DOUG NOLANDS TAKE

http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10562

"But let’s not digress… What we do know is that acute market instability has again reared its ugly head. Policymakers are reacting, of course. To this point, policy measures have succeeded in thwarting a breakdown. I am skeptical that policymaking will so easily stabilize the markets. The Fed’s move to pre-commit to “pegged” zero rates for a couple more years may somewhat benefit the leveraged speculating community – while throwing a volatile mixture on the Treasury Bubble. But who believes this is fair to savers or the right medicine for our economy? And Europe will be walking a tightrope, as they struggle to support the faltering periphery without imperiling the system’s core. And as contagion effects continue to mount, it will come down to the markets’ view of the German taxpayer’s willingness to backstop the continent.

Sovereign debt crisis means all the easy solutions have been expended – and all the proven and conventional ones as well. When former Federal Reserve Vice Chairman Alan Blinder was asked to comment on National Public Radio about the Fed’s new rate policy, he chuckled and said “they’re desperate.” I’ll assume it was nervous laughter. I will also presume that the marketplace will be increasingly unnerved that desperate policy measures risk destabilizing already highly unstable global markets (5% daily swings in equities; abrupt 4 point moves in bonds; 5% in currencies…). Are there any “safe havens”? There were in ’08. And all this equates to myriad market and economic uncertainties, including the risk of ongoing de-risking and de-leveraging. Best I can tell, the strongest bull argument going is that governments will support the markets. Well, the markets are in a world of hurt when that faith evaporates. This wasn’t much of an issue in 2008."



John Mauldin's "Beginning of the end game"