The single most important issue for understanding why the finacnial system is not healthy and why we’re set to have an even bigger crash than in 2008 has to do with one word…
Today, we now have a financial system that is even more leveraged than in 2007… backstopped by even less high quality collateral. So when the panic hits, the selling pressure will be even MORE extreme.
Italy is back in recession for the third time since 2008. Germany’s economy contracted in the second quarter of 2014 and will likely be in recession before the first quarter of 2015. France has registered zero growth for six months now.
We continue to be told that the US economy is in recovery and stronger than ever. The press trumpets heavily massaged data (GDP growth and the unemployment number) while ignoring data that clearly indicates the US economy is in the toilet (labor participation rate, median income, etc).
We have the very makings of a Crash. If stocks breakdown from this line and cannot reclaim it, we could easily wipe out all of the gains going back to 2013.
At some point, the markets will call BS on Spain’s dreams of recovery and the bond markets will rebel. When this happens the whole fraud will come unraveled. However it might take a full-scale political crisis before this happens. And by the look of things we’re not far from one.
There is a saying that you don’t ring bells at the top. It’s not really true. Every time the market forms a major peak, at least in the last 15 years, there are usually a preponderance of signs of excessive speculation and leverage.
We have corporate insiders selling the farm, investment legends warning of a collapse, institutional investors selling stocks, and global growth slowing rapidly.
The fact Yellen believes in this stuff is telling. You won’t hear the Fed talk about incomes or jobs because the Fed has no clue how to create either. But asset prices are easy to boost… just spent $3 trillion and you’ll get a roaring stock market.
Will this latest stimulus plan be the one to ignite growth again in the People’s Republic? We’ll see…but given that globally the world economy is slowing again… the odds aren’t good.
Generally since 1999, and especially since 2008, the financial world has been dominated by Keynesian lunacy. Collectively, Central Banks have cut interest rates over 500 times and printed more than $12 trillion combating a brief 9-12 month period of deflation.
This is why Capitalism is failing in the US: because not only is it now clear that the US economy is, for the most part, a rigged game… but that NO ONE involved in the rigging is punished.
