Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Stock Market Dismisses Doom and Points to the Road to Economic Recovery

Stock-Markets / Stock Markets 2012 Mar 03, 2012 - 06:10 AM GMT

By: Doug_Wakefield

Stock-Markets

Best Financial Markets Analysis ArticleOver the last 11 weeks, investors have enjoyed a continuing rising trend in equity markets. If the news pointed to rising tensions in the Middle East, higher cost at the gas pump, debt levels around the world that nations could not sustain, they were all dismissed. The road to "recovery" has spoken in "the markets".


On October 27th, 2011, I released the article Darwin's Deceptive and Dangerous Devices. That day, "European leaders expanded a bailout fund to stem the region's debt crisis", and headlines read "S&P 500 Extends Best Month since '74, Euro Rises". In less than 2 months, on December 21st, the leaders at the European Central Bank hit the electronic switches and handed out € 489 billion Euros ($639 billion) to hundreds of banks across Europe to "shore up the financial system". This was the largest a largest infusion of credit by the ECB into the banking system in the 13 year history of the euro currency. The last day of February, headlines read, "ECB Hands Out $712 Billion in Loans to Banks" and we learned that in a little over two months, more than € 1 trillion (€ 489 billion on Dec 21st + € 529.5 billion on Feb 29th) had been "pumped into Europe's financial system" in an "attempt to stabilize banks, governments and businesses".

$DJW (Dow Jones World Stock Index) INDX

Anyone capable of using the dictionary can find that "stabilize", according to Merriam Webster online, means:

"to hold steady as to maintain the stability of (as an airplane) by means of a stabilizer, or to limit fluctuations of (as in prices).

Now help me out. When a global stock index jumps 20% in 18 trading days in October, and then climbs 17% in 49 trading days over 11 weeks, have markets "limited fluctuations of prices", thus revealing "stability"? When one looks at the same index in 2011, we find that in 12 trading days the price declined 18%, and in 24 trading days it declined 15%. How can anyone look at these dramatic price swings, the longest taking place in a couple of months, and come to the belief that the actions of central bankers and photo opt summits by world leaders are taking place with the intent of "stabilizing" our lives and our global financial system?

$DJW (Dow Jones World Stock Index) INDX

National Debt Graph - 1940 to Present

Evidently, central bankers do not understand that the creation of billions to bailout problems that started in the millions, and trillions to bailout problems that started in the billions, can NEVER lead to stability. This is virtually impossible. And yet, the brainwashing continues.

"Let me begin by thanking the Federal Reserve Bank of Chicago for inviting me to participate in this important conference on the role of central banks in financial stability. As you know, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) assigned the Federal Reserve a central role in the new framework for achieving and maintaining financial stability." [Italics mine] Vice Chair, Janet Yellen, 11/11/11, the 14th Annual International Banking Conference in Chicago

During the two decades preceding the crisis, central bankers and academics achieved a substantial degree of consensus on the intellectual and institutional framework for monetary policy. This consensus policy framework was characterized by a strong commitment to medium-term price stability and a high degree of transparency about central banks' policy objectives and economic forecasts." [Italics mine] Chairman, Ben Bernanke, 10/18/11, The Effects of the Great Recession on Central Bank Doctrine and Practice, Boston

"Addressing a dinner late on Thursday (3/1/12) at an EU summit in Brussels, Draghi (ECB President) told the leaders of the ECB's provision of more than 1 trillion Euros of liquidity via a special loan program had only won them a temporary reprieve and there could be no let-up in reforms. 'It was a subdued message,' said one euro zone diplomat briefed on Draghi's intervention before the 27 leaders. 'He said there were timid signs of stabilization but emphasized that the overall situation was fragile.'" [Italics mine] Draghi Reportedly Says the ECB has done Its Bit, 3/2/12, CNBC

ECB Balance Sheet

Money Morning Australia, 2/23/12 before the 2/29/12 bailout

It is obvious from examining the charts above, that increasing debt and lot's of it, has been the long-term objective of central bankers the world over. To state "central bankers seeking stability" is an oxymoron. The growth of global debt for decades, and the parabolic growth of debt in the last 4 years to replace yesterday's deteriorating collateral from previous debt schemes, screams at any sane person willing to admit that the emperor's clothes have always been nothing more that debt creation to produce more exotic financial instruments that built a global house of instability. Until our universities, our politicians, our religious leaders, and our businesses stop treating these men and women as moral leaders seeking to bring "stability" into our world and lives, we will only see more instability. The smooth markets over the last 11 weeks have made many believe "more debt leads to higher asset values", never even considering the fact that whether prices move rapidly up or rapidly down over a month or two, the story is still the same...more instability. Until millions around the world wake up to the reality that a tiny handful of political and financial leaders are continually telling the rest of us they are bringing order out of chaos, our silence will only move us toward greater instability. Our individual lives continue to move away from stability, and more towards slaves of the state.

Remember, on Friday, September 19, 2008, the headline, Bush Asking for $700 billion Bailout stunned the world. On February 29, 2012, the headline had become, ECB Pumps a Fresh $700 Billion into Euro Banks, and we go about our daily lives as if this is the new norm of "stability".

Could it be, that we don't react to headlines regarding more massive debt injections by central bankers, the only individuals in the world that can make such an action take place, unless markets are caving in?

$INDU (Dow Jones Industrial Average) INDX

$INDU (Dow Jones Industrial Average) INDX

"Long before my election to the Senate I learned two things pretty thoroughly. One was, if you want to get rich - that is, very rich - in this world make Society work for you. Not a handful of men, not even such an army as the Steel Trust employs, but Society itself. The other thing was, that this can only be done by making a business of politics. The two things run together and cannot be separated. You cannot get very rich any other way." The Confessions of a Monopolist (1906) Frederic Clemson Howe, page 69

If you are interested in our most comprehensive research and trading commentary, consider a subscription to The Investor's Mind: Anticipating Trends through the Lens of History.

Doug Wakefield
President
Best Minds Inc., a Registered Investment Advisor
2548 Lillian Miller Parkway
Suite 110
Denton, Texas 76210
www.bestmindsinc.com
doug@bestmindsinc.com
Phone - (940) 591 - 3000
Alt - (800) 488 - 2084
Fax - (940) 591 –3006

Copyright © 2005-2012 Best Minds Inc.

Best Minds, Inc is a registered investment advisor that looks to the best minds in the world of finance and economics to seek a direction for our clients. To be a true advocate to our clients, we have found it necessary to go well beyond the norms in financial planning today. We are avid readers. In our study of the markets, we research general history, financial and economic history, fundamental and technical analysis, and mass and individual psychology.

Disclaimer:  Nothing in this communiqué should be construed as advice to buy, sell, hold, or sell short. The safest action is to constantly increase one's knowledge of the money game. To accept the conventional wisdom about the world of money, without a thorough examination of how that "wisdom" has stood over time, is to take unnecessary risk. Best Minds, Inc. seeks advice from a wide variety of individuals, and at any time may or may not agree with those individual's advice. Challenging one's thinking is the only way to come to firm conclusions.

Doug Wakefield Archive

© 2005-2014 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