by David Stockman
The robo-traders and Wall Street punters were busy painting the tape yesterday, and did bump the Nasdaq composite across the magic 5,000 threshold for the first time since March 2000. But even as Wall Street urged home-gamers to “return with us to the thrilling days of yesteryear”, the caveats about “this time is different” were flowing with abundance:
This time, the Nasdaq at 5,000 is underpinned by substantial companies with strong sales and credible plans for growth, not wishful schemes to “monetize eyeballs” and sell pet food online.
Not exactly. This time is very different, but, as they say, not in a good way. Not even close.
Since the two days of March 9 and 10 in the year 2000 when the Nasdaq closed over the 5,000, the financial markets have been converted into central bank managed gambling halls and the global economy has bloated beyond recognition by 15 years of non-stop financial repression. Back then, a few hundred stocks were wildly over-valued based on monetizing eyeballs; now the entire market is drastically overvalued owing to the false financial market liquidity generated by $14 trillion of central bank asset monetization—-mostly public debt— since the turn of the century.
As a result, the global financial system and economy are orders of magnitude more fragile and vulnerable to collapse than they were 15 years ago. Indeed, nearly all of the tail winds which managed to quickly revive markets and economic growth after the dotcom crash have now played out, and, if anything, will morph into stiff headwinds in the period immediately ahead.
(For the rest of his article, click the link.)