02.05.08
Gored By Both Parties, the Bull Thrashes in Agony
Despite popular belief, the equities bull market is still dead. It thrashes around every now and then, but the new reality is starting to sink in. If you look at the numerous problems in the banking system reality is starting to set in again and the short covering rally we witnessed last week seems like a distant memory. Despite what I would call “flare ups” the pattern we saw last week when the Fed cut again was not only extremely bearish but an indication that things are about to get a lot worse, a lot faster. The most terrifying aspect of what we are about to see is that any crisis could trigger the final capitulation.
Thus this warning before my next series of articles are posted:
Much of what we have seen thus far has a historical parallel and unfortunately the mistakes made in the past have been repeated and amplified now. The de-leveraging process is one that could have been resolved in a short period of time yet the political environment will never allow it. This means the ongoing agony of a slow and painful decline instead of a short, sharp bear market.
How does this play out? The theory that there is a bank sponsored mirage known as a monoline bailout is a stall until a real solution can be found or more of the fertilizer derivatives can be sold to suckers. This stall will not work. The “Bailout” will be recognized by investors for what it is, much like the Super-SIV which never existed was.
Then the bull can mercifully be dragged off the stage in the cart and off to it’s final slaughter.
Beef. It’s what Americans eat.
As well as bears….
