The markets had a very weak session yesterday. With Bernanke’s final stand in front of Congress out of the way, along with options expiration and end of the quarter performance gaming, the bulls are running out of excuses to gun the market higher.
This is evident in the action of the last three days. All three days traders tried to push the market higher at the open. However, there was no follow through and every time the market retracted the early gains. This is not indicative of major buying power coming into the markets.
Yesterday we noted that the corrupt edifice that has sustained the “recovery” is crumbling. A big part of this edifice is the Fed and its role as regulator of monetary policy and the banking system.
The Fed publicly claims it wants to help the economy and Main Street. However, as we are now discovering, the Fed is more than willing to sacrifice the good of the people in order to prop up a few insolvent big banks.
Bernanke and other Fed doves continue to proclaim that QE is beneficial to the economy. However, we now know from the former head of the BLS that the Fed’s claims of job growth are incredibly inaccurate (real unemployment is over 10%) as well as its claims of low inflation (real inflation is around 8%).
Higher costs and lower job growth. Neither of those is pro-recovery or pro-Main Street.
Moreover, we now find that Wall Street has been manipulating the commodities market as well as the interest rate markets: both of which have major impacts on average Americans.
If the Fed didn’t know about this, then how can anyone trust the Fed to understand the financial system, let alone “save” it? And if the Fed did know about this, then it’s proof positive that Bernanke is happy to turn a blind eye to Wall Street’s pushing of commodity prices higher (hurting Americans across the board).
I’ve long said that this entire recovery was a sham. Real employment has yet to come back in any meaningful way. And the housing “recovery” has been dominated by large financial institutions (ones with close ties to the Fed) buying up tens of thousands of homes, pushing prices higher to the point that once again Americans can’t afford them.
It’s just like 2007 all over again. Only this time around, we know for a fact that the Fed hasn’t fixed things and has bankrupted itself and the financial system pretending that it can.
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Best Regards
Graham Summers