Global Markets In Review: Reversal In Financial Markets

Seeking Alpha ^ | 11-01-2009 | Prieur du Plessis

[blam]

Global Markets In Review: Reversal In Financial Markets

Prieur du Plessis
November 01, 2009

Rewind the movie to before the stock market lows of March 9: Stocks down, corporate bonds down, commodities and gold down, emerging-market currencies down, safe havens in fashion, including the U.S. dollar and government bonds. In short, risky assets closed sharply lower over the past few days as concerns mounted over the outlook for central bank policy and the sustainability of the global economic recovery, with investors only warming momentarily to the U.S. emerging from recession as shown by the Q3 GDP report (announced on the 80th anniversary of Black Tuesday, October 29, 1929).

Cameron Brandt, senior analyst of fund tracker EPFR Global, said (via the Financial Times):

Good corporate earnings - viewed in recent weeks as fuel for a sustained recovery - are currently being regarded as ammunition for policymakers looking to close the fiscal and monetary stimulus taps.

Adding to the economic uncertainty, Chuck Butler of the Daily Pfennig, highlighted a study by Peter Bernholz (Professor of Economics in Basel) in which he analyzed the world’s 12 most important periods of hyperinflation and discovered that the tipping point occurred when deficits amounted to 40% of the expenditures: Butler said:

For the United States we have arrived at exactly that point. The deficit of $1.5 trillion amounts to 41.7% of the $3.6 trillion in expenses.

Source: Walt Handelsman, October 30, 2009.

[snip]

[VRWC For Truth]

Here’s the deal. The government is spending trillions to keep interest rates down to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers’ incomes. ‘It’s a direct wealth transfer from savers and retirees to overly indebted borrowers,’ says Greg McBride, senior financial analyst at Bankrate.com.

THROW THE BUMS OUT!

[AndyJackson]

‘It’s a direct wealth transfer from savers and retirees to overly indebted borrowers,’

This is wrong and it would be helpful if people would follow the money instead of attempting to incite warfare among us "little folk." Overly indebted borrowers are not the beneficiaries of this either. Some day they still have to pay the money back. Who are getting billions in bonuses? Goldman Sachs? Explain to me how that works again.

[org.whodat]

Some day they still have to pay the money back.

So could you give me a link to the pay back schedule from GM and Chrysler, and AIG, not to mention CIT that may file this week.

And if you don't have the poster is correct and you are sucking air!

[IDontLikeToPayTaxes]

bump

[AndyJackson]

You seem like a smart fellow, so I am surprised that you miss the blindingly obvious. Very rarely does the borrower get the cash he borrowed. Inevitably it goes to the seller of real estate, the automobile dealer and manufacturer, etc. etc. So rarely is the debtor the beneficiary of the excessive debt, but rather someone else who got paid with the money the debtor borrowed.

Yes debts can be liquidated in bankruptcy, but the debtor is usually little better off as a consequence.

It's an old proverb. As I said, follow the money.

[org.whodat]

LOL, my tax dollar went to bail out a failed business, it was not you every day transaction. If the banker are business makes a bad deal let them live with the results. I repeat my tax dollars are not an every day transaction and to treat them as such is and endorsement of the government picking losers and winners.

[AndyJackson]

I agree completely.