THE HUGE OVERVALUATION OF ALL ASSETS IS NOW UNWINDING...THEREBY CAUSING A CASH SHORTAGE...
THE FED ETAL HAVE ONLY "INJECTED CASH" INTO THE BANKING SYSTEM WHICH WAS THE PRIMARY ENABLE OF THE MASSIVE BUBBLES...
THIS IS AN ATTEMPT TO "SAVE THE SYSTEM"...
NAMELY THE BANKING SYSTEM...WHICH ALSO SERVES THOSE PARTS OF THE ECONOMY THAT WERE NOT INVOLVED IN THE ASSET SPECULATION...
BUT LITTLE OF THAT "NEW MONEY" IS ACTUALLY OUT IN THE SYSTEM...AS YET...IT IS FROZEN IN THE BANKRUPT BANKING SYSTEM STILL SHELL SHOCKED BY THE PLUNGE IN ASSET PRICES ACROSS THE BOARD.
THE ANOMALY IS THAT THE DOLLAR HAS RISEN AS THE RUSH TO CASH ENSUES...
AND AMAZINGLY GOLD, OIL AND COMMODITIES HAVE FALLEN IN THE FACE OF HUGE MONEY PRINTING...
NO FLIGHT TO SAFETY YET...EVERYONE JUST WANTS A SEAT IN THE LIFEBOAT!
...BUT ALL THAT IS A STORY FOR 2009...WE ARE HAVING A KEYNESIAN HEART ATTACK NOW...AND NOTHING ELSE MATTERS.
WHAT GIVES...?
IF THE CASH INFUSIONS DO NOT "BRING BACK THE BUBBLE" ...
BUT ONLY RE-LIQUIFY THE NON-SPECULATIVE PART OF THE ECONOMY... ALL ASSETS COULD JUST STAY LOW FOR A VERY LONG TIME...
THIS WOULD REALLY BE A RETURN TO NORMALCY... WHERE STOCKS SELDOM SOLD ABOVE A P/E OF 10 AND DIVIDEND YIELDS WERE ABOUT 4% TO 6%...
REMEMBER EVEN IN 1929...A P/E OF 20 WAS CONSIDERED MASSIVELY OVERPRICED...AT THE TOP!!
AND DURING THE DEPRESSION YIELDS WERE SELDOM LOWER THAN 5% ON GOOD STOCKS...
SO WE HAVE A LONG LONG WAY TO FALL BEFORE EVEN THE 1929-1932 "NEW PARADIGM" IS REACHED...
VERY LIKELY GOLD WILL ONLY RISE ONCE THE SYSTEM IS LIQUID ENOUGH TO BE OUT OF THE WOODS...
THE QUESTION IS HOW MANY MORE BAILOUTS WILL HAPPEN...? IT IS THE BAILOUTS THAT WILL CAUSE THE HYPER-INFLATION...
AND ONLY A FOOL WOULD THINK WE ARE AT THE END OF THE BAILOUT CYCLE NOW...
SLOWLY SLOWLY OTHER "TOO BIG TO FAIL" INSTITUTIONS WILL ARISE... SOCIAL SECURITY AND MEDICARE FOR EXAMPLE... STATE AND LOCAL GOVERNMENT... PUBLIC PENSION FUNDS...
AND THERE IS STILL THE CREDIT CARD BUBBLE TO BAILOUT...ETC...
SOONER OR LATER...THE BAILOUTS WILL KICK HARD ASSETS BACK UP AS A "DEFENSIVE PLAY" WHEN PEOPLE FINALLY REALIZE THAT A LOT OF MONEY NEEDS TO BE PRINTED YET...TO "FUND" THE "TOO BIG TO FAIL" ASPECTS OF THIS NEW POST BUBBLE ECONOMY...
CONSUMER SPENDING WILL PLUNGE IN THE MEANTIME BASED ON JOB LOSSES, HOUSE DECLINES AND THE MAXING OUT OF CREDIT CARDS... SO EARNINGS ARE ESSENTIALLY DEAD AS FAR AS THE EYE CAN SEE...!!
THANK GOD FOR THE PRINTING PRESS...IT WILL BE THE ONLY GAME IN TOWN SOON!
BERNANKE MAY HAVE TO "PRINT" ANOTHER FIVE TO TEN TRILLON DOLLARS JUST TO STABLIZE THE SYSTEM AND RESTORE ANY SEMBLANCE OF NORMALCY IN THE GLOBAL AND US ECONOMY...
BUT...WATCH FOR THESE COLLAPSES IN EASTERN EUROPE...THEY COULD QUEER THE LOW RATES LOW GOLD SCENARIO OVERNIGHT!!
HIKING RATES TO DEFEND NON DOLLAR CURRENCIES WILL BE THE NEXT SHOE TO FALL...AND THAT COULD SHUT DOWN THE FED PRINTING PRESS VERY QUICKLY!!
