Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

The Greatest Money War of All Time

Stock-Markets / Financial Crash Feb 08, 2010 - 09:16 AM GMT

By: Martin_D_Weiss

Stock-Markets

Best Financial Markets Analysis ArticleWe are caught in the grips of a great war!

It is not a traditional land or sea war with tanks and battleships.

Nor is it an anti-terrorist, guerilla war for hearts and minds.


Rather, it is war of a third kind — pitting government bureaucrats against millions of investors … and causing massive collateral damage to innocent Americans.

Battle by battle, this great war has been escalated — each time with bigger guns deployed by Washington, each time with deadlier attacks striking Wall Street or Main Street …

Battle #1 began in Thailand in 1997 when global investors suddenly ran from its currency, dumped its stocks and abandoned its real estate.

Within weeks, the contagion spread to neighboring countries; within months, the fallout forced Russia to default on its sovereign debts.

Long Term Capital Management, a major player in the high-risk derivatives market, went under. Wall Street was on the verge of an unprecedented meltdown. The Dow plunged.

But the U.S. Federal Reserve responded swiftly, opening the money spigots full throttle and temporarily putting out the fires.

Soon, the pundits came out of hiding. They said the crisis was over. They swore up and down that the Fed had won the war.

However, any appearance of victory was deceptive in the extreme. All the Fed had really accomplished was to win a single battle, postpone the inevitable collapse, and in the process, help create another, far larger problem: the Tech Bubble of 1998-1999.

Investors, flush with cheap cash, rushed headlong into worthless IPOs. Harebrained business models prevailed. The Nasdaq DOUBLED in just one year.

Battle #2 began when the Tech Bubble turned into the Tech Wreck of 2000-2002.

Investors dumped their grossly overvalued dot-com stocks. Within weeks, the contagion of selling spread to other technology companies; within months, it spilled over into the entire economy.

Tech Wreck Losses: $6.5 Trillion

According to the above data compiled by the Fed, before it was over, U.S. households had suffered …

  • Losses of $3.6 trillion in stocks
  • Losses of $997 billion losses in mutual funds, plus
  • Losses of $1.9 trillion in life insurance and pension fund reserves

Total Tech Wreck losses: $6.6 trillion. (For the proof, click here.)

This time, the Fed responded with even bigger guns: To avert an all-out deflation, Chairman Alan Greenspan not only dropped interest rates to their lowest level since World War II, but he kept them at those extraordinary low levels for the longest period since the Great Depression.

He pumped cheap money into the economy like never before. He virtually banished the fear of risk. And, as a direct result, tens of trillions in borrowed dollars rushed into the U.S. housing market.

Again, the pundits swore the worst of the crisis had passed. Again, the government claimed it had scored a victory. Again, they were dead wrong.

Battle #3 was the monster born from the ashes of Battle #2: The Fed’s response to the Tech Wreck created the Housing Bubble, which, in turn, spawned the Housing Bust.

And alas, the losses resulting from the Housing Bust of 2007-2009 were 2.4 times greater than the losses from the Tech Wreck of 2000-2002.

Housing Bust Losses: $15.5 Trillion

According to recently released Fed data, even excluding the early real estate losses of 2007, the Housing Bust caused U.S. households …

  • Losses of $6.0 trillion in real estate
  • Losses of $4.4 trillion in stocks
  • Losses of $1.5 trillion in mutual funds, and
  • Losses of $3.6 trillion in life insurance and pension fund reserves

Total Housing Bust losses: $15.5 trillion. (For the proof, click here.)

Combined losses suffered during the Tech Wreck and the Housing Bust: $22.1 trillion.

Yet now, under a new administration, the bailout brigades are up to their old tricks.

For a third time, they’ve retaliated with easy-money fire hoses, this time driving short-term interest rates to practically ZERO.

For a third time, they’ve deployed bigger guns. This time, with bailouts and stimulus that add up to 30 percent of GDP — TEN times more than the average of all prior postwar recessions.

And again, they’ve had the audacity to declare “victory” … to say that the “crisis is over” … and proclaim that the “recovery is sustainable.”

Inevitable result: Another gigantic bubble, another bust, and another round of devastating losses — this time in sovereign government debt (e.g., Treasury bonds).

This is why the collapses of sovereign debt markets in Greece, Spain, and Portugal are so alarming. (See “The Next Contagion.”)

And this is why the Obama budget — including an astonishing $1.6 trillion deficit in the current fiscal year — is so dangerous.

My recommendations are unchanged:

Avoid all long-term bonds, whether issued by federal governments, private corporations, or municipalities.

Approach all stock investments with great CAUTION — tight stop losses, plenty of cash, and solid hedges.

Above all, do not fall for this new deception. Keep your money safe. Make sure you’re not engulfed in the next round of collateral damage.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules