Monday, March 02, 2009

Crush Depth

Remember how the may-sayers and doom predictors were saying that the "Ship of State" was heading straight for the rocks?

Wrong. Turns out the "Ship" of State is actually a Submarine, commanded by a crew of Keynesian Economists which believe that government intervention - as massive as necessary - will achieve full employment and stable prices.

With these Keynesians in charge, we have become the greatest debtor nation in history, running up a crushing debt that is relentlessly forcing us towards financial meltdown and total disaster. And now the Keynesians are telling us that more massive government intervention, with trillions and trillions of dollars we have to borrow tossed everywhere - will fix everything. It's never worked and it never will. Simply put, you cannot spend - or borrow - yourself out of debt. But the Keynesians - in defense of their bankrupt theories - will simply tell us that we haven't spent enough.

As a result, the Submarine of State, with the stock market being a convenient depth gauge, just went below 7,000.

Question... what is the crush depth? At what number does this all implode? I have often said the real floor of the stock market is around 4500. Below that, it's straight to the bottom. But today I heard economists saying the bottom will be 3500. As the dive downwards continues, next month they may be predicting - with heads inserted solidly up their butts, a floor of around 2500.

We have an entire generation of economic theorists all taught to believe that economist John Maynard Keynes and his theories are the holy grail of economics. For them to admit otherwise, they have to admit they have been wrong from day one. Never going to happen, so down we go.

Have we already passed the crush depth? Probably. Is any of this stoppable? Probably not, since the government is still clinging to the Kenyesian idea that spending and borrowing will get us out of trouble.

We may still have an upwards swing in the stock market, perhaps back up to the heady heights of the 8500 or 9000 range, but it will be a short-lived spike, a last gasp as it were, and then... as Gandalf said to the Hobbits - as the last Elvin ship, crewed by starry-eyed liberals (and full of Kenyesians running for cover) was preparing to head into the sunset - "So here at last, we come to the end of all things".

Epic Hollywood stuff... except for the fact that this is real life.

No comments: