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The Fed Is Funneling the Investing Herd Off a Cliff
The Fed Is Funneling the Investing Herd Off a Cliff
What happens to price in a bidless market? It goes off a cliff.
As you probably know by now, it turns out lemmings didn’t voluntarily commit mass suicide: they were driven off the cliff by those in charge. Lemming Suicide Myth: Disney Film Faked Bogus Behavior.
Investors in stocks, bonds and real estate are being herded off the cliff by the Federal Reserve. The name of the game in the New Normal is to force investors large and small into risk assets. When the risk assets blow up, the herd plunges headlong over the cliff en masse.
Virtually every statistic and every public utterance by Federal Reserve spokespeople or mouthpieces is designed to persuade us of several untruths–untruths that are the essential foundation of the vested interests benefiting so mightily from the corrupt, unsustainable status quo:
1. The official statistics–unemployment, GDP, etc.–are accurate reflections of actual economic activity.
2. Risk assets (stocks, bonds and real estate) are no longer risky because “the Fed has your back.”
3. Too big to fail/jail corporations are the foundation of our prosperity, so no expense will be spared to bail them out and restore corporate balance sheets and profits.
That each of these propositions is self-evidently untrue creates a massive problem for the Fed: the Fed and its minions must overcome the weight of truth with propaganda and persuasion–and if that fails, then it must strip anyone who dares leave the herd of any safe returns on their capital.
In other words–if you leave the risk-on herd, you lose any hope of low-risk returns and if you manage anyone else’s money, you also lose your job. The Fed is herding the crowd with financial tasers, causing anyone who veers away from the risk-on herd financial pain.
Anyone who dares to bet against the risk-on herd and the Fed: you will be destroyed.
…click on the above link to read the rest of the article…
The Central Banks Are Losing Control Of The Financial Markets
The Central Banks Are Losing Control Of The Financial Markets
Every great con game eventually comes to an end. For years, global central banks have been manipulating the financial marketplace with their monetary voodoo. Somehow, they have convinced investors around the world to invest tens of trillions of dollars into bonds that provide a return that is way under the real rate of inflation. For quite a long time I have been insisting that this is highly irrational. Why would any rational investor want to put money into investments that will make them poorer on a purchasing power basis in the long run? And when any central bank initiates a policy of “quantitative easing”, any rational investor should immediately start demanding a higher rate of return on the bonds of that nation. Creating money out of thin air and pumping into the financial system devalues all existing money and creates inflation. Therefore, rational investors should respond by driving interest rates up. Instead, central banks told everyone that interest rates would be forced down, and that is precisely what happened. But now things have shifted. Investors are starting to behave more rationally and the central banks are starting to lose control of the financial markets, and that is a very bad sign for the rest of 2015.
And of course it isn’t just bond yields that are out of control. No matter how hard they try, financial authorities in Europe can’t seem to fix the problems in Greece, and the problems in Italy, Spain, Portugal and France just continue to escalate as well. This week, Greece became the very first nation to miss a payment to the IMF since the 1980s. We’ll discuss that some more in a moment.
…click on the above link to read the rest of the article…
Investors Start To Panic As A Global Bond Market Crash Begins
Investors Start To Panic As A Global Bond Market Crash Begins
Is the financial collapse that so many are expecting in the second half of 2015 already starting? Many have believed that we would see bonds crash before the stock market crashes, and that is precisely what is happening right now. Since mid-April, the yield on 10 year German bonds has shot up from 0.05 percent to 0.89 percent. But much of that jump has come this week. Just a couple of days ago, the yield on 10 year German bonds was sitting at just 0.54 percent. And it isn’t just Germany – bond yields are going crazy all over Europe. So far, it is being estimated that global investors have lost more than half a trillion dollars, and there is much more room for these bonds to fall. In the end, the overall losses could be well into the trillionseven before the stock market collapses.
I know that for most average Americans, talk about “bond yields” is rather boring. But it is important to understand these things, because we could very well be looking at the beginning of the next great financial crisis. The following is an excerpt from an article by Wolf Richter in which he details the unprecedented carnage that we have witnessed over the past few days…
On Tuesday, ahead of the ECB’s policy announcement today, German Bunds sagged, and the 10-year yield soared from 0.54% to 0.72%, drawing a squiggly diagonal line across the chart. In just one day, yield increased by one-third!
Makes you wonder to which well-connected hedge funds the ECB had once again leaked its policy statement and the all-important speech by ECB President Mario Draghi that the rest of us got see today.
…click on the above link to read the rest of the article…
