This death march of 5 years implies long suffering along the way. The current low projection on forward GDP is 3 percent. Let them suffer if that goal can be reached. Only a select few can dismiss the power this Fed has on our economy. Had I suggested this economy and stock market would start seeing accelerated economic growth 5 years after the debacle, I would have been dismissed as the class clown. Now that it is happening (at least from the general publics perspective) how can you stick to a 5 year old belief without changing any part of that view?

You prefer to see this as a 5 year delusion. I see this as the natural law of human nature. Can you dismiss the roaring 20’s simply because it lead to the Great Depression?

Red, personalizing the whole economy is as foolish as if you were an auto worker or steel worker that saw their jobs decimated. I don’t expect the world to stop and take notice. As long as the people driving this economy are complacent things will remain the same. You assume the tipping point already happened when clearly it hasn’t. Is anyone here denying the street got it right by advancing 20 percent in the last 6 months anticipating better times? Is earnings going to cause the forward P/E ratio to go much higher? You should give more credit to the number crunchers.

You argue with me even though I anticipate an eventual depression. This argument has been going on as the market aligned my way. I am not blind to the situation. In fact my rallying cry about the devastation of the common worker was over 20 years ago when there were very few who cared. I am talking about how the system works and when the money will dry up. We are on an accelerated path as far as Wall Street is concerned. Is it temporary? Will it end tomorrow? Who knows, but based on history a large debacle usually is followed by all the big guns thwarting another trouncing. With the amount of ammo and free hand the world governments have, it will take much longer to see that train wreck than most here want to believe. It’s not about right or wrong. Not about retribution or morals.

Gary, a few days back I came across a news item stating that 101 million Americans were now on the various food programs and SNAP.

I honestly thought it was a misprint.

The number is twice as big as the largest I had ever seen before. Sure enough though the data claims the costs to government are running at a staggering 1000 dollars per person per year amounting to over 100 billion annually in food and nutritional supplements.

When one in three individuals are affected by macro changes in the economy I think we can call that “personal”. What part of feeling oppressed by something of that magnitude is foolish?

On your point about the street “getting it right” I thought you might like to take a look at a chart from Steve Keen I came across this week. He has plotted the S&P, Margin debt and the CPI going back to 1890 (1959 for margin debt).

In an article titled “A Bubble So Big We Can’t Even See It” he shows just how absurd current stock valuations are relative to the long term CPI trend and points out it has only been since 1980 that a wide divergence between share prices and the CPI exist.

What is interesting to me is that this coincides with Neoliberalism asserting itself and the promotion of globalization policies that arose at the same time. The gutting of US and other Western nations manufacturing bases has been partly a result of trade liberalization and free trade agreements that were put in place since the early eighties.

So is the street really getting it right?

Well if leveraging yourself to the eyeballs and betting on margin were correct then the boys did indeed figure that an acceleration in margin debt would lead to a rapid increase in asset prices.

That’s not such a novel idea perhaps because it is stating the obvious which as we know is the path by which most bubbles are blown. So the trend really is your friend. Only up until the moment credit gets squeezed though.

Question is, what happens when we decelerate? That would also suggest asset prices taking a big tumble but more importantly it is the speed with which the deceleration proceeds.

Take a look at the article. It offers some great insights. The charts themselves leave the clear suggestion that this period of rising stock prices may be near to have running its course. But we all know that too (don’t we?).

The problem on the horizon for this next period though is that it will be pension funds getting zapped just when they are needed most. So if the market is indeed heading into a long-trend down cycle (just as Boomer retirements are commencing in a big way) it becomes hard to imagine just how many people will be on government assistance and food stamps before it is all concluded.

Like I said….it is getting personal.

A Bubble So Big We Can’t Even See It – Steve Keen
http://www.zerohedge.com/news/2013-07-07/guest-post-bubble-so-big-we-cant-even-see-it

There is one note I didn’t add in the preceding comments, Mario. That one is in regards to the price of stocks versus the long trend CPI. Steve Keens charts may indeed be telling us that the CPI is being suppressed although we cannot know without his saying what figures he used to arrive at the chart plots he uses. If the CPI is being suppressed at the same time that stocks are being artificially pumped higher during a period of strong stimulus then that would explain the wide divergence between the two numbers. I cannot imagine that the gap will not be closed though over time and perhaps it will be a more restrictive credit environment and rising rates that will bring the charts back their means. On the issue of food stamps though….I have to admit I was shocked. Flabbergasted is maybe a better word. I never thought it would get this bad this fast. It is only a short jump now to socialization of the whole of society with the exception of those who did not fall between the cracks.

Cam,

Once again I don’t disagree with the trend. If you look the trend has picked up dramatically from the early 80’s. If anything the housing debacle did us all a favor by accelerating the problem and bringing it front and center. That still doesn’t mean I believe we will resolve and solve the situation favorably.

Here is where things are dramatically different between me and most on this board. Human behavior has been studied and psychologists pretty much know the stages we go thru when shock hits the system. You prefer to believe the last 5 years was a world conspired smoke screen whose intent was to deceive. My take is that “hope, denial, and faith” were the prevalent motivation from all the higher powers that influence the markets. Nothing sinister about it. All men in powerful positions still experience shock and anxiety given the magnitude of the debacle, no matter how dirty their hands were. It is in their own best interest to placate the masses, and not just the few, at times like these. Especially at times like these. You find their actions as morally reprehensible, as do I, but given the economic structure we live under, it was not exactly unexpected.

We live with a dichotomy of emotions and morals. There is no simple answer and easily understood cause and affect. In the end though, no matter what our intent, external forces will find an equilibrium. I believe it will only happen after another bout of economic expansion, while most here believe it has already happened and has been held from public view.