Of Two Minds

Why would anyone sell when further gains are guaranteed? Because the gains are unreal but the losses are real. When markets are soaring and your portfolio is rocketing higher, the gains seem unreal. Did I really make that much in one day, week, month? Wow!

The middle class has already collapsed, but thanks to debt and bubbles, this reality has been temporarily cloaked. What collapsed the middle class? In many ways the answer echoes an Agatha Christie mystery: rather than there being one guilty party, a number of suspects participated in the collapse of the middle class.

Unfortunately for those at the top who’ve benefited immensely from speculative bubbles, speculative bubbles don’t create a vibrant middle class–they push what’s left of the middle class off a cliff. What exactly is the Middle Class and what unique role does it serve in the economy?

Please study these charts as a means of understanding the inevitability of economic stagnation and a revolt of the decapitalized middle class. I’ve been covering the decline of America’s middle class for over a decade with charts, data and commentary on the social depression that has accompanied the decline.

This heavily managed ‘market structure’ is far from equilibrium and extremely prone to instability. The relentless melt-up in stocks offers ample evidence that the market is rock-solid and that any decline is an enormous opportunity to buy the dip. That this has worked splendidly for the past 13 years cannot be denied.

Our Nobility’s assessment of risk and their war-gaming of vulnerabilities are fatally deficient. Many people have heard of Nassim Taleb’s black swan but fewer understand how few events qualify as black swan. Per Wikipedia, a black swan is an unpredictable or unforeseen event, typically one with extreme consequences, an event that is beyond what is normally expected of a situation and has potentially severe consequences.