Tuesday, September 30, 2014
Why Is China Hoarding Gold? Alan Greenspan Explains
This is more evidence Greenspan believes gold is money, despite his official anti-gold quotes as the former Fed Chairman.
http://www.zerohedge.com/news/2014-09-30/why-china-hoarding-gold-alan-greenspan-explains
http://www.zerohedge.com/news/2014-09-30/why-china-hoarding-gold-alan-greenspan-explains
US Regulators Fear "Runs" From PIMCO's Systemic Risk As Outflows Soar To 12.5% Of Assets
PIMCO is the world's largest bond fund. With Bill Gross's "resignation" (he knew he was going to be fired), the outflow of funds is accelerating. A "run" on bonds means there will be panic selling.
Finance 101: when bonds sell off, bond yields (interest rates) rise. This will not only burst the bond bubble, but certainly the equities bubble.
The money authorities ("plunge protection team") will absolutely work into the night to try to prevent this. Gross's departure from PIMCO could be the black swan event. That's how fragile financial markets are.
http://www.zerohedge.com/news/2014-09-30/us-regulators-fear-runs-pimcos-systemic-risk-outflows-soar-125-assets
Finance 101: when bonds sell off, bond yields (interest rates) rise. This will not only burst the bond bubble, but certainly the equities bubble.
The money authorities ("plunge protection team") will absolutely work into the night to try to prevent this. Gross's departure from PIMCO could be the black swan event. That's how fragile financial markets are.
http://www.zerohedge.com/news/2014-09-30/us-regulators-fear-runs-pimcos-systemic-risk-outflows-soar-125-assets
Unintended consequences of a strong dollar
According to the Austrian school of economists, a strong
currency is beneficial, as it represents strength in an economy, and
purchasing power is sustained.
But if the dollar continues to gain strength, relative to the ruble, Chinese yuan, Canadian dollar, and euro, it will likely hurt US exports, which is generally negative for equities. If the dollar continues to gain strength as a safe haven and also in anticipation of QE ending, expect the market rally to reverse.
Forward thinkers will understand the Fed can't let this happen on their watch, so they will probably resume printing more dollars, but probably masqueraded in some other official-sounding nomenclature, because the populace is catching on to the fact that QE is merely debt monetization (i.e. legalized counterfeiting).
With markets collapsing, I just don't see how the Fed won't step in. They will intervene with more "stimulus", at which point precious metals will rally again. Of course, we don't want to be around when the final collapse occurs, as no amount of paper will save a currency so debauched that all confidence in it has evaporated.
But if the dollar continues to gain strength, relative to the ruble, Chinese yuan, Canadian dollar, and euro, it will likely hurt US exports, which is generally negative for equities. If the dollar continues to gain strength as a safe haven and also in anticipation of QE ending, expect the market rally to reverse.
Forward thinkers will understand the Fed can't let this happen on their watch, so they will probably resume printing more dollars, but probably masqueraded in some other official-sounding nomenclature, because the populace is catching on to the fact that QE is merely debt monetization (i.e. legalized counterfeiting).
With markets collapsing, I just don't see how the Fed won't step in. They will intervene with more "stimulus", at which point precious metals will rally again. Of course, we don't want to be around when the final collapse occurs, as no amount of paper will save a currency so debauched that all confidence in it has evaporated.
Gold Drops, Silver Tanks
Commodities are tanking generally, as the
dollar gains strength as a safe haven. Of course, long-term this is a
mistake, as the reserve currency is the most abused. But for now, the
masses foreign and domestic are creatures of habit, so they will run to
the dollar as geopolitical skirmishes pop up everywhere.
If you have some precious metals, wait it out, or if you believe you need more, nibble in. The goal is to have at least 5 - 10% of your net worth in physical precious metals, as a counter balance to your financial assets.
If the stock market corrects, precious metals may decline in unison, but will rebound as market participants wake up to the fact that the metals represent real purchasing power. If equities crash, then well, you better have some exposure to precious metals, because it can get even uglier than 2008/2009.
Perspectives on scale and magnitude are important. At the last secular bottom in 2001, silver was $4/oz. and gold $250/oz. In 2011, silver peaked at $49 and gold peaked at $1923. Today, silver is $17 and gold $1208.
Can both drop further? Probably. But timing the exact bottom will be impossible. Can both rally much higher? Certainly, as long as fiat currencies continue to be created out of thin air, backed by nothing more than promises from insolvent governments.
Accumulating hard assets is the right play. But it also takes resolve, because timing is an unknown.
If you have some precious metals, wait it out, or if you believe you need more, nibble in. The goal is to have at least 5 - 10% of your net worth in physical precious metals, as a counter balance to your financial assets.
If the stock market corrects, precious metals may decline in unison, but will rebound as market participants wake up to the fact that the metals represent real purchasing power. If equities crash, then well, you better have some exposure to precious metals, because it can get even uglier than 2008/2009.
Perspectives on scale and magnitude are important. At the last secular bottom in 2001, silver was $4/oz. and gold $250/oz. In 2011, silver peaked at $49 and gold peaked at $1923. Today, silver is $17 and gold $1208.
Can both drop further? Probably. But timing the exact bottom will be impossible. Can both rally much higher? Certainly, as long as fiat currencies continue to be created out of thin air, backed by nothing more than promises from insolvent governments.
Accumulating hard assets is the right play. But it also takes resolve, because timing is an unknown.
“Markets can remain irrational longer than you can remain solvent.”― John Maynard Keynes
Monday, September 29, 2014
Friday, September 26, 2014
The Secret Goldman Sachs Tapes
Maybe this is why Eric Holder resigned. After all, he publicly admitted the too-big-to-fail banks were too big to jail.
http://www.bloombergview.com/articles/2014-09-26/the-secret-goldman-sachs-tapes
http://www.bloombergview.com/articles/2014-09-26/the-secret-goldman-sachs-tapes
Thursday, September 25, 2014
No More Foreplay: Russia Threatens European Gas Supply Disruptions
Speaking of global warming, El Nino should make this a cold winter, and Russia is threatening to do exactly what many feared: cutting off Europe's gas pipeline. And so it goes, and why Putin is holding all the cards.
http://www.zerohedge.com/news/2014-09-25/no-more-foreplay-russia-threatens-european-gas-supply-disruptions
http://www.zerohedge.com/news/2014-09-25/no-more-foreplay-russia-threatens-european-gas-supply-disruptions
How Much Gold Is Really Out There? …Not Enough!
The author doesn't come up with a number for the fair price of gold, but if one connects the dots on his assumptions, the price could be well north of $100,000 per ounce.
http://blog.milesfranklin.com/how-much-gold-is-really-out-there-not-enough
http://blog.milesfranklin.com/how-much-gold-is-really-out-there-not-enough
Wednesday, September 24, 2014
Tuesday, September 23, 2014
China Moves To Dominate Gold Market With Physical Exchange
https://www.goldcore.com/goldcore_blog/China_Moves_To_Dominate_Gold_Market_With_Physical_Exchange
Marsh highlights that in 2015, the IMF will review the composition of their Special Drawing Right (SDR) monetary unit, and an important milestone for the Chinese currency will be “the possible inclusion of the renminbi” in the SDR. According to Marsh. “there is a growing belief that the Chinese currency now conforms to a sufficient number of standards for convertibility that it will be become one of the constituent parts along with the dollar, the euro, yen and sterling.”
In all aspects of the Chinese gold market, be it the commercial sector or the official sector, the importance of gold as an investment and as a backing to a future currency is being explicitly signalled by the Chinese authorities.
Syria Becomes the 7th Predominantly Muslim Country Bombed by 2009 Nobel Peace Laureate
Last year, Obama wanted to bomb Syria to kill Assad. Today, Obama is bombing Syria to help Assad. That, in a nutshell, is all one needs to know about US foreign policy.
https://firstlook.org/theintercept/2014/09/23/nobel-peace-prize-fact-day-syria-7th-country-bombed-obama/
https://firstlook.org/theintercept/2014/09/23/nobel-peace-prize-fact-day-syria-7th-country-bombed-obama/
Monday, September 22, 2014
Congress Votes for More War in the Middle East
Ron Paul is on the mark--again.
http://ronpaulinstitute.org/archives/featured-articles/2014/september/21/congress-votes-for-more-war-in-the-middle-east.aspx
http://ronpaulinstitute.org/archives/featured-articles/2014/september/21/congress-votes-for-more-war-in-the-middle-east.aspx
There are 200 million people bordering the countries where ISIS is currently operating. They are the ones facing the threat of ISIS activity and expansion. Let them fight their own war, rather than turning the US military into the mercenary army of wealthy Gulf states. Remember, they come over here because we are over there. So let’s not be over there any longer.
First Germany, Now France Folds On Syrian Airstrikes
http://www.zerohedge.com/news/2014-09-22/first-germany-now-france-folds-syrian-airstrikes
Perhaps most concerningly for The US administration, the fact that Germany and France have denied the US leaves them instead sided with Russia's perspective on Syria and ISIS, as "there are deep concerns that the U.S. will bomb not only ISIS positions in Syria, but also the Syrian government forces."
Barbarism Versus Stupidism
http://kunstler.com/clusterfuck-nation/barbarism-versus-stupidism/
In my lifetime, the USA has not blundered into a more incoherent, feckless, and unfavorable foreign policy quandary than we see today.
The US-led campaign to tilt Ukraine to Euroland and NATO — and away from the Russian-led Eurasian Customs Union — turned an “intelligence” fiasco into a strategic humiliation for the Obama White House. Notice that the story has vamoosed utterly from the American media headlines, even when the Russian Engineers’ Union issued a report last week asserting that the Malaysian Airlines Flight MH17 was most likely shot down by 30mm cannon fire from Ukrainian military aircraft. The USA State Department didn’t deign to refute it because doing so would have drawn attention to the fact that it was the only plausible explanation for what happened.
Likewise, the campaign to paint Vladimir Putin as Stalin-in-a-judo-robe never really reached take-off velocity, since by all appearances he was the most rational and cool-headed actor on the geopolitical stage, following logical and long-established national interests. If the West had just left Ukraine alone, and allowed it to join the Eurasian Customs Union, that basket-case nation would have been Russia’s economic ward. Now the US and the EU have to support it with billions in loans that will never be paid back. Meanwhile, our European allies have been snookered into a set of economic and financial sanctions against Russia that guarantees they’ll be starved for oil and gas supplies in the winter months ahead. Smooth move.
Sunday, September 21, 2014
The Ponzi Economy
http://www.hussmanfunds.com/wmc/wmc140922.htm
When the most persistent, most aggressive, and most sizeable actions of policymakers are those that discourage saving, promote debt-financed consumption, and encourage the diversion of scarce savings to yield-seeking financial speculation rather than productive investment, the backbone that supports a rising standard of living is broken.
Meanwhile, financial repression by the Federal Reserve has held interest rates at zero, discouraging savings while encouraging and enabling households to go more deeply into debt. Various forms of deficit-financed government assistance and unemployment compensation have also been used to make up the shortfall, allowing consumption, and by extension, corporate revenues and profits, to be sustained. As long-term economic prospects have deteriorated, the illusion of prosperity has been maintained through soaring indebtedness, coupled with yield-seeking speculation in risky assets that has repeatedly (albeit not always immediately) been followed by crashes throughout history.
The central point is this. The U.S. economy has shifted course from one of productive capital accumulation to a reliance on continuous expansion of debt in excess of the economic ability to repay it. Call this the Ponzi Economy.The U.S. Ponzi Economy is one where domestic workers are underemployed and consume beyond their means; household and government debt make up the shortfall; corporate profits expand to a record share of GDP as revenues are sustained by household and government deficits; local employment is replaced by outsourced goods and labor; companies refrain from productive investment, accumulate the debt of other companies and issue new debt of their own, primarily to repurchase their own shares at escalating valuations; our trading partners (particularly China and Japan) become our largest creditors and accumulate trillions of dollars of claims that can effectively be traded for U.S. property and future output; Fed policy encourages the yield-seeking diversion of scarce savings toward speculation in risky securities; and as with every Ponzi scheme, everyone is happy as long as nobody seeks to be repaid.
If you wonder why the economy feels “fine” despite the persistent thinning of the U.S. capital base and the hollowing out of its middle class, it’s because we are covering the shortfall at every turn with the endless issuance of cheap debt that needs to be rolled forward forever.
The PetroYuan Cometh: China Docks Navy Destroyer In Iran's Strait Of Hormuz Port
This is where the real war is taking place: the battle for reserve currency status. China doesn't wish for the yuan to replace the dollar--such a dramatic shift would cause major dislocations in global financial markets.
But China does want to create a multi-polar currency world--one where the current reserve currency, the petrodollar--can no longer fund wars not in the best interests of China and its trading partners, to include Russia and Iran.
The implications of the dollar losing its hegemony privilege have been discussed many times. America will no longer be able to fund its profligate spending from foreign buyers of its debt. It will no longer be able to create dollars out of thin air, without severe consequences to the purchasing power of the dollar.
And we'll see rising prices across the board--not just in fuel, but EVERYTHING as energy sources are used to transport all tangible items in an economy.
http://www.zerohedge.com/news/2014-09-21/petroyuan-cometh-china-docks-navy-destroyer-irans-strait-hormuz-port
But China does want to create a multi-polar currency world--one where the current reserve currency, the petrodollar--can no longer fund wars not in the best interests of China and its trading partners, to include Russia and Iran.
The implications of the dollar losing its hegemony privilege have been discussed many times. America will no longer be able to fund its profligate spending from foreign buyers of its debt. It will no longer be able to create dollars out of thin air, without severe consequences to the purchasing power of the dollar.
And we'll see rising prices across the board--not just in fuel, but EVERYTHING as energy sources are used to transport all tangible items in an economy.
http://www.zerohedge.com/news/2014-09-21/petroyuan-cometh-china-docks-navy-destroyer-irans-strait-hormuz-port
The future for gold is physical
http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=253679&sn=Detail
“The growth of the Shanghai Gold Exchange
to become the world’s largest physical gold exchange provides
compelling evidence that the future for gold is physical. As the market
shifts from west to east, the expansion of strong gold trading hubs in
Asia will improve price discovery, liquidity, transparency and
efficiency; all of which will transform the landscape of the global gold
market. As a major global market, this will enable China to take its
rightful place in the world gold market.
“The development of the International
Board, opening up the Chinese market to global investors is a
significant first step towards the internationalisation of China’s gold
market which already accounts for 30 per cent of global demand. The
World Gold Council’s role is to use its global expertise to help support
and grow that market on the international stage.”
Did the CEO of the World Gold Council just say that? He sounds like a conspiracy theorist, not the enabler of the global gold price suppression scheme led by central banks and their agents in crime, the bullion banks.
The Silver Paradox In One Chart
http://www.zerohedge.com/news/2014-09-19/silver-paradox-one-chart
...the retail silver investor, as indicated by the silver ETF flows, appears to be taking advantage of the lower price environment to accumulate additional metal. This is also true in the silver coin and bar market.
Saturday, September 20, 2014
Friday, September 19, 2014
Wednesday, September 17, 2014
Sunday, September 14, 2014
Saturday, September 13, 2014
Why Goldman Sachs Is Wrong On Gold & Danger For The U.S.
Pento has been banned from a couple financial media outlets for his abrasive, yet truthful analyses. He makes a solid case for gold bullishness, as well as for economic storms to return.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/13_Why_Goldman_Sachs_Is_Wrong_On_Gold_%26_Danger_For_The_U.S..html
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/13_Why_Goldman_Sachs_Is_Wrong_On_Gold_%26_Danger_For_The_U.S..html
Obama’s Betrayal of the Constitution
http://www.nytimes.com/2014/09/12/opinion/obamas-betrayal-of-the-constitution.html?hp&action=click&pgtype=Homepage&module=c-column-top-span-region®ion=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=1
PRESIDENT OBAMA’s declaration of war against the terrorist group known as the Islamic State in Iraq and Syria marks a decisive break in the American constitutional tradition. Nothing attempted by his predecessor, George W. Bush, remotely compares in imperial hubris.Mr. Bush gained explicit congressional consent for his invasions of Afghanistan and Iraq. In contrast, the Obama administration has not even published a legal opinion attempting to justify the president’s assertion of unilateral war-making authority. This is because no serious opinion can be written.
Fed’s Fischer Leads Committee Watching for Asset-Price Bubbles
This is a classic signal of a top in markets--a contrarian indicator that financial asset bubbles will pop. The Fed has formed a "committee" to prevent said bubbles. Got it.
Humans have now learned how to defy the laws of physics and gravity, also.
http://www.bloomberg.com/news/2014-09-12/fed-s-fischer-leads-committee-watching-for-asset-price-bubbles.html
Humans have now learned how to defy the laws of physics and gravity, also.
http://www.bloomberg.com/news/2014-09-12/fed-s-fischer-leads-committee-watching-for-asset-price-bubbles.html
Friday, September 12, 2014
As Turkey Refuses To Join "Anti-ISIS" Coalition, John Kerry Comes Begging
Well, that's another ally the US can't count on.
http://www.zerohedge.com/news/2014-09-12/turkey-refuses-join-anti-isis-coalition-john-kerry-comes-begging
http://www.zerohedge.com/news/2014-09-12/turkey-refuses-join-anti-isis-coalition-john-kerry-comes-begging
Wednesday, September 10, 2014
For 90% Of Americans: There Has Been No Recovery
http://streettalklive.com/index.php/daily-x-change/2385-for-90-of-americans-there-has-been-no-recovery.html
While the financial media incessantly drones on about the rise of the stock market, what is missed is that after two devastating bear markets many families no longer have the capacity to participate (particularly after following Wall Street advice).
Tuesday, September 9, 2014
Monday, September 8, 2014
These Kinds Of Market-Rigging "Practices" Will No Longer Be Allowed On The CME
I call BS. Market riggen has been occurring--blatantly in the light of day. And it will continue to occur as long as the monied interests are in charge.
http://www.zerohedge.com/news/2014-09-08/these-kinds-market-rigging-practices-will-no-longer-be-allowed-cme
http://www.zerohedge.com/news/2014-09-08/these-kinds-market-rigging-practices-will-no-longer-be-allowed-cme
Obama's Former Chief Economist Calls For An End To US Dollar Reserve Status
This Keynesian economist WANTS USdollar hegemony to end? Might as well give the dollar its last rights before the hanging. The death of the USDollar--by suicide. That will make a great headline.
Next thing we know, the Fed Chairman will be dumping dollars out of a helicopter. Ooops, it's already happened.
What's that other expression? Be careful what you wish for; you may get it.
http://mobile.nytimes.com/2014/08/28/opinion/dethrone-king-dollar.html?referrer=&_r=3
Next thing we know, the Fed Chairman will be dumping dollars out of a helicopter. Ooops, it's already happened.
What's that other expression? Be careful what you wish for; you may get it.
http://mobile.nytimes.com/2014/08/28/opinion/dethrone-king-dollar.html?referrer=&_r=3
Legend Warns World Headed For Financial Chaos & Contagion
This piece by John Ing is like one long, run-on sentence, but I can't really argue against his points.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/8_Legend_Warns_World_Headed_For_Financial_Chaos_%26_Contagion.html
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/8_Legend_Warns_World_Headed_For_Financial_Chaos_%26_Contagion.html
Sunday, September 7, 2014
Friday, September 5, 2014
Facing shortages, Venezuela takes over toilet paper factory
This is more evidence of why centrally-planned economies are inefficient due to malinvestment.
http://www.cnn.com/2013/09/21/world/americas/venezuela-toilet-paper/
http://www.cnn.com/2013/09/21/world/americas/venezuela-toilet-paper/
Thursday, September 4, 2014
HealthCare.gov Hacked
Government agencies can't even lie straight.
http://www.zerohedge.com/news/2014-09-04/healthcaregov-hacked
http://www.zerohedge.com/news/2014-09-04/healthcaregov-hacked
In Shocking Move, ECB Cuts By 10 Bps, Sends Deposit Rate Further Into Negative Territory
Negative yields translate to a subtle form of bail-in, where depositors/account holders are taxed for parking their money. Negative yields also completely dismantle the capital asset pricing models, rendering future valuation and risk assessment as useless. As a result, asset bubbles are forming globally, and the concept of "riskless return" is obsolete.
Economics textbooks have to be re-written, as we live in a financial world which is upside down--literally. These "extraordinary" monetary interventions are unprecedented and will no doubt end in tears.
http://www.zerohedge.com/news/2014-09-04/shocking-move-ecb-cuts-10-bps-sends-deposit-rate-further-negative-territory
Economics textbooks have to be re-written, as we live in a financial world which is upside down--literally. These "extraordinary" monetary interventions are unprecedented and will no doubt end in tears.
http://www.zerohedge.com/news/2014-09-04/shocking-move-ecb-cuts-10-bps-sends-deposit-rate-further-negative-territory
Wednesday, September 3, 2014
What Germany, Russia & China Are Doing As Gold Plunges
The strong hands (smart, long-term, patient money) bought physical precious metals on the dip yesterday.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/2_What_Germany,_Russia_%26_China_Are_Doing_As_Gold_Plunges.html
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/2_What_Germany,_Russia_%26_China_Are_Doing_As_Gold_Plunges.html
Tuesday, September 2, 2014
The Chart Obama Does Not Want Merkel To See
Sanctions against Russia aren't hurting Russia. They are hurting Europe.
http://www.zerohedge.com/news/2014-09-02/chart-obama-does-not-want-merkel-see
http://www.zerohedge.com/news/2014-09-02/chart-obama-does-not-want-merkel-see
Monday, September 1, 2014
Dethrone ‘King Dollar’
This author is correct on the concept of currency devaluations (it's a race to the bottom in a currency war), but minimizes the harmful effects of inflation. Google "Triffin dilemma" for a better explanation of the privilege and hazards of holding the global reserve currency.
Like most Keynesian economists and academicians, the author also completely misses the logic behind the Fed extending USDollar hegemony. If the dollar were to lose its reserve currency status, there would be major dislocations in global trade and financial markets. Inflation would soar as foreign holders dump USDollars.
http://www.nytimes.com/2014/08/28/opinion/dethrone-king-dollar.html?_r=1&module=ArrowsNav&contentCollection=Opinion&action=keypress®ion=FixedLeft&pgtype=article
Like most Keynesian economists and academicians, the author also completely misses the logic behind the Fed extending USDollar hegemony. If the dollar were to lose its reserve currency status, there would be major dislocations in global trade and financial markets. Inflation would soar as foreign holders dump USDollars.
http://www.nytimes.com/2014/08/28/opinion/dethrone-king-dollar.html?_r=1&module=ArrowsNav&contentCollection=Opinion&action=keypress®ion=FixedLeft&pgtype=article
It's Settled: Central Banks Trade S&P500 Futures
It's official: central banks do manipulate markets by artificially goosing up certain asset classes (equities and bonds), while suppressing others (precious metals). "Conspiracy theorists" have been accurate all along, while the apologist deniers once again have egg on their faces.
This isn't just about "I told ya so." When central banks distort markets, they are attempting to alter the laws of nature. Eventually, mother nature wins, and this will end badly for all players. Market manipulation can work short-term, but market gravity will eventually win out. One can throw a ball in the air, and catch it, temporarily suspending the forces of gravity. But once released, the gravitational force will eventually cause the ball to drop back down to earth.
Similarly, artificial demand for collateralized mortgage bonds was propped up by favorable credit ratings and institutional fraud, with the underlying premise that US home buyers would not default on their mortgages, irrespective of their creditworthiness--as long as home prices appreciate into perpetuity. When those assumptions were proven wrong--horribly wrong--the subprime mortgage market cratered and cascaded into a systemic banking crisis. In turn, the real estate collapse triggered a financial meltdown as credit markets seized up, destroying liquidity.
Despite rhetoric proclaiming debt monetization stimulates the economy, QE was intended to save bank balance sheets, and the Fed stepping up as the buyer of last resort of Treasuries and MBS as investor demand collapsed. For the same preventative reasons, central banks are buying up SP500 futures to prop up the stock market as investors (both retail and institutions) flee the rigged casino, due to loss of investor trust. Without central bank buying, markets would have collapsed due to the dearth of buyers.
Stock and bond markets are truly Potemkin villages standing on their last legs. Removing the artificial props would collapse the foundations, prompting more central bank intervention. The unprecedented level of interventions will not end well and astonishingly reveal the desperation of the central planners.
http://www.zerohedge.com/news/2014-08-30/its-settled-central-banks-trade-sp500-futures
This isn't just about "I told ya so." When central banks distort markets, they are attempting to alter the laws of nature. Eventually, mother nature wins, and this will end badly for all players. Market manipulation can work short-term, but market gravity will eventually win out. One can throw a ball in the air, and catch it, temporarily suspending the forces of gravity. But once released, the gravitational force will eventually cause the ball to drop back down to earth.
Similarly, artificial demand for collateralized mortgage bonds was propped up by favorable credit ratings and institutional fraud, with the underlying premise that US home buyers would not default on their mortgages, irrespective of their creditworthiness--as long as home prices appreciate into perpetuity. When those assumptions were proven wrong--horribly wrong--the subprime mortgage market cratered and cascaded into a systemic banking crisis. In turn, the real estate collapse triggered a financial meltdown as credit markets seized up, destroying liquidity.
Despite rhetoric proclaiming debt monetization stimulates the economy, QE was intended to save bank balance sheets, and the Fed stepping up as the buyer of last resort of Treasuries and MBS as investor demand collapsed. For the same preventative reasons, central banks are buying up SP500 futures to prop up the stock market as investors (both retail and institutions) flee the rigged casino, due to loss of investor trust. Without central bank buying, markets would have collapsed due to the dearth of buyers.
Stock and bond markets are truly Potemkin villages standing on their last legs. Removing the artificial props would collapse the foundations, prompting more central bank intervention. The unprecedented level of interventions will not end well and astonishingly reveal the desperation of the central planners.
http://www.zerohedge.com/news/2014-08-30/its-settled-central-banks-trade-sp500-futures
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