The Federal Reserve and our fearless leaders in Washington have set up a “Can’t Lose” scenario for big bank speculation.
Their traders are almost guaranteed winners . This is a “no brainer” situation which leaves me sorry that I left the tradeing desk a lifetime ago.
The big banks can borrow money from the Fed for close to 0%, which they theoretically should be lending to consumers for mortgages, small business loans, and other economy stimulating activities.
Instead they are useing this almost free money to speculate or trade in foreign currencies, or to buy commodities such as oil , gold futures, or anything else which is benefiting from a falling dollar.
Prices across the board are being bid up despite the imminent onset of the next phase of our recession/ depression.
Large multinational corporations are showing growing profits due to the weakened dollar . Overseas sales in foreign currencies are brought back to the U S where an additional profit is realised due to the dollars weakness.
If you pay attention to the economic reports, you will notice an exorbitant number of corporations reporting that they exceeded estimates of earnings per share (E P S ) but they are also reporting shrinking sales volume.
The increased profits despite smaller volume is due to cost cutting overhead.( Layoffs) , in addition to the falling dollar.
A win for multinational corporations, a big LOSS for the American worker.
The Market continues to recover, passing the Dow 10000 mark and not looking back, yet the U S economy is still mired in a spreading recession.
Unemployment is increasing week by week. Last week the new filings for Unemployment insurance wasd ONLY 510000 ..Only!! Are you kidding me.
They say that is an improvemnt showing a turn in the economy.BULL FEATHERS!!!
They don’t care.
They have an agenda which welcomes spreading economic pain for the little guy.
In September consumer credit fell almost $ 15 billion, the 8th consecutive month of contracting consumer credit, (Over $ 170 billion total so far)
Considering that consumer debt is still exceeding historical levels by over 60% of income, or almost 2 1/2 to 1 . This indicates an additional correction can be expected, which should exceed the rapid decrease which we have just experienced.
These figures do not include the mortgage credit markets, creating an additional credit contraction of $ 4 – 6 trillion.
This scenario, coupled with other market factors which we have discussed over the past 16 months will create a serious deflationary spiral, which should accelerate as the prime ARM’s begin to accelerate in 2010-2011.
At this rate of deflation the burgeoning recession/depression figures to have another 5-8 years, assuming that the Government leaves the economy alone, Which it won’t.
Next- Don’t forget the falling dollar!!! A great way to further muddy the waters .