A Psychiatric Diagnosis of the U.S. Market: Schizophrenic Disconnect From Reality

If you think a delusional market is healthy, it’s time for a psychiatric exam.


What diagnosis would an experienced psychiatrist offer when presented with the bizarre behavior of the U.S. stock market? We assume that the wild mood swings of greed and fear are “normal” for markets devoted to short-term profit and speculation, but the stock market’s disconnect from reality is far beyond mere mood swings.

The stock market thinks it’s solidly on pavement, but in reality it’s like a car flying off a cliff: the Wiley E. Coyote moment is just ahead. There’s nothing but air beneath the stock market.

Consider the reality of PE expansion from a price-earnings (PE) of 10 at the bottom in 2009 to 18+ today, while profits are stagnant. And what is driving this expansion other than a delusional belief that profits will magically reverse and log massive gains in the second half of 2016?

If we strip out “one-time expenses” and other accounting flim-flam, profits are plummeting. How else can we characterize this disconnect between stagnant sales (look at Apple, CAT, etc.) and “profits” that are one step away from outright fraud as anything other than delusional?

As global trade, U.S. rail traffic and other non-gameable measures of economic activity stagnate or decline, how can anyone connected to reality expect sales and profits to rise sharply?

The stock market is hitting new highs for what reason? The typical answer is: more central bank stimulus is on the way, the Fed/ BoJ /Bank of China/ European Central Bank have our back, etc. etc. etc.

But the reality is obvious to all: the returns on central bank stimulus have declined to near-zero. Trillions in additional stimulus are needed to just keep the delusional markets from experiencing gravity (see car photo above).

And how about the manic mood swings from panic in February (i.e. a whiff of reality) and the euphoria of new highs in summer? If this isn’t the acme of bipolar delusion, then what is?

Perhaps the greatest delusion is the confidence that this ephemeral bubble “wealth” is actual wealth that can be counted on to fund pensions and insurance claims in the future. Pity the deranged souls who actually believe that stock gains based on fraudulent claims of “profit” and delusional expectations of rising profits as the dollar strengthens and the global economy implodes are “wealth” that can be considered permanent.

The only possible diagnosis of this stock market behavior:

1. Patient (the U.S. stock market) is suffering a schizophrenic disconnect from reality.

2. Patient (the U.S. stock market) is suffering from bipolar mania that leads to delusional beliefs in delusional profits and delusional central bank omnipotence.

3. Patient is suffering from psychotic delusions of wealth, akin to the delusion that the patient is ruler of the world, galaxy, universe, central banks are all-powerful, etc.

If you think a delusional market is healthy, it’s time for a psychiatric exam.

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  • That is what helicopter counterfeiting money does!

    July 8, 2016 94,517,000 Americans Not in Labor Force

    The civilian labor force expanded in June, adding 414,000 people, the Bureau of Labor Statistics reported today. The number of employed people increased by 67,000 to 151,097,000 in June, but the number of unemployed people increased even more, by 347,000 to 7,783,000.

    http://www.govtslaves.info/94517000-americans-not-in-labor-force/

  • What is going on behind the scenes really will let you know the whole story.

    December 27, 2014 Every major bank to receive survival kits – What do they know that we do not know?

    Why would every major bank need survival kits for all their employees? Why is the US government prepared to spend up to $200,000 on survival kits for bank employees at Bank of America, American Express Bank, BMO Financial Corp., Capitol One Financial Corporation, Citigroup, Inc., JPMorgan Chase, and Wells Fargo, just to name a few? What do they know that we do not know? Perhaps they are preparing for bank runs and employees to be forced to shelter in place?

    http://www.naturalnews.com/048113_survival_kits_banks_federal_government.html

    https://www.youtube.com/watch?v=zFEW-qytIfI#t=20

  • jadan

    Smith, you’re such a pessimist! Don’t you know the unemployment rate is below 5%? Now that the socialist threat from the left has been neutralized, Wall Street is feeling enthusiastic. You’ve been off smoking with that Michael Snyder character, haven’t you?

  • Zap

    13 trillion in negative yielding debt and that figure is increasing at a fantastic rate over just the last few years…..up from 0 historically.
    Now they are talking about central bank imposed negative rates, something that has never existed in financial history as far as I know,
    What more does anyone need to know about the economy, it is all being rigged and propped up by increasingly desperate central banks.

  • Brockland A.T.

    Nothing but air beneath the market?

    More like the hard vacuum of debt and derivatives.

    If not a psychiatrist, then a NASA space flight scientist. They’ve been trying to figure out defying gravity and controlled flight in vacuum for decades.