June 26th, 2012
in Gary's blogging
Many unknowledgeable souls are asking what is really going on if the World Finances are so deplorable, why are the markets moving sideways today and not crashing? There are many moving parts to this dilemma of a slow motion market place. One is partially because the cash crowd, composed of mattress money, normal investors and pros alike, are either NOT in the market or they are not willing to close out long positions. Therefore we are not seeing wild swings as the 'uninformed' can move the markets in times of panic. There are also those who have now lost a considerable percentage market share in their portfolios and are willing to wait it out. Good, bad or indifferent these slacker investors don't seem to care while their 'dogs' flounder reducing and eroding their financial base even further but it helps market movement stability.
Another reason why we have not seen a fall of any great magnitude is because there still remains a firm belief among the masses at large is that these financial giants will figure out somehow to make things favorable again and therefore no need to sell. Just one more meeting and an announcement of undeniable success is just around the corner and the markets can continue their climb. Which may happen 'sometime' in the future, but not in this near future. That you can take to the bank, hummmm, maybe not as they are in trouble too.
The market may appear stable today because it hasn't moved much but the fundamentals need serious attention in this artificially held up market. The indexes are overbought, propped up with MM Hopium and Delusionol and Keynesian financiers disregarding stark reality. They continue to throw money, that doesn't exist, at issues that can't be fixed that way. It doesn't matter as they can claim they are doing something and just need a little more time. Well, that is a crock of hooey and what we need now is for this crisis to come to a head and quit kicking the can down the road. So why is this crisis a financial problem and why is it going to eventually sink the markets?
Unfortunately, it would take many, many hours of explanation to cover all of the financial intricacies that make up this World kettle of stinking fish. If you are one of my regular readers you should be up to speed as I have covered many of these issues in the past. Basically elected politicians created the initial mess that has blossomed into today chaos. BECAUSE they are politicians they can't tell the truth and therein lies the problem of ever seeing a 'fix'. Continuing to 'print' money is not a fix and the tax payers, you and me, are going to pay heavily for this continued imbecilic thinking. A financial calamity of great proportions, which I speak of frequently, is needed to reset the clock. I think one is coming soon and these morons can then point fingers at each other claiming the 'other guy' caused the 'crisis'. That is just fine with me so long as we stop spending WHAT we don't have.
Other actions that are keeping the boat artificially afloat is Operation Twist. It is acting like a water pump keeping a boat full of holes keeping it from totally going under. The problem is that the occupants of the boat are being held up at gun point for alms to pay for the pumps operation. Well these poor folks have long since run out of money and the boat stewards are now accepting IOU's. Most of which will be paid back by tax payers not even born. Yet the 'sheeples' hold on believing the Government Custodians they elected will fix what these idiot politicians broke in the first place. It is a shame the elected continually blame everyone except themselves for the problems they were appointed to fix.
Unfortunately, kicking the can down the road has become the mantra of our fiscal wizards in charge and it makes me sick. The real issue here is that there is an end to the road and it is coming up soon. In this financial fairy tale our politicians continually tell you that everything will be alright, don't worry, be happy. However, this road has a cliff at the end and our great and illustrious leaders are doing very little to stop the economy from going over this fiscal drop-off. Doing nothing and throwing money at the problems is ONLY going to end this story in a crisis. Which brings us back to where I began – we need a crisis to sink this floundering garbage scow and start again.
An excellent article below provide one way of insuring fiscal stability. Rules ARE needed and Keynesian money throwing policies need to be disbanded.
. . . the need for policy-makers to base decisions on 'rules' as opposed to the whim of short-termist solutions and band-aids. . . they point out the dilemma that the short-cuts to solve immediate problems are in and of themselves unpredictable and so a longer-term rules-based strategy - which empirically has led to re-election (which may come as a surprise to many who see palliatives as populist vote-buying) - is a far better solution both politically and economically.
Jeremy Warner has looked long and hard at the new EU Grand Plan and decided: it won't work.
Ambitious plans to be put before this week's EU summit – yes indeed, yet another crisis summit – to turn the eurozone into something much closer to a fiscal union make for easy analysis. On almost any level you care to take, they won't work.
As for the immediate crisis, it does nothing to address that. Wriggle and squirm as Europe might, it still remains hard to see how this crisis can end in anything other than an almighty pile up.
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Written by Gary