Mr. Sensitive

February 28, 2014

NASDAQ 5000

Filed under: Uncategorized — lbej @ 12:44

Bubblewatch ’14—It’s okay.  We’re going to print 5,000 on the NASDAQ again, and we’re going to collapse again, but it’s okay.  I’ve resigned myself to the inevitability of the market disaster and, frankly, I think it’ll be good for us in the long term.  We’ve got to address structural trade and currency imbalances in the global economy as well as the obscene concentration of the wealth of society in the hands of one-one hundredth of one percent of the population.  The world’s central bankers have put off the day of reckoning by inflating a series of asset bubbles through increasingly radical and intractable monetary policies, trading responsibility for time.  When this bubble bursts, the Fed, ECB, BOJ and People’s Bank of China won’t have any way out.  The downside risk is accelerating, competitive devaluation that becomes a currency war, then a trade war, then a real war.  I don’t believe it will go that far, but the plutocrats who’ve been the beneficiaries of central bank largesse will have to come down to earth and live with the rest of us, and they’re not going to do that without pitching the hissy fit to end all hissy fits.  They’ll go after our democratic institutions (yes, even more than they are already) and that’s where it will get ugly, if it does.

But it should be one hell of a Wall Street party before that happens.

One of the traders on CNBC’s Fast Money (the inferior midday version) said today—as we make new highs across the board—that “the only reason to be worried about the NASDAQ is if you’re short” (meaning that you’ve sold stocks short, not that you are slight of stature).  I won’t name the guy because he’s just part of a chorus of bubble-warblers, but I will say this: there are plenty of reasons to worry about the NASDAQ if you’re long, but the biggest reason is that no one on Wall Street is worried.

But it’s okay—it’s inevitable, so it has to be okay.  It all brings to mind a few lines from my favorite Auden poem:

The enlightenment driven away,

The habit-forming pain,

Mismanagement and grief:

We must suffer them all again.

That’s from 1 September 1939, a poem about exactly what you’d think it’d be about.  Again, I don’t think that’s the path we’re on, but the march to WWII—the greatest calamity in human history—did begin with the bursting of a US stock bubble.

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