Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Consumer Booms Inevitable Bust

Economics / US Economy Jan 13, 2009 - 09:24 AM GMT

By: Oxbury_Research

Economics

Best Financial Markets Analysis ArticleA Nation Named Desire - Classic film buffs will be familiar with the 1951 film – A Streetcar Named Desire – which starred Marlon Brando and Vivian Leigh. My favorite scene in the film involves Blanche DuBois (Vivian Leigh) and Stanley Kowalski (Marlon Brando).

Blanche DuBois is a fallen woman – her family fortune and estate are gone. In an absolutely classic line, Blanche says to Stanley Kowalski - “I have always depended on the kindness of strangers”.


I can think of no better analogy for the current condition of the United States than Blanche Dubois. Here stands the United States, her vast fortunes have been frittered away by a generation of people who followed a doomed economic model. An economy based mainly on consumption simply does not produce any real long-term wealth, only long-term debts.

Now the United States is reduced to, like Blanche DuBois, relying on the kindness of strangers. The US is nearly totally reliant on strangers (overseas investors) to buy trillions of dollars of US Treasury paper just to keep the lights on in the country. Yet most Americans don't even realize this.

Muddled Thinking from Wall Street

The ignorance of some Americans doesn't bother me nearly as much as the sheer arrogance and sense of entitlement of some people from Wall Street. I came across an article this week written by someone from the Point and Profit stock trading service.

In the article, he stated that foreign investors would gladly buy up any amount, no matter how large, of Treasuries the US would sell. Why? Because they “have” to do it to sustain their economies. I wonder if he has ever left the cozy confines of Manhattan?

Here is a direct quote - “They (meaning foreigners) have nothing , they build nothing , they sell nothing without OUR demand”. So he is basically saying that foreigners are nothing without the United States. The whole purpose in life of everyone else on the globe is to merely serve the needs of Americans and to make their Wall Street masters filthy rich.

I think I will send a copy of that article to every overseas institutional fund manager and central banker. I wonder what the arrogant author of that article would think when all of the “worthless, nothing ” people around the globe do absolutely nothing at upcoming Treasury auctions?

Many of these countries that are filled with these “worthless, nothing ” people such as China actually have plenty of money unlike the United States which, like Blanche DuBois, is reduced to relying on the “kindness of strangers”.

More Muddled Wall Street Thinking

I also came across a critical comment about an article written by my brilliant colleague at Bourbon & Bayonets, Nicholas Jones. In their comment, the person said that Nick's analysis on the Fed's money creation was worthless because Nick was ignoring the trillions of dollars lost by the banks.

That person went on to say that it didn't matter that the Fed had created all of this funny money. After all, the banks weren't lending any of it – a liquidity trap. Obviously, this person has swallowed the Wall Street deflation fairy tale hook, line and sinker.

This person should try to do something that Wall Street people rarely do – think outside the box. I don't care how many trillions of dollars that the black hole called bank balance sheets has swallowed up. The Federal Reserve can create many more trillions of dollars than were lost in the blink of an eye. The Fed can literally create an infinite supply of funny money if they so wish.

There is also no law that says the Fed has to go through the banks to get the money to the public. They can easily use Ben's famous helicopter. I can picture it now – armies of uniformed government thugs wearing arm bands saying “US Federal Reserve”.

While black helicopters hover overhead, these armies will go into every American community. Street by street and house by house, the Fed armies will go, giving out freshly printed money to one and all. The only catch will be that the funny money they give out will have an expiration date on it. If you don't spend the money within a few weeks, the money will become worthless.

One consolation however - the money will be pleasant to the eye. The new money will come in the color of your choice and will have a picture of your favorite CNBC talking head on the front. On the back, there will be a picture of Ben Bernanke with the slogan In Ben We Trust in bold letters.

So much for Wall Street worries about a liquidity trap and deflation. It is inflation and the rapidly descending value of the US dollar that people should be worried about.

Even More Muddled Thinking

Here is another interesting tidbit I ran across this week. Michael Lewitt of Harch Capital Management said that the last thing Wall Street “investors” are thinking about when purchasing zero percent Treasuries is reselling them at a profit. Mr. Lewitt said that, in most cases, the Wall Street “investors” are expecting to resell the zero percent Treasuries at a loss.

I would argue that these Wall Street “investors” are NOT thinking at all. Why would anyone in their right mind deliberately make an investment into a security where you know you are guaranteed a loss? I thought the whole idea was to make money.

Oops – I forgot! The whole idea is to make money for Wall Street, not for their clients. These Wall Street “geniuses” are paid exorbitant fees and make millions of dollars a year in salary and bonuses for this type of investing acumen? Incredible!

Why would any individual investor give his or her hard-earned money to these Wall Street money managers? To lock in a guaranteed loss? A better solution for clients of Wall Street firms would be to put their money under the mattress. I think that is what Blanche DuBois would do.

By Tony D'Altorio

Analyst, Oxbury Research

Tony worked for more than 20 years in the investment business. Most of those years were spent with Charles Schwab & Co., both as a broker and as a trading supervisor. As a supervisor, he oversaw, at times, dozens of employees. Tony was trading supervisor during the great crash of 1987 and was responsible for millions of dollars of customers' orders.

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2009 Copyright Nick Thomas / Oxbury Research - 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.

Oxbury Research Archive

© 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