The Multi-Trillion Question For the Markets Pt 1

Phoenix Capital Research's picture

Given the
popularity of my previous article We’ve
Broken All the Trendlines
(Glenn Beck featured it on his show 3/15/11), I
thought I’d present a follow up regarding the implications of those charts.

 

When the
Financial Crisis took total hold of the financial markets in 2008 (the early
warning signs occurred in 2007), the Feds tried to regain control of the system
via three tactics:

 

1)   Suspending
accounting standards for financial institutions

2)   Pumping
money directly into the system (to everyone from McDonalds to Hedge Funds)

3)   Announcing
an indirect money pump, Quantitative Easing, through which it allowed the
primary dealer banks to flip their Treasuries for cash.

 

The primary
goal of all three of these was to shore up the large insolvent banks. However,
the Feds presented these efforts as intending to save the financial system/ US economy
(which, incidentally had been wrecked by those same insolvent banks).

 

These
efforts worked partially for a while. The system stopped imploding and most
assets began rallying again (especially stocks). However, it was clear that these
policies were at best, nothing more than a band-aid on the primary issues
plaguing the financial system (too much debt, unchecked leverage, and a lack of
trust induced by fraudulent accounting practices) and at worst nothing more
than a giant “funnel taxpayer money to the banks” scheme.

 

Anyone with
a working brain can see this. Wall Street bonuses have returned to pre-Crisis
levels while unemployment, food stamp usage, and the like EXPLODED higher. In
simple terms, the only ones who have seen a recovery are the bankers. Everyone
else has seen their situation worsen (not to mention their children and grandchildren
who are now on the hook for TRILLIONS more in debt).

 

Which brings
us to today and the charts I showed in my earlier article. The liquidity
induced rally of the last three years is now beginning to break down. This time
in 2010, the Fed was pumping between $40-50 billion per month into the system
to keep things afloat. Today it’s $100+ billion.

 

And yet,
stocks are still beginning  to break down.

 

Sometime,
and I cannot say when exactly, the markets will say “enough” to the Fed’s money
pumps. By “enough” I mean that additional liquidity will no longer have any
effect on the markets. This will likely occur simultaneously with a US Dollar collapse
or some kind of debt default in the US.

 

When this
happens, the REAL Crisis will hit. Those who think that 2008 was the REAL DEAL
are mistaken. The US is heading towards a situation similar to that which
occurred in Greece last year.

 

The Multi-Trillion
Dollar question is: IS it happening now?

 

Best
Regards,

 

Graham
Summers

 

PS. If
you’re getting worried about the future of the stock market and have yet to
take steps to prepare for the Second Round of the Financial Crisis… I highly
suggest you download my FREE Special Report specifying exactly how to prepare
for what’s to come.

 

I call it The Financial Crisis “Round Two” Survival
Kit
. And its 17 pages contain a wealth of information about portfolio
protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
of 2008).

 

Again, this
is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com
and click on FREE REPORTS.

 

PPS. We ALSO
publish a FREE Special Report on Inflation detailing three investments that
have all already SOARED as a result of the Fed’s monetary policy.

You can
access this Report at the link above.