FacebookTwitterRedditEmail

The Bubble Machine

The U.S. stock market (Dow, S&P, Nasdaq) is in a bubble unparalleled in human history. This includes: the South Seas mania, the Tulip Bulb craze, the 1920s insanity, the Dot.com bubble, and the housing/mortgage debacle of 2005-2008. For 10 years the stock market has breathlessly raced upward in acrobatic levitation, pausing very rarely.

The singular source of the bubble is of course the Federal “Reserve”. The Fed has no reserves; its only assets are mostly worthless paper. Nonetheless, it creates “money” and shovels it to the top tier banks, dealers and other favored entities. Loan demand is slight to non-existent, and therefore these institutions, lacking other credit worthy places to employ the money, have no recourse but to buy stocks, stocks and more stocks. The financial world has been so squeezed into this singularity that it is the only game in town.

One of the problems is that the stock market “averages” mask the thermonuclear caldera below. The Dow etc, are currently trading at historically extreme valuations. But far more dangerous, however are the hundreds of stocks outside the averages, involving billions if not trillions of dollars, trading at cosmically absurd levels. One example of hundreds is the stock of company WXYZ, an internet software company. The company has an astronomical market capitalization of $39 billion dollars, has $1.1 billion in annual sales, trades at infinity times earnings (it has no earnings), 14 times alleged book value, and a price to sales ratio of 36 times. It, and its ballooned multi-hundred look alikes are the driest of tinder.

The real catastrophic threat is that these bubble stocks will blow rather simultaneously, and when they do blow they will have a good chance to devastate the entire stock market, the financial markets, and the economy. This junk as well as all the more rationally priced “good stocks” will be liquidated to meet margin calls, balance sheet requirements and all the other hardwiring needs of the financial markets. There will be a manic and panicked scramble to salvage anything. The balloon blowing Federal Reserve has only itself to blame, but the entire populace will suffer immeasurably when the convulsion occurs.

More articles by:
bernie-the-sandernistas-cover-344x550
January 29, 2020
Jefferson Morley
Weakest Link: Impeachment and National Security
Peter Lackowski
Venezuela, January 2020: Hardship and Resistance
Kenneth Surin
BoJo Johnson’s Brexit Fantasies
Ron Jacobs
The Swamp That Trump Built
Scott Corey
A Different Impeachment
Peter Cohen
How to Survive this Election
Manuel García, Jr.
Mutually Assured Madness: Immunity to the 25th Amendment
John Kendall Hawkins
Soviet Hippies: The Grass is Greener on the Other Side
Chandra Muzaffar
The International Court of Justice and the Rohingyas
John Grant
Iran is Not Responsible for US Deaths in Iraq
Kevin Zeese - Margaret Flowers
The World Demands Us Out of the Middle East
Shawn Fremstad
Marital-Status Discrimination Reduces Fertility in China
Lawrence Wittner
Could the Climate Crisis be “The Good News of Damnation”?
Tom Engelhardt
The Fate of the Earth (See Page Five)
Myles Hoenig
Why the Green Party isn’t the Problem
January 28, 2020
Patrick Cockburn
China’s Coronavirus Outbreak Reminds Me of the Irish Polio Epidemic I Survived
P. Sainath
Making Rebellion Attractive: Why the Establishment Still Hates John Reed
Geoff Dutton
Where Was Rudy Giuliani When Democrats Needed Him?
Sam Pizzigati
The Evolution of “Davos Man” into . . . Trump Fan!
Jeremy Kuzmarov
Truth a Major Casualty of Impeachment Hearings
Michael Welton
Autobiographical Roots of Habermas’ Thought
Greta Anderson
Remove the Livestock, Not the Wolves
Nick Pemberton
Sorry Chomsky and Friends, The Green Party isn’t the Problem
Jack Rasmus
Trump’s Feeble Phase 1 China-US Trade Deal
Mike Garrity – Jason Christensen
Natural Gas Pipeline Corridor Threatens Imperiled Species and Inventoried Roadless Areas
Daniel Falcone
Make America Radical Again: A Conversation with Harvey J. Kaye
Binoy Kampmark
Split Hearings: the Assange Extradition Case Drags On
Eric Toussaint
Greece: a Chronology From January 25, 2015 to 2019
Nino Pagliccia
An Open Letter to Justin Trudeau on Venezuela
Robert Hunziker
Reflections of a Scientific Humanist
Jeffrey St. Clair
Who Cares If It Leaks? An Afternoon at Hollyhock House
January 27, 2020
Peter Harrison
Adani and the Purpose of Education
Dean Baker
Can Manufacturing Workers Take Many More of Trump’s Trade “Victories”?
Robert Fisk
Trump in Davos: US isolationism is Reaching Its Final Narcissistic Chapter
Ariel Dorfman
The Challenge for Chile and the World
Victor Grossman
The Misuses of Antisemitism in the UK and the USA
Thomas Knapp
Bernie Sanders, Joe Rogan, Human Rights Campaign, and Truth in Advertising
Fred Gardner
NewsGuard Can Save You From Putin!
Lawrence Wittner
A Historian Reflects on the Return of Fascism
Rose Miriam Elizalde
Cuba: a Matter of Principle
Bob Topper
The Better Moral Creed
George Wuerthner
Giving Cover to the Abuses of Big Ag
Christopher Packham
This is Really Happening
Negin Owliaei
Americans Need to Hear More From Iranians, Here’s Where to Start
Ted Rall
Corporate Crap That Doesn’t Kill Bernie
FacebookTwitterRedditEmail