Randoms: Conspiracy Now?

By Todd Harrison  JAN 07, 2010 11:45 AM

Tinfoil spoils abound!


One more time (before we celebrate), I wanna touch on a point that was postured in my Ten Themes for 2010.

My inbox is inundated with emails highlighting a handful of financial prognosticators who are now saying, "Duh! Of course the government is buying futures!" and "It would be irresponsible for them not to buy futures."

To this I'll again say that the only difference between intervention and manipulation is communication.

Way back, when we traded with Quotrons at Mother Morgan (MS) at 1251 Avenue of the Americas, headlines routinely crossed the tape that the Bank of Japan was buying Yen. That was fine; desperate times called for desperate measures and the dealing was done above the table.

The current day frustration emerges on two levels. First, the playing field is artificially skewed and traditional metrics have, in many cases, been overwhelmed. I suppose, in hindsight, seeing it and not blindly betting on it is worse than not seeing it at all.

The deeper level of angst isn't about the next five days or five percent. It's about the next five years, or the ten after that, when we pass this baton to our children and wish them well, as they weigh the world.

What most folks don't get—and what keeps me up at night—is that this dynamic is cumulative. While a synthetic wealth effect is certainly better than a cataclysmic crash, we must learn from the past or it will repeat with increasing magnitude. It will arrive in waves, with each seismic shock incrementally larger than the last.

Modern day society, awash with zero percent financings, government sponsored euphoria and the constant transference of obligations from one perception to another, is running to stand still, at best, and swimming backwards at worst. Seriously people, have we already forgotten what happens with risk gone awry?

Moreover, conventional wisdom dictates that the ultimate backstop is in place; Uncle Sam on steroids, flying Bernanke's Apache helicopter with an arsenal of never-ending ammunition. It's an image that makes the Greenspan Put look like chicken feed, a mere pimple on an elephants arse.

Feel free to dance to the music, but keep an eye on an open chair. While it's difficult to imagine, nobody is larger than the market, at least for a prolonged period of time.

That truth may take some time to see, but it will again be obvious with the benefit of hindsight.

Perspective Check!

You wanna see 21 reasons why we're not embarking on a new secular bull run, despite what you’ll read in the popular press?

Check out the table below, courtesy of our friends at Gluskin Sheff:

Click to enlarge

Random Thoughts:


No positions in stocks mentioned.