Like many of y'all seem to be indicating, I've tended to be a cautiously hedging pessimist the more heated this 'boom' has appeared to be (haven't read the whole thread). I've seen a few 'movies' like this one before, maybe you remember the recent last one about a decade ago. The curtain might be going up... then again, IDGAS, just drifting on autopilot
Some financial analysts are advising that a US Federal Reserve bailout of our oh-so-trustworthy banking and investment Titanic has already begun
, on 17 September.
Link and some quotes below for your amusement. I have no idea how valid it is, but a few years ago I had a seven-figure buyout which I've largely kept in very calm waters, willingly giving up a lot of what I perceive as undue risks, and waiting...
By Pam Martens and Russ Martens: December 23, 2019 ~
" The S&P 500 Index and the Dow Jones Industrial Average set new record
highs every single
day last week. This occurred despite the Federal Reserve justifying its unprecedented hundreds of billions of dollars each week in cheap
loans to Wall Streetís trading houses as necessary to stem a ďliquidityĒ crisis.
You canít have a liquidity crisis when the stock market is setting record
highs for an entire week. Those two things just donít correlate.
The Fed, through its money spigot, the New York Fed, began sluicing these funds to Wall Street on September 17, the day the overnight borrowing rate in the repurchase agreement (repo) loan market spiked from 2 percent to 10 percent. This was the first such intervention by the Fed since the financial crisis.
The repo market is where banks, hedge funds and money market funds loan each other money overnight on the basis of good collateral like U.S. Treasury securities.
An unprecedented spike to 10 percent in the repo market is a harbinger that one or more of the borrowers in this market is in trouble
and lenders donít want the exposure so they are backing away from lending. This is how free markets are supposed to work
. They are supposed to be allowed to send pivotal warning signs from time to time through an efficient pricing mechanism.
But instead of allowing the free market and efficient pricing components to function, the Fed cut this short and drew a dark curtain around this part of the market by flooding cheap
, electronically-created money to Wall Streetís trading houses.
On December 12, the New York Fed upped the ante. It announced that over the next month it would shower
the trading houses (primary dealers) on Wall Street with a cumulative total of $2.93 trillion in short-term loans.
Now Wall Street has made it clear what the cheap money is being used for. Itís not being loaned out to help the general economy Ė itís being used to push the stock market to record highs each day.
U.S. taxpayers are also the big losers. The Federal Reserveís balance sheet is ballooning again as a result of these repo loans and is now back over $4 trillion. If its balance sheet is this big now, whatís going to happen if Wall Street blows itself up again and the Fed has to intervene as a legitimate lender of last resort. Are we looking at an unthinkable $8 trillion balance sheet at the Fed?
U.S. taxpayers are ultimately on the hook for any losses at their central bank.
U.S. investors and U.S. citizens are also the big losers. A euphoric stock market undermines the case in Congress for making the critically-needed reforms of Wall Streetís mega banks before they blow themselves up again with derivatives.
And, finally, the next generation and their children
are the ultimate biggest losers of all. ..."
ďThe Debt to the Penny and Who Holds ItĒ: