Casino economics: How the S&P 500 endured two 50 percent dips in the 2000s and sent the middle class packing.
It took the S&P 500 about 13 years to get back to where it was in 2000. Of course the power of inflation has taken an even deeper toll on this trend. The stock market is largely a spectacle for most average Americans. It is a dramatic sideshow like going to the track and betting [...]
Are stock investors coming back in at another debt induced peak? How regular stock investors are horrible at market timing.
The media is falling over itself with articles on how fantastic the stock market is. The fact that the S&P 500 is now up from the March 2009 lows by over 100 percent seems to put the financial crisis in the annals of history. Yet for most investors, the stock market is largely a casino. [...]
Is the stock market a sham for the middle class? Retail investors expected to pull out $475 billion in funds. Volatility index under pricing real risks.
The stock market is largely a source of entertainment or awe for most Americans instead of being a true source of wealth. In the United States roughly 42 percent of all financial wealth is aggregated with one percent of the population. One third of Americans have no savings at all so for this group, the [...]
Smoke and mirrors economy – 47 percent of the members in Congress are millionaires. 67 percent of Senators. Fed and Treasury money close to $7 trillion.
The Federal Reserve is really deep into uncharted territory. In no other time in history has the Fed been so intricately involved in the overall economy. The Fed balance sheet has expanded to an incredible level under very little scrutiny by the public or elected officials, many who have a vested interest in keeping the [...]
QE3 into infinity and stagflation – Federal Reserve now purchasing over 50 percent of MBS and planning on buying $40 billion per month into infinity.
The Federal Reserve is playing with financial fire here. The last employment report was terribly weak and no amount of spinning can make it good. The drop was largely based on hundreds of thousands of Americans dropping out of the labor force. Is that really a positive sign? Last week we received data from the [...]
Zero effective policy and stalling QE3 – Why QE3 will have little financial impact if implemented. Deposits at US commercial banks quickly approaches $9 trillion.
The markets eagerly await the words of central bankers over the next few days. The markets are on the fence waiting to see if Ben Bernanke gives the green light for QE3. What many fail to realize is the Fed already has other mechanisms to force banks to lend in the current marketplace. First, there [...]
The end game of global leveraged debt – double-digit percentage point market declines in Europe and Japan and the danger of refinancing debt with longer term debt.
There is a painful realization that shifting debt around like a game of musical chairs has little merit unless real production is achieved as an end result. May was a disappointing month for markets in general. While the S&P 500 certainly fell, markets in Japan and Europe took double-digit declines. The massive amount of leverage [...]
The chicanery between the Fed and ECB – twin balance sheets near peak levels and many European nations back in recession. Methods of understating US unemployment rates.
The Fed and ECB (European Central Bank) have taken notes from the exact playbook in dealing with the global financial crisis. People tend to believe that these are somehow fully set government agencies but in reality, they are designed to protect their number one constituency group. The Fed and ECB have the primary mission of [...]
Contagion and the viral spreading of debt based systems – CEO pay at regional banks surge on average to $10.5 million thanks to bailouts while austerity is forced onto the middle class.
The biggest economy in the world just reached a new peak with their unemployment rate. We are not talking about the United States but the massive block in the Eurozone. The unemployment rate in the 17 country block reached a new all-time high at 10.9 percent as austerity measures are being used to combat massive [...]
The cascading waves of debt implosion – 5 charts looking at debt leverage, velocity of money, and contagion impacts from the European crisis.
If you inject money out of thin air into the banking sector but no quality jobs emerge, is the result a success? The bailout mission statement revolved around keeping credit available for the American public. The absolute opposite has occurred. A massive internal credit deleveraging has been taking place but the banks have simply hoarded [...]