NEW ERA OF GROWTH AND PROSPERITY?

Exhibit A http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10709

"Deleveraging – the process of unwinding the economic damage wrought from years of excess - will be a quite arduous economic process; one that will commence at some unknown date in the future. Oh, I guess I failed to mention that total (financial and non-financial) Credit ended Q2 at a record $55.031 TN, or 353% of GDP. And Rest of World holdings of our financial assets ended the quarter at a record $19.100 TN, a $3.860 TN increase from the end of 2008. "

Exhibit B

http://www.mauldineconomics.com/frontlinethoughts?utm_source=newsletter&utm_medium=email&utm_campaign=frontline

"In 2010, the number of Federal Register pages devoted to proposed new rules broke its previous all-time record for the second consecutive year. It's up by 25% compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business."

So we have world Central Bankers printing money like there's no tomorrow, and it is the OPINION of many letter writers that YOU "have to be in stocks for long term...." BUY NOW AND BUY OFTEN!

It is hard to argue the success of current policies for inflating Risky assets. But the whole idea of Bear Markets and periods of reconciliation are that the preceding excesses are cleansed and we acan start anew, REAL GROWTH, a REAL ECONOMY.

Is it any wonder, while some who come here and post how great the stock mkt is, how I'm missing the boat, is that THEY are missing the point of my blog.....the greater risk IMHO is not understanding the greater issues and what might their impact be at some point.

I can't predict THE TOP or when the TIPPING POINT will arrive, what I am saying is current policies are aimed at one sector, STOCK PRICES, and a WHOLE LOT OF AMMO has been used to gain higher prices, but what has been the EFFECT on the overall economy?

Higher spending, consumption.....and a LOT of it is Gov't, but stock prices back to near record highs has increased Household wealth. Housing prices had been a more stable storehouse for personal wealth until the BUBBLE....again created by reckless FED policy of unusually LOW Interest rates held low for TOO LONG, in the face of OBVIOUS price speculation that only after the crash was anyone complaining.

ALL this money thrown at the core problems? Is creating even MORE and larger dysfunction, and total credit market debt is still near 350% of GDP....for now the DAY OF RECKONING has been pushed back.......looking at these 2 charts, especially the one showing debt in 1929 (we know what happened next) and where we are standing today......DO NOT LOOK DOWN!

Duratek

INCONSISTANCIES

Ever since I started my blog, my goal was to educate, to light a fire under the avg person to try to be in more control of their financial destiny.

Depending on your age, and goals you would perhaps look at your investment future differently. I will make it clear again, my goal is not to give you any advice, and everything I post is just my opinion, and articles posted I share opinions, charts of others.

YOU should not make ant decision based on what I think, of course as any writer would suggest, you should work with a financial advisor, professional and make it clear what your objectives are.

I believe we are in a SECULAR BEAR MKT, so that means over a LONG period of time stocks are in for a rough ride. These long term trends can last longer than you think, some of that depends on how hard OTHER FORCES, like the FED fight the prevailing trend.

ALL a BEAR MKT tries to do is RESET things, return the economy and market to a balance, a natural balance so REAL GROWTH can return and the previous imbalances and speculation, excesses can be healed so we can start anew.

This Bear has been fought like no other, HISTORIC, NEVER BEFORE SEEN measures have been taken by the Gov't and especially the Federal Reserve which has overstepped its mandate.

It IS NORMAL to experience periods (CYCLICAL BULLS) of 3 years or more of counter trend rallies and bullish periods, stocks usually react positively to FED MEASURES.

My personal finances aside, I am VERY CONSERVATIVE, so what I do (which I don't usually publish) may not be for everyone.

One of the MORE difficult things to do is ride the bull, especially while it undergoes a shakeout, draw down...like in early 1998 right before one of the greatest rises in stock wealth ever seen in such a short period of time. FED INDUCES TECH CRAZE...worries over Y2K....1998 crash..but that wasn't sustainable, nor was 2003-2007....each time with more disastrous results.

SO either I am 100% WRONG for worry now, and we have sustainable recovery built on SOUND economic policy......or the mother of all shit will hit the fan based on the level of attack fighting the inevitable reconciliation which will bring us to ground zero and true healing to build again from a sound base.

Duratek

HOUSING LEADS US ECONOMY OUT OF RECESSIONS....EXCEPT THIS TIME!

Housing has led the economy out of every Recession:.......until now. Stocks are what is supposed to lead us out? What is targeted by the FED?

With 30% of US homeowners underwater, all that has been done is keep them indebted, transfer debt to the FED, give Treasuries to the deadbeat Banks, bailing them out, in turn they buy stocks, gold....Fed and govt buy ALL US mortgages....stocks are targeted....manipulated

There is your answer why so many remain unemployed, if the economy dips down again, what tools are left to combat it?

WTF happened to all those m'fers who cheated and were a part of this financial disaster certainly committing felonies against the people?

JUSTICE? NOT ONE TRIAL, NOT ONE CONVICTION.

The Gov't represents the people?

D

TOWER OF BABBLE

http://www.oftwominds.com/blog.html

"If the Fed wanted to "save" housing and not the banks, why not buy mortgages directly from homeowners?"

QE3 AND SOMETHING IS WRONG

Why would OIL and the Transports fall after the QE3 and DOW rise to flat?

D

SOME REALITY TO PONDER

WEAK MANUFACTURING DATA GLOSSED OVER?

http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

QE3 BOOST A HOAX?

http://finance.yahoo.com/news/steep-slide-oil-prices-shows-070648288.html

Crude oil's biggest drop in two month's this week signals investors are deeply skeptical about whether recent stimulus efforts by global central banks - including last week's announcement by the U.S. Federal Reserve of a third round of quantitative easing - will have a meaningful impact on restoring growth, analysts and traders told CNBC.

The positive effect of the Fed's much-awaited stimulus announced last week wore off more quickly than many thought in the oil markets, which are considered a leading indicator of future economic activity.
"The oil market is telling us there is not much faith in another round of QE," said John Licata, Chief Energy Strategist for Blue Phoenix Inc., an independent energy research and consulting company.

QE3 WILL WORK?

http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10707

US IN RECESSION NOW?

http://www.safehaven.com/article/26926/ecris-lakshman-achuthan-says-us-in-recession-now-that-makes-three-of-us

BEARISH BROADENING MEGAPHONE TOP SPX 1550 STILL IN PLAY?

WE NOW HAVE A BOOM?

http://finance.yahoo.com/news/marc-faber-were-bernanke-resign-104243316.html

"Central bankers are "counterfeit money printers" and Federal Reserve Chairman Ben Bernanke should resign for messing up the U.S. economy so badly, Marc Faber, author of the Gloom, Doom and Boom, told CNBC on Friday.
He said Bernanke was one of the main proponents of an ultra-expansionist economic monetary policy that was to blame for the latest financial crisis.
"If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous - it doesn't work that way. It's a temporary boost followed by a crash," Faber said."

ANother Headline/story

World Stocks Jump on Fed Pledge for U.S. Economy

AP
World stock markets bounded higher Friday after investors got just what they wanted — big moves by the Federal Reserve to help the U.S. economy out of its funk. More »

Problem is, this move creates asset bubbles, moves stocks, does LITTLE or NOTHING for job creation....I Love a bull mkt like the next guy..I'd rather see people get jobs and a sustainable recovery.

Ask yourself this WHY WOULD THE TARGET THE STOCK MKT NEAR ITS HIGHS?

D

FUNNY HOW WHEN ECONOMY FALLS SHORT IT"S ALWAYS "UNEXPECTED"

• 

  Consumer Credit Falls Unexpectedly in July ReutersConsumer credit fell in July for the first time in nearly a year as Americans reduced credit card debt, a worrisome sign for the economy.

I've said it once, if I have to say it 1,000 X's, Investors are set for a FLEECING.

D

SURE, MORE QE PLEASE, BUT

Can the Fed Suprise Markets Without Disapppointing Them?

Breakout
The minutes may have been stale, the Jackson Hole speech uncertain, but the August payrolls report last Friday was crystal clear in its warning on jobs.

**Problem is, preserve some jobs? Maybe....CREATE LOTS OF JOBS? NO. QE has one purpose and only one purpose, to goose stock markets. While in and of itself not a bad thing in the short term, this is CRACK, artificial sweetner.....and it WILL LEAVE a bitter after taste

D

CRACK ADDICT

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>

D

"DIVERGING LIKE IT'S 1929" Doug Noland

"Importantly, traditional rules and analysis no longer apply. Monetary policy has been locked in super ultra-loose mode now entering an unprecedented fifth year. Here in the U.S., financial conditions can’t get meaningfully looser. The Federal Reserve has pushed corporate and household borrowing costs to record lows. Liquidity abundance will ensure near-record 2012 corporate debt issuance. “Loose money” has already had too long a period to impact decision making throughout the economy – with decidedly unimpressive results. Arguably, previous unfathomable monetary measures some time ago created dependencies and addictions that are increasingly difficult to satisfy."
http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10705

5 years of EASY money policies with unimpressive economic results. Unemployment goes down as job seekers give up in droves. What more can be done? A most noted wise man once said taxing is not the answer its the government spending that is the problem.

Year after year, the US must borrow $1Trillion plus, we now owe over $16 TRILLION, and what happens is near 70% of the gov't budget is used to pay JUST the interest on the debt. This is NON PRODUCTIVE.

We are LOCKED into a war in Afghanistan that President Obama is too stupid to figure out cannot be won, costing precious lives and gobs of money. Did he forget to look up the Soviet's experience? or anyone who has tried to roll over that country.

What DOug's essay goes into detail is to try to explain that now the US and WORLD eonomies (and stock markets)  are addicted to QE like a CRACK ADDICT.

The direction and gains in world indices are in stark contrast to what feet see on the ground.

Only one of 2 things can happen, a CRASH in the stock market, or a ROUSING revival of world economies, which will it be?

Duratek

CALL ME CRAZY

But did today's advance only make the divergences that DO exist even that MORE foreboding?

For you EW's out there http://danericselliottwaves.blogspot.com/2012/09/elliott-wave-update-6-september-2012.html

ECB ACTION A "GAME CHANGER"?

SHIPPERS ARE NOT ACTING RIGHT.

"What FedEx had to say was in many ways not too surprising. Weak growth worldwide, with a Europe still in crisis and a slowing China, has crimped revenues for the company, forcing them to lower earnings estimates for the first quarter."


YRC Worldwide Inc. "has shrunk its headquarters staff from around 2,000 to less than 400 as the company tries to streamline its operations."

LONG BEACH, Calif. " (AP) -- UTi Worldwide Inc. reported Thursday that net income fell 17 percent in its fiscal second quarter as a weak economy hurt demand for freight services. CEO Eric W. Kirchner said companies were "increasingly careful" about spending on freight and logistics, and he doesn't expect weak trends to change in the second half of the year."

GAME CHANGER??

Jacob Kirkegaard of the Peterson Institute for International Economics says the plan is not a band-aid and "really does have the potential to be a game changer."
Here's how it will work: The ECB will buy unlimited government bonds so long as that euro zone government complies with an economic reform program approved by the euro zone leaders. The ECB, in turn, will offset those purchases by taking an equal amount of money out of circulation, keeping its mandate to maintain stable prices.

"WHEELS COMING OFF CART FOR CHINESE ECONOMY?

http://finance.yahoo.com/news/wheels-coming-off-chinese-economy-185524157.html

"And because the growth of electricity historically outpaces the growth of the economy, it means the economy can't be growing more than zero," he added.
"If you look at the manufacturing surveys, the price indices, they suggest zero growth, as do the mountains of copper in the car parks and the iron ore in the graineries."
Chang, author of "The Coming Collapse of China," said other headwinds, such as an anti-reform government, will also hurt its economy.

"After 35 years of growth, the wheels are coming off the Chinese economy," he said.

"DEBT DESTROYS EVERYTHING" by Martin Armstrong

http://www.martinarmstrong.org/files/DebtDestroysEverything/index.htm

"Obama is preaching the destruction of the middle class small business owner in order to pay that pound of flesh now demanded by the bankers. He ignores the fact that almost 70% of the entire accumulated national debt went to interest payments to the bondholders – not to improve the lives of people. This idea of socialism has in itself been a lie. For you see, the numbers do not lie. The bulk of the national debt has been interest payments not to help anyone but the moneylenders. He preaches "socialism" while practicing the hypocrisy of lining the pockets of the New York bankers. MF Global will not be prosecuted. Why? Corzine is his buddy?"



Bottom line is out of one side of his mouth our President preaches equality, socialism and the EVIL of Wall Street, while his #1 contributor is Goldman Sachs? WHILE the FED chief under his rule has made it so the AVG American cannot find yield, but same FED chief has publicly admitted he has targeted the stock market for appreciation for its "WEALTH EFFECT"

Who benefits the most when stocks go up? Who owns more stocks? You guessed right, the wealthy. The Conservative saver, retires person, or the avg person with some stocks in his IRA benefits the least, and the SAVER is penalized.

They have it now, where you are literally FORCED into RISK ASSETS in a YIELD STARVATION environment, even as it is shown, that current policies are NOT putting enough people back to work, but it IS LINNG THE POCKETS of the bankers, INSIDERS, and Wall Street Elite.

Here is another good read http://www.mauldineconomics.com/frontlinethoughts?utm_source=newsletter&utm_medium=email&utm_campaign=frontline  "The consequences of easy money policy"

"I missed the part where Congress gave the Fed a third mandate, to target the stock market. But Bernanke not only takes credit for the stock market, he points out that the rebound in the housing market is also due to Fed policy, because it fostered lower mortgage rates. Which it did. But let's also remember that it was Fed policy that helped create the housing bubble to begin with. Which I don't remember Bernanke taking credit for, even though he was on the Fed then and up to his eyeballs in supporting that policy."