Markets Rally -- Time to Short the Livin'...

...shit out of them! I'm calling my broker and fully leveraging my margin account today. If I'm right, I make gobs of worthless money. If I'm wrong, I go bankrupt.

Ain't capitalism grand?

Why am I doing this? Because Moody's is releasing some ratings tomorrow. Any downgrading of any kind will further depress financials. Therefore, Moody's is probably under a lot of pressure to help maintain the status quo. The problem for Moody's is its status as a private, independedent, global outfit that relies on nothing more than its credibility to do business. If Moody's issues a ponies-and-princesses-in-the-sky report, the global finance community will no longer take it seriously. Additionally, such glossing over the obvious problems in the system will further exacerbate the overriding uncertainty problem. Either way, I say bonds and equities take a beating tomorrow and Friday. There might be a hit today too, due to profit taking, but it will pale compared to what could happen on Thursday and Friday.

As for me, I'm modest, just hoping to make a quick 100 grand.

Even if I'm wrong about the effect Moody's has tomorrow, the market's inexplicable rally yesterday leaves nowhere to go but down for a while. The only possible good news that could have justified yesterday's rally was that the Mortgage Bankers' Association reported gains in mortgage applications. Given the MBA's history of rosy proclamations in the runup to (and even midst of) the housing meltdown, anything they say is suspect at this point.

There was some big merger yesterday, too, in the tech world. Meh. Mergers are not as sexy as they used to be. Most of them don't work. (Time Warner-AOL, Daimler-Chrysler, etc.) M&A no longer has anything to do with marrying two businesses; sadly, it's just another vehicle for the Rye/Greenwich crowd to generate disgusting fees for themselves.

Nothing explains yesterday's rally except massive market manipulation. By whom? The only players with that kind of clout are the Fed and the Treasury by way of the Social Security Fund. Since Treasury falls directly under executive purview, I would tend to finger it.

The Enronization of the entire financial system is now fully complete. Every proclamation is to be taken with a grain of salt. Data is garbage, especially that available for public consumption. That's what you get when con artists run the show. At some point the jig is up. You can't keep the shell game going forever, and the longer you try to keep it going, the more devastating the consequences. That's what we should have learned from Enron (but apparently didn't).

Maybe they're hoping that by rearranging the deck chairs through the Christmas buying season, the Titanic will be saved. Maybe they think they can keep the charade going forever. Maybe the severity of the situation has finally dawned on major financial players so they're pulling out all the stops in a noble but doomed last-inning, last-strike effort. Whatever the reason, it looks increasingly desperate and pathetic.

Now I know what it must have been like to live in the last days of the USSR, when the government was scrambling to keep up the charade, struggling mightily against the reality of bankruptcy. Make no mistake about it: we are bankrupt, just like Enron. We've got a $trillion+ (yes, that's with a "t") sunk into the moronic war on terra (to great effect -- feeling safe about the state of the ~100 nuclear weapons in Pakistan these days?) on top of the $8 trillion we already owed, on top of ~$40 trillion in consumer debt on top of a $2 billion PER DAY (and growing) current account deficit thanks to our twin addictions to Middle Eastern oil and Chinese-made gadgets. Add it up -- we'll never be able to pay it back; we are bankrupt. Scratch that -- hyper-inflation would allow us to pay it back, but I'm not crazy about the idea of paying a hundred bucks for a loaf of bread.

So, yeah, short plays are looking really good these days. Do it at your own risk, though. Don't even try to sue me if you go bankrupt shorting because I'll be bankrupt too.