Anyway IMO the situation in world finacial affairs seems to be is a state of panic. There are problems now in Korea, Greece and all stockmarkets are taking a dive. It doesn't look good. What is your opinion? Regards Errol 43
in this order debase currencies inflation takes hold flight to gold and silver only a few left holding the cards, are you one of them?
Difference between 2008 and now is that central banks had more room to cut rates to cushion the fall. This time round interest rates in most of the developed countries are already at record lows. They either need to crank up the QE until the markets lose confidence that central banks can not control deflation, or they go the way of negative interest rates like the Swiss, the Swedes and the Danes until the markets lose confidence that central banks can not control deflation for which they need to chase higher yields for investor returns. Either way it involves a loss of confidence in central bank policy, government backed bonds and currencies and a rush into the private sector for shares, corporate bonds and other tangibles.
Plus the fed is way backed into a corner now, not raising by the end of the year is essentially an admission that the economy is so fragile that it can't manage the quater point bump they've been building up to for a year or more, even a failure to raise in September is going to look pretty damn bad. With nobody expecting a rate rise in September now I can keep my aud/usd short position open without worrying that it will stop me out when they don't announce. Meanwhile we could easily see a rate cut here. Given that economies everywhere are leaving the engine running with the garage door shut it's going to be hard to figure out what to do besides buying gold and swiss francs.
The central banks don't control the interest rates. This is the job of the bond market. When bonds tank shortly, interest rates will rise quickly. It is not a money problem. Companies are awash with money. There is more money parked waiting than ever before. Q.E. will not do anything. What is missing is opportunity. How do you make money when our governments are creating a deflationary environment with the hunt for taxes which is destroying the economy?
The markets are going to be very volatile over the next month until the Fed meeting with wild swings in both directions due to a lack of liquidity and sensitivity to the slightest news. I'm basically staying on the sidelines holding cash ready to move afterwards. If I was basing my decision of whether the Fed will hike or pike purely on the data, I would say they would pike, but the Fed's decision aren't purely data dependent. If they do pike, I'll be cautiously adding to my gold positions in incremental amounts as it passes through resistance levels until I'm convinced there's been a change in market sentiment.
The Fed has to raise rates. The pension liability is larger than the debt liability so it will actually be a welcome rise to a lot of Americans.
Interesting documentary on a historical case study on central bank shenanigans: [youtube]http://www.youtube.com/watch?v=K_oET45GzMI[/youtube]
I'm loving them old computers! And this guy: https://gifsound.com/?gif=i.imgur.com/mrhyRlO.gif&v=_c_q-1FUFMQ
Scuse me! It's hard to believe that losing a couple dozen billion just 15 years ago was so dramatic that they made a documentary about it. There's a good documentary on the 87 crash as well as the dot com, I'll see if I can find them.
