The Next Round of the Financial Crisis is at Our Doorstep.

Phoenix Capital Research's picture

The next round of the financial crisis is at our doorstep.

 

The primary driver of the stock market, since 2009, has been the expansion of the Fed’s balance sheet. Remove this expansion and the S&P 500 would have effectively flat-lined.

 

Now the Fed is ending QE and “surprise” stocks are cratering.

 

Is this really a surprise?

 

After all… we know that…

 

1)   Stocks are expensive by just about every conceivable metric.

2)   Global GDP growth is overstated dramatically with China at most growing 3.5% per year, the US in recession, and Europe in a full-scale DE-pression.

3)   QE is completely useless at generating growth with Japan in a triple dip recession after launching a QE program equal to 25% of its GDP and the US in recession despite having spent over $3 trillion.

4)   Central Bankers don’t care in the slightest about how their policies affect the rest of us.

5)   Even investing legends who have made their billions off of stocks admit the market is a complete farce and that a Crash is coming.

6)   Billionaires moving their money out of stocks and into ANYTHING else at a record pace.

 

And finally..

 

7)   None of initial problems which lead to the 2008 crisis (excessive leverage, rampant fraud, etc.) have been addressed.

 

Let’s face the facts. The very same problems that lead to 2008 remain in place today. The people who created this mess have gone unpunished. No one went to jail. No rule of law was upheld. Instead trillions of US taxpayer dollars were funneled to a bunch of crooks and liars.

 

And the Fed and friends actually thought growth might come out of this?

 

I’ve written before that the Fed’s policies were cancerous and would kill the system. This has proven to be the case…

 

·      The bond market is illiquid and extraordinarily dangerous thanks to the Fed screwing up the yield curve and soaking up Treasuries from QE.

 

·      The stock market has no bearing on reality, with accounting standards thrown out the window and investors fleeing in droves.

 

·      The economy is in shambles with almost all job growth post 2008 based on phoney accounting or crappy part time jobs… again thanks to policies employed by the Fed.

 

·      The middle class has been destroyed thanks to Dollar devaluation and rising costs of living that have wiped out savings and made it impossible for the average American to get by.

 

·      Retirees and those close to retirement have lost valuable interest income courtesy of the Fed’s zero interest rate policy.

 

At the end of the day, the Fed with its misguided theories have demolished capitalism: the single most powerful form of wealth generation in the history of mankind. All the Fed has really accomplished is leverage the entire financial by an even greater amount… which has set the stage for a collapse that will make 2008 look like a picnic.

 

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

You can pick up a FREE copy at:

 

http://www.phoenixcapitalmarketing.com/roundtwo.html

 

Good Investing

Graham Summers

Phoenix Capital Research

 

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spinone's picture

Capitalism is just a word that describes part of the human spirit.  Some people look for ways to make a better mousetrap.  Capitalism is never destroyed.  Its like holding a beach ball underwater.  As soon as all this manipulation stops holding back the capitalist spirit, it will rebound to the surface again.

Bemused Observer's picture

You can't lay all the blame at the Feds doorstep. They aren't acting in a vacuum, they are doing what they're doing at the behest of very wealthy and influential folks who think this will keep them from having to take losses. If the dominant powers insisted on an alternate strategy, that is what they'd be doing.
You guys in high finance need to keep in mind that the bulk of the impetus for this crap comes from the kinds of folks you deal with...it isn't a stubborn economy with lazy workers that refuses to grow, it is horrid mismanagement of financial assets, mal-investment and manipulation that is preventing the growth you keep looking for.
The Fed does what they do because they think it's what you WANT, what will make you guys happy. Don't make the mistake of thinking that Janet Yellen actively MANAGES this economy. All she does is determine what the wish of her masters is, and figure out how she can use her position to give them what they want, regardless of the effect on the system. She isn't a manager, she's a tool.

C'mon...you're not seriously waiting for her to get it right, are you? Because I promise you she ain't trying and she doesn't care.

the grateful unemployed's picture

if i am correct their policy is to destroy the bond market, a selloff in stocks will be painful (temporarily) but the same effect on bondholders is catastrophic, they are forced to accept liquidated value (which as we no from 2008 never happens with stocks) so the stock market crashes, the fed just blows the bubble again.