I remember these nights back in late 2007 and into 2008.
(S&P 500 Futures 07/29/11, 22:00)
It’s time to cut the crap. This is the same sort of “dislocation move” that happened a number of times during period leading up to the collapse in 2008. Tonight is back in that pattern – no liquidity whatsoever, large moves, bid and offer stacks literally disappearing, and the computer HFT machines going nuts with what little is left.
The trigger was an announcement that the Boehner bill does not have the votes to pass and will not come to the floor. The rules committee is calling an emergency meeting in 20 minutes to tweak it to get the required additional votes, but there’s no announcement as of yet as to what’s being changed.
The problem is that just as in 2008 this is all Kabuki Theater. There is no actual solution that avoids a downgrade and the potential tax and interest spiral that can result from it without actually balancing the budget.
Just as in 2007 and 2008, we’re getting the “tanks in the streets” threats – today from various banks and other institutions, from Geithner and Obama for the last few days, and I’m sure there will be more of them tomorrow.
It doesn’t matter though – either the underlying problem is solved now or the situation will deteriorate exactly as it did in 2007 and 2008 until the market pushes the big fat button.
No, not the one marked “EASY” – it’s the one marked “RESET.”
It will happen unless the cycle is interrupted right now.
If there is any sanity in DC this cannot be allowed to happen. If it happens there is no Federal Reserve “dry powder” available to arrest the decline, the dollar is a few cents away from breaking critical all-time low support and should this situation get away from you both the dollar and the market are likely to dive at the same time leaving all of you no good options.
I know everyone says “we can’t do that this fast.”
Sorry, we have to do it this fast.
Washington squandered the opportunity to do it in 2007, 2008, 2009, and 2010. Now you have to do it, or we’re screwed.
I’ve been writing on this since 2007. I and a few others spent a lot of time and digital ink in the 2008 campaign – then in the 2010 campaign and during the entire period between the two. Washington bailed out banks instead of forcing them to eat their own cooking and shutting them down. We still have HFT machines sitting on the exchanges quote-stuffing the hell out of the exchange – today was especially bad. We still have huge numbers of bad loans held at bogus value on balance sheets. And we have a Federal Government providing $1,700 billion – 12% of GDP – in false economic demand that does not actually exist!
The alarm clock is ringing right now.
Wake the hell up folks. Band-aids will not fix this.
Oh sure, you can probably produce a rocket-shot rally tomorrow with some sort of sticksave, and I wouldn’t be shocked if it happens. Not one little bit. But all these sorts of wild gyrations do is destroy liquidity – they take people out of the market who either get blown up outright or who simply push the “FLATTEN” button on their terminal, push the chair back and go to the bar, saying “fuck it – I can’t play in this casino as the cards are marked.”
As in 2008 if you keep this crap up there will be a crash. This is not conjecture – it is fact. It will come fast, hard, and without warning. It will destroy all the so-called “progress” that Bernanke has crowed about in the stock market and bankrupt those who were foolish enough to get back in as investors, not traders, who cannot act quickly enough to protect themselves.
The time for cock-and-bull games is over gentlemen. Mr. President, you have to stop with your Imperial attitude. You’re not a King – you’re a President. You have lost the consent of the governed and of the majority party in Congress. That’s the end of the discussion for you – and your puerile attempt to play the “Granny down the stairs” card has backfired.
To the Democrats, stop listening to Pelosi. She’s a dried up old prune who has never had an honest idea in her life. Not once. She’s hellbent and determined to bankrupt the nation and she doesn’t give a damn what happens fiscally. She never has and never will. You follow her, you’re going off the cliff with her.
To the Republcans, you better cut the crap too. $90 billion in cuts the first year is immaterial and will not stop the downgrade cycle. It will happen almost immediately if you ram this through at which point you’re screwed, blued, tattooed and done and so are the rest of us.
To all of Congress: You need $750 billion in actual cuts from today’s spending right now from today’s levels for 2012. Then you need another $750 billion next year.
Pick a path – tax increases or spending cuts – but get there. Yes, it will tank the economy. I understand that. So do you. Suck it up – you’re out of choices.
STAND BEFORE THE AMERICAN PEOPLE – DEMOCRAT, REPUBLICAN, CONGRESSPERSON AND PRESIDENT AND TELL THE PEOPLE THE TRUTH: YOU HAVE ALL INTENTIONALLY AND MALICIOUSLY LIED FOR THE LAST THREE YEARS VIA FEDERAL DEFICIT SPENDING. THE ECONOMY HAS NOT IMPROVED – IT HAS IN FACT DETERIORATED, AS THE DEFICIT PERCENTAGE COMPARED TO GDP HAS GONE UP, NOT DOWN.
We must face reality and we must do it now.
This path we are on – the same path we were on in 2007 and 2008 with lies from both political parties – must not be allowed to continue. You lack dry powder to address what you are going to cause to happen in the markets, which are already voting and their vote is “two thumbs down.”
In short, grow up. The market is bigger than you are, and no amount of strutting and threatening will change a damn thing in this regard.
It didn’t work in 2008 and it won’t work now.
Either stop the crap or reap consequences that are far more severe than they were in 2008.
That much I can assure you.
Something To Remind You….
“No, it can’t happen again, and certainly not this soon…..”
Are ‘ya ready?
Come to Tickerforum – we still got ‘yer back….. before this happens – again.