There is no longer any perception of risk acknowledgment in this market any longer. We have become so accustomed to buying every dip, including even minor ones, that no one even sees the need to pay attention to news, data, analysis, or reality. We are living in a surreality instead. This is the very definition of a bubble mentality!
The bubble mentality ignores the warning signs and is ambivalent to risk. It routinely dismisses those risks without proper regard or due diligence. This is precisely the mindset that inflates the bubble far beyond appropriate price levels because all the warning signs are discounted, even scorned. Anyone who questions the price levels of the target asset in the bubble are ridiculed and belittled.
We are once again in what Alan Greenspan once referred to as a stock market price level that reflected "irrational exuberance", but Ben Bernanke not only pooh-poohs that thought, he even worships the idea, calling it, instead, a "wealth effect". Really? By creating "irrational", artificial price levels for assets that are far beyond their merit, we are thereby creating "wealth" (very loosely defined and considered). What a twisted and callous way of thinking about the damage done when those "wealth effect" bubbles pop, millions of small businesses are destroyed, and even more jobs are wiped out, never to return. Perhaps Mr. Bernanke's cronies consider those bubbles to be creators of wealth, but I'm sure the victims of central bank guinea pig solutions don't appreciate being sent to the economic garbage dump in response to Mr. Bernanke's eternal experimentation with their lives.
That said, we are once again buying the dip because everyone knows that that's what we do, despite that large "sequestered" budget cuts on just two weeks away. I suppose that the market is expecting, based upon past history, that the Republicans in the House will, as usual, roll over and give Obama everything he demands (while mendaciously calling it bipartisanship), so, since the GOP no longer has any credibility, and is now the Rubber Stamp Party, it ignores (even the most remote possibility) that they may suddenly find a spine again.
And because of this, it will once again take something cataclysmic, to bring us back from surreality, to the brink of disaster and coerced recognition of reality, once again! And the cadre of collectivist czars will once again deem that their wisdom is tantamount, and must therefore be imposed, until the leave in their wake of calamities something that no amount of government tinkering will be able to fix. They, in their hubris, will once again devastate, while denying the same destruction they caused. And we will once again wash, rinse, and repeat, at least until we end up at the bottom of a cliff as economic road kill. The day of reckoning will come with ever increasing likelihood of a mortal economic wound!
Here is what the bubble looks like this morning:
