Dour Debby Downers ~ The Risk Averse Alert

Wednesday, February 06, 2013

Dour Debby Downers

I was a little surprised when Doug Cass tonight said the current market environment reminds him of summer 1987. Cass' Fast Money appearance followed Bethany McLean who made the case for APPL falling to $200, a prospect with which the stock's technical state confers. It makes you wonder what inside the rumor mill might be stirring behind the scenes. Not that either of these two guests appearing on CNBC's Fast Money tonight are likely privy to it. Rather, one wonders whether this public airing of what are extraordinarily dour outlooks indicates theirs an unwitting part in a fishing expedition venturing alleviation of a relative dearth of shares available for shorting?

As for Cass' sentiment-based concern driving his bearishness, any similarity to summer 1987 might be best likened to that in mid-September 1987 when the market's counter-trend reaction back up toward its late-August peak was nearing completion. This is to affirm the market vulnerable to spectacular collapse once completing its counter-trend rally unfolding since March 2009 bottom. Indeed, the ninety or so S&P 500 points Cass believes at risk here could come in their entirety at some trading day's open, this as a result of circumstance leaving little likelihood the market might bounce back soon after. This is the reality of risk currently hovering over what is fairly called a trash heap at the bottom of the capital structure, whose status as such is formed by a massive mountain of debt—likely to prove unpayable: illegitimate—saddling every corner of [ever diminishing] economic functioning, both in the private and public sectors.

If there is anything to take away from the Justice Department's weak, belated effort to bring civil charges against criminal ratings agencies and successful prosecution of “representations and warranties” improprieties occurring in the mortgage-backed securities derivatives market, it is that the age of free-reigning scam artists appears under pressure, if not drawing to a close. However neither of these judicial actions changes the fact today's global imperial system is rife with the fruits of misdeeds—scams benefiting a few at the expense of many—so let's not be deceived. Only with movement to radically alter the framework in which an otherwise hopelessly insolvent banking system is situated can there be cessation of systemic threats presented by an imperial, scarcity-driven, calamity-inciting institutional arrangement euphemistically rationalized in the language of the "free market." What does this likely portend, then? Only scams of an even greater dimension! We certainly should not suppose 2008 was the end of it.

Word on the Street
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