stock_creeper's  Instablog

Futures are rallying tonight as Obama's polls hit new lows and on the eve of the upcoming FOMC meeting where hopefully a new QE program will be unveiled.

The libs on the blogs, the libertarians and fiscal conservatives (the same group of people that to the detriment of the economy, want withold spending and liqudity interventions) are scratching thier heads as to why the stock market refuses to fall despite all the supposed 'headlines risks'. Greece and Spain are supposed to on the verge of default so why do stocks refuse to fall, they ask themselves. Why are consumers still spending as much as ever?  How can stocks keep going when there are no jobs?  Where is the debt default and day of reckoning for decades of reckless speculation, excess and geed? 

Sorry, liberals, but it ain't happening. No day of reckoning, no double dip, no shoes to drop, no crisis, no lessons learned. Stocks have entered the so called 'low volatility;' buy all dips' ramping phase. We saw similar patterns back in Fall 2009 and again in Fall 2011. It's where the funds habitually buy all the dips, where earnings 'surprise' to the upside yet again, where all bad news is 'priced in' and where 'better than expected' makes its triumphant return. 

Bailouts work. They worked in 2008/2009, and they are working again now. With any successful program you have the usual naysayers who will dismiss it as merely kicking the can down the road or a 'band aid' fix, but that TARP 'band aid' has proven to be pretty durable beyond the wildest of expectations; it's been over three years and still no relapse. Stocks are rallying now, the gains made in assets over the past two weeks  more than easily pays for the Greece & Spain bailout. The consequences of moral hazard are miniscule compared to the systemic risk of letting important institutions fail.

What about the proposed Obama tax hike on millionaires? Not surprisingly, it's DOA because spendism, pro-growth policy is here to stay. Oracle smashes estimates again, web 2.0 booming in the Silicon Valley with new millionaires & billionaires being minted every day, housing in Palo Alto at record highs, China's economy continues to defy expectations, and treasury yields at record lows. Congress, the public isn't going to let the liberal curmudgeons undo this global liquidity, wealth creation and capitalism boom.

pajamasmedia.com/tatler/2011/09/20/obama.../

On Monday, President Obama presented a plan for tax hikes that have already been rejected by Congress when Democrats controlled it. He didn’t consult with either the Republican-controlled House or the Democrat-controlled Senate in drafting the plan, virtually guaranteeing that without champions for the plan in either house, it will not pass. The White House signaled today, that they know it won’t pass, and that’s their actual plan. He isn’t going to quit and hasn’t already quit, and he isn’t going to do a thing about unemployment in the private sector. It’s all about re-election.

We should be thankful we have policy makers like Geithner, Trichet, Merkel, and Bernanke rather than the likes of Mauldin, Schiff, or Krugman in charge. It's no surprise that udder faced Roubini wants the Euro to breakup and Greece to default. Or that Krugman and Robert Reich want the government to fritter away trillions of dollars for useless job creation programs, hiring incentives and counter-productive regulation.