They brainstormed. They cajoled. They Jawboned. They printed.
This has been going on for over four years and during this entire time the “money” stayed locked in the closed loop of the financial/investment system and sent the prices of assets ever skyward. And during all this time, the economy and everything related to it was subject to the disclaimer of “weakness”. Housing, credit creation, employment, production, consumption, spending. Anything you can think of was “weak”.
Then, suddenly, after months and months of obscene amounts of stimulus “money” pointed directly at banks and government, the major averages made new all-time highs. That’s right, as “weak” as everything was, markets made new highs. Some say it is the markets discounting better times ahead. Others say it is a recovery in corporate profits. Others attribute the rise to the Feds stimulus. But most non-finance people have no idea why the market has done what it has done. And if you ask them about the Federal Reserve and the stimulus, they have not a clue as to how, why or how much.
I’m not bemoaning these new highs because I think they are contrived or for any other reason. But what I have noticed is that now that markets are here, at all time highs, all the “weakness” has remarkably disappeared. It’s like someone flipped a switch or turned a page. All of those bad mortgages and underwater homeowners. All those unemployed or underemployed, vuala! it no longer matters. As the markets rallied, no negative news mattered. It made no difference that nothing was really improving, simply a stabilization at depressed levels. Now, its all good and if you are still having problems then you must truly suck.
Now the Japanese have gotten into the act. Their markets and currency are on a wild ride, greatly upsetting everyone in their region but producing (up until last week) some serious one way action.
I’m not sure what the point is in this exercise other than to vent about how we have spent ridiculous amount of wealth on nothing but keeping the government afloat and saving the balance sheets of the big banks. Plus, the creation of the thirty million dollar condominium apartment in Manhattan. Not one road has been fixed with all this money. There has been nothing, NOTHING done with all this insane amounts of capital other than to buy government bonds and MBS. BTW–the quasi-government agencies buy every new mortgage originated no matter who does the origination. There is only Fannie, etc.
And to make matters even worse, all the money used to buy MBS paid “full boat” and then the sellers (banks) hypothecated the money times 10 at least. So now we are levered to the hilt, again.
And they are not going to stop. They simply cannot.
So what about all those people left behind, the ones that don’t have a multi-million dollar pied a tier in Manhattan, a McMansion in the tri-state area and a beach house? Well, you’re screwed because the government, media, banks, and the markets say that its time to move on up. Don’t get left behind!If you enjoy the content at iBankCoin, please follow us on Twitter