It's not just Boomers who fear the Big Five-Oh..... Take the financial markets.....
The frenzy in the bond markets could be caused by attempts to keep the 10 year bond yield UNDER 5.0.....
Consider:
Greenspan created a situation after the first stock bubble burst wherein yield became SO LOW that many investors and pension funds simply had to take a flyer on stocks.....
Remember those .9% returns on bank CDs.....?
WELL THAT PUT, OR KEPT, A LOT OF PEOPLE SPECULATING IN STOCKS....WHO WOULD HAVE PREFERRED THE RELATIVE SAFETY OF BANK DEPOSITS...
Today, it is very possible that the BATTLE TO AVOID THE BIG FIVE-OH IN BONDS is just as urgent as the BATTLE TO HOLD DOW 10,000....! NO MATTER WHAT....IT'S THE NEW "SINE QUO NON" FOR WALL STREET TO SURVIVE.
Greenspan, and his clients on Wall Street, know that they are on THIN ICE NOW.... Stocks have not exactly been the place to be over the post bubble years....DESPITE HUGE EFFORTS BY THE FED TO KEEP STOCKS AS "THE ONLY WAY TO GO" .....PRIMARILY BY HOLDING RATES SO LOW, SO LONG......OR, IS IT TOO LOW, TOO LONG?
Alas, even to the point of trashing the dollar and spiking oil and other commodities....ALL ARGUABLY JUST TO KEEP PEOPLE IN STOCKS!
LATELY, FOR THE FED AND WALL STREET... THE ENEMY IS AT THE GATES--EVERYDAY.
THE FED SIMPLY MUST CONTINUE RAISING RATES NOW NO MATTER WHAT....THEY MUST CONTINUE BACKING OUT OF THEIR UNTENABLE POSITION OF ULTRA-LOW RATES IN THE POST BUBBLE ENVIRONMENT.
ON THE BRIGHT SIDE HOWEVER;
HIGHER RATES COULD SAVE THE DOLLAR AND REDUCE THE COST OF OIL AND GAS.... AND ALSO STOP THE CONTINUED OVER-EXPANSION OF GLOBAL CAPACITY IN PLACES LIKE CHINA AND INDIA....
ON THE DARKER SIDE;
HIGHER RATES COULD FREE MILLIONS OF SMALL INVESTORS FROM THEIR SLAVERY TO THE STOCK BROKERAGES....AND ALLOW THEM TO RETURN TO THEIR BELOVED BANK CDs WHERE THEY'LL FEEL SAFER.
FURTHERMORE; HIGHER RATES WILL LIKELY BURST THE MUCH TOUTED REAL ESTATE BUBBLE THAT IS MOST SERIOUS ON BOTH COASTS AND IN THE INTER-MOUNTAIN WEST....SO BEWARE FREDDIE AND FANNY!
For Greenspan it's really a case of choose your poison.....cheaper gas and support for the dollar;
OR,.... lower stock prices and a bursting of the house bubble.... WITH POSSIBLE CREDIT AND BANKING PROBLEMS TO FOLLOW....
No doubt Greenspan would GLADLY let the dollar slide...but for the effect it has on oil and commodities;
(despite valiant efforts to trash gold by the Fed's various shills in the thin gold market).....
RIGHT NOW EVERYTHING IS "HANGING FIRE".....AWAITING THE "NEXT BIG EVENT."
....or perhaps, the next series of small events that finally catches the imagination of the investing community. Stay tuned......
