Wall Street

What Lies Beneath

By David Stockman  |  September 10, 2018

“Maybe,” he said hesitantly, “maybe there is a beast.”

– William Golding, Lord of the Flies (1954)

This is, by some measures, the Greatest Bull Market in the History of Humankind.

So, what kind of economy lingers beneath it?

It’s a beleaguered one.

At 2,880, the S&P 500 Index is up 85% from the pre-crisis peak of 1,562 in October 2007. Even when you strain the inflation out, the gain is 55%.

Let’s take a look at what Main Street has to show for all that greatness…

That’s a 1.2% gain in real take-home pay. Since the turn of the century, wages are actually flat.

But – after its “near death” experience from September 2008 into March 2009 – the real value of the stock market has risen approximately 45 times more than real incomes.

It’s all a function of massive central planning.

As such, it’s the biggest pile of bullshit we’ve ever seen, too.

Indeed, in today’s fraught environment, those deaf, dumb, and blind kids are sure playing some kind of game. It’s not connected to anything happening on Planet Earth.

Wall Street is ignorant of the fact that there’s no economic basis whatsoever for “Dow 26,000”… or “Nasdaq 8,000”… or “S&P 2,900”…

These are just bubbly numbers held aloft by the fatuous presumption that Imperial Washington will never let them burst.

Meanwhile, our political system is fixing to implode.

Because – newsflash – we’re right in the middle of an extra-constitutional coup.

And this is all about Imperial Washington’s Political Elite.

To them, the sitting president is an illegitimate invader. They want him and all his “deplorables” out.

And – with Deep State precision – they’re exfiltrating the Donald from the Oval Office.

Now that the rogue gendarme has the Donald’s inner trio of scumbags (Michael Cohen, David Pecker, Allen Weisselberg) by the shorthairs, there’s no stopping its final push for the kill.

He’ll become ever more desperate, reckless, and impulsive as the Deep State, the Democrats, and Inside-the-Beltway Republicans trim his remaining toehold on power.

But we’re in this mess because our Leviathan deifies phonies who peddle intervention and dependence, always and everywhere. It’s all about the Warfare State… and the Welfare State, too.

Ultimately, our elected enablers put Wall Street before Main Street.

They embrace legislation like “TARP” and the Federal Reserve’s bailouts of AIG, Morgan Stanley, Goldman Sachs, and the lesser gambling houses.

And why wouldn’t they? They, too, are beneficiaries – direct and indirect – of monetary central planning and massive money-printing.

Rather than stand tall for free markets and fiscal rectitude, they capitulate to expediency.

Their engine of growth is regime change and “boots on the ground” over there.

Its domestic program includes surveillance-state suppression of liberty and demonization of nations and leaders that won’t bend the knee.

And they’ve taken to turning Putin’s Russia – with an economy a tenth the size and a military about a seventh the size of the U.S. – into Hitler’s Germany 2.0… or 3.0… or 4.0…

And they, too, are sure this is unlike April 2000… And, to them, there’s really no comparison to September 2008, either.

It’s the end of financial history! That’s not hyperbole. That’s pretty much all they’ve got.

Every vestige of sound money, honest price discovery, and financial discipline has been eviscerated.

What’s left is the will of politicians to deliver free lunch and more windfalls to Wall Street and the 1%.

So, Mitch McConnell, Chuck Schumer, Nancy Pelosi, and Jay Powell have our backs…

We’ll take the “under.”

Because Donald J. Trump won’t go without taking it all down with him…

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR