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Paul B. Farrell
April 13, 2010, 12:01 a.m. EDT · Recommend (7) · Post:
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Mighty America's 5 stages of rapid decline
First Take "?
Alcoa lite
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Yes, we hit 11,000. Propaganda. Yes, we'll quietly sneak past 11,722 (Dow's 2000 peak). Yes, we'll happily climb to 14,164 (Dow's 2007 peak). Maybe. But you're being conned: Even a new record of 14,165 barely equals CPI inflation the past 10 years.
Get it? Wall Street's lost more than 20% of your money the past decade. Now they're blowing a new bubble, filled with more toxic costly hot air.
Afraid of a hurricane? Pandemic? Global Warming? Dow Jones Advisor columnist James Altucher tells Shelly Banjo what stocks to consider.
Yes, the bull's back. But not the bull market kinda "bull." The "happy talk" kinda "bull" propaganda. Did you hear the double-speak coming from our Greenspan clone, Ben Bernanke, the Fed's No. 1 lobbyist, Washington's cleverest politician and Main Street America's biggest enemy? His "best guess" last week: "If economic conditions improve, as I expect, we should see increased optimism among consumers and greater willingness on the part of banks to lend, which in turn should aid the recovery."
Yes, if this, if that, if, if, if ... pure bull. Bernanke said nothing that a high school student couldn't recite from an Econ 101 text. What's he really telling us? The Fed's member banks won't lend a dime till the consumer get more optimistic. What nonsense: He shoveled trillions to Wall Street fat cats last year when consumers had zero optimism.
Bernanke's spouting the happy-talk sound bites for cable news. Why? Bernanke's under fire: Congress is considering restrictions on the Fed's secretive out-of-control spending that's adding an estimated $23.7 trillion in new debt to America. You can't trust Ben's propaganda.
Now check on the other end of the "truth-or-consequences" spectrum: Yale Economist Bob Shiller's warning a double dip in the economy "has a substantial probability." Bloomberg/BusinessWeek also says Pimco boss Bill Gross has turned bearish, warning that the "almost three-decade bond-market rally is coming to a close," that "bonds have seen their best days" as "rates are moving up." Stuff Bernanke should be telling us.
Yes folks, we're all optimists, blind optimists. We dismiss facts, block reality, deny history, even recent meltdown. Not just Wall Street, also Main Street's 95 million investors. Yes, you. We all want to be deceived. We want to trust in a better future, want the good news, optimism, happy talk, bull markets. We desperately want to forget the harsh reality of the recent past.
And Wall Street and co-conspirators in cable TV know this too. You're profiled as a loser. They know you're a sucker for happy talk.
Yes, this Propaganda Machine is feeding the media a steady diet of happy talk. And the No. 1 rule for ratings success is: "Know what the masses want and feed it to them." Audience become sheep, cheer, want more. Today people are desperate for good news after the tragic lack of leadership the past few years.
We got a dark reminder last week as two former Citigroup bosses (one a former U.S. Treasury Secretary) admitted they "did not have a grip on what was happening" in their "too-big-to-fail" bank. Yet those bozos created a disaster and still pocketed hundreds of millions. And far more evil, their fat-cat successors are spending hundreds of millions of their shareholders' money to defeat financial reforms that will prevent this from happening to them again.
Unfortunately this historical cycle is doomed to recur. Except the next time it'll end in another, bigger meltdown, and the Great Depression 2 that the Fed and Treasury keep pushing downstream. So expect the Propaganda Machine to keep feeding sound bites to the media, as this Happy Conspiracy between Wall Street, Washington and Corporate America keeps manipulating Main Street's 95 million investors. It never ends.
Here are three historical reminders:
BusinessWeek, Kiplinger's and USA Today reported on the false predictions made before the 2008 subprime credit meltdown spread rapidly across America and the world:
Bernanke: "I don't anticipate any serious [failures] among large internationally active banks."
Ken Fisher: "This year will end in the plus column ... so keep buying."
"Mad Money" Jim Cramer: "Bye-bye bear market, say hello to the bull."
Goldman Sachs' Abby Joseph Cohen: "The fear priced into stocks is likely to abate as recession fears fade."
Barney Frank: "Freddie Mac and Fannie Mae are fundamentally sound."
Barron's: "Home prices about to bottom."
Worth magazine: "Emerging markets are the global investors' safe haven."
Kiplinger's: "Stock investors should beat the rush to the banks."
Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The Millionaire Code," "The Winning Portfolio," "The Lazy Person's Guide to Investing." Farrell was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner. He has a Juris Doctor and a Doctorate in Psychology.
Alcoa has a long history of managing expectations. As the unofficial opener of the earnings season, it sets the tone for those that follow. Did Alcoa deliver? Well, sort of.
6:06 p.m. April 12, 2010 | Comments: 7
- Castor-PolluxM35 | 11:23 p.m. April 12, 2010
"New Dow high ahead? Happy talk feeds sheep http://on.mktw.net/auhV57" 11:03 p.m. EDT, April 12, 2010 from MKTWFarrell
"Mighty America's 5 stages of rapid decline http://on.mktw.net/aMqSFu" 12:02 a.m. EDT, April 6, 2010 from MKTWFarrell
"How Lazy Portfolios will whip 2010 Collapse http://on.mktw.net/cDYUDQ" 11:45 p.m. EDT, March 29, 2010 from MKTWFarrell
"The Capitalist Anarchy and the Lobbyist Bubble http://on.mktw.net/dn7ZsT" 11:21 p.m. EDT, March 22, 2010 from MKTWFarrell
"'Wall Street' sequel an omen of U.S. collapse http://on.mktw.net/cNc7o1" 11:25 p.m. EDT, March 15, 2010 from MKTWFarrell
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