The Clusterfuck Nation Chronicle

Commentary on the Flux of Events

Conspiracy theory is not for me (see July 29), but I don't believe the stock market melt-up is due to "bargain hunters" or other such gremlins hallucinated by the AP wire or CNN. My guess is that major banks (J.P. Morgan, Citigroup) are goosing the markets to create an illusion of stability -- and to forestall a stampede to the exits by disgusted small shareholders (the ones who have been too nauseated to open their monthly statements). If there are any "bargain hunters" among professional stock traders, then the average IQ on Wall Street is in double digits.

Even the mighty central banks have limited resources for sustaining the magical levitation of stock markets. There are only so many dollars invested in foreign assets and equities that can be called home and funneled into US stock -- which is how I think this stunt is being performed.

If this is what has happened, then the government and the central bankers will be very close to running out of tricks. What's more, I suspect that, as the trend reverses back down, we will soon learn how this melt-up was engineered and that it will reflect very negatively on President Bush, though I doubt he was anywhere near the center of this gambit. Until very recently, I disbelieved correspondents who wrote saying that Bush might be forced out of office before his first term expired. But if we learn that the government has been desperately colluding to re-inflate equity values, the public may see that as a continuation of the Enronitis infection, and Mr. Bush will end up in grave state of discredited.