It blows my mind that people are asking why the S&P 500 hasn’t broken its record. The correct question is why it even gets close.
I listen to enough liberal talk show on NPR to become well acquainted with the mythical recovery that always gets hit by some “unpredictable” and extraneous problem that is never Obama’s fault. In 2010, the “stimulus” was working and then, out of the blue, the Greek debt crisis came into full view. Then in 2011 it was the tsunami.
Even though Americans know this is not a recession like the ones in the past, but the shift in American prosperity where all the fiat-currency-bankster madness of the previous two generations comes crashing down on our heads, politicians and their cheerleaders at CNBC keep pretending that we can just go on as we have been and recovery is just around the corner. If recovery isn’t happening soon enough—that is a problem that requires a brief explanation, which, when it is noticed again, will require still another brief explanation. Since the global economy is huge, and bad news is everywhere, there will always be another excuse available to divert superficial attention to blame something else other than the American economy.
This week the excuse is Cyprus. I agree that Cyprus is bad news, and the attempt to exploit the situation in Cyprus by robbing bank deposits is even worse news.
“For the fifth time in the past two weeks the broad-based index came within 5 points of its record, only to be beaten back either by technical resistance or, as was the case Monday, more disturbing global headlines. ‘There’s resistance to climb over a high that hasn’t been breached since ’07. It takes a tremendous push,’ said Mitchell Goldberg, president at ClientFirst Strategy. ‘There’s an awful lot of people out there who are just breaking even now, who have become more risk-adverse and have had enough of risk-taking in the stock market,’ he added. ‘The news cycle doesn’t help.’ Indeed, it was the latest out of Europe that pulled the stock market down Monday, with an agreement to bail out Cyprus banks rattling investors concerned about the deal coming apart and its contagion risk. Markets were also spooked by comments from Dutch finance minister Jeroen Dijsselbloem saying that the Cyprus bailout deal might be a template for other bank bailouts in Europe.”
I realize that Dkjsselbloem’s admission is horrible. But what sort of person who knows anything about the world’s economy and its political leadership could be surprised by Dutch finance minister’s statement? The Eurozone is a bankrupt husk that will flail about in its death throes to avoid the inevitable break-up about to happen. Why expect anything else? Why would you be making investments or trades on the basis of any other scenario?
The problem with this story about a “risk-adverse” group of people in the stock market is that it is biased for no reason. Rather than say they are “risk-adverse” we ought to describe them as being wild risk-takers who eventually realize how insane they are being and pull back for awhile before jumping into the stock market over again.
The American economy is in shambles, with too much debt, too many bailouts, and too little savings. We don’t need to blame Cyprus for our problems.
It will become clear soon enough, that we are just a bigger Cyprus.