Yes folks, we’re all optimists, blind optimists. We dismiss facts, block reality, deny history, even recent meltdown. Not just Wall Street, also Main Street’s 95 million investors. Yes, you. We all want to be deceived. We want to trust in a better future, want the good news, optimism, happy talk, bull markets. We desperately want to forget the harsh reality of the recent past. And Wall Street and co-conspirators in cable TV know this too. They have you profiled (yes, psychologically profiled) as a “loser.” To them, you are a sucker for their happy talk.

Wall Street’s “Propaganda Machine” is feeding the media a steady diet of happy-talk. And the number one rule for ratings success is: “Know what the masses want and feed it to them.” Audience become sheep, cheer, want more. Today people are desperate for good news after the tragic lack of leadership the past few years. We got a dark reminder last week as two former Citigroup bosses (one a former US Treasury Secretary), admitted they “did not have a grip on what was happening” in their “too-big-to-fail” bank. Yet those bozos created a disaster and still pocketed hundreds of millions. And far more evil, their fat-cat successors are spending hundreds of millions of their shareholders’ money to defeat financial reforms that will prevent this from happening to them again.

Unfortunately this historical cycle’s doomed to reoccur. Except the next time it’ll end in another, bigger meltdown, and the “Great Depression 2” that the Fed and Treasury keep pushing downstream. So expect the “Propaganda Machine” to keep feeding sound-bites to the media, as this “Happy Conspiracy” between Wall Street, Washington and Corporate America keeps manipulating Main Street’s 95 million investors. It never ends. Here are three historical reminders:

“Propaganda Machine” in 2007-08 subprime meltdown

BusinessWeek, Kiplinger’s and USAToday reported on the false predictions made before the 2008 subprime credit meltdown spread rapidly across America and the world:

• Bernanke: “I don’t anticipate any serious [failures] among large internationally active banks.”
• Ken Fisher: “This year will end in the plus column … so keep buying.”
• Mad Money Cramer: “Bye-bye bear market, say hello to the bull.”
• Goldman’s Abby Joseph Cohen: “The fear priced into stocks is likely to abate as recession fears fade.”
• Barney Frank, “Freddie Mac and Fannie Mae are fundamentally sound.”
• Barron’s: “Home prices about to bottom.”
• Worth magazine: “Emerging markets are the global investors’ safe haven.”
• Kiplinger’s: “Stock investors should beat the rush to the banks.”
• Madoff: “It’s virtually impossible to violate the rules.”

Bad calls? Very bad. But Main Street’s a willing victim, we want to believe the happy talk.” We’re all trapped by this deadly disease, like sheep waiting to be slaughtered.

“Propaganda Machine” in 2000-2003 dot-com crash & recession

Back a few years ago we reviewed a 2003 book, Bull! 144 Statements from the Market’s Fallen Prophets, published during the 30-month recession, when Wall Street was losing $8 trillion in market cap. Here’s a few of America’s opinion leaders spreading their misleading happy-talk as the market slowly disintegrated for 30-months from 11,722 to 7286 in October 2002. Yet they prattled on. Unfortunately, many of these “Fallen Prophets” are still misleading investors as members of the new “Propaganda Machine.”

• James Glassman, author Dow 36,000. “What is dangerous is for Americans not to be in the market. We’re going to reach a point where stocks are correctly priced, and we think that’s 36,000 … It’s not a bubble. … The stock market is undervalued.” A month earlier Dan Kadlec published Dow 100,000. (Oct’1999)
• Larry Kudlow, CNBC host. “This correction will run its course until the middle of the year. Then things will pick up again, because not even Greenspan can stop the Internet economy.” (Feb’2000)
• Mad Money’s Jim Cramer: “SUNW probably has the best near-term outlook of any company I know.” (Sept’2000)
• Lehman’s Jeffrey Applegate. “The bulk of the correction is behind us, so now is the time to be offensive, not defensive.” (Dec’2000)
• Alan Greenspan. “The 3- to 5-year earnings projections of more than a thousand analysts … have generally held firm. Such expectations, should they persist, bode well for continued capital deepening and sustained growth.” (Dec’2000)
• Suze Orman. “The QQQ, they’re a buy. They may go down, but if you dollar-cost average, where you put money every single month into them … in the long run, it’s the way to play the Nasdaq.” (Jan’2001)
• Maria Bartiromo. “The individual out there is actually not throwing money at things that they do not understand, and is actually using the news and using the information out there to make smart decisions.” (Mar’2001)
• Goldman Sachs’ Abby Joseph Cohen. “The time to be nervous was a year ago. The S&P then was overvalued, it’s now undervalued.” (Apr’2001)
• Lou Dobbs, CNN. “Let me make it very clear. I’m a bull, on the market, on the economy. And let me repeat, I am a bull.” (Aug’2001)
• Larry Kudlow. “The shock therapy of a decisive war will elevate the stock market by a couple thousand points,” with Dow 35,000 by 2010. (June’2002)

All propaganda. No facts. All happy-talk designed to manipulate you and me. All part of an tacit conspiracy, the “Propaganda Machine.” In fact, the Dow bottomed only after a 30-month bear market, in October 2002 at 7286. The Iraq War started in April 2003.

“Propaganda Machine” in the 1929 stock crash & 1930’s “Great Depression”

The “Propaganda Machine” never stops, and thanks to the Supreme Court, it will make matters worse in coming years. Let’s go back to the crash of ’29 and the first “Great Depression.” Unfortunately it will take a replay of the 1929 disaster to trigger Wall Street reform. Dodd’s bill is too little, too late. So listen closely to all the happy-talking – past, present and future – and plan accordingly because 2012 is the “new 1929:”

• Irving Fisher, Yale Ph.D. in economics: “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.” (Oct. 17, 1929)
• Goodbody market-letter in New York Times: “We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.” (October 25, 1929)
• Business Week: “The Wall Street crash doesn’t mean that there will be any general or serious business depression … For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.” (November 2, 1929)
• Harvard Economic Society: “A serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.” (November 10, 1929)
• Treasury Secretary Andrew W. Mellon: “I see nothing in the present situation that is either menacing or warrants pessimism … I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.” (December 31, 1929)
• Wall Street Journal: Re the top before the “real” stock market crash from Dow 298 to Dow 41:“Chase National Bank says the current conditions of very easy credit and poor business have always been a buying opportunity in the past. Absolutely confident that any list of good stocks will have good gains by end of 1931 and probably show a profit by end of 1930.” (June 1930)
• President Herbert Hoover: “The depression is over.” (June 1930)

Yes, the “Propaganda Machine” is relentless, is growing stronger. And thanks to the Supreme Court’s incredibly dumb decision that treats corporations as humans, Wall Street’s “Machine” will feed more and more propaganda through the media, lobbyists and campaign donations, to control Washington. “The Machine” has your profile, knows you’re easily manipulated by happy talk, bullsh*t and nonsense optimism. There’s little you can do: Capitalism and democracy are dead. And unlike 2008, we will not be able to dodge a replay of 1929 and a new “Great Depression 2” after the coming crash.

orig.pub: MarketWatch Apr’10