<<The change is that the Fed does seem to try to support the bond and stock markets in this way today whereas they didn't in the past.>> they do now because they know they because they know the financial network is frighteningly dependent of the equity and bond market.
The startling thing is that during the secular bear of 66-82 so few were dependent on the market relative to the huge numbers now that what is at stake has now escalated exponentially; during 66-82 the pain was unemployment and inflation but there was not this "o my o my the stock, i am ruined". With only one household in 10 having a Mutual Fund account, it was on the back burner of concern. There was no CNBC, there was no "yada yada the stock market".
But now the number of shares being held in MFs is so extraordinary that it works out that there be virtually 2 MFs account for every household in the U.S.A. The FED is not blind, they know they are sitting on a powder keg that stands over an uncollasped sinkhole .
I have said oft before, societies were never meant to have economies based on the stock market, the stock market must be based on the economy.
If we had not divorced ourselves from all reality in terms of traditional evaluation we would NOT be in such dangerous straights now.
But behind closed doors Greenspan knows we are walking tightrope, he can't say it, because that would bring an immediate crash, so they they use the PPT/the Working Group like never before due to dire circumstances.
I have likened Fed actions to Sisyphus, they prop and prop, but it nonetheless keeps slipping downward.
Rob Stein, who is chief economist for the Astor Assessment Fund(Economist out side the power centers are far superior to those working inside the TheBox,imo); a fund that has been 100% short since the Bubble, was on Bloomberg TV and stated they are still 100% short and they have no qualms about that, it is going to get worse.
When asked about the Michigan Sentiment index he was rankly sarcastic with the remark " imagine a poll based on the 5 house wives in Michigan", but that is about how good that MS number actually is; it is a joke.
When asked "but the consumers keep spending, that's good, no?'" he said (Not Verbatim!) "so they keep spending and get deeper in debt, so what, the fact is that is not good"
Plus factors like zero% financing and rebates is a smoke screen for dire problems.
Hell the only thing left is the Fed desperately fighting the inevitable.
I support the views of Dr. Marc Faber and where he sees this all leading.Whew! Max |
