The Zombie Triumph of 2008…
We’re writing ahead of the close on Monday…stocks are up, but we’ll have to wait to find out how it turns out. We’re writing earlier than usual because we have to head back to France, to a funeral, alas. The burial will take place in Pere Lachaise cemetery…which we’ll tell you about.
In the meantime…
That’s probably the hardest part of this business…waiting for something you know SHOULD happen… It can take years.
We remember waiting for the dot.com bubble to pop. People thought we were just “out of it.” We just didn’t “get it,” they said. They said new technology had changed the rules of the game forever. Previously – that is, in the world B.I. (Before Internet), which was to them equivalent to the time when pre-humans walked on four legs – the value of stocks was limited to the value that could be added by PHYSICAL processes. You could build more factories. You could sell more widgets. But you were up against physical limits. There was only so much energy…so much labor…so many trucks…and so many people who wanted to buy your widget. So, you could anticipate growth. But within limits.
If you paid more than 30 times earnings, you’d have to be out of your mind…because, come on, things just don’t grow that fast and the faster they grew the more likely they were to crash into something.
In this new electronic age, the sky was the limit. Because information flew around the Internet at the speed of light – and at practically no cost. There was no limit on how much human life could be improved with this new, free, information…so there was no limit on how much you should pay for one of the companies that was pushing electrons around.
In practice, free information turned out to be worth no more than people paid for it…and the dot.com revolution blew up in January 2000…leaving only a handful of survivors (who have done very well, thank you.) In our view, the stock market has been in a bear trend ever since (even though the Dow rose after the initial downturn, at least in nominal terms, until 2007).
But we waited three years before the blowout…with people laughing at us the whole time. They were getting rich on dot.com stocks…while we didn’t get it. And it looked like we’d never get it.
But then, guess who got it? They did. Good and hard, as we like to point out.
Next, we waited three years – at least – for the housing/consumer credit/derivatives bubble to blow up. We saw it coming. We warned our dear readers. But for what seemed like an eternity, it looked like we were wrong. Houses just kept going up and up and up. Wall Street just kept making more and more money. It looked like it would never end…until 2007, that is.
Waiting is hard.
You begin to have doubts. Maybe you’re wrong. Yes, it OUGHT to happen the way you imagine. But maybe you missed something. Maybe this really is something new and different.
And so we wait again. What for? Three things…
For the next leg down of the bear market…
For the inevitable heavy-handed and disastrous intervention by the authorities…
And for the final collapse of the dollar and the US bond market.
We might also say we’re waiting for the end of the welfare state…for the end of the dollar-based money system…for the end of the American imperium…
But those things may be even farther into the future…
So let’s stick with those things that are closer to hand.
Wait…the markets have closed. The Dow rose 81 points. Oil closed over $77. Bond yields are headed up. Gold was flat.
Hey…the economy doesn’t seem to be sinking towards deflation and a bear market today.
Well, we’ll just wait until tomorrow…
And more thoughts…
Meanwhile, we’ve been tracking the zombification of the US. The zombies are becoming more numerous, more parasitic, and bolder. From food stamps to bank bailouts everybody wants to live at someone else’s expense.
We hadn’t thought of it this way before but the election of Barack Obama to the White House was not exactly what it seemed. It was not a triumph of light over darkness, nor right-thinking over neo-con devilry.
Still, compared to George W. Bush, it seemed like even electing a half- wit would be an improvement. And Barack Obama is no half-wit. He has all his wits about him. Trouble is, he was also the candidate of choice for the zombies. And his election marks a major milestone; the zombies now control the White House and Congress. They control America.
Obama won 28 states. John McCain won 22. The Obama states are full of debt-fattened zombies – with an average per-capita state debt of $1,728. The McCain states are relatively solvent, with an average per- capita debt of only $749.
In the states that went most heavily for Obama – Hawaii, Vermont, New York, Rhode Island, Massachusetts and dear ol’ Maryland – the average state debt per capita was even higher, at $4,606.
We don’t need to make too much of this. It’s pretty obvious what was going on. The zombies saw one of their own. They wanted someone who would give them something for nothing. In Barack Obama, they got it…maybe even more than they bargained for.
Here’s the latest news:
WASHINGTON (AP) – The federal government is on track to record the second-highest deficit of all time with one month left in the budget year.
The Treasury Department says that through August, the deficit totaled $1.26 trillion. That’s down 8.1 percent from the same period in 2009, when the government recorded a record $1.4 trillion deficit. But it is on pace to total $1.3 trillion – the second-largest deficit on record.
Soaring deficits have become a major issue with voters heading into the midterm elections. Republicans have highlighted the deficits to illustrate how government spending is on the rise under Democrats.
So you see. It just proves our whole point. Nature abhors a vacuum and detests a monopoly. After the fall of the Berlin Wall, America had a monopoly on force. No nation…nor even all the world’s other nations put together…posed a serious military threat.
Nature couldn’t stand it. She got to work. If America could not be brought down a peg by other nations, she would have to bring herself down. How? The typical ways…spending too much money…getting into expensive wars with nobodies…wasting her resources overseas while letting the zombies take over at home.
First nature needed a stooge – a willing dupe – to implement the program. George W. Bush was perfect in the role. He never met a spending bill he didn’t want to sign or a war he didn’t want to join.
And then came the decisive election campaign of 2008. Nature must have been worried. What if a real reformer came up? What if he cut the budget, brought home the troops and threw out the zombies? Ron Paul did present himself. And yes, his program would have meant a big reform. But no…the American people – bless their greedy little hearts – wanted nothing to do with it. They had become accustomed to living in a style they couldn’t afford. They wanted more of it.
They turned their back on Ron Paul and voted instead for Barack Obama.
Yes, dear reader, it was the Zombie Triumph of 2008. It kept America on track – on the road to perdition.
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