The Clusterfuck Nation Chronicle

Commentary on the Flux of Events

My prediction of a stock market debacle on Monday played out in reverse -- instead of a Black Monday melt-down we got a continuation of a multi-day melt-up. But is it really any less of a debacle? The net effect is a more pronounced "speed wobble" of a system running out of control. In fact, based on the indexes for the past week, the wobble is much worse than it had been. We've become accustomed to 150-point-range Dow days in both directions. We are now into the 200 and 300-point range in either direction. We're above the red-line zone.

It's especially ironic that Monday's market melt-up came (apparently) on the great news of Citicorp and Morgan / Chase reporting fabulous and astonishing profits. That's rich. Citicorp's derived largely from the sale of a huge Manhattan building. The background profit churn comes from their credit card operations -- meaning the promotion of hallucinated wealth -- which will only set the stage for widespread personal misery in the days ahead of deflationary depression, as former "consumers" meet the re-po reaper. Congratulations Citicorp. Morgan / Chase's "profits" derive from a different kind of hallucinated wealth: accounting tricks based on derivatives positions -- meaning casino-style bets via "creative" abstract investment vehicles so many times removed from any acts of productive activity that their relation to real value exists only as an ephemeral notion in a few people's heads.

So, I apologize for the premature call. I hasten to add, though, that the days ahead are historically the prime ones in late October when misplaced financial hopes come to grief. When the bottom falls out of this latest suckers' rally, investor fear will be smelled from sea to shining sea and the herd will really start running.

The US economy -- the beast behind the machinations of finance -- is a sick puppy. We're told constantly that two-thirds of "it" is composed of "consumer spending." We know that this consumption is being done on credit cards. To me this means a base of economically irresponsible citizens who spend way more money than they have, mated with a financially irresponsible banking sector that extends way too much credit to citizens with poor prospects of paying off their debts. Add to this a suburban clusterfuck living arrangement that can't be sustained, based on imported fuel supplies that could be compromised at any moment, and you will see a recipe for epochal calamity.