Back to Line in Sand at S&P 1040

We are right back to where we were before Monday's "rally for no apparent reason", looking at S&P 1040 as an inflection point. Below that we'll want to press short to see if we can reach S&P 1020.

Too much economic data to go through this morning but my favorite nugget was this one - it indicates Americans (a) have learned nothing and (b) are happy to spend whatever the government gives them.

• The Commerce Department said Thursday that consumer spending rose 1.3 percent in August, even better than the 1.1 percent gain that had been expected. But incomes edged up 0.2 percent, the same as in July.

That's pretty much what we've been doing for an entire decade - before we had the house ATM funding the difference between wages and spending. Now we have the government ATM filling the hole. [Jun 3, 2009: A Country that Cannot Function Without Easy Money] Until we return to an era where spending is born of wages / savings rather than handouts from either a house bubble or a government bubble, we have learned nothing. And now we can clearly see why politicians act the way they do - why should they act responsibly when the people are willing to spend at 5x their rate of income growth.

The subsidized economy of America continues on...

• ... consumer spending jumped by the most in nearly eight years in August due partly to the government's Cash for Clunkers program...

Why bother saving money [Dec 29, 2008: What Happens if America Returns to a Historical Savings Rate?] ... when the government is happy to fund your lifestyle? [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] [Jul 30, 2009: Cash for Clunkers a Bit Hit, Government Asks "What Can we Buy You Next?"]

After all money grows on trees. And no one asks what the costs of all these benefits are. [May 29, 2009: In 1 year, US Taxpayer on the Hook for $55,000 More per Household]