Tech Bubble was replaced by the Housing/ Mortgage Bubble, which has been replaced by the the Gov't Finance Bubble.....while THE US is not Greece (as Doug Noland points out) where Sovereign debt collapse caused short term rates to rocket from 2% in 2009 to over 23% last week!......The S&P warning on our debt is not being taken seriously by the RISK markets..... I mean here we are issuing RECORD amounts of debt, and 10 year yields are below 4%..>WHY WORRY?
Gov't debt has taken the place of speculative mortgage debt, and with 2012 elections not that far away, what programs will officials agree to cut?
The MAIN driver of our economy is HOUSING, not the stock market, and it lies LIMP as a Chinese Pad Thai noodle. IN excess of $TRILLION was taken from home equity during the boom and used for consumption.....the FED and GOVT now conspire to fill the void....stock market gain are great, but it only covers a much smaller cross section of Americans.
We are 2 years plus into Recovery and still have a 4 week moving avg of unemployment claims near 400,000. Companies were eager to cut overhead and now reluctant to add them back.....if they believed we had a sustainable recovery would they hesitate?
Commercial construction is at a near standstill. Baby Boomers have lost big in their one main nest egg to retirement, their home equity.....and downsizing to retirement is on hold for many as they cannot sell their homes.
FED zero interest rate policies have not had the desired effect on housing so conspiring with the PLAYERS, their sights were set to where they could manipulate an outcome......when growth does not come from ORGANIC means, but from outside stimulus and manipulation it is doomed to fail.
Once supposed stabilization of Financial System was accomplished (outward appearance) why continue with FED GAMING? why not look for a more NORMAL functioning and FREE MARKETS?
WHY continue the policies of today when INFLATION is evident in every corner? SILVER Hit new high today rising $3 PLUS!! to over $50 an ounce...OIL is over $112 and other commodities as well near or at all time highs.
Is the FED still fighting DEFLATION and why....The answer might be as well as the time is here or near of the policies doing MORE HARM THAN GOOD, and in a corner they are with NO WAY OUT.
The FED might say they can UNWIND what they have done.....what is going to happen should they go to a net seller and not buyer of Treasuries through direct or INDIRECT purchases?
WHO will replace the $600B plus of Treasury demand.....and what is the likely course of interest rates down the road when the Gov't Finance Bubble POPS as all Bubbles do?
Europe weakness will send demand our way? We are not as bad off as them? (what many experts say). EVERY Bubble has limits, maybe we are not there yet, but it doesn't take much observation to see the NEGATIVE effects of the current policies and that they HURT not help the avg person.
If, like the GOOD OLD DAYS, you depended on getting a decent return for your deposits in savings, those days are dead and gone. There is ONE GAME in town, and that is the inflation play and forced entry into RISKY ASSETS or......THE US $ is again under 74.......anythnig we buy in US $'s goes UP as IT goes down....deleting much of the positive effects of said FEd and govt policy
Duratek
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4 comments:
If the FED was willing to go through so much to inflate, why did they ever let the DOW fall from 14,000 to 6500?
Why are they doing all this now?
Either they are total idiots or great manipulators who have been controlling this country since 1913.
They DONT set policy, they react....the market forced their hand.....step in or who knows what (in their mind)....they supplanted other demand for speculaation and debt....total idiots maybe not....not raving genius either....BOOM BUST cycles are coming in very short time frames now, ever since FED policy hit extremes
They dont necesarrily "LET" anything happen...but are happy to step in and fluff it up again....nothing is for free though...."doing it now?" bail out the insiders and banksters of course
@anonymous: if you look back at central bank history you can certainly make the case for manipulation/conspiracies. but its not just the US fed. Most central banks play the same game. First step is extension of credit. The hot games are commodities, stock markets (tulips in one instance) and housing. The government will actively help the Fed to achieve the bubble (think first time home buyers credit). Once the bust comes here comes the Fed riding to the "rescue". The government also benefits from the central bank buying of bonds which they can use to please their campaign contributers or pay the military industrial complex to blow stuff up else where. Meanwhile the big boys close to the fed benefit from the huge sums of money flating around at insane low interest rates. They are not idiots but sometimes I worry they might lose control of the markets sometimes.(hyperinflation ends the game . by that I mean that even big players will find the wealth they amassed by raping the general poplulation worthless). So yes the big players and the govt both benefit from these games.
And its not limited to the US. Take a look at iceland, Ireland etc. The game is in full swing in Canada, Australia, India, China among other places right now. I refer you to read the blog by Steve Keen debtwatch for info on the Australian bubble and Garth Turner greaterfool.ca for the Canadian story. Of course "its different there now". Commodities always go up. China is going to the moon etc etc
@Duratek its distressing to see the moral hazrd building up thrughout the bailouts (S&L, LTCM, Nasdaq, Housing). It was nauseating to hear Goldman Sucks CEO say hes "doing Gods work". After all the misery they have caused the least they could do is accept responsiblity and apologize.
For Australia I like the Privateer Bill Buckley puts a nice piece together.
Yes all the CB's can come into the game, most have pulled back and our FED is doing th eheavy lifting.
Insiders are taken care of first, Hank Paulson saw to that, not the others will, Obama really didn't bring in too many outsiders who could have gotten a new set of eyes on a lot of issues...big dissapointment.
Instead of steady growth the FED under Greenspan and Bernake have give us more bubbles and busts then under any other time frame....they didnt learn from 2000 so they did it all over again...this time keeping rates even lower for an even longer period of time, well its still on.
This action is fueling inflation across the free world, what is being fought here by the Fed is LOW inflation or Deflation....first from housing values, then stocks followed...housing still at worst levels and stocks they did goose pretty good..
But now the money is getting loose and they cannot control it, also attracting speculators...pushing commodities even higher,
In a free mkt system interest rates would have risen on their own from demand and there would not have been a housing bubble...I POINT finger directly at the FED for that.
In the meantime everyone speaking is not telling the truth, misrepresenting the data...telling half truths....most cannot tella lie from truth avg Joe very confused.
The FEd is actually selling bonds to the big houses, which they buy with the 0% money....and then that gets into speculative areas....so they say the are not directly monetizing the debt...a half truth
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