In The Eye Of The Hurricane
The financial crisis is over. The economic crisis has begun.
The "solution" reverberating from Washington to Wall Street, amid the celebratory atmosphere in the financial markets, must be put in perspective. It represents yet another massive wealth transfer from the United States to far flung corners of the globe.
How could it be otherwise? Can one legislate new wealth into existence? Does the action by the federal government create any more products and services or capacity to produce them in the United States? If the action to be undertaken in Washington is to revive the credit markets, shouldn't we ask who exactly holds the credit?
Net net, the US is a debtor. The rest of the world, its creditor. Government action to boost the value of the credit, then, benefits the rest of the world. While the media dwell on certain high-profile beneficiaries of this transfer of wealth, there is little examination of from whom the wealth is being transferred and by what means.
Some lip service is paid to "the taxpayer," but virtually none to those who will pay the most. Most of the burden will fall - as it has in the recent past - at the gas pump, the grocery store, the monthly bill. That is, in the form of the inflation tax. It is very popular with politicians as it makes someone else appear to be the tax collector. Such taxes are borne disproportionately by the American middle class.
The markets are already sniffing this out. As the bailouts have intensified, oil prices have resumed their rise. By the time we are staring down the $200 barrel, few will connect the dots back to this day. And of all the world's financial markets, those that are up the most already are those of BRICOPEC:
Russia, Brazil Lead Record Emerging Market Gain; Bonds Rally
By Denis Maternovsky and Fabio Alves
Sept. 19 (Bloomberg) -- Emerging-market stocks surged the most in 20 years and currencies and bonds soared after central banks pumped cash into credit-markets, shoring up confidence and luring investors back to riskier assets.
Russia, China and Brazil led the rally. more...
The United States' creditors, who have begun to balk at extending yet more and more credit, may now get that boost of "confidence" needed to allow the debtor to work his way deeper into the hole. As will their middle man, the US financial system. The markets attempts to stop the decline have thus been kicked a bit further down the road.
Editor's addendum: On the short selling rules imposed today, two notes. One, we extend our sympathy to Mike Morgan who we tried to warn against shorting financial stocks. This regime – we think it is fair to at this point time to stop calling it an administration – knows no limits in the business of market controls. Two, politicians forget that a short seller is a buyer albeit at a lower price. Take him away and in a market panic there are no buyers at all. A market can in theory then fall to zero. You've been warned.
http://www.itulip.com/forums/showthr...8757#post48757
The financial crisis is over. The economic crisis has begun.
The "solution" reverberating from Washington to Wall Street, amid the celebratory atmosphere in the financial markets, must be put in perspective. It represents yet another massive wealth transfer from the United States to far flung corners of the globe.
How could it be otherwise? Can one legislate new wealth into existence? Does the action by the federal government create any more products and services or capacity to produce them in the United States? If the action to be undertaken in Washington is to revive the credit markets, shouldn't we ask who exactly holds the credit?
Net net, the US is a debtor. The rest of the world, its creditor. Government action to boost the value of the credit, then, benefits the rest of the world. While the media dwell on certain high-profile beneficiaries of this transfer of wealth, there is little examination of from whom the wealth is being transferred and by what means.
Some lip service is paid to "the taxpayer," but virtually none to those who will pay the most. Most of the burden will fall - as it has in the recent past - at the gas pump, the grocery store, the monthly bill. That is, in the form of the inflation tax. It is very popular with politicians as it makes someone else appear to be the tax collector. Such taxes are borne disproportionately by the American middle class.
The markets are already sniffing this out. As the bailouts have intensified, oil prices have resumed their rise. By the time we are staring down the $200 barrel, few will connect the dots back to this day. And of all the world's financial markets, those that are up the most already are those of BRICOPEC:
Russia, Brazil Lead Record Emerging Market Gain; Bonds Rally
By Denis Maternovsky and Fabio Alves
Sept. 19 (Bloomberg) -- Emerging-market stocks surged the most in 20 years and currencies and bonds soared after central banks pumped cash into credit-markets, shoring up confidence and luring investors back to riskier assets.
Russia, China and Brazil led the rally. more...
The United States' creditors, who have begun to balk at extending yet more and more credit, may now get that boost of "confidence" needed to allow the debtor to work his way deeper into the hole. As will their middle man, the US financial system. The markets attempts to stop the decline have thus been kicked a bit further down the road.
Editor's addendum: On the short selling rules imposed today, two notes. One, we extend our sympathy to Mike Morgan who we tried to warn against shorting financial stocks. This regime – we think it is fair to at this point time to stop calling it an administration – knows no limits in the business of market controls. Two, politicians forget that a short seller is a buyer albeit at a lower price. Take him away and in a market panic there are no buyers at all. A market can in theory then fall to zero. You've been warned.
http://www.itulip.com/forums/showthr...8757#post48757
