Posted on 01/02/2013 12:03:19 AM PST by bruinbirdman
Bears beware. A monetary revolution is underway.
The US, Japan, Britain, as well as the Swiss, Scandies, and a string of states around the world, are actively driving down their currencies or imposing caps.
They are tearing up the script, embracing the new creed of nominal GDP targeting (NGDP), a licence for yet more radical action.
The side-effects of this currency warfare -- or "beggar-thy-neighbour’ policy as it was known in the 1930s -- is an escalating leakage of monetary stimulus into the global system.
So don’t fight the Fed, and never fight the world’s central banks on multiple fronts.
Stock markets have already sensed this, up to a point, lifting Tokyo’s Nikkei by 23pc and Wall Street by 10pc since June.
The New Year ritual of predictions is a time for bravado, so let me hazzard that the S&P 500 index of stocks will break through its all time high of 1565 in early 2013 -- mindful though I am of flagging volume and a wicked 12-year triple top.
The Shanghai Composite will continue its explosive rally as China loosens the spigot again. The Politburo is reverting to its bad old ways of easy credit for state behemoths, and an infrastructure blitz, with $60bn of fiscal stimulus as well for good measure. Reform can wait.
Yes, we all know that China has added $14 trillion in extra credit since 2009, equal to the entire US banking system. It is trouble waiting to happen. But trouble can be deferred.
The more that investors come to think another cycle of global growth is safely under way, the riskier it will be to hold corporate bonds, $8 trillion in the US alone. With yields priced for deflation, that bubble is dangerous to own on 10-year maturities
(Excerpt) Read more at telegraph.co.uk ...
stocks soared for a while in Zimbabwe as their inflation spiraled out of control
The more that investors come to think another cycle of global growth is safely under way, the riskier it will be to hold corporate bonds, $8 trillion in the US alone. With yields priced for deflation, that bubble is dangerous to own on 10-year maturities. The money will rotate into equities and bullion, with China’s central bank driving gold through $2,000 at last.As a polar bear, I doubt that such a happy cycle is upon us. We merely have a rally within a structural trade depression.
The headwinds of deleveraging will return with gale force. The glut of excess global savings that lay behind the great crisis of 2008-2009 -- and that has kept us stuck in the Long Slump ever since -- is still getting worse. The international trading system remains badly out of kilter.
There is chronic overcapacity across global industry and not enough demand to carry a full cycle of economic expansion, or to reach "escape velocity" as they say these days.
Until that changes, every global rebound is doomed to disappoint within a few quarters, and that includes the cyclical upswing of 2013.
Economics ping.
So long as Uncle Ben is talking QE, it's just buffering the next phase of the long-wave contraction.
Watch your cash disappear right before your eyes!
World fiat is devaluing: most of all the Yen, which will crash before the end of the year.
Too much Government debt and WAY too much Japanese Government debt.
Buy gold and silver.
I’m planning to sell into any pops. We have this scenario repeating in two more months. And who knows what else will be going on...esecially in the M.E.
This headline needs a Stackers Alert tag.
Saved
Saved
DUN
Dow Un-Industrials “sore” soar, as Federal Pensions pump in.
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liquidity
abandon purchases
barter ruthlessly
discrimate financially against all those who voted to destroy you
let “stinky” and his insiders eat cocaine
a dog-eating jackal is not a border collie
ground him
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