Saturday, October 09, 2010


"Finally, whatever actions the Fed takes in the name of further stimulus will have the same unintended consequences as all previous stimulus efforts: Long-term sustainability will be sacrificed in favor of a short-term boom. Since World War II, the underlying strength of the U.S. economy has allowed the central bank to get away with this strategy, as the economy simply outgrew the inefficiencies caused by monetary manipulation. But what happens when we are in a period of secular decline?"

In last 10 years we have suffered thru 2 brutal bear markets, leaving us with investments in general BELOW what they were 10 years ago. BOTH times the FED fought these "slowdowns" with near 0 interest rates, first to 1% they created, propagated and stimulated the housing bubble which bevame the FINANCIAL CRISIS.

Currently they did even more, wehave 0% rates, 4% 30 year mortgages, $2 TRILLION FED balance sheets (most crap), FED deficits soaring above $1 TRILLION per year, cash for clunkers, first time home buyer credits then extended to everyone, GSE's are 90% of all mortgages which the public guarantees, 2 years of gov assitance for out of workers,

$800 Billion of direct GOV stimulus, POMO actions by FED directed at the stock market, and so on......we can directly LINK all of these to the increased SPX profits, which have eased recently.

BUT, unemployment "OFFICIALLY" sits at a liars stagnant 9.6%, Gallup poll said it is cuurently above 10%, U6 says closer to 20% ! IS IT GOV PAYMENTS that PROP UP CONSUMER SPENDING?

INCOMES are stagnant, work week not growing, housing does not support HELOC'S which drove consumer spending during the boom, many are taking OUT retirement funds and not putting in plus all those lost jobbers are not saving? playing the markets?

Gold has soared to new highs, bonds near PANIC lows for 10 year, ALL TIME HISTORIC LOWS for the 2 yr .36% !!!!!!!!! I have showed the link between yield and stocks for last 10 years, that has been broken for more than 6 months.
Suffering continues for many, but not for those connected to thenow MUCH too much bigger to fail banks

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