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The Market Just Figured Out Two HUGE Problems (ObamaNomics DeathWatch™)
Zero Hedge ^ | November 12, 2012 | Graham Summers

Posted on 11/12/2012 1:07:41 PM PST by Zakeet

The US Presidential election ended November 6, 2012. Since that time, the market has fallen 3%.

There are a multitude of reasons for this, but the primary one is the fact that the markets is beginning to realize two key items:

  1. Everything that was a problem in the run up to the US election is still a problem (in fact many issues are now worse than they were a few months ago).

  2. Having engaged in pre-emptive and extreme actions to keep things calm in the run up to the election, the US Fed and ECB have run out of effective monetary bullets.

Regarding #1, according to the ECRI, as of June 2012, the US is back in recession. The ECRI has proven far more accurate and timely in predicting recessions than the NBER. And now that the election is over I expect other US data (the ISM, LEI, and employment numbers) to start moving towards reality (bad).

By the way, the US just hit a new record for food stamp usage.

Across the pond, the European banking and sovereign debt crisis continues to worsen: Greece has to redeem €5 billion worth of bonds on Friday. The country just managed to pass its latest budget proposal (which undoubtedly the country will fail to meet… just like all the others) but the troika has yet to issue its latest report on Greece.

Germany has stated point blank that without the troika report, Greece won’t be getting more funds. Is Germany finally ready to let Greece fail? It’s hard to say. But Germany did put together a special advisory panel to focus exclusively on assessing the cost of a Grexit back in August.

Elsewhere in the EU, Spain continues to implode. The mainstream financial media notes that people are now killing themselves when evicted from their homes. However, things are in fact worse than that. My contacts in the country inform me that in some regions the government hasn’t even paid its pharmacies in six months. Indeed, the region of Valencia owes its pharmacies an insane €500 million.

This is nothing short of a societal shut down. Expect the civil unrest and economic implosion to accelerate in the coming weeks and months.

And finally, France’s private sector is falling to pieces. September’s auto sales numbers were worse than those of September 2008. The country’s PMI reading is back to April 2009 levels. And the French Central Bank has announced the country will re-enter recession before year-end.

Again, nothing has been fixed in the last six months. In fact, things have gotten much much worse.

As for #2, it is now clear that the ECB and US Fed used up their last remaining effective bullets this summer in their efforts to aid the Obama re-election campaign (Romney stated he would fire Bernanke, hence the Fed’s decision… while various EU officials admitted the Obama administration requested that they keep things calm in the build up to November).

Indeed, stocks are now sharply down since QE 3. Gold and Silver, in contrast are up. If this dynamic does not change immediately then the positive consequence of the Fed’s actions (namely stocks rising) is now obsolete while the negative consequence (higher inflation) is about to hit lift off.

What would the market look like without the Fed’s aid? According to the business cycle the S&P 500 would be closer to 1,000.

In the EU, the ECB announced a plan to make unlimited bond purchases for EU nations that meet various reforms and “conditions.” The problem with this is that none of the countries that need money (namely Spain and Italy) want to meet any conditions as their economies are already imploding without additional austerity measures (see the information on Spain above).

Thus, the ECB promise has in fact turned out to be a colossal bluff. At the end of the day, Mario Draghi can say whatever he wants, but unless Germany is willing to go along with the ECB, he can’t do much of anything. Germany demands “conditions” therefore so does the ECB.

So… the global economy continues to slow. Europe is burning (literally in some countries). And the primary Central Banks (the Fed and the ECB) are out of ammo.

Buckle up… things are about to get messy.


TOPICS: Business/Economy; Culture/Society; Extended News; News/Current Events
KEYWORDS: economy; inflation; market; recession
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To: nodumbblonde

That’s exactly what it is. They have this attitude that businesses have this endless supply of money at their disposal. It’s disgusting.


41 posted on 11/12/2012 3:13:58 PM PST by CommieCutter
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To: Republican Wildcat
Because it is already law.

If it's a tax, no, it's not. Tax bills have to originate in the house. Obomacare is a senate bill. It may have "passed", but it wasn't created following Constitutional procedures. Therefore, it's unconstitutional as a tax if the procedure itself is argued.

If the Republicans wanted to stop it, they could. They could simply defund it. It's not valid unless it's re-written by the house and brought up by the house for a re-vote.

It's just that Republicans like it (I.E., it's the good 'ol good cop/bad cop routine).

Remember. Washington sees us as a slave force and not as human beings. We're dollar signs. In Washington, it's all about power and money. It has nothing to do with us. We're like the public school kids - slabs of meat on an assembly line. Each one has a dollar value. We're born, we pay, we die.

I believe once a politician spends too much time living in the beltway, they lose all their sense of humanity. When they need our attention for some reason, they become like actors on a stage. They say they're doing everything for us. Yes, it's all for us (and the ignorant audience cheers them on).

42 posted on 11/12/2012 3:18:35 PM PST by concerned about politics ("Get thee behind me, Liberal")
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To: The Duke

I’m in IT so this is really my knowledge area.

I think it’s tied to GDP. And that dollar and QE
Deflates it, among gold .


43 posted on 11/12/2012 3:24:11 PM PST by Morris70
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To: nodumbblonde

Excellent post.

In my view the US govt is like the family in 2007 riding a wave of false prosperity based on maxxed out credit cards and helocs on a house with negative equity.

It can’t end well....


44 posted on 11/12/2012 3:28:28 PM PST by nascarnation (Baraq's bankruptcy: 2016)
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To: CommieCutter

The other day, my daughter said, “Everyone thinks we’re rich because we own a business.”

We live in the same tumble-down, perpetually-being-restored old house we lived in before we started the business. Our newest vehicle is 10 years old, just as before we started the business. We haven’t taken a vacation in 5 years. NOTHING has changed in our lifestyle but suddenly everyone thinks we’re rich.

I just want to bang my head against the wall...


45 posted on 11/12/2012 3:35:21 PM PST by nodumbblonde ("I'm all for helping the helpless, but I don't give a rat's a** about the clueless." - Dennis Miller)
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To: concerned about politics

“The Republicans, no matter how many times the American taxpayers vote them in, have never gotten rid of anything the democrats have done.”

Not quite...Reagan signed the death warrant for the Interstate Commerce Commission, and Clinton executed it in 1995. That means it died at the ripe old age of 108.

:-)


46 posted on 11/12/2012 3:39:56 PM PST by sergeantdave (The FBI has declared war on the Marine Corps)
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To: nascarnation

But they don’t think anything bad is going to happen because not much has happened to the irresponsible big spenders they know.

Credit card debt? File bankruptcy and that’ll all go away. (I know someone on their third bankruptcy. It’s just a get-out-of-jail-free card to them.)

Can’t afford the house? The government will force the lender to let you stay.

Sheesh, they see people that have never held a job in their lives with plenty of food, heat, medical care and enough cash for tattoos and booze.

What could possibly go wrong? Big Daddy has always made everything okay so far!


47 posted on 11/12/2012 3:48:30 PM PST by nodumbblonde ("I'm all for helping the helpless, but I don't give a rat's a** about the clueless." - Dennis Miller)
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To: Zakeet

Don’t count on it.


48 posted on 11/12/2012 4:33:51 PM PST by sarasmom
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To: Logical me

So much for my retirement plans.


49 posted on 11/12/2012 4:56:51 PM PST by MrChips (MrChips)
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To: MrChips

I have started eating my savings.


50 posted on 11/12/2012 5:11:05 PM PST by Wildbill22
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To: Zakeet

“I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom.
And to preserve their independence, we must not let our rulers load us with perpetual debt.
We must make our election between economy and liberty, or profusion and servitude.
If we run into such debt, as that we must be t...axed in our meat and in our drink, in our necessaries and our comforts,
in our labors and our amusements, for our calling and our creeds as the people of England are, our people, like them,
must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts
and daily expenses; and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes;
have no time to think, no means of calling our miss-managers to account but be glad to obtain subsistence by hiring ourselves
to rivet their chains on the necks of our fellow-sufferers Our land-holders, too, like theirs, retaining indeed the title
and stewardship of estates called theirs but held really in trust for the treasury, must wander, like theirs, in foreign countries,
and be contented with penury, obscurity, exile, and the glory of the nation. This example reads to us the salutary lesson,
that private fortunes are destroyed by public as well as by private extravagances.
– Thomas Jefferson, letter to Sam Kercheval about reform of the Virginia Constitution, July 12, 1816; Bergh 15:39-40


51 posted on 11/12/2012 5:14:00 PM PST by TomasUSMC ( FIGHT LIKE WW2, FINISH LIKE WW2. FIGHT LIKE NAM, FINISH LIKE NAM)
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To: nodumbblonde

I have a friend who owns a business and is in the same position and a lot of dummies think he’s sitting on piles of cash.

I had a liberal friend (this was about 10 years ago) that thought we were loaded when we lived in our first house which was 920sq ft. Granted, my wife is good at making our home look great, but still ...


52 posted on 11/12/2012 5:43:12 PM PST by CommieCutter
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