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Is it Deja Vu All Over Again?
Back in November, 2010, I wrote that the current tussle in the market “was an epic battle. Force against force. Titan v. titan.” Back in November, 2010, we had an overbought, overvalued, and overly bullish market, that was built on a poor foundation, versus the buyer of last resort, the Federal Reserve. That market should have rolled over, but we know what happened next as the Fed kicked off its asset purchase program known as QE2. The market went on a relentless tear. The winner by technical knockout: the Fed.
I say “technical” because we all know that QE2 did little to help the real economy, and whatever stock market gains were made have been reversed as prices are back at November, 2010 levels. I wrote this back on October 26, 2010: “What is clear is that the stock market is not the economy, and the Fed’s actions appear to help Wall Street more than Main Street. I don’t think that is their intentions, but maybe monetary policy can only go so far in its effects, and this recession/ depression will just need the tincture of time before we see the economy on the mend. In other words, despite the Fed’s action, the economy will heal itself on its own time. However, that is the risk with all this meddling. It is unlikely to have an impact and I think there is significant risk that it could make things worse (i.e., prolong the healing phase).” How true is that today?
Fast forward to November, 2011, and we find ourselves in a similar situation. We have an overbought, overvalued, and overly bullish market that has arrived at this point courtesy of one of the strongest Octobers on record. Like 2010, the economy is on the brink of recession. Instead of the Fed, we now have the European Central Bank or some such entity to come to the rescue. It is their turn. As I wrote back in 2010: “There is only one reason to be bullish and that is the Federal Reserve is backstopping this market.” We can substitute those words “Federal Reserve” with ECB or IMF or China.
And that is where this market stands folks? Back in 2010, I wrote: “The data says that the market should rollover. QE2 and POMO is a force that says “happy days are here again”.” In 2011, it is deja vu all over again! We just need to find a new entity to bail out the markets and paper over our problems.
The stakes are high and our economic leaders know this. They will do everything in their power to stem the inevitable. Will the recent up surge in momentum give hold to a new trend higher? I honestly don’t know. The data says “no”. The bullish trends in the Dollar and Treasury bonds say “no”. Because like last year, those things won’t matter until they do.
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one big fixed rigid global central market for macro plays. No market at all. Sterilised and controlled. As objective now is debt support through ZIRP and then debt wipe out NOT through growth but through hyper inflation over long years. In the meantime starve people.
QE2 threw money into the markets giving the appearance that the economy was in recovery. The real economy had not decayed enough to over come this gift to Wall Street. As time goes on, the real economy will die and no amount of debt or money printing will matter. Game over.
“””The stakes are high and our economic leaders know this. They will do everything in their power to stem the inevitable.”””
INEVITABLE.
Reading this article gave me a glimpse as to why Law and Order and the Justice System, regarding the financial criminality rampage; has been thrown under the bus.
Not only does it protect crony criminals in our political/financial system but it contains the reality of becoming widely known information to the public. Hide, spin, lie and recycle.
This is a high crime of all Centuries. History is made and hidden.
Y'know, after a wetting my ears, I think I may have come to tentative conclusion: that the so-called 'efficient market hypothesis' is way of saying 'Sharks eat smaller fish' - and while the 'dumb money' keeps betting on the fundamental reversion to mean, or achieving some sort of equilibrium, the Sharks simply move from one profit/shoal to the next. YEs, it's obvious - but it's important to note that the resolution system has NOTHING to do with correct valuation in the current period, rather it takes at least ttwo periods to correct to the previous level's equilibrium...or something like that.
Your article makes the economy sound like a "little" boo-boo that just needs time and some salve to heal alll on its own. I agree with you that maybe when things started to unwind in 2007 & 2008...if they had left things alone then it would have eventually healed on its own. It would have hurt for a period time, but healing would have eventually set in as the system found its equilibrium. The problem is that the FED and other CBs have been lobbing QE missles and "Cash for Junkers" grenades into the wound of this economy all to stem the flow of blood and the system will NO longer just heal on its own because its addicted and so distorted that it will take a "miracle" to even begin to find the right road back to sanity. I wish it was different, but its not.
SIN:
I think we are saying the say same thing!
We desperately need alien contact with a bunch of rich, not to bright monsters who can be skinned by the local confidence-humans and sold much marginal local real estate and well worn bridges.
I for one will welcome our scaled masters of they bring a lot of cash.
We desperately need alien contact with a bunch of rich, not to bright monsters who can be skinned by the local confidence-humans and sold much marginal local real estate and well worn bridges.
I for one will welcome our scaled masters of they bring a lot of cash.
they already offered
http://red-pill.org/intergalactic-bailout-rescue-global-collapse/