Wednesday, December 22, 2021

The Pandemic Wealth Hypothesis

What we have witnessed throughout this pandemic is the largest transfer of wealth from the working class to the ultra wealthy in human history. All under the ubiquitous premise that the pandemic improved the economy and increased overall national wealth. This entire con job is now massively levered to a generation that has gorged itself on junk assets. When they explode, multiple generations will learn the lesson of a lifetime...

Wall Street and its acolyte financial service industry makes its money from RISK ON positioning. In a 0% world, they make nothing from RISK OFF. Which is why they never advise investors to take down risk and why they NEVER see any type of financial dislocation ahead of time. And STILL the financial media at large refer to these people as  the experts.

Throughout 2021 risks have grown steadily all year. It started with a growth stock melt-up at the beginning of the year liquified by record global monetary stimulus. And now fittingly, it's ending with a growth stock meltdown amid the withdrawal of monetary stimulus. And yet, the predictions of financial pundits have remained the same throughout this entire time. They saw no risk in the melt-up and they see no risk in the meltdown. 

They are experts at ignoring risk.

And why would wealthy insiders warn of a massive wealth  transfer taking place in broad daylight when in fact it's been taking place for decades and only went into overdrive during the pandemic? 

It's Shock Doctrine on steroids.

It's amazing the amount of risk people can ignore, when they've been conditioned their entire lives to believe that extreme imbalances are normal. The continuous decay of society has become their "steady state", because to their eyes it's imperceptible.

Consider the fact that John Glenn orbited the Earth back in 1962 and yet this year multi-billionaire Jeff Bezos visited the edge of space for a few minutes in what the media reported as a major accomplishment. Now that is frightening. In the Planet Of The Apes the people became so dumb, the apes took over. At this rate that movie is starting to look like a documentary.

Getting back to this epic wealth transfer, it's now a done deal. The "stocks" today's bagholders now own are saddled with record amounts of corporate debt at the end of the cycle. Meaning the stock market has now turned into a massive call option on global RISK OFF which is long overdue. 

And so it is that all of the risks of 2021 have coalesced into the end of the year. Which means that Wall Street is now getting paid out record bonuses for leading a pump and dump scheme the explosion of which will make the Housing Crisis seem like a picnic by comparison.

Record issuance of junk stocks during a pandemic and not one pundit sees anything wrong with this. They are corrupted to the soul. 

Which gets us to the Santa Rally which officially begins next week and carries two days into the New Year. Historical odds are high that in this low liquidity environment stocks remain artificially pinned to the new permanent plateau of mass deception. Of course, past performance is no guarantee of future results.

Should anything untoward happen during this timeframe, then Wall Street's low volatility "delta hedges" will quickly turn net long and result in an avalanche of forced selling. Since the days of 1987 Wall Street still hasn't learned that there is no such thing as "dynamic hedging".

And for all this risk, today's pundits predict even better things in store for 2022. 

Here we see Dow internals are now at the same level as they were at in late 2015 just after Fed "Policy error" that precipitated global meltdown at the start of 2016.

In summary, this entire fraud is now dependent upon Santa Claus. 

And if he doesn't show up this year, at least we all know why.

Way too much openly accepted criminality.