"Simply Put: Why I'm So Damned Bearish"
You just can’t separate politics from the stock market today. All the covert corporate welfare and overt social welfare policies that our economy used to be able to overcome are now much too big and stark in their premise that I find myself writing about politics and policies even when I start off on what I mean to be a totally market-focused blog post. It didn’t use to be like this.
From October 2002 to October 2007, I was building and running an eponymous hedge fund that I founded. I wrote more than a million words for publication all about my trading and investing strategies and ideas for the Financial Times, TheStreet.com, the now-defunct Razor Magazine (I’m still waiting to get paid for my last few articles for them) and others. I focused exclusively on making money in my actions and my words…and if you go back and look, I hardly ever mentioned politics and policy issues because they weren’t all that meaningful to the stocks like Apple that I owned and wrote about why from $7 to $160 and Google which I owned and wrote about owning from the day it came public. And I hardly ever mentioned politics when I talked about those stocks.
I began scaling back my hedge fund and wrote about how I just didn’t like the risk/reward set up in the broader markets and the economy in late 2006 as both were hitting all-time highs and the world’s economies looked as “good as they could get” as I told Larry Kudlow on CNBC at the time. I closed my hedge fund entirely as I started this TV anchor job realizing what a tremendous career opportunity it is for me and not wanting to screw it up by focusing on anything else while I’m at it, as I wrote for the Financial Times in my final article for them in late 2007. While I wrote a lot about how I was worried about the macro-economic cycle turning south as 25 years of boom seemed to be coming to an end that year, I figured at the time that it’d probably be a quick downturn and we’d be fine and back to a bull market and growth economy in a year or two. Again, I wasn’t too worried about politics or policies and how they’d impact my ability to make money in the market on good stocks.
* But the ability for our economy to grow changed last year when the Republican/Democrat Regime in charge started taking hundreds of billions of dollars and handing to AIG which then funneled that welfare money to it to Republican/Democrat Regime’s biggest donors and closest friends the investment banks like Deutsche Bank and Goldman Sachs, the insurance companies, and the media companies like GE whose GE Capital needed welfare to stay solvent.
* When that wasn’t enough, the Republican/Democrat Regime gave $2 billion to the shareholders of Bear Stearns.
*When that wasn’t enough, they nationalized $6 trillion in mortgages at Fannie Mae and Freddie Mac. When that wasn’t enough, they wired $800 billion into checking account of the shareholders of Citigroup, Bank of America and Goldman Sachs and GE Capital again.
*When that wasn’t enough, they guaranteed trillions of dollars of worthless loans at Citigroup, Bank of America, Goldman Sachs and GE Capital again (remember that the $6 trillion of nationalized Fannie and Freddie loans were simply, initially “guaranteed” in the EXACT same manner…but don’t worry, these guys won’t need the taxpayer again, really…).
* And when that wasn’t enough, they wired hundreds of billions of dollars to credit card companies like Capital One and American Express.
* And while all that wasn’t enough, they sent $70-80 billion to the shareholders of GM and Chrysler.
*And when that wasn’t enough, they nationalized GM and Chrysler and want to give it to the overtly Socialist Canadian government and some mafioso businessmen running Fiat in the endlessly corrupt Italy.
*And when that wasn’t enough they created a multi-trillion dollar PPIP program that will enable Goldman and Morgan Stanley to profiteer off of the worthless junk they’ve got on their own balance sheets.
*And when that wasn’t enough, they passed an $800 billion “stimulus” package that will benefit only those companies that are politically-connected enough to get the government work.
* And when that wasn’t enough, they a program to write $8,000 to anybody rich enough to buy a home right now (you get another $10,000 if you live in the bankrupt state of California, where they don’t have enough money to pay teachers, but apparently they do have enough money to pay people rich enough to speculate on real estate ownership)…
* And when that wasn’t enough…
The total ANNUAL budget for social welfare programs for the poor, including Social Security, Medicare, Medicaid, Food Stamps and so on…is ONLY $1.5 trillion. Add up even the most conservative numbers of the overt corporate and home ownership welfare programs that have been INSTITUTED in ONLY THE LAST 15 months, and you’re talking 10 times that number.
All the the time, they’ve been promising us that these corporate and home ownership welfare are actually for the “greater good” and that our economy would “suffer horribly” without them. Meanwhile, housing prices keep collapsing, unemployment keeps skyrocketing and the stock markets have all lost 30-40%. I’ve said all along that it’s the very policies that are supposed to be fixing the economy that are actually destroying it.
How can anyone tell you that you’re better off AFTER these bailouts than you would have been if all those trillions of dollars hadn’t been redistributed to the investors in corporate America and the home ownership class?
How can anyone expect housing to stabilize after $6 trillion in mortgage debt was nationalized at Fannie and Freddie (supposedly, of course to help stabilize housing). Nationalizing them made the US Govt the largest landlord in the US, which essentially means more than half the $10 trillion mortgage market is now in the hands of, as a Minneapolis spokeswoman says, “where we have no one responsible for the maintenance of the property.”
Rebecca asked me yesterday on Happy Hour why I’m so bearish and pessimistic…it&... that these politicizing and nationalizing policies are now the rule and not some sort of bizzaro world exception in this country. And these trillion dollar welfare policies are OF COURSE destroying the basis and the drivers of our economy before our eyes.
We can fix this economy and this country. But it’ll have to be political, and we’ll have to rid ourselves of these people in the Republican and Democrat parties who have chosen to ignore our Constitution and your rights in it.
I don’t trade any more and I won’t while I’m doing TV. But I do still write an investment newsletter that has both Google and Apple in it as core long-term positions and these blogs and I try to make them as market- and trading-related as possible. But the fact is that it’s impossible to separate the potential of Google and Apple in the next few years from the horrifically momentous policies that the Republican/Democrat Regime in power has put over on all of us and those fine companies in the last 15 months.
Sell this market, short this market above 8,000, as I’ve been saying. We’re gonna see lower lows in the next year or two. And you know who to blame — yourself and the people you voted into power, if you’ve voted for any of the Republicans and Democrats in power who have done this to our country and our economy.