My Dear Welfare Bulls,

Let me start by offering my sincere congratulations. Over the last 26 months, as the “markets” have accommodated your increasingly outsized, though consistently baseless, notions of your sizable acumen, I haven’t really taken the proper time to tell you what a fantastic job you’ve done of prospering. And bravely, wading into the maelstrom of MASSIVE SHORT SELLING and PERVASIVE BEARISHNESS to stake your contrarian claims and reap the abundant rewards.

Except for, no. I mean yeah, you’re awesome because you got richer over the last couple years. Which is awesome because, as anyone knows who has ever examined the purpose of living, it is clearly: as you live longer, get richer. Because then, when it comes time to die, you won’t look around and be like, whoa, where’s all my afterlife money? It’s gonna be fun, to look around and not do that, just as you shuffle off this mortal coil and “take stock” (which is a funny pun, for this post, lemme tell ya). And I hope to be there, and take pictures, and revive this blog by posting them here, with captions of joy.

No but seriously, we’re all grown-ups here, so let’s cut to the chase, because we all know that trading is serious business. It’s like the Boggle of chart squiggles. It’s like killing Osama Bin Laden, over and over again, into a dirty sock you found lying near your boxer shorts during the bots’ 11:30  green stick paint party. Put on a trade or two, and you can almost rech out and touch the afterlife money, because while those squiggles are boggling it all feels nothing like the fiction the satanic poor have erroneously claimed it is for centuries, not so much with their mouths, as by existing, and just staying. fucking. poor. all the time, like total assholes. What a rush.

Anyway I digress. When last we met on topic, I was all like, locating you in the latter portion of that whole hotornot world view. And I want to talk about that for a minute, if I can manage to remember I do, because it’s important. People who “watch” the “news” (ok, I should really say “People”, but who has enough airquotes these days, anyway?) are hearing all these fantastic daily reports from the stock market, and those that never peek under the hood–that is, all the normal people–have no idea that there might be more to it than the relentless happy headlines of the “Dow Jones rose seven-tenths of a percent today” and the “NASDAQ was up 16 points on volume of 2 quillion shares”. And they have been relentless, since March 2009. This is wrong, and that’s a subject for another post I likely won’t write, but I can’t help wondering, “OMG what if they knew??? OMG!

See the thing is, you’re a sham. You might be lovely, down-to-earth people in real life, with your boxers back up around your waists. But as you have sat down and bought this market over the last two years, you have purchased a sham, which has made you partial owners of a sham, and as we all know, in America, until your last asphyxiating gasp when you are transmogrified into the sum total of your afterlife cash, you are the pile of crap you own, so by the transitive property of American Economics -101, alas, you are a sham. Even if you sold it all back like the good clever boys you are, a thin film of sham-spores lingers yet in those places your washcloths don’t reach.

Now those of us not so fortunate to be mainlining the welfare-bull kool-aid are frequently admonished that the markets are not the economy (godcannotwaittodismantlethisone inanotherpostishallneverthelesskeepnotwriting), and that you have to “trade what you see”, and that what we have seen is a fantastic opportunity.

Trade what you see.

Uh-huh, uh-huh. Now I assume this is meant to refer to “markets”, open, free, transparent, efficient harbingers of the myriad greater goods (ha! more pun!) deployed capital has brought into our lives. Only, as any two-bit blogger can tell you, what has been “seen” by market players here over the last little while is a buncha free cash, courtesy of the Federal Reserve, and by extension, taxpayers present but especially future. Now normally, when some government-affiliated organism (the Fed is ex-government, but obviously plays some very serious governing roles, and has had a permanent afternoon appointment in a highway motel with the Treasury since the good old days when a Goldman Sachs leader led it openly, as opposed to by background regulatory capture) hands out money, this is called welfare. This is, natch, where you earned your Street name. When you appear on tv, you like to talk about this rally being “liquidity-driven”, because then it sounds like you’re doing something professional, as opposed to lining up and cupping your palms for the ducat-pour like the aforementioned asshole poor, whom many among you enjoy criticizing for creating this crisis by suckling at taxpayer teats and borrowing beyond their means.

What is less often reported on the news is that the ducat rain (the conveniently euphemized “bailout”, which makes it sound like we’re all saving a ship before it sinks, as opposed to tapping out lines of blow and handing pirate banks rolled-up benjamins as we set merrily off to sea) has never ended, and will not end as long as interest rates remain at essentially zero. So sure, banks can take my hard-earned dollars that I deposit in a savings account and leverage the shit out of those while paying me a few basis points’ (the jargon name for “hundredths of a percent”, sounds waaay cooler) interest. But why bother doing that, when they can borrow money for nothing from the government, buy a treasury bond, which is a form of loan to the government, and collect a few percentage points in interest–hundreds of basis points, which sounds very cool indeed–at zero risk or outlay. In other words, on welfare, borrowing beyond their means, at least compared to way back when banks were required to act like actual fiduciary institutions with, y’know, accounting and stuff.

But clearly, this is not what you welfare bulls have seen. You’ve taken a hard look at all that’s created by a feedback loop of manufactured cash (of course it’s not the Fed printing money, stupids, it’s the financial industry) with zero responsibility to lend, hire, or invest, and you have called it “good business”.

Many among you are fond of pointing out what a good predictor markets are of future economic activity (which is, of course, horseshit of a higher order still, and by the way impossible if the economy and the market are two different things, so which is it, sound reasoners?) and we can look to a chart like this one to confirm your irrational thinking. I mean, look, just look at this record of

Corporate profits in Current Dollars. IVA stands for Inventory Valuation Adjustments and CCA stands for Capital Consumption Adjustments. All indices are seasonally adjusted at annual rates.

Per “Bloomberg”, whoever he is. So what do we “see” here? That around the time the ducat thunderstorm began, profits had plunged? That the market correctly predicted how they’d snap right back? That corporations are seriously outperforming the entire history of themselves?

Yeah right. How about this: the most obvious thing in this chart is that, starting around 2002, or about the time our glorious housing bubble switched from straight horse to speedballs, corporate profits went parabolic, in what is clearly a long-term unsustainable exaggeration of an otherwise steady trend. They dipped briefly while all the houses that had pretended to have value during ramp 1 proved to be worthless, and then corporations dumped their employees in a massive refusal of domestic social responsibility and a win-win outsourcing to countries where brown people will work for a sliver of a ducat per year, and then initated ramp 2, a.k.a. the further refusal of the history of mathematics, statistics, and humanity that calls mean reversion a thing of the past.

The number-one thing to “see” here is that the mild market speed bump that was the biggest financial crisis in several generations, and the most globally concerted ever, should have been a healthy correction for corporate America. It was not, despite some nagging questions, e.g., Is our economy 70% consumer-driven, and are corporations failing to employ consumers? Deft workaround answer: Sure, but the rich ones, and all the new ones around the world, will make up for those asshole poor folk. Plus, it’s time to put an end to welfare, Medicare, Social Security, public education, and government (big asterisk for that massive corporate-socialist government policy though, natch), so those people will likely just quietly die off, afterlife-dollarless, leaving only the hardworking, worthy non-assholes behind.

We had an opportunity to improve our governance, our thinking, our planning for the future, our collective fiduciary responsibility and management, and we did fuck-all, jack-shit, nothing. Oh I’m sorry, not nothing. I mean, have you seen the index averages?

For now, of course, What You Get Is What You Decide To See, and that has stood you in great stead for what is becoming a long while. But I am confident this clarity of vision you have brought us will,some years from now, stand about equal with bleeding hundreds of words in a contortion act attempting to prove that Wall Street might be wild ‘n’ crazy, but it ain’t criminal: visions of sugar(daddy)plums, the stuff of wishes, and proof of the fact by the required intricacy of the denial. What you have decided to see these last two years is essentially what the financial arm of our national leadership sees, which is that we can wallpaper over decades of horribly short-sighted, cutthroat behavior that has spilled over into persistent, institutionalized, seemingly irreversible fraud, malfeasance, and graft, and flip that house before the paste peels away. I am not a buyer, and look forward to seeing you all in foreclosure.

Yours very sincerely,

Unexpectedly, Inc.