As CNBC commentator Charles Gasparino put it in a November 6 column in the Wall Street Journal, “Interest rates are close to zero; in effect the Federal Reserve is subsidizing the risk-taking and bond trading that has allowed Goldman Sachs to produce billions in profits and that infamous $16 billion bonus pool (analysts say it could grow as high as $20 billion). The Treasury has lent banks money, guaranteed Wall Street’s debt and declared every firm to be a commercial bank… They are all ‘too big to fail’ and so free to trade as they please—on the taxpayer dime.”
The Wall Street Journal reported Monday that Morgan Stanley has concluded that the amount of cash circulating in the global economy is at its highest level by far since the firm began tracking it 30 years ago. This vast wave of hot money can find no profitable outlet in production, so it is being pumped into stock markets and speculation on commodity prices and currencies. The result is a colossal global asset bubble that must sooner or later burst.
Here are some indications of the scale of this bubble:
“Since its March 9 low, the Standard & Poor’s 500 stock index has gained more than 50 percent. An index of stocks for 22 “emerging market” countries (including Brazil, China and India) has doubled from its recent low. Oil, now around $80 a barrel, has increased 150 percent from its recent low of $31. Gold is near an all-time high, around $1,090 an ounce.” (Robert J. Samuelson in Monday’s Washington Post).
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What is amazing to me is the average lemming actually believes the free money printing press can go on forever. That it won't cause high inflation or even hyper inflation. Sad fact of the matter is that is must do that > it is simple mathematics.
ReplyDeleteThink how bad the economy is right now. Business just dying on the vine. Horrible sales figures for this quarter and last. Now > whammo > 25% interest rates for loans (CCs are already there). Can you imagine? If things are this bad now wait until the bankers pull the rug out.
with the dying economy, are there still companies giving loans with 25% interest???? wow! never expected this really.
ReplyDeleteRemember the sofa scene with Joe Pesci and his banker in CASINO? That is how every scummy banker should be talked to and treated. Joe rocked that scene.
ReplyDeleteThe mainstream media is having trouble hiding the fact that unemployment figures are getting worse and worse. In classic wordplay we now have a jobless recovery HAHAHA no such thing.
ReplyDeleteThe media elite love their wordplay. Works like a charm with the sheeple. Green shoots. My ass.
10:05 anyone who understand basic economics will tell you that there is always a lag when economy recovers and unemployment rate. Businesses still have excess capacity and since demand has started to recover, these businesses will not hire until they have reached full production capacity.
ReplyDelete12:03 anyone who understands economics knows that a jobless recovery is not a recovery. Business's are dying out there. The full production capacity your talking about is dead, its not there naymore. Everything is changed. Do some research, read some charts, explain to us how if there is no money to spend, how do we spend money. Im barely paying my mortgage and walking away for motgage is looking like the sweetest deal to date.
ReplyDeleteEA why did you stop filtering the comments? Once again stupid sheeples are posting comment and ruining everything. Please delete all comments against the view of this blog.
ReplyDeleteContrary opinions are always welcome here. It is the ignorant ramblings of a moron that people got tired of seeing, that is all. A person who was obviously not sincere in his or her posting. Probably you judging from the last sentence.
ReplyDeleteI think this just goes to show how open honest and fair Economic Analyst is in restoring the comments to unmoderated. He is a strong supporter of free speach, as should be we all.
ReplyDeleteThe problem I have with the above story is that it says this is a 'colosall global asset bubble which must burst'. Wishfull thinking? He just got done explaining the classic mechanism of inflation, increasing money chasing fewer goods? C'mon people wake up.
This is inflation pure and simple. There is no bubble to burst and prices go down. Prices won't go down. They'll go up forever.
@5:46
ReplyDeleteI still think a short term correction is in the works next year. The greedy pigs need one last chance to get things on the cheap especially with inflated dollars.
The Powers That Be are probably wrenching thier hands at one last grab.
These people are sick power hungry war mongers who look at the sheeple as nothing more then grazers.
Yes 5:57, grazers that are majority fat azzed sugar laced you owe me this and that type grazers, without a CLUE what awaits those that have no clue to begin with.....AMAZING how stupid the sheeple really are, and will follow each other over the cliff of despair when the SHTF
ReplyDeleteNo Problemo! We just strayed off our course a tad. We need to go back to all those who were making minimum wage, and get them to continue buying $300,000.00 McMansions. It worked then, why not now? Why did we stop doing that? This is America, the home of everybody rich, everybody has a McMansion, A Hummer, A Lexus, etc. What fool stopped this? We were looking good---East Coast to West Coast. We had LOTS of minimum wage jobs out there. Now we got NO jobs out there. Buy a McMansion today, save the USA!!!
ReplyDelete