WASHINGTON, May 25, 2012 – Today, the Memorial Day weekend is already upon us. We say “already” because it seems as if just yesterday we were celebrating New Year’s Day 2012 whilst ringing in a torrid bull market that, like all bull markets, was going to last forever. How things have changed. Today’s Dow futures point to another down market open less than half an hour from when we’re writing this column, and, courtesy of our friends in Europe, the weekend doesn’t promise much good news.
It’s interesting that most young people today don’t have a clue as to what Memorial Day is all about. Its origins date back to the conclusion of the Civil War when Northern States, impressed with the gathering Southern custom of decorating with flowers and flags the headstones, memorials, and markers of slain Civil War soldiers on various dates in May. Hence the holiday’s original name, “Decoration Day.”
We’ve read that the prototype holiday was started by black freedmen in Charleston, SC in 1865. They conducted a memorial service at the mass grave of Union POWs who’d died in the camps. We don’t have the time to confirm this story, but it’s an attractive one and certainly not out of the question.
In any event, the meaning of the holiday eventually encompassed commemorating the sacrifices of all soldiers who died in wars defending our country. It became a national holiday and its title was revised to “Memorial Day” to cover its broader meaning.
It’s rather poignant looking back on the origins of this holiday. When you think of all the men and women who died to defend our democracy and freedom, then fast-forward to today, you wonder if some of these heroes might be looking down on us right now and wondering what the heck it was that they fought for.
Socialized medicine? Nanny state fiddling with individual rights? Confiscatory tax policies demonizing those who are successful? Mass transfers of wealth? Limited free speech? Unequal justice under law? And, perhaps more esoterically, a perpetually sputtering economy that encourages banks to hoard cash while small businesses and individual family budgets sputter and die?
If this sounds a lot like Greece, you’re right. But it’s also us and pretty much everyone else around the globe. After generations of lies from politicians and happy acquiescence by voters who either didn’t bother to go to the polls or just hung around and enjoyed the ride and the lies, the bills have actually come due and nobody wants to pay them.
The day of reckoning first occurred on our own shores on 2008 well after warning shots had been fired in both the Recession of 1987 (when savings banks went into mass fail mode) and, later, in the “Asian Contagion” of the late 1990s. The signs were there, but the politicians just kicked the can down the road. In 2012, they continue with the same non-solution. The situation is not pretty, and the potentially violent solution is going to leave a mark.
In a small way, at least, the futures are telling us that this morning. Allegedly, something is going to come to a head this weekend with regard to the Greek crisis, which is really only a microcosm of our own. Not only did Greek politicians from all sides lie to the Greek people about their own economic situation. Greek citizens of all stripes, like American citizens, happily went along.
But many of them did us one better. Many of them, for whatever reason—perhaps detecting the inherent corruption in the system—didn’t bother to pay the taxes that funded their phony system. Which system, in turn, didn’t work to hard to collect the revenue, perhaps with the aid of a little palm greasing on the side.
The bills are now due in Greece, and it is absolutely impossible to pay them without reducing the entirety of the Greek people to at least a generation of voluntary slavery. For some reason, we don’t think this will be a consensus solution.
Greece has gotten to the point where they can’t even form a majority government to grapple with the issue. The situation can’t go on. So the only thing that remains is the burning question: Will the European Union, or the Greek people themselves be the ones to pull the plug on the nonsense, declare effective default, and go back to a radically devalued drachma before resetting the game clock? Allegedly, that’s what we’ll get an answer to this weekend. But we shouldn’t hold our collective breath. The Europeans may find a way to punt again.
We shouldn’t laugh at the Greeks, though, with all their ridiculous parties that can’t get together, get serious, form a working parliamentary majority, and get the job done one way or the other. Because our Congress, even though we’re only dealing with two political parties, is no less confused, clueless, and feckless. The Greeks are the canary in the coalmine for us.
Since at least some investors have caught onto this fact, they’re continuing to pull money out of the stock market. Even the more adventurous types don’t want to be very much at risk this weekend. So selling will predominate today. Indeed, most of these late afternoon buying sprees—the “2:15 Buy Program Express” investment advisor Dave Fry calls them—are generated by computerized high-frequency trading (HFT) programs looking for a quick, profitable, largely phony trade before the market close.
All in all, it’s a grim way to celebrate Memorial Day. A better way might be to return from our weekend trips to the mountains and to the beaches and get to work letting our politicians know that they’d better shape up or we’ll ship them out in November.
This column will return on Tuesday, as Monday, Memorial Day, is a bank holiday and Wall Street will be closed. Have a good weekend.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
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Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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