This process is not over, not by a long shot. As anyone who invested during the Peso crisis or Asian crisis can tell you, when carry trades blow up, the volatility can be EXTREME.
Whenever investors themselves begin to comprehend that the Fed is now more leveraged than many of the investment banks were when they went bust in 2008, the end game will begin.
$8 trillion in QE spent by Central Banks failed to generate any sustained GDP growth or jobs. So what did the Central Banks do? They stopped talking about growth and began talking about “inflation.”
The next time stuff hits the fan, will the world be as trusting in Central Banker proclamations? Will we continue to believe these folks are omnipotent? Or will their phony promises accomplish nothing?
The Central Bankers bet the financial system that their theories were correct. They were wrong. Horribly wrong. And we will all pay the consequences for it.
These people know the gravy train is about to run off the rails and they’re looking for safety. They don’t care if they miss out on another 5% gain in the stock market, they want to get out of stocks NOW.
If the GOP takes the senate, the days of the Fed doing whatever it wants will have ended. This may well in fact be what pops the US stock market bubble. The GOP hasn't controlled the Senate at any point since the Crisis hit in 2008. If the GOP controls both the House and the Senate, the Fed will be in for SERIOUS problems.
In simple terms… we’re back in 2007, but the Fed will have very real limitations to what it can do when this bubble pops. And it will pop in the not so distant future.
This is only going to usher in the next round of the Great Crisis that much faster. Only this time around, entire countries will go bust, NOT just banks.
So… the economy is weak, corporate profits are unlikely to rise much, if at all, and stocks are sharply overvalued… ALL of these point towards another collapse in the markets…
The Fed has ended QE. And it won’t be launching a new program anytime soon. So when this rally ends and stocks collapse, the Fed won’t be coming to the rescue.
For five years we’ve been told that the world was in recovery. If things are SO great… why is it that even a 10% correction in stocks triggers panic from the Fed?
