Unstable Mountains: A Landslide is Ready to Happen!

Now that longterm Treasury yields are holding their heads continuously above the 5% level, we’ve entered a new financial environment that drastically changes the risk for stocks, which are at ludicrous levels, given the true state of affairs all around them anyway. The mere water that has welded together the fractured strata of these mountainous valuations in the form of ice is thawing under the heat of rising yields, and the strata are making sounds like they are shifting and getting ready to slide.

Expect an extreme collapse when reality finally manages to thaw out investors’ sleepy heads, but who knows how long the crazies can keep breathing in the stratosphere…or keep thinking they are breathing? Who knows how long something that looks like a solid mountain to many can hold together before it entirely crumbles in surprise?

High tech has returned to its summit of being the sole strength holding up the stock market’s mountainous averages, but the profits reported by high tech are fake profits in the one sense that matters: They are built mostly out of the stock gains of all the shares that corporations have purchased almost incestuously in each other ventures. So the profits are nothing more than their own behemoth abilities to run each other’s stocks up in value because of their huge access to cash and loans. They are purely speculative paper profits that can vanish overnight.

Those fake profits that all the market makers claim are evidence of a “strong business economy” will instantly turn into losses when the terrain starts sliding downward. Such a large portion of corporate earnings has nothing to do with the services any corporation is providing for its clients; so, they are no evidence at all of a strong business economy. This whole mountain is effectively the biggest, most complex Ponzi scheme in market history in that it is just supporting itself with its own bets.

This is unlike any market we’ve ever seen in that illicit intercourse between corporations is now being reported as profitable trade, but who am I to argue. Prostitution has always been lucrative, even if a high-risk trade. Its corporately intertwined, self-perpetuating nature, based on nothing but its own bets on fantasy profits that everyone knows will not, at best, materialize from AI for years, sets it up for systemic, rapid collapse, but I have little solid idea of when such unstable bedrock will collapse; however, the time will come when the summit topples off like that mountain in Tibet.

The current situation actually looks more like the mountain I reported on in this past Thursday’s headlines in Germany, where it appears the entire mountain is in a slow-motion state of imminent collapse as dust rises day after day from age-old cracks all over the mountain’s face that have never dusted before, and pebbles and occasional boulders tumble on all sides of the mountain. The mountain is continually and audibly rumbling even though it is not volcanic.

We’ve never seen a collapse like this if it happens, so geologists don't appear to know if a warning should be sounded. It is more like a “What on earth is going on here” kind of situation. Yet it is Germany’s highest peak, just like this is the stock market’s highest, most-impressive peak ever; so, if it does crumble under all of its own ponderous and seriously fractured weight as the ice in its veins thaws under the extreme recent summer heat, loosening the layers that have been wedged by frost but also welded by ice, it may be the collapse of a lifetime. (I’ve reposted the video below to save you from having to look it up.)

Maybe the crumbling stone of this enormous mountain that seems to be buckling under its own weight will all find a way to settle into a new equilibrium of repose made of large blocks stacked timorously on top of each other, but stable for a while longer as we move back into winter’s freeze, again locking the rock back up. Maybe it won’t do as the mountain in Tibet did for similar reasons, surprising everyone when a peak that looked like solid rock gave way and slid to the distant valley floor. Pity the villages, however, that wait underneath the mountain’s rumbling mass to find out.

Pity the investors who are standing beneath this top-heavy, poorly supported stock market if it suddenly gives way, as appears increasingly likely.