Be careful who you are listening to, imo. A crisis in confidence leads everyone who has an agenda to point the finger at their leading cause of the problem. Europe loves to point the finger at the US, as we love to point the finger at them. There is plenty of blame to go around. Just a few weeks ago, the Europeans were VERY smug in their finger pointing. Today, the story has changed dramatically, as their banks are failing too.
There are many issues involved in this downward spiral. Even banks who have the money (and plenty of it) are refusing to lend it out, causing rates to rise daily. Short term rates (overnight, 2 day) are even higher then weekly rates or monthly rates! The trust issues are clearly taking the forefront.
From a "bad news is good news" point of view, all the talk of a very deep, long depression is the type of talk you should expect to hear before a real bottoming process can be found. People, funds, governments are selling anything and everything to raise money...in all denominations.
Keep in mind that right at the top of the recent oil price spike, the talking heads started saying that $200 oil was next. Well, guess what? We've turned back from $150 oil down to $90. Just one example of being very careful who you listen to!
IMO, it would be a very, very positive thing to see a coordinated rate cut from all the major players, EU, USA, Japan, etc... We saw Australia cut their rate 1% overnight and that was twice as much as anyone was expecting. I believe this was a shot across the bow and that we will see more action in the next few days.
No one should expect a V bottom here, as the deterioration in both the markets and most people's confidence has been steadily getting worse. These are somewhat necessary evils in the bottoming process.
At some point we may have a massive bear rally but, once again, be careful that you don't expect too much out of it!
jmo
TO |
