The Big Long:
This is how it ends, with a political movement based solely upon revisiting the mythical past. There's nothing real about it. It's all just a Jedi Mind Trick paid for with record stimulus. Japanification fueled by 10 megatons of fiscal and monetary payload.
When the Japanese attempted all of these stimulus gimmicks they were roundly criticized by economists in the U.S. for not taking on the hard reforms to create a sustainable economy. Fast forward past 2008, and U.S. economists are doing the exact same thing - ignoring real economic reform. Because that was when they were forced to realize they had spent a career studying failure. More than anyone they were happy to embrace Disney markets. The alternative was to admit failure.
Fast forward and the belief in printed money is total. Gamblers have been conditioned to be complacent. Which is why in the midst of global meltdown they merely shrug their shoulders, or better yet buy the dip. Because it's only a matter of time before the central bank bailout arrives.
Here we see selling pressure has become more and more complacent over time.
Japan and China have both learned the hard way that there are limits to bailout-o-nomics. The limits arrive exactly when gamblers begin to believe that central banks are invincible. Ironically, Hugh Hendry who coined the phrase "Disney Markets" and even described the very mechanics of delusion, discovered the hard limits of moral hazard in 2015:
"China is set to record its weakest growth in GDP in 25 years. Yet it seems to have entered a bull market and may be where we deploy much more of our risk capital next year. That's because the recent exuberant run up in onshore Chinese equities seems to me to amply demonstrate the power of imagined realities."
After that delusion he lost his hedge fund.
Chinese markets have been closed all week, so I will show Hong Kong as a proxy for then and now AND 2008:
The MAGA Kingdom is now the epicenter of imagined realities. The epicenter of denial. And the epicenter of moral hazard. The unquestioned belief in central bank invincibility, leading to over-leverage and super crash.
Only in a certifiable insane asylum would a random blogger such as myself have to describe this insanity to anyone. We've been long awaiting the day when the sheeple at large are no longer amply rewarded for bending over with their heads in the sand eagerly awaiting their daily talking point enema from Sean Hannity. While their assets are artificially levitated by central bank money printing.
That day has arrived.
Our days of rage are over. However, for those taken in by this biblical delusion, theirs are about to begin. Nevertheless, after the rioting, the new day will dawn. And the new policy-makers will be forced to realize that the days of continuously recycled gimmicks are over.
Hard to believe, I know.
Hard to believe, I know.
