Market Mayhem is Due to Truly Perfect Storm for 2019 Recession

Market Mayhem is Due to Truly Perfect Storm for 2019 Recession by David Haggith for The Great Recession

“The perfect storm” has become a cliché, but the current setup for a 2019 recession just became so text-book perfect in alignment of the three most critical recessionary forces that I have to use it.

Let me start by noting that a stock market that rallies because the news is bad — as happened a little over a week ago when we got a terrible new jobs number (only 75,000, less than half of the weak number economists expected and lower than what it takes just to keep up with population growth) — is a market that is locked in dependence on recovery-mode life support where everyone is happy just because the ambulance will soon be on its way … again.

That market as well as the “recovery economy” built around it is destined to fail because you cannot sustain growth or build enduring wealth on the need for an endless flow of bad news to keep forcing central banks to create new money in order to keep goosing the marketplace along. It’s a stock market running on absurdity. The need for endless salvation is not the hallmark of health. However, the market’s codependency on the Fed is not the set-up I’m talking about. It is merely evidence that this soaring market is not a healthy market. (A tree blooms most, you know, just before it dies.)

It is, however, exactly the kind of stock market we have become used to because the market has become addicted to Fed support (I’ll call it “Fedaid”) over the past decade. Because this abnormality (in a broader historic context) has become the new norm, investors fail to realize that this time is greatly different because of three truly significant situations in its setup that I’ll lay out below. This time, bad news is the worst of news, but the market — because of its decade of Fed-addled memory — completely fails to see the storm that is arriving all around it right now. That kind of blindness can also be the setup for one hellacious crash.

stock market roller coaster sets up 2019 recession

Market Mayhem sets up the 2019 recession

You see, investors think the market is plunging up and down on the waves because it is trying to break through a hardened ceiling that has held up for eighteen months. During those eighteen months, the market dropped off of three tops that were barely successively higher than each other (just enough higher each of the last two times to test whether going higher was possible and then fail).

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David Haggith

Knave Dave — vigilante against the false profits of The Great Recession Too many criminal CEOs still fill their porky bellies with the biggest taxpayer bailouts in the history of the world. These bailouts protect their reputations, saving them from the fall they should have taken. They continue to receive bonuses for having done an unparalleled job of destroying their companies! Many of their companies wouldn’t be making any profit at all if not for the interest they’re making off of nearly free government bailouts. Just this week Hewlett-Packard fired its CEO, but is still paying him a bonus of millions of dollars in exchange for a year of corporate wandering in the wilderness. Netflix’s CEO cost his company hundreds of thousands of subscribers and had to reverse his decision. Bank of America’s CEO launched a debit-card fee plan that was immediately stupid in the eyes of many, but greed an arrogance led him to think he could pass it by his customers, and he lost customers in droves and had to reverse his decision, as did the many major banks that followed him. Since these corporate leaders do things most of us can immediately see as being dumb, why are they rewarded with salaries a thousand times greater than many of us make?