BGR:
< The rest of the world sits on piles of cash>
The horrendous fall of many of the world's stock markets has destroyed real wealth. Ditto, the currency crunches. Yes, the central banks of the world are printing madly, but to have this foolish exercise work, one requires CREDIT-WORTHY borrowers. They are few and far between around the globe. Additionally, one also requires a population that is inclined or has a need to borrow. Again, not much showing up outside of the U.S. and to a lesser degree, Europe.
The Japanese savers poured a river of cash into our markets last year, and in my opinion, provided the offset for the reduced flows to domestic mutual funds. They have been retreating back home for months, unfortunately much lighter of load, having lost what I estimate to be 35-40% due to currency and market wounds.
I think the cash on the sidelines is not consequential. Additionally, there is a slow but sure (finally) exodus of professional dough from the tulip. The support comes from the e-bananas and the dip-flips,....not your most savvy investors, and probably prone to the normal grip of panic once the losses start to come. Their use of massive margin also suggests that once they feel some sustained pain, their exodus is likely to clog the air lock doors.
Sir Alan's blood pressure can be measured directly in the bond prices and bond spreads. We are almost right back to the levels that locked the bond markets last Fall. My comfort level as a bear mounts now with every passing day. (g)
Best, Earlie |
