Archive - Aug 28, 2009 - Story

So the conclusion is that it always has and always will be about the US consumer. And any concerns that China may stop purchasing US securities are, unfortunately, groundless - China can ill afford to push the US middle class into a greater savings mode, and thus will cooperate as much as it can with the Federal Reserve in keeping both mortgages (for the illusory net wealth effect) and interest rates as low as possible for as long as it can. However, this being simply another fiat-funded bubble, and due to its Ponzi nature, a much more vicious one, the second this symbiosis ends for whatever unforeseen reason, the impact on China, and by implication on the US, will reverberate throughout monetary and fiscal policies and likely result in civil unrest both in the US and China, once Walmart can no longer provide cheap garbage to satisfy the American demand for constant credit-financed unneeded products, and once the China GDP illusion of minimum 8% growth is popped, resulting in an end to the Communist-Capitalist hybrid experiment.

Total Federal Reserve balance sheet assets for the week of August 26 of $2,049 billion

• Spending increases in July thanks to CfC subsidies on less than expected consumer income (AP)
• AIG in no rush to sell stuff (WSJ, h/t Aditya)
• AIG rises and many ask why (NYT)
• AIG's swap blunder now replaying on Wall Street (Bloomberg)
• Hulbert: Rally since March has been extraordinarily speculative (MarketWacth)

• Asian stocks advance on higher commodity Prices, Dell earnings.
• Banks on the FDIC's sick list top 400.
• China’s stocks retreat, Index heads for fourth weekly decline.
• Consumer Spending in US probably climbed in July on `Cash for Clunkers'.
• Euro heads for second monthly gain versus the dollar on recovery optimism.