Best of the Week
Most Popular
1.SNP Offers Labour Deadly Death Embrace Alliance, Holding England to Ransom, Destroy UK From Within - Nadeem_Walayat
2.Gold And Silver – Most Widely Used Currency In Western World? Stupidity - Michael_Noonan
3.Election Forecast 2015 - Coalition Economic Recovery vs Labour Collapse - Nadeem_Walayat
4.Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - Nadeem_Walayat
5.Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It - Mike_Shedlock
6.Leaders Debate Election 2015 - Natalie Bennett Green Party Convincing Anti-Austerity More Debt Argument - Nadeem_Walayat
7.Labour Economic Collapse vs Coalition Recovery - UK Election Forecast 2015 - Video - Nadeem_Walayat
8.China’s Stock Market Mania; How High can Red-chips Fly? - Gary_Dorsch
9.Gold and Misery, Strange Bedfellows - 31st Mar 15 - Dan_Norcini
10.Ed Miliband Debate Election 2015 Analysis - Labour Spending, Debt and Economic Collapse - Nadeem_Walayat
Last 5 days
Gold & Silver Alert: Silver Stocks’ Signal - 20th Apr 15
Now is the Time to Buy Resource Stocks, Especially Gold Equities - 20th Apr 15
DJ Transportation & Utility Averages Suggest Stocks Bull Market Is Over - 20th Apr 15
Crude Oil Price Bull Market Hope - 20th Apr 15
Stock Market Bears Get Slaughtered Despite Greece Counting Down to Grexit Financial Armageddon - 20th Apr 15
The Rise of the Paper Machines - 20th Apr 15
Gold and Silver Inflection Point - 20th Apr 15
SP500: A Butcher's Stock Market (Chop Chop Chop) - 20th Apr 15
Are Stock Market Bears Slowly Gaining Control? - 20th Apr 15
Sugar Commodity Price Bear Rally - 19th Apr 15
Avoid the Spread of the Stock Market "China Syndrome" - 19th Apr 15
Stock Market Going Nowhere Fast - 19th Apr 15
An Easy Way to Profit From the Two Biggest Trends in the Stock Market - 19th Apr 15
No Scripture Is Divine, Authentic and Beyond the Creation of the Human Brain - 19th Apr 15
Inflation, Central Banks, and Business Cycles - 18th Apr 15
Stock Market Correction May be Nearing End - 18th Apr 15
UK Housing Crisis, Immigration, Population Growth, Election Forecast 2015 - Video - 18th Apr 15
Q1 Corporate Earnings Risky for Stocks - 17th Apr 15
US Stock Market Getting Scarier by the Day - 17th Apr 15
Stock Market Watershed Day - 17th Apr 15
Gold Price Has “Hallmarks Of Market That Is Bottoming” - 17th Apr 15
Chinese Stock Market - Men Go Mad in Herds - 17th Apr 15
Two Stocks Offering Investors High Yields and Profits - 17th Apr 15
Gold Price Has “Hallmarks Of Market That Is Bottoming” - 17th Apr 15
Chinese Stock Market - Men Go Mad in Herds - 17th Apr 15
Two Stocks Offering Investors High Yields and Profits - 17th Apr 15
King Dollar Hurting Stock Market Corporate Earnings! - 17th Apr 15
Production Declines Hide Bigger Crude Oil Storage Issues - 17th Apr 15
Top Three Takeaways From Today’s OPEC Crude Oil Report… and How You Can Profit - 17th Apr 15
How to Profit from Australia's Healthiest Biotech Stocks - 17th Apr 15
What Is Really Driving Gold Price? - 17th Apr 15
Will Ever More Boomers Selling Retirement Assets Change Investment Prices For Decades? - 16th Apr 15
Won't Be Contagion with 'Grexit' Greece Euro-zone Exit - 16th Apr 15
Sharp Decline in USD/CAD and Its Consequences - 16th Apr 15
Blackstone is like Apple, Google, Hermes, Boeing - 16th Apr 15
The Most Dangerous Financial Headline I've Seen Since the 2008 Crisis - 16th Apr 15
Is Legal Tax Avoidance Extinct in the UK? - 16th Apr 15
Why Russia Will Send More Troops to Central Asia - 16th Apr 15
More Thoughts on the Current Crude Oil Market - 16th Apr 15
U.S. Treasury Secretary Warns Greek Exit Will Cause Enormous Disruption and Hardship - 16th Apr 15
The Hottest New Place to Find Stock Dividend Income in Q2/2015 - 15th Apr 15
How to Escape the Pensions Squeeze - 15th Apr 15
Water Crisis Game Changing Water Revolution - 15th Apr 15
The Drying of California - Corporate Farms Control of Water - 15th Apr 15
OPEC Going Broke, Dumping U.S. Dollars. Is That Good Or Bad? - 15th Apr 15
OPEC Just Confirmed It’s Losing the Oil War - 15th Apr 15
Four Uranium Companies Poised to Profit from the Growth of Nuclear Power - 15th Apr 15
Stock Investing Tread Softly… and Carry a Big Risk-Management Calculator - 15th Apr 15
Crude Oil Price Technical Outlook - 15th Apr 15
Important Bitcoin Price Action - 15th Apr 15
UK House Prices, Immigration, Population Growth and Election Forecast 2015 - 15th Apr 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Historic Bubble

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.


© 2005-2015 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

Free Report - Financial Markets 2014