The Ubiquity Problem

And slime had they for mortar

—Genesis 11

When it comes, Bloomberg’s newsroom clerk will dash over to the AP newswire, pull a likely item off the tape and, because he has to write something, blame the stock market crash on whatever he grabbed. Evening newscasters will report this bullshit, and it will be wrongly consumed as fact at dinner tables across the land. The difference between causation and correlation will never be considered.

Socionomists understand that an event like a bully move by the president of Russia often  happens around major turning points in social mood, which correlates with turning points in the market. But the cause of a market collapse is the buildup of instability in the financial sytem, not any one news event.

The paradox in the financial markets is that the stability that central bankers strive for is the very thing that creates instability.

On a sunny day, the snow on a mountainside presents a picture of stability. But, beneath that serene white blanket, minute cracks are forming to weaken it. The longer it remains on the mountain, the more ubiquitous the cracks under the surface, until the snowpack reaches critical state. When this happens, researchers can predict that an avalanche will occur. They just can’t predict when the last snowflake will float down from a cloud to precipitate it.

The ubiquity of fissures in the global financial system first reached critical state in 2000. Repeated efforts by the Fed to prevent a washout to cleanse the system held the market up until 2007. The 54% crash into the lows of ’09 caused central bankers around the world to undertake a massive bailout, but nothing substantive has been done to fix things. Truth is, the only real fix is a Jubilee-like flattening of most of the unpayable debt that is choking off global economic growth. Leviticus 25-26 is good read here. A perp walk for Wall Street sociopaths would be welcome, too.

The Market
DJI mar 6
It’s late, and the players are too tired to keep the party going, not ready to go home yet. As long as this rally does not top the December 31 high, I will treat it as countertrend, laboring under the weight of massive negatives in sentiment, valuation and momentum.

The largest of the credit cycles in the financial system, the Levitican 7, 30 (28) and 50 year cycles all converge into a low in the summer of 2016. It shouldn’t take a commitment to Pascal’s Wager to avoid holding investment assets until after the lows.

Cheers,

Rod

No one should consider any part of this presentation as a recommendation to buy or sell any securities whatsoever.

This entry was posted in On Markets. Bookmark the permalink.

Comments are closed.