Still Not Bullish

GDP falls 6% and the market goes up. The government passes a $3.4 trillion budget that will explode the deficit and the market goes up. The UAW hammers Chrysler's lenders in a bankruptcy scandal and the market goes up.

On top of this, consumer confidence has shot skyward. People are thinking of spending again and feeling much better about the economy in general. But why?! I don't get it. We're still in a mess.

Taxes are about to skyrocket. As Milton Friedman said, the real rate of taxation is equal to the rate of government spending. In other words, if the government spends it, they must tax to get it back. And government spending, if graphed, would look a lot like the hockey stick graphs used by would-be dot.com founders during the tech craze.

Banks are actually bulldozing foreclosed homes instead of taking possession. Granted, these were homes that were abandoned before construction was complete, but destroying them does not exhibit confidence in the market.

We are set to shed roughly 600,000 jobs for the last 30 days, bringing us dangerously close to 3 million jobs lost in 2009 alone! People are still losing work, which means they are losing income, and the poor rate of savings we have in this country leads me to believe that most people cannot live long without a paycheck.

So why are we up in the markets? Simple, it's denial. It ain't just a river in Egypt. It is a very human reaction to sustained bad news. We simply start to choose to ignore things that don't bring us joy. But denial won't keep the market up. I'm doubling down on my short positions. This thing is bound to tank again soon.