I am going away this weekend so I won’t be posting until Monday.
But before I go I think it is interesting that this rally in the US at least does not look to me to be widely based. The volume of trades is thin and so much of the movement comes in the last half hour before the bell and overnight. You rally don’t have to be conspiratorially minded to feel this is a few large players ramping the shares between them. Adda to this the prime movers both up and down are so often financial shares.
This is a ramp job run by the high frequency traders.
Further supporting this suspicion is that fact that funds of all kinds continue to see cash withdrawals. Wealth is being taken OUT of the market even as the ‘rally’ proceeds.
OPn a larger scale you have to ask where will the next three quarter Trillion come from. Each time there has been a major fall 750 billion somethings appear from somewhere and it buys us another leg up. The FED was first up. Then the ECB. China ans Japan have been hosing asia down until earlier this year. Japan will try again I am sure. China? I think they are going to spend their DOllar debt holdings. Whether that alloows them to buy more US debt or whether that older dept, coming back into ciculation via China’s overseas oil and metals deals, distorts Dollar debt availability – I don’t know.
But when we have our next crisis, when the next pustule of debt bursts, where will the next 750 billion dollar sticky plaster be found?
When you look at the shape of the ‘recovery’ what I see – roughly – is that each intervantion bought a rise which was smaller and lasted a shorter time than the one before. Certainly the ECB intervention is gone.
I think the last chamber is now void and they are waving around an empty gun.
Financial stimulus is finished, because Sovereign debt levels relative to any possible level of growth, are already at or beyond their limits.. I think the bond market, certainly Bill Gross of Pimco thinks so.
Fiscal austerity IS NOT going to clear the debts. Because the level of cuts required to make a significant dent in the debt will also cripple any hope of growth. The cuts will create poverty and contraction NOT growth in Greece, Portugal, Spain and Italy. IF, IF that is, the measures are actually implimented. Which I think is 50:50.
If they don’t impliment the cuts their debt grows. If they do, their growth falls and the debt grows. Good prognosis!
I think the UK is likely to be on the same path but not so far along.
If China does finally choke back property prices in China i think OZ will be in for a nasty shock. I think if Brazil and Mexico finally start to feel the knock on effects of global demand downturn – then several Euopean and at least one major US bank will find their cahs flow is very seriously strangled. Spanish banks in particular look to me to be about to get hurt.
In the US CRE is coming. Low rates will help but I don’t think it will be enough.
I just can’t see the financial sector being able to get through a year, maybe not even 8 months without another major jolt and the need for another immediate transfusion from us to them.
We’re in a storm. Every time we’re at the bottom of a wave, everybody panics and says – you’re right we must be in a storm because I can’t see the horizon. But when we rise to the wave’s crest and for a few moments we can see the horizon line again, everyone seems to say – Oh it must be fine. I can see the horizon again. Just before we plunge down again.
We need to clear the debts. If we do we have a couple of really deradful years while we build from the bottom up. If we don’t we will be sold into debt slavery for ten years or more. Either way vast losses are going to be taken.
One way the wealthy take their share and we all get to rebuild. The other way, the way we’re on, we pay for it all while they dopn’t even have to rebuild.
Bon weekend !