Monday, February 7, 2011

Rationale for Optimistic Pessimism

Realists are often mistaken for pessimists, and for that reason and because my views are often considered pessimistic by the average viewer or reader, it's appropriate to couch my ideas in a more palatable form.

By and large, today's data is fully indicative of what I see wrong with the current economic condition and system, and a discussion will follow today's figures.

Dow 12,161.63, +69.48 (0.57%)
NASDAQ 2,783.99, +14.69 (0.53%)
S&P 500 1,319.05, +8.18 (0.62%)
NYSE Composite 8,336.64, +48.14 (0.58%)

As is clearly evident, the stock markets continued to rally on Monday, and advancers finished well ahead of declining issues, 4447-2097. New highs on the NASDAQ beat new lows, 259-20, and on the NYSE, 343-12. These measures are at extremes and have been for at least the past two-and-a-half months. Volume, another semi-permanent feature of the "new" market (post-Lehman crash) was back in the abyss.

NASDAQ Volume 1,782,761,625.00
NYSE Volume 4,389,051,500

Crude oil futures on the front end fell to their lowest level in a month, down $1.55, to $87.48. Gold lost 80 cents, to $1,348.20, and seems to be stuck at that $1350 level, while silver is exhibiting better fundamental value, up 28 cents, to $29.34. Silver is poised for another breakout above $30, and this time, will carry gold higher, but outperform on a relative basis.

Getting back to my optimistic pessimism, a move upward in stocks may be reason for celebration for some, especially high corporate officers and bank executives, though not so much for the average rank-and-file employee.

That's why my commentary on rising values of equities is often layered with considerable doses of cynicism. Gains in the stock market are purely paper trades, which may look great in your retirement account - for now - but we've seen this play before. The true beneficiaries of higher stock prices are speculators with more money than they need and the aforementioned CEOs and higher executives.

I wouldn't be so sour on global corporations if they paid their fair share of taxes, didn't inordinately benefit the top 1% of wealthy people in the world, weren't the worst violators of most environmental regulations and didn't exploit both their own employees and consumers in general every chance they get. Other than that, they're OK.

In reality, not all corporations are inherently evil, though they receive largesse from government that the ordinary citizen is not afforded. Some are better than others, and the world would probably be a better place if we had more Steve Jobs and Apples and less of Jamie Dimon and JP Morgan and their ilk.

So, seeing corporations report above-average earnings while 15 million Americans are without jobs really raises my ire. I like to think I stand for the good values in America, where anyone can get a decent job at a living wage, not be treated as a tax-and-wage slave and where there's some wealth equity, but I just don't see that in corporate America, where greed and outrageous salaries for those at the top of the food chain are the norm.

Besides the obvious reasons to dislike corporations and their Wall Street pimps, the current climate is one in which the entire sector is being fueled by endless money creation by the Federal Reserve, with the dough flowing right to the largest financial institutions while the middle and lower classes are left with the dribble down of inflation and stagnant wages.

The current climate of fascism, which, in its purest form, is a marriage of corporations and the government, to the detriment of the citizenry. This fascist state has been growing for the past 30 years (yes, it started with the great Ronald Reagan) and has been ramped up by both recent presidents: Bush and Obama.

Much of the corporate-government fascism is tied to the military as well, which continues to waste our resources in an ugly spending spree of destructive capitalism. The wars in Iraq and Afghanistan are abominations designed only to keep the status quo and the powerful in power. While America seems calm and secure at the present, the underlying squandering of resources through corporate subsidies and military adventurism are ultimately harmful to society at large.

So, while I may sound pessimistic concerning investments and Wall Street, the death or considerable downsizing of these institutionalized wealth destroyers would be good for the bulk of Americans. The status quo means higher and higher taxes and deficit spending to the moon, debts that can never be repaid and eventual default. Only by changing attitudes and the game itself will America return to being a beacon of hope and good for the world instead of the monolithic monstrosity of domination it has become.

In my mind - and maybe yours - America is about self-determination and freedom. Freedom of speech, of ideas, of movement. We have become so desensitized to our own plight that we allow ourselves to be stopped at roadblocks when driving our cars, patted down and molested at airports and watched by surveillance cameras as we walk our streets.

So, no, I do not wish to see more of the same corporations - hand-in-hand with government - taking more of our freedoms and stifling more innovation. I wish to see an America chock full of wishful, free thinkers, workers, doers and entrepreneurs. Small business is the real engine that runs this economy. The mega-corporations are aberrations, and bad ones. For every Wal-Mart that goes up, 100 small businesses close their doors. For every Citi, Chase or Bank of America branch, more money is stolen from local economies, never to return. For every Exxon-Mobil or Chevron fixing prices, more people cannot do what they please or spend their money on what they want or need and for every tax or government give-away, another would-be entrepreneur leaves for Asia or South America, where economies are growing, where regulations don't stifle competition and growth.

There are plenty of places to park your money for investment purposes, but Americans of this generation have not learned the hard lessons of the Great Depression: that stock certificates are only paper and only worth what "a greater fool" is willing to pay for them. We haven't learned that a home is a place to live, not a piggy bank, should cost no more than three times one's annual income, and shouldn't take 30 years to pay off a mortgage upon one.

Americans of today have been deluded by media, lied to by politicians and robbed by the fractional banking debt system of the Federal Reserve. So, yes, I revel in the failures of Wall Street and the government and their institutionalized lunacy and await their demise, even cheer it on. For once we have purged the system of the excesses, parasites and the unholy alliance of big business and big government can America regain its sense of value, fairness and equality.

America has always stood for the people first, but we've lost our way, through deceit, apathy and payoffs. I see change happening on the fringes. More people are expressing their doubts and concerns openly. Others are making material changes, not satisfied with working only to pay taxes, mortgages, food and utility bills.

Politicians always offer change for the better but haven't delivered a long time. The change surely must come from the people, by the people and for the betterment of the people. I feel we can do it, though the struggle may be long and difficult and that is why I am optimistic.

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