A concerted effort featuring huge infusions of public money provided by the Fed, highly focused buying orchestrated by Treasury officials that gave a positive skew to key averages, abetted by buying opportunity calls to individual investors by stock brokers from Panama to the Yukon, kept financial markets from total melt down in recent weeks. An impressive performance in its way, but alas, one that can’t be endlessly sustained. And since the underlying cause of the market’s problems, a world maxed out on debt, has not been addressed, the really big "break" (to use a market term) is likely to prove truly horrific.
When can we expect it? Probably October, traditionally the cruelest month for stocks—unless a monster hurricane takes out Houston or Bush bombs Tehran before then. The following poem, rendered in the style of England’s great curmudgeon of verse, Algernon Charles Swinburne, describes what might occur this October or thereabouts...
The Great Stock Plunge
Before the opening gong,
There’ll came to a new trading day,
News of a swoon in Hong Kong,
Fears that some bonds might not pay;
Profits that come with a warning,
Earnings, but sales that fell,
Inflation, again greatly spawning,
Rate hikes that make debtors yell;
Firms crying out for new money,
Deals that fall through the cracks,
Quarterlies no longer sunny,
Hedge funds taking big whacks;
The Fed once again in the fore,
Will step up and bravely declare,
We won’t, this new crisis ignore,
Good times, we won’t let them impair;
With a flourish they’ll open the vaults,
And out will gush seas of cash,
That briefly check fears of defaults,
And give some new life to the bash;
Down deep, though, remain real doubt
That turns market players more fretful;
While their hands may still hope to acquire,
Their guts sense a downturn most dreadful;
Oh they’ll whine, "we have all been deceived,"
Cry out, "we must now all be saved,"
They will truly be woefully grieved,
But in truth, it is them, this road paved.
*******
