By Karl Denninger
The Russell is now down 24% from it’s peak this year, and is in a Bear Market.
The Nasdaq is within 1/3% of being down 20%.
The S&P 500 is within 1/3% of being down 20%.
The Dow and Transports both broke their significant lows, confirming a Dow Theory SELL signal.
We are now officially (back) in a Bear Market.
A Bear Market that virtually every so-called “expert” and a whole host of prognosticators claimed couldn’t and wouldn’t happen because “Bull Markets last, on average, 42 months.”
The problem with their claim is that we weren’t in a Bull Market.
We are still in the previous Bear Market which began in 2007.
The Government conspired with the banks and mainstream media to suck you into believing in a faux “Pax Americana” recovery that in point of fact never really happened.
You’ve lost 36% of the “gains” – more than a third – you had off the March 2009 lows. You are now down 30% from the highs – still. Cramer’s “Getting Back To Even” has now been exposed as a complete load of crap – the correct thing to do for long-term investors was to get the hell out of the market in late 2007 or early 2008 and stay the hell out.
Free market? What free market? Borrowing and spending 12% of GDP to try to prevent the market from excising the excesses of intentional fraud is a “free market”? Allowing “high frequency traders” to step in front of you with various artifices and frauds is a “free market”? Propping up housing prices to keep you from being able to buy a house at a reasonable price, consigning you to being a debt slave and unable to sell should you need to move for reason, instead of deflating houses to make them more affordable is a “free market”? Continuing to lie about the sustainability and ability to pay public pensions and salaries – in some cases nearly three quarters of a million dollars for a school superintendent – is a free market?
What are you folks smoking?
The policymakers and crooners are pretty-clearly running out of rope.
Mark my words on this – when the full depths of the coming collapse in stock prices has run its course, and 30 year Treasuries are going at a 2% coupon, you’ll be “offered” to convert your 401k or IRA to them with some of your losses “put back”, with one proviso – you can’t touch it until you’re 65. At 2% you’ll be getting screwed but 90% of Americans are too stupid to realize it and will take the deal.
That’s the marker on the government’s funding model imploding within the next two to three years, and the market will discount that event long before it actually comes to fruition.