing but upside to come …the next several years are going to be good for stocks.”
Yes, one of Wall Street’s favorite co-conspirators is hypnotizing thousands of our best money managers and advisers into believing the lie that this bull market will roar indefinitely. Worse, they’ll use that message to sell naive investors on buying whatever junk Wall Street is selling.
Get the picture? A little conspiracy begins in your head, a conspiracy between your gullible brain and Wall Street’s con men selling hype, hoopla and happy-talk. Listen and you’ll lose.
With the election all but over and Fine Gael is heading the new government all that has happened is we in Ireland have changed one set of gangsters for another and we the voters will live to regret putting in the same old codgers back into their cushy seats in the Dail on promises of change
No my friends the show goes on especially for Wicklow as we are about to put the same tired old TD’S back in to their lucrative expenses accounts and perks without anybody asking them to account for their last spending spree at our expense
When will the voters wake up and face reality?? It must be that people are not hurting enough! But don’t fret we will soon enough be regretting putting in these professional leaches back on our backs when they start putting our taxes up and cutting our social services and when they start selling off our family silver
I am already preparing my demonstration kit and am getting ready to protest outside the Dial
None of the established political parties are telling the truth and default is inevitable it is just a matter of how long we as a nation will take to realize that we have been hoodwinked all over again.
Just wait until you have to pay a toll to go for a walk in the local Forrest ,then we might wake up as a people
Dear Resident my name is Thomas Clarke and a vote for me is for:
· A vote for me is a vote to stop the madness of powering billions into black holes, no nonsense legislation such as over regulation in health and safety and common sense.
· A vote for me is a vote for a better deal for the self-employed and entrepreneurs reversing the penal taxes on commercial vehicles and giving access to the same social benefits as the PAYE workers
· A vote for me is a vote for more accountability and for vigorous prosecution of white collar crime
· A vote for me is for the abolition of the universal social charge
· A vote for me is a vote for a jobs stimulus plan that will address the needs of the unemployed and local business and not the needs of pen pushers in FAS
· A vote for me will cost you 66% less than other TD’s as I will work for the average industrial wage
· A vote for me is a vote for proven local commitment and for common sense!
· For more information please log on to www.wicklowindependent.net
· Thomas Clarke firstname.lastname@example.org
If I did not manage to call to you it was because I physically did not manage to get to your door with 130 ,000 voters scattered all over the Wicklow County to get to talking to everybody for 2 minutes there is just not enough time to get to every door