Pride and Politics

“I like to see a man proud of the place in which he lives. I like to see a man live so that his place will be proud of him.”
-Abraham Lincoln

The scariest part about this week’s US market rally, which is the 1st up week since the first week of January, is that for it to continue, we need this circus of the US government’s help.

Whether you are a Republican or a Democrat (or neither), you have to admit that Washington has turned into a certified gong show. If you thought Wall Street’s “economists” were bad, man oh man are we being given an entertaining expression of economic “strategy” by these Senators and Congressmen – this, as the Captain of the Charlestown Chiefs in Paul Newman’s “Slap Shot” would say about the Hansons before game time, “is em-bah-rah-ssing.”

While I am proud of the New Reality’s liquid long American capitalist finally seeing a steepening of the yield curve, and very much happy to see those who invested in Chinese and Brazilian equities this year make tremendous year to date returns, I am truly embarrassed to have these economic crackerjacks YouTubed by the world. The American financial system loses credibility by the day by simply having these US politicians open their mouths.

Effectively the only economic data point that matters this morning is the US employment report. Guess what – it’s going to be really bad… yes, Nouriel Roubini told us, remember – dig bunkers in your basements and hoard Kraft dinners, the Depression cometh…

After yesterday’s +1.6% move, the SP500 is now +12.4% above the low print that is still freaking out poor ole Harry Reid. Even “no drama” Obama raised his voice about that apocalypse past yesterday, multiple times actually, reverting to Bushy’s go-to move of fear mongering these idiot economic savant politicians into getting another trillion dollars of stimulus passed.

Thank God that stock markets are leading indicators that can reveal political rhetoric as useless. A bi-partisan global macro investment process has concluded that all of the major stock markets around the world, with the exception of Russia, continue to make higher lows on selloffs, and higher highs in some cases, like China, on rallies.

China? When was the last time Roubini went to China? Right after Davos, the man went to Russia! Nouriel, I’ll bet that was outright depressing… the Russian stock market has lost almost 80% of its value since the Goldman prop desk top ticked oil last year. The Russian currency has lost over a third of its value, and Putin has turned out to be the raccoon Georgia found in her garbage can.

China, as in that really big country with a lot of people and a lot of cash, was up another +4% last night, taking the 2009 year-to-date performance of the Shanghai Stock Exchange Index to +19.8%. Bull market what? Yes, much like the Bovespa in Brazil, Darwin’s 2009 scorecard of global economic power shifting continues to reveal The New Reality. While American traders were trying to figure out if Pelosi was going to speak again intraday, the Bovespa was belly dancing on the heads of the short selling community (sorry Cramer, but I bet you liked it anyway), locking in another impressive +2.4% day, taking the Brazilian stock market to up almost +10% for the year-to-date.

If you want to see the men and women of this country proud of the place in which they live, let her hard working blood sweat and tears lock arms with the American capitalists who don’t need leverage to run their businesses. Stop lending moneys to the socialist bankers and give it back to the capitalists. Let them borrow short, lend long, and earn an unlevered return. Let them crush every single competitor who needs debt to compete with them. Let Darwin’s rules reign.

When was the last time you saw Chinese or Brazilian politicians on CNBC? When was the last time one of these cruise line organizer Wall Street conferences asked the central bank governor of China to the key note speaker? No, no… instead, our manic media gives the mike to Washington’s Hanson Brothers… and we embarrass the American flag with their economic idiocy.

As the US Treasury Yield Curve continues to steepen (the spread between 10 and 2-year yields is a healthy 195 basis points wide again this morning), and long term American cost of capital continues to increase, the long-awaited process of creative destruction in the US financial system is picking up momentum. The faster we can expedite my team crushing Ken Lewis’ research team, the less we will have to depend on these politicians pontificating on socializing Bank of America. Stocks that go to zero can’t go down anymore.

This Bank of America is not America’s Bank – not the America that I want to raise my son in at least… and certainly not the one that Lincoln envisioned. As Obama and Geithner herd their politicized cats into the West Wing this weekend, I will be praying that the man who claims to have “no drama” eliminates it from the process. If yesterday wasn’t drama, I could have just as easily have turned the channel to the Young and the Restless.

This country is where she is today because we didn’t have a proactive process – going right back to the reactive and politically charged solutions of Paulson’s short history past is only going to make things worse. Please, Mr. President, please… those of us who haven’t asked for bailouts are begging you – please, let the uncompromised Americans of this country be “proud of the place in which they live.”

Have a great weekend.

Pride and Politics - etfs020609


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