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Confidence -- the
most essential element in any market's functioning and the most
valuable asset a market itself may possess -- has vanished. It does
not exist in the global economy. It does not exist in the
unregulated frozen markets of the CDO & CDS world. Banks have no
one's confidence or trust. But trust is for a different discussion. |
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Confidence does
solidly exist
on the regulated trading platforms of the CME, NYX, and several
bourses around the world but then we must consider the next most
essential element -- the items brought to market for sale. And
therein lies the rub. Essential to steady flowing trading is a
fungible currency... or currencies that can themselves be traded in
and out before and after the trading of underlying assets. |
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Currencies are backed by nothing other
than confidence and trust. Gold standards vanished so long ago that
most people under age 60 cannot comprehend the essence of a currency
that is backed by gold. Confidence and trust are in long-term
decline. Therefore, not only are all currencies' impossible to
value, but they are backed by a depreciated level of trust. |
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Deflation is accelerating. So why buy? |
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Inflation is unusual in most products
and services. Food, clothing and shelter are declining in cost.
Luxury items are declining in cost. So why buy? |
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People have lost and are left with
capital inadequate to play with, gamble with, or invest and hold in
assets. So how can they buy? They cannot buy. Perhaps in several
years...? |
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The psychology that was fully born in
August, 1982, has been completely killed. It is no longer a fun game
to talk stocks and real estate valuations at the proverbial cocktail
party. Instead, most people have experienced pain for the first time
in their spoiled and pampered lives, they are suffering losses, and
they do not understand why. They do not understand how it is
possible that their assets are declining in value... not only their
houses, but their stock portfolios, and their retirement accounts.
The period when the stock market was a fun and profitable game has
ended. |
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People expect taxes to increase and many
understand that that will decrease their potential gains from asset
sales. So why buy? People expect capitalism to be broken further by
the world leader of capitalism, the USA. |
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So why buy? |
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Credit will be
less-available. Potential lenders will be more reluctant and
risk-averse. Why buy when lenders will not lend upon those assets
you are contemplating to buy? |
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Companies are reducing salaries and
bonuses. Not just major financial companies. Remunerative
expectations are in decline. Salary and bonus cuts are occurring in
industrial, financial, service, and all businesses. The only raises
to be found are those Congress awards to itself. The only place
there will be few cuts in the developing
depression is in government. So why buy? |
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Few
under the age of 55 know of,
are
able to recall the deflating markets of the 1970s, or understand
why our recently-dead bull market started
in August, 1982. And even fewer people have chosen to arm themselves
with the knowledge of the Great Depression of the 1930s or
with enough basic economic
principles to know how to efficiently buy
razor blades let alone stocks, bonds, or real estate. |
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This essay has not
touched upon a new element in the investment and economic equation:
undermined capitalism.
That is the New Financial Statist Age we are left with after
trillions of dollars of so-called investments in financial
institutions and manufacturing and whatever else may be next on the
government's target list. Inflationary, maybe. Detrimental for
future investment as politicians who know not what a real job is or
a real salary maybe are providing input into real business
decisions? Absolutely yes. Why buy? |
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You will do better to go out and get a
job in government. Why shouldn't you too get paid for being stupid
and lazy and accomplishing little? |
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