Annual Fund Manager Benefit Rally

“But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior)” - Remarks by Governor Ben S. Bernanke before the National Economists Club, Washington, D.C., November 21, 2002

Watch out. This guy is a real nutter, IMO. The “Helicopter Ben” of course alludes to the similarity to Milton Friedman’s famous suggestion that to stimulate the economy the government could simply randomly drop money from helicopters.

“‘Of all the Fed governors, Bernanke is the one I would be most fearful of,’ said Rich Parker, head of trading at Stamford Group. ‘He is too fast with the trigger and his take on inflation and deflation has been proven wrong.’”

“I actually turned on Bubblevision for a moment right before the announcement, just to see what kind of hoopla was going to surround this. When I watched George, Al, and Bennie walk into the room, my first thought was that these three were the Moe, Larry, and Curly of economic and monetary policy — and as incompetent a trio as one could ever assemble.” - Bill Fleckenstein

Suze Orman on CNBC special program on housing “The tide has turned”.

“Why, of course, the people don’t want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece. Naturally, the common people don’t want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship~[V]oice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country. ”

– Hermann Goering, interview during the Nuremberg Trials, April 18, 1946

Well the animal spirits are strong again this morning with the futures up overnight. Google’s beat-the-number results last night probably at the heart of it, Google up to 340 or so in pre-opening trading. This puts Google’s market cap up to $100 billion, more or less, for a price-to-sales ratio of about 15. Brokerage houses are falling all over themselves to raise price targets to $400, $450 and beyond. Another entry for the what-were-they-thinking diary.

Anyway, Lowry’s correctly foreshadowed yesterday’s reversal of Wednesday’s rally by showing very weak demand on Wednesday despite the large rise in the “popular indexes” as Lowry’s calls them. Yesterday, selling pressure rose significantly will buying pressure dropped, showing the bears still having the upper hand per Lowry’s measurements. Will Google and a further drop in the price of oil (to just under $60) be enough to regenerate demand for stocks? We’ll see….