Wednesday, December 30, 2020

The Trump Era: Age Of Unfettered Criminality

Trump's true believers assume that he got away with the pump and dump of the century. Those who believe in "criminality as usual" will be the ones holding the bag...

"In U.S. financial slang, a bagholder is a shareholder left holding shares of worthless stocks"

The Anti-Christ was just chosen as the most admired man in America. Cheating on his wives and taxes got him elected four years ago, but it was four years of non-stop lying and corruption that put him over the top:

What went wrong? That is the question that historians will be asking decades from now. Especially historians from outside the U.S. attempting to avoid this descent into abject corruption.

We can hope this is America's moral low point, however Banana Republicans have clearly embraced their descent into depravity as the path of least resistance. It's a 50 year tradition going back to Nixon. 

We still don't know if Trump will leave the White House when Biden is inaugurated. Trump laid the groundwork for all of this election criminality four years ago just before the 2016 election. Leading up to the election he was behind Clinton in the polls, so he pre-emptively declared that the election was rigged in case he lost:

"Of course there is large scale voter fraud happening on and before election day."

"Why do Republican leaders deny what is going on? So naive!"

And of course the election WAS rigged by foreign agents from Russia in his favor. However, Trump abandoned all concern over the rigged election the moment he won. 

In other words, Trump had in mind four years ago exactly what he is doing right now. Attempting to destroy democracy in broad daylight. Using Twitter to rain incessant doubt on America's electoral process that has endured over two hundred years. 

And it worked, because Banana Republicans no longer believe in democracy, all they believe in is greed, corruption, and criminality. Trump has pardoned more criminals than any president in U.S. history.

He will go down in history as the criminal president.

But what does this all have to do with Ponzi markets? Good question.

My assertion is that Ponzi markets are inherently fraudulent. And now Ponzi schemes have been legalized. We can look no further than Bitcoin and the Crypto market for examples. One can argue that as a dollar alternative and for buying children on the dark web, Bitcoin will always have utility. However, of the thousands of crypto currencies, most are merely pump and dump schemes. Bitcoin was the first crypto currency therefore it's the most popular one, otherwise it has no differentiating feature.

Bitcoin made a new high overnight, which is appropriate because we are seeing a global manic reach for risk during this Satan rally:

This week, Emerging Markets - another implicit dollar short trade are going parabolic, especially Asian markets.

What's interesting is that in local currency terms, most non-U.S. markets are underperforming the U.S. It's only in suppressed dollar terms where they look spectacular. If you read Zerohedge or any other dedicated purveyor of disinformation, they will say that global stocks are at an all time record high in 2020. Which is lending credibility to this epic con job. 

I suggest however, that most global markets are not making new highs, in local currency. We also see that commodities (black) are languishing below 2009 and 2016 lows. 

What people still don't acknowledge as we cross over from 2020 into 2021, is that America's post-recession recoveries have become more and more fraudulent. Each one requiring more and more stimulus to paper over the cracks in the facade which are now record wide.

For those wondering what effect the $900 billion stimulus will have on GDP in 2021, here we below can see the crater that has been dug. The red line is absolute GDP ($ billions). The stimulus just passed will get GDP roughly back to the 2017 level. The remaining four years of lost GDP must come from the vaccine and re-opening. Bearing in mind that employment is back at 2015 levels.

Meanwhile, cyclicals are now ABOVE the pre-pandemic levels, having already priced in full recovery.

During Trump's four year reign of corruption, there were four rallies and three crashes so far... Each rally lasted on average one year and crested either just before or just after year-end. Each rally and crash was of greater magnitude than the last.  

I call it the Wall Street business cycle. Others call it a broadening top:

"In the broadening top formation five minor reversals are followed by a substantial decline."

It is a common saying that smart money is out of market in such formation and market is out of control.  In its formation, most of the selling is completed in the early stage by big players and the participation is from general public in the later stage."