Today could be the day.
Summer seems to be ending early and events are very definintely in control. Policy makers, however, are divided, fractious and out of ideas. Days of falling markets and the declines are getting steeper. We are adrift.
In the US, the FOMC (Fed Open Market Committee) was completely divided on whether to ‘stimulate’ further. Which means print some more dollars. I think they will and soon.
At the same time, indicating how US policy will become even more paralyzed as we get to November, John Boehner, who is Leader of the Republicans in the House of Representatives, just publically called for the resignation of Tim Geithner and Larry Summers. They are the last two members of Obama’s economic team. The rest having already chosen to resign and jump ship.
Boehner is currently leader of the House minority party. After the Mid Terms I think he will be leader of the majority party. What then for agreement over financial policy?
They are in disarray. And so is the economy. House sales in July PLUNGED 27% in one month. The largest one month drop EVER. While in the UK the picture for house sales is similar. Mortgage lending is down in the UK by 20%.
Over in Japan the BoJ and the government are like two deer in the headlights. Neither has any idea which way to jump. They are equally petrified of what might happen if they try to issue yet more debt but also what might happen to the Yen if they don’t. Damned either way. I think they will QE in the end. I think all the Central banks are trying to play chicken with each other. None of them wants to be the first to break from the pack and run for it.
In Europe, Ireland’s stock exchange fell 4% today as Ireland’s major cement maker revealed a HUGE drop in profits.
Greeks banks are suffering accelerated losses on loans and bad debts. The Greek govenment is encouraging them to merge in order to create larger ‘more robust’ banks. How gathering IED’s into a pile helps I’m not sure.
Hungary is finding its currency is weakening again knocking on the head their hopes of growing out of debt. The Florint continues to fall against the Swiss Franc in which the majority of Hungary’s debts has to be paid. They are not going to achieve escape veloicity and will be pulled into a nose dive.
The same is going to be true for Spain.
So in every case the problems we had before the summer and before the bail-out fund was created, are back unchanged.
Nothing has been solved. All we did was have a quiet summer. Buckle up boys. The ride is about to start. The Dow fell like a stone from the open and dipped under 10k. The ftse is diving.
Fingers crossed!
All interesting info, but the MSM simply ignores this in the main. No back-story. To be fair, the FT does have commentary that explores the unthinkable and many comments from the well informed.