EARLY LOOK: The Seeds of Manipulation

“When people learn no tools of judgment and merely follow their hopes, the seeds of political manipulation are sown.”
-Stephen Jay Gould

Modern day science lost an important mind when Stephen Jay Gould passed away in 2002. He was only 60 years old, but had already contributed a great deal of biological research on the evolution of man. Many of Gould’s research essays were collected in volumes with titles like “Ever Since Darwin.” He developed the theory of “punctuated equilibrium”, where evolutionary change occurs much more rapidly than during longer periods of stability.

I wake up every morning with a hope that our financial leadership and thought processes about markets and risk evolve. Hope, unfortunately, is not an investment process, and I often find myself getting frustrated. Sometimes it’s pretty obvious in my writings; I get that.

But do politicians around this world get it? Let’s consider this morning’s global macro news run:

1.      “I wish there was a miracle, but all we can do is persist with our efforts.” –Bank of Japan Governor Masaaki Shirakawa

2.      “All we can do on the Monetary Policy Committee is stand ready to react” –Bank of England Deputy Governor Charles Bean

3.      “The only way we will change them is by forcing them to change” –Senior United States Senator (NY) Chuck Schumer on China

Collectively, I don’t even know how to start summarizing these statements. This is getting bad. The Bubble in Global Politics seemingly has no peak in sight. We are all hostage to the Seeds of Political Manipulation.

Setting aside how ridiculous Schumer’s comments about America’s Creditor (China) are, let’s consider where these comments from Japan and the UK are coming from this morning.

1.      In Japan, the BOJ left interest rates unchanged at ZERO percent for the umpteenth time in the last few decades (really successful economic policy model for America to follow by the way – who needs to evolve and learn from that?) and implemented a fresh 20 TRILLION Yen, 3-month loan facility, to inject more liquidity into their politically compromised bureaucratic bubble economy.

2.      In the UK, with Gordon Brown leaning as far left as he can possibly bend in order to save his political career, monetary policy politicians are trying to reconcile why this thing called inflation has reared its ugly head into their compromised government inflation reporting system. Inflation in the UK is running up +3.5% all of a sudden. That’s well above their stated target. That’s what happens when you burn the value of your currency.

Again, I can’t go on the record addressing these China comments from Schumer. I just deleted what I wrote about them. I cannot get my head around them in anything that resembles a professional way. Back to Japan and the UK:

1.      What is 20 TRILLION Yen going for these days anyway?

2.      In the UK, are they admitting what American monetary policy makers wouldn’t dare? That setting policy is a reactive exercise?

We regularly beat this point to a dead pulp, but real people in this world are coming up with real proactive plans to prevent crises. Meanwhile, we have mathematically and scientifically incompetent politicians around this word sowing the seeds of their own mindless market manipulation, then reacting to what they themselves planted?

Now I have a headache.

Back to the math, twenty TRILLION Yen equals $222 BILLION Dollars. Oil is trading up at $83/barrel and copper at $3.40/lb this morning. Western and Japanese governments are creating more money than God himself could count.

Printing moneys for an “extended and exceptional” period of time will end with inflation that politicians will be reacting to and “wishing for a miracle” that the rest of us who aren’t paid to be willfully blind don’t see.

Sorry China. That’s all we can say this morning about Schumer’s comments. Sorry. He’s just another American politician who “has learned no tools of judgment” who is “merely following his own political hopes.” Please don’t sell your Treasuries. Please.

My immediate term support and resistance lines for the SP500 are now 1144 and 1163, respectively. I have 17 longs and 8 shorts in the Virtual Portfolio, and if the market is up today on these hopes of globally socialized losses, I intend on selling into them.

Best of luck out there today,
KM

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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