Almost every professional, and many lay investors know that the world’s financial system broke down in 2008 and the Central Banks of the world have attempted to transfer Bank Risk to their own Balance Sheet. But saving the banks from their epic and giant fuck ups will take more money than the world has, or could realistically print.On Saturday evening, Spain announced a Big Bailout. Lot’s of money promised but few details.
Just two weeks ago, markets began to fall in earnest after dripping lower for weeks and the pending failure of the European System was to blame. But then, mysteriously and out of the blue, markets had their best week of the year last week. Never mind volume was lower than during any other advance in this Central Bank controlled market. Obviously the Policy Response was leaked to people with Capital and they bought big.
But last weekends news has officially Jumped the Bailout Shark, meaning that it won’t help. You see, everyone expects that more Bailout Money will mean higher equity and commodity markets like after past “aid”. But after a certain point, maybe this point, it won’t mean that at all. Maybe it will mean just the opposite. I don’t know if we’ve hit that point, but it feels like it today.
The stated goal in the Free Money Regime is to buy confidence by boosting stock prices. Most investors now know that “boosted prices” are not justified or sustainable without solving the problems first. The way to do that is to make the debt disappear and dismantling the investment status quo. That will be a long and hard battle before we can rebuild. The fact is that the best performing issues are classically defensive says a lot about the current market.
Don’t get me wrong. I don’t want the world to end and I don’t want another Great Depression. But Bankers, Inside Traders with Friends in High Places, and the families of Chinese Party Members should not be the only beneficiaries of all this free money.
8 Responses to REALITY BITES
Best post yet..agree 100%
If you agree with anything I say, I must rethink everything…
great post, scott
i am also curious as to what kind of “plan”, is/not being planned. how are they going to lift themselves out of this trick bag. there isnt enough money in the world to pay off anything. print,go ahead,whats the dollar worth now,about 12 cents.default,maybe,but at what expense? War,maybe, but i dont think so,not with mutually assured destruction. so i ask,what would be the easiest way to pay down all debt, and keep the almighty buck strong,well into the future. think about a silver dollar,it’s a dollar, if you took it to a store to purchase anything,it’s only a dollar. but now that same ounce that has one dollar stamped on it is really worth whatever spot is on any given day.30 bucks lets say. thats where we truly are,worthless paper.if we were back on the gold/silver standard, our buying power in the dollar would jump to the moon.i think the last move that comes next,in order to pay down debt to all our creditors worldwide would be to back it all in pm’s,they have nowhere else to take it.
we have fiat currency.
yea,but real discovery is a bitch.the sooner blyth masters and her handlers’at jpm start to dump their silver shorts then it’s game on. they may have already begun.
Paulson should have saved Lehman bros. He didn’t care for Fuld, so he said he had no authority to save them. But that totally fucked up confidence in the system Lehman was too big to fail at that time.