My goal is to AVOID a revolutionary situation. The folks on this board blame the Fed for everything. It definitely plays a huge role. The Fed's money printing is basically choosing those that have pre-existing financial wealth as winners and those without it as losers. That's one thing for folks my age who had an opportunity to accumulate in a different era/context. But, it is quite another for the youth. Their professional careers start in an era of how unemployment and underemployment, with artificially high college tuition costs, home prices, gas and necessity prices, etc.
When the youth in a society has no prospects, bad things happen. ZH points out the student loan debt all the time. But, the housing bubble was an intergenerational transfer of wealth that we are refusing to let reverse. Those students graduating with oodles of debt and little prospect for higher paying jobs CANNOT afford overpriced housing assets. Thus, the housing recovery WILL NOT happen because the "flow" of household formation cannot happen. And, the money printing simply leads to an increase in the price of necessities which again hit the youth disproportionately because they never had the chance/time to accumulate the financial assets to ride through this financial repression and necessities are a greater fraction of their salaries, reducing disposable income.
But, what about these scams? Why do I focus here? Because we still have massive wealth in society that could be deployed to productive investment and reverse course. Instead, it is tied up in tradnig scams that create no value. When society's resources are all directed to that which at best, redistributes value and generally consumes value, REAL growth doesn't occur. Fake nominal growth does. Unless real growth through real investments in illiquid productive investments returns, we are hosed.
I don't want the financial sector to shrivel up and die. I want it to succeed and grow. But, it can only do that by restoring trust and returning to its roots. That's what it used to do by allocating capital to productive companies and restoring internal balance to the market in the form of relative valuation. IPOs and M&A generally create value. M&A's will would accelerate massively if market capitalizations were realistic. M&A is still quite low because sophisticated investors know many companies are bubbles. The massive internal disconnect in the market (MOMO bubbles enabled by short squeeze and float jam scam) only breeds distrust from retail investors who know it is a matter of time, so they scale out gradually.
My issue with these scams is that they systematically engender malinvestment. And no, it is not caused by Benny B. It is enabled by the excess liquidity, but enablement and cause are two different things. It is caused by unchecked greed of certain institutions and manner others who've decided to pocket a little more short term gain at the expense of lost of trust and secular decline. For those that think I'm wrong, look at the RIF on WS that continue. It will accelerate as trust is lost...
I will not walk away until the institutional longs do the right thing and restore balance. Yesterday's Yahoo incident got me working on the comprehensive short thesis to post on Seeking Alpha. You've seen my posts for long enough to know that I had identified the issues that Tim Phillips and Paulo Santos publish on more than a year ago. Last night, I started putting out a few more tidbits that undermine the story and highlight the true fragility of this situation.
When they let the scams go and restore balance, I walk away. That doesn't threaten the status quo. It simply means they make money (and more over the longer term) from productive investment rather than predatory skimming/scalping, which is leading us toward destabilizing outcomes.