US Gov't guarantees EVERY mortgage, this CRACK cannot be taken away or that market falls apart, is that healthy?
FED has lowered Bank rates to basically 0%, this in turn lowers mortgage rates to historical lows, now after 4 years of this CRACK, can they afford to ever let rates rise?
Savers get 0% on MM savings, this CRACK leads to a BAD TRIP. MARKET is addicted to CRACK rates at 0%. Take it away and the addict will foam at the mouth.
What all this does, is embolden the RISK TAKERS, create worse imbalances, and makes for a pretty lopsided trade. SHORTS serve a purpose, they bring balance and sometimes FUEL for rally....ECB move last week was to BURN shorts, stem EURO weakness.....supply CRACK to the addict.....now maybe this buys time as Doug points out in the previous piece posted, but it only ADDS to the lopsided PUT on the market and rates......each time the addict needs MORE and STRONGER CRACK.....we are nearing the law of diminishing returns.
WHEN CRACK IS SUPPLIED, YOU can't take it away, certainly not suddenly, How do you ease out of a MULTI TRILLION FIX?
My friends, and JACK (my bullish needler), all I want is BALANCE restored, you don't reach sustained economic activity with CRACK, you get it with balance and not with ONLY supporting the risk markets and rewarding wild speculation.
As I said, the FED and ECB have been chasing everyone out of the POOL, and onto the same side of the BOAT....my vision is of the TITANIC.
As in previous attempts to NOT allow the economy to HEAL without excessive intervention...AKA tech bubble, Housing Bubble.....Tulips and on and on.....2 MEN DRAGHI and BERNANKE seem to hold the WORLD in the palm of their hands, that my friends is a SCAREY thought indeed. That's a lot of power between just 2 men.....what if their assinine experiment goes wrong? EVERY BUBBLE in history POPS.....and my thinking is what is perculating now is GOV't DEBT....the biggest bubble of them all.
IT is being MISPRICED, risk is because of all the intervention and manipulation, it just will end badly....I'm afraid.
Already you see how this HISTORIC CRACK is passing by the very economy it is said to benefit, how IRONIC....yet these....2 men persist....more and MORE of the same...NO TURNING BACK NOW>