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Living in a Dream Land Wall Street Centered World

November 10th, 2009

Judging from recent stock market performance all is well with the US economy and with the world. Our spin masters in Washington seem to have Americans once again believing that we can get along just fine living in a dream land Wall Street centered everything is wonderful world.

It’s really a tribute to the power of trillions of dollars being unleashed upon Wall Street. A few trillion here and a few trillion there and you can move any market. Just ask the plunge protection team.

I’ve never been one to engage in believing conspiracy theories but the action of the stock market over the past few months makes me think I should reconsider. One can certainly speculate that enough funny money has been advanced to Wall Street at about zero interest rates that at least some of it has flooded into the market. I’m pretty sure that when trading firms and the big too big to fail banks are swamped with cheap cash the urge to put it to work with speculative trading activities becomes quite strong.

Actually, that is an understatement. The huge bonuses that Wall Street and the big banks are about to once again pay out are largely based upon spec trading profits.

With home foreclosures still very much with us, with oil prices refusing to decline from around $80 a barrel, with banks still afraid of small business lending (hey, it’s more fun to speculate with taxpayer and Chinese money), and unemployment still climbing, and the Wall Street firms acting like no crisis ever occurred, one has to wonder how long the dream land Wall Street world can go on?

However long it lasts I’m petty darn sure that the end game will not be pretty. I can’t escape having visions of a huge flock of Black Swans about to swoop in for the kill.

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