On Incredible Complacency of the Markets

So I hear people blaming things on the PPT or Plunge Protection Team when the market continues to go up despite the barrage of ominous economic news. Do I know that it exists? Well sort of. It is defined on Ask.com and just about anywhere in the web. So we know that PPT was created to avert another plunge experienced in 1987. Does it exist today? I don't know and I won't take a position on it or give this entity credibility until there is ample credible evidence.

But on days like today, when the market ignores all the warning signs thrown at them and still manages to shrug off the bad news and continue to go up, I have to at least wonder about PPT. I am only human. PPT is convenient and easily accessible. But what really is driving this insane market move?

I know that the markets are foreward looking. So by the movements of the markets recently, it is factoring in robust economic growth, tame inflation, near term FED cut, no fall out from mortgage and housing meltdown, improving dollar valuation against the Euro and Yen, prudent Chinese global economic policy, low oil prices, and solid national security.

So, I think about this. Am I a fool for being too negative on the market and the health of the economy? Am I wrong for not buying that the current economic climate is the worst it will get and that improvement is just around the corner? Perhaps. But I don't buy it.

Why?

Because of the complacency in the markets and the financial pundits who continue to hold out hope that it won't get worse and that this time it is different. People dig up words like PPT to explain the unexplainable. No one said the markets would be rational. But historically, complacency in the market place has been rewarded with pain. In 1929, a close parallel to today's market could be made. Despite ongoing concerns regarding excess liquidity, growing negative economic indicators, and rising speculation in the stock markets, the markets continued to climb until, well we know how that ended. Am I saying that it would be that bad? No, but, actions in the market place currently is a harbinger that just around the corner might be a disaster waiting to happen.

Right now we have the ticking time bomb called mortgage lending crisis that is within minutes of exploding. Despite recent on going concerns about inflation, devaluation of the dollar, rising mortgage delinquencies and foreclosures, and weakening US economy, we are seeing the market that stubbornly marches on ignoring all signs of danger. How long will this continue? I do not know, but I know that the danger is out there and waiting. I have said recently that I expect some form of a blow up in Countrywide sometime this week, and I must admit, I am running out of time. But at least I have my money right where my mouth is. I will continue to remain bearish until the bearish factors resolve themselves. But the currnet indication shows that we are just beginning the bear phase and not at the end. Perhaps I am wrong, but it sure would be one hell of a way for me to go broke when the economy is slowly crumbling around us.