Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Update - Nadeem_Walayat
2.Will Deutsche Bank Crash The Global Stock Market? - Clif_Droke
3.Gold Price In Excess Of $8000 While US Dollar Collapses - Hubert_Moolman
4.BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017 - Nadeem_Walayat
5.Gold Stocks Massive Price Correction - Zeal_LLC
6.Stock Market Predicts Donald Trump Victory - Austin_Galt
7.Next Financial Crisis Will be Far Worse than 2008/09 - Chris_Vermeulen
8.The Gold To Housing Ratio As A Valuation Indicator - Dan_Amerman
9.GDXJ Gold Stocks - A Diamond in the Rough - Rambus_Chartology
10.Gold Boom! End Game Nears As Central Banks Buying Up Gold Mining Companies! - Jeff_Berwick
Last 7 days
Donald Trump Post Debate Meltdown, Betfair Betting Market Points to Collapse in Odds of Winning - 30th Sept 16
Silver Way Undervalued - 30th Sept 16
Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - 30th Sept 16
After the Debate, the Deluge? - 30th Sept 16
Has Dow Theory Lost its Relevance: Stock Market Ignored it and Rallied to New Highs - 30th Sept 16
Donald Trump Failing to Recover After 1st Debate Hillary Shimmy Loss - Betfair Betting Market - 30th Sept 16
BEA Revises Q2 2016 US GDP Growth Upward to 1.42% - 29th Sept 16
Could the OPEC deal set stage for the Next Stock Market Risk Rally? - 29th Sept 16
Why Trump Lost, Hillary Won the 1st U.S. Presidential Debate - 29th Sept 16
Is a Dollar Crash Imminent After the Senate Overrides Obama Veto on Saudi 9/11 Bill? - 29th Sept 16
2017: Gold and Silver's Year of "Public Recognition" - 29th Sept 16
Did Trump Win the 1st US Presidential Election Debate? - There's Something Happening Here... - 29th Sept 16
FED Goes from ZIRP to NIRP! - 29th Sept 16 - Chris_Vermeulen
Here’s Why You Should Be in Cash Right Now - 28th Sept 16
The Fed Put a 50% Tax on Your Retirement Plan - 28th Sept 16
Massive Chinese Debt And Why They Are On A Gold Buying Binge! - 28th Sept 16
Stocks Commodities and FX Markets Waiting Technically While Fundamental Data Neutral Poised - 28th Sept 16
This Commodity Has Perked Up its Investors' Portfolios - 27th Sept 16
Charting the Continuing Gold Market Correction - 27th Sept 16
Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - 27th Sept 16
Financial Markets and FX Setups 27th Sept - 27th Sept 16
Crude Oil, Forex and Stock Market Trend Forecasts - 27th Sept 16
Why There is Trump - 27th Sept 16
Save Up to 70% in Shopping Expenses for Daily Items - 27th Sept 16
Gold’s Moving Averages and Long-Term Outlook - 26th Sept 16
September Stock Market - The Not So Silent Demise of Deutsche Bank - 26th Sept 16
SPX sell signal confirmed - 26th Sept 16
SPX is testing the next level of support - 26th Sept 16
Outrageously Entertaining US Presidential Campaign Final Stages - What Happens Next? - 26th Sept 16
BoJ, FOMC and Where To Now? - 26th Sept 16
Stock Market New All Time Highs Next - 26th Sept 16
Why Trump Will Win US General Election 2016 Prediction Forecast - 26th Sept 16
Martial Law Rolls Out Across the US As Jubilee Nears - 26th Sept 16
Stock Market More Correction Likely - 25th Sept 16
US Presidential Election Forecast 2016 - Trump Riding BrExit Wave into the White House - 25th Sept 16
US Economy GDP Growth Estimates in Free-Fall: FRBNY Nowcast 2.26% Q3, 1.22% Q4 - 24th Sept 16
Gold and Gold Stocks Corrective Action Continues Despite Dovish Federal Reserve - 24th Sept 16
Global Bonds: Why Our Analyst Says Things Just Got "Monumental" - 24th Sept 16
Where Did All the Money Go? - 23rd Sept 16
Pension Shortfalls Could Be 4X To 7X Greater Than Reported - 23rd Sept 16
Gold Unleashed by the Fed - 23rd Sept 16
Gold around U.S Presidential Elections - 23rd Sept 16
Here’s Why Eastern Europe Is Doomed - 23rd Sept 16
Nasdaq NDX 100 Big Cap Tech Breakout ? - 23rd Sept 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

U.S. Economy Dancing On Quicksand

Economics / US Economy Jul 12, 2010 - 03:49 PM GMT

By: Bob_Clark

Economics Best Financial Markets Analysis ArticleDo not attempt to adjust the picture. We control the horizontal and the vertical.
(Old outer limits TV show intro)
 
Bernanke speaking to the heads of the reserve banks.


"Pssst, want to make a trillion dollars. We control government policy. We control fiscal and monetary  policy and we will tell you where we are headed with our policies.  They will be the opposite of what the majority is expecting.  We will change direction when the consensus is extreme and the other side of the trade is available so we can take on huge new positions. Then we will switch course.  It is risk free and the gains will be spectacular. They will help us survive this financial debacle."  Question from a bank president. "But what about the citizens Ben?" Bernanke replies. "To hell with them"

When the government is manipulable it gives new meaning to the concept of a contrarian trade.

We will all be rich

It used to be that only a few countries could be wealthy, the United States was rich because it had  became a manufacturing super power at the same time as it took advantage of third world countries by having it's multi national corporations, protected by the CIA,  drill for oil, strip off various minerals and resources and keep all the profits. Sure they would throw the local dictator a bone now and then and keep him in power but most of the cash ended up leaving the country. They operated a protection racket on the Saudis for example to get cheap oil.  Before the United States, Britain was the master of the world, through their military land forces and navy they brought the world to heel and basically pillaged it's resources.

Now the conventional wisdom is that everyone can be wealthy at the same time.  All we have to do is wait until China and India  grow into financial super powers then we all become rich. This at the same time that resources become rarer.  That is crazy talk, globalization floats on a sea of debt,  to me we are being sold a load of bull.

Lets double dip 'em

Things just do not add up, at least not if you are looking for benevolence.  The bailout has been mainly directed at the banks or the money has funneled down to them.   Is this new austerity idea an ongoing way to help the big banks make it through this crisis? It seems clear the Fed does not want it's reserve banks to lend to anyone unless the government is backing the loan.  The Fed is continuing to hold junk debt from the reserve banks and pay interest to otherwise insolvent banks, government money I might add. This is a clear effort to make banks profitable, risk free, at a time when lending money is clearly not a profitable business.  They are intentionally preventing the banks from making loans to the public and small business by paying out on deposits that are risk free.

Here's the thing, they could easily stimulate the economy by simply not paying interest on deposits held at the Fed.  This is a big, obvious silver bullet but it seems to me they are so fearful of economic conditions that they have no intention of using it.  A slow down will give even less reason to lend.  

There is an even darker take on what is happening.  It is that the Fat boys are using a weak President and a government full of hacks to swing the economy around and yo-yo the fundamentals that effect and stimulate the way money managers invest people's money.  They are doing it  after taking the other side of the all those money  managers trades and essentially stealing the money, with no intention of helping the little people on main street. Now in hindsight it seems clear the plan was never to restore prosperity but to swing toward austerity.  Keep in mind austerity is just another word for hard times.  That is why the banks were not lending. 

When you factor in malevolence things start to make sense.

The whole thing stinks. 

In hindsight the austerity plan has been known to the big boys for awhile, the bond market is starting to look like a replay of the stock rally from the March of "09" lows.

Again, it seems like they set it up and will now make it look like something else caused it. 

 
 
Neither borrower nor a lender be

The bankers are not Keynesian or Austrians or Globalists, they are greedy bastards, period.  They have developed what is essentially a fascist partnership with their government lackeys. They don't give a rat's asset about the people. Think about this, in a depression the banks that made high ratio loans should be out of business by now.  Are they?  No, in fact they are declaring record profits in many cases.  Ask yourself why. 

Could it be that they loaded up on stocks when everyone else was selling. Why did they do that at that time?  Could it be they knew the fix was in and huge torrents of cash were coming and  would be directed into equities? Talk about insider trading.

Now they have loaded up on government debt right on the lows as the worlds financial geniuses were saying that they were the short of the century, certificates of confiscation.  

The investment community has been sandbagged again. 

In the chart below I shifted the bond ETF chart over so the lows line up.  You can see how similar they are.  If you look at a recent chart of the SPY and line it up with the bond chart on a real time basis you will also see they were dumping stocks to roll into bonds long before talk of austerity, in fact they were doing it as Europe thrashed in potential death throes. Hardly a time to be thinking of austerity.

 

Contrary to popular belief.

Some financial web sites have reader counters that tell how many people have read each contributor's articles and I have checked my readership in the past.  I found it surprising that sometimes 5 to 6 thousand people had read a single piece I had written on just one site.  I have found that the more ominous or alarming my title the more hits it gets. That suggests that there is a dark cloud of fear and nervousness overhanging society.   It also shows that investors are searching for an edge, something that will help them make safe, profitable investments. It makes another thing crystal clear, most investors don't have a clue what they are doing.

Of course there are many readers that simply have an interest in economic matters and just enjoy reading and discussing these things but I think many are actually looking for help.

This is very disturbing because I read the same articles looking for strong commonality and consensus.  Then I look for trades going the opposite way.

If this austerity program  makes the banks stronger as the little guy goes under for the third time, I will not be surprised.

Remember Yo-Yos? The Fat Boys clearly do. Think as a contrarian, question everything you read, trust no one.

Bob Clark is a professional trader with over twenty years experience, he also provides real time online trading instruction, publishes a daily email trading advisory and maintains a web blog at www.winningtradingtactics.blogspot.com  his email is linesbot@gmail.com.

© 2010 Copyright Bob Clark - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 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

Catching a Falling Financial Knife