Saving the Stock Market Again

Anyone can do this. All it takes is a fantasy free look. What happens next is as close to obvious as it ever will be when the genuine motivations of people are observed. Look at the world through the prism of fantasy and you are a resource. Take a fantasy free look and you are in control of your own thoughts and actions.

Here is what to expect with respect to the stock market and certain popular stocks.

Just by looking we know the system of sponsoring corporate buybacks, letting friends of the Fed break the law, not enforcing accounting laws and providing obscenely cheap money is coming to an end. There is trouble in paradise. For the same system to provide ever rising stock prices, all billionaires must be on the same page. They are not anymore.

Short squeezes are still working but not as well and must be accompanied by outright buying by central banks. Look for central banks to continue buying, mostly in important stocks they already own. That won’t be enough. At some point a market decline will not be easily controlled.

A number of trial balloons will be launched to see how the public will respond to central banks simply buying stocks outright to “save the world”. The public won’t object and of course no one who has money at risk will object. The public is still not aware of what central bank policy hurts them. The public won’t care.

There will be a strong push to nationalized large tech companies and other efforts will be made  to protect investors who have positions in these stocks. Probably an effort will be made to have the government buy facebook for an outrageous sum. How else can the results of so many misguided stock purchases be protected. Monumental efforts will be made to transfer as many stock losses to the tax payers as is possible. This is what TARP accomplished in 2008. It will happen again.

The crisis in 2008 began as real estate investors passed losses back to lenders rather than take the losses themselves. Mom and Pop started defaulting much later. In the next crisis, that will happen again. This time losses will need to be transferred on all kinds of assets. The public won’t mind. They don’t know any better.

All of this is knowable just by understanding human nature. Fantasy hides human nature so what to expect next is not something very many people will figure out.

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