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The Flight Into Equities
We know in our heart of hearts there is no substitute for free market
efficiency, but we keep electing politicians who promise bailouts,
handouts, stim programs, wars on cancer, drugs and poverty, better
healthcare, more jobs, better retirements and taxes on the rich. When
will we learn?
Now let’s look at what’s going on with market fundamentals:
Shipping prices are going up, suggesting trade may improve.
Insurance company prices are going up, suggesting toxic assets may improve.
Banks are going up, suggesting they missed financial Armagedden again.
Gold and silver are going up, suggesting the Central Bank is still
trying to inflate the credit and money supply.
While government claims credit for fixing the economy, we know deep down
government can only fix the economy as in castrate it.
There is no free lunch. Borrowing from Rich Peter to pay Poor Paul does
not work long because overtaxed Peter runs out of money before Paul gets
rich, and debts pile up so high they cannot be repaid or even serviced.
If government was so wise, why did it remove financial protections in
place since the last Great Depression? And why do monopoly media
headlines refuse to admit with GDP down 12.4% the last three quarters,
we are in another Great Depression?
We simply do not get something for nothing, individually or collectively.
$100 Trillion of IOUs Congress authorized, plus $200 Trillion of big
bank, AIG, FNM and FRE derivatives dwarf and destroy the capital of
American big banks by as much as ten times. $592 Trillion of off balance
sheet, over the counter, and unregulated derivatives dwarf the world
economy, and their risk pricing models did not work, leading to default.
And they are likely to go down for Round Two some day ahead.
But maybe not for a while.
