Inderdaad, waar komt al dat geld vandaan? Dat vraagt Richard Daughty zich ook al langer af. Ook vraagt hij zich af waarom die "PPT-club" elke 14 dagen bij elkaar komt, terwijl dat vroeger eens in het half jaar was of zoiets.
vr.gr. duro
Part of my problem with fear is, I assume, that Total Fed Credit was down again this week, this time by $647 million, which is not a lot, I admit, but a far cry from the customary increases of three and four billion a week! So if the Fed is not creating excess credit, and hasn't been for months, where is the money coming from?
Before you answer, the Fed itself is not absorbing our debt, either, and their hoard also declined by $1.1 billion last week, and the banks unloaded $33 billion in government bonds last week, too.
Hearing the raucous sound of the Mogambo Alert Klaxon (MAK), we rush to the teletype machine to read "Alert! Alert! Money had better start coming from some damned where, and pretty damned soon, too, as you cannot get rising stock prices, rising bond prices, rising real estate prices and/or rising government prices without lots and lots and lots of new money!"
After all, it's not for nothing that Gary Tanashian of biiwii.com reveals, in his essay "Back to Bonds", the simple synopsis "Ours is a system of chronic inflation. In a fiat system, it is growth in liquidity that spurs economic growth at the expense of currencies."
And speaking of the price of government rising, from Bloomberg that we learn that wherever money is coming from, it will need to increase a lot more in the future, as “States and municipalities" are asking the dimwitted voters to approve "a record $80 billion in new bonds. The $80 billion and counting is contained in 678 separate proposals."
Sensing a chance to use math and maybe learn some, I grab my calculator and say "Let's see: 678 proposals in 50 states. Hmm! There seems to be something there, but what? What could it be?" Soon, I give up, as the math is obviously too complicated, and I file it under "Suspicious Stuff".
But an interesting non-math statistic about this municipal bond stuff is that "The amount is a record for a general election, far eclipsing the previous record of $47 billion that was placed before the voters in 2002.” Thus, in a sudden embarrassment of riches, we not only learn that state and local governments are idiots and are counting on the idiot voters to cut their own economic throats, but that $80 billion minus $47 billion is defined as "far eclipsing"! A two-fer!
So where, where, where is all the money coming from to finance the continuation of the rises in stocks and bonds and houses and government? Well, for one thing, the Treasury put us another $10 billion in debt last week, which is a nice piece of change, but foreign central banks only bought up $112 million ("Le chump change" in French, so I hear) in America government and agency debt. The answer must lay elsewhere.
the banks are so massively over-leveraged that they have a measly $40 billion lousy bucks as reserves against $5.5 trillion in savings? Hahahaha! Again with that cold, hollow laugh of the damned!
My hands involuntarily clench and my eyes bug out in disbelief to think that a measly $40 billion as reserves against a whopping $5.5 trillion in depositor liability is a trifling $0.0073 per dollar! Two-thirds of one freaking cent!
And with a gigantic $6 trillion dollars in the loans and leases portfolio of the banks, these "assets" only have to decline by a trifling a 1% in price to wipe out their entire reserves! Hahaha! This is the level of absolute, ruinous insanity that reigns in the banks! 'All financial crises originate in the banks!'"
Michael A. Nystrom, in his essay at BullNotBull.com titled "Dow Manipulation" seems to agree with me. He notes that the litany of bad news is overwhelming when he lists "The yield curve has remained inverted for months; we had the first negative reading in the Philly Fed index in three years; national housing sales have plunged and prices are showing their first declines since 1993. The index of leading economic indicators has declined for seven straight months. Online advertising revenue is down; newspaper advertising revenue is down; the help wanted index is down. Across the board the economic news is terrible - everything is pointing to a recession."
So why are the stock and bond markets rallying? Government manipulation! "It makes me consider," he says, "that the only thing standing between this market and a crash are the November elections." Then he says the one thing guaranteed to send The Mogambo into a fit of panic and screaming, namely that inflation is soaring. "Under normal circumstances," he says, "today's inflation report - the highest inflation reading in 11 years - would have absolutely creamed the market. There is, to put it mildly, something fishy about this market."
And when something is "fishy", it means that it will get older, stinkier and more "fishy", as it always does, until it rots away. And that lugubrious day may be coming sooner than any of us realizes, as Susan Albright has an article posted on IndiaDay.com titled "US Stock market showing huge divergence - a sure sign of a coming multi-year bear market." In particular, the Russell 2000 versus the Dow is behaving strangely, although she did not mention the divergences between the Industrials and the Transports, as does Richard Russell of the Dow Theory Letters. She writes, as does Mr. Russell in the final analysis, that these huge divergences are "a sure sign of a coming multi-year bear market", and that these kinds of anomalies are a "technical analysis tool for calling major bear markets."