What was deemed acceptable monetary policy badly mutated. Seemingly perpetual bubbles have consequences.
Avoiding market instability is the Fed’s priority.
The passing of Paul Volcker marks the end of “the greatest generation” of monetary policy stewards.
It’s repo madness for the financial sector but our federal government continues to command the debt bullet headed for the asset bubble.
Bear markets and recessions have been rescinded. Stocks always to up. Debt and deficits don’t matter. The Beijing meritocracy is up to any challenge. Global central bankers have things well under control. We shouldn’t underestimate Craziness Extremis. But prolonged market distortions come with grave consequences.
The epicenter of the Bubble is in “repo” finance and myriad instruments (CDO’s, ABS, special purpose vehicles, derivatives and such) financed directly and indirectly in short-term market-based lending markets.
Chinese Credit is heading toward an inevitable crisis of confidence – with or without a trade pact. China’s Bubbles have inflated dangerously
Stocks are fired up at the prospect of a year-end melt-up. The surprise would be a global bond market beat down.
With global policy rates already so low, the future will see even greater central bank reliance on QE. And central bankers are determined to ignore excesses.
Delaying the day of reckoning only makes things (much) worse. The world over the past couple weeks has experienced riots in an expanding number of countries – including Lebanon, Egypt, Iraq, Spain, Chile, Bolivia, Ecuador and Hong Kong. Wait until the global Bubble bursts.