The Rich Man’s Panic…” It means we have entered the Twighlight Zone, with flash crash risk growing exponentially by the day due to liquidity risk – a place where even the rich men will not be able to escape.”

Monday, June 8, 2015
By Paul Martin

Monday, 8 June 2015

Market historians may remember the stock market mania of the early 1900’s referred to by some as ‘the rich man’s rally’, because like today, it was the top 1% of the 1% that really made out. In folklore it was the Gatsby’s, and in reality the Rockefellers. And today, it’s Warren Buffett and Bill Gates, all of whom who have one thing in common – maximization in the exploitation of credit and crony capitalism. In hindsight we can now see for John Rockefeller and his ilk it was just the beginning in this regard, as the Fed and larger US credit cycle were just getting rolling, born of volatility at the turn of the century in the rich man panics of 1903 and 1907 that brought The Creature From Jeckyll Island into existence.

Of course some may say both Buffett and Gates (both then and now) bought the crash in 2008, which means they deserve the rewards. And on a basic level this would true if it were not for the fact they were tipped off and bailed out by government lackeys, many who also profited personally from the very debacle they helped create as well. This is crony capitalism at it’s finest, with the blueprint established all those years ago on an island just off the coast of Georgia. Because when you know about all the backdoor bailouts ahead of everybody else, as well as given sweetheart deals at the expense of the taxpayer, it’s not really a level playing field – is it?

So the rich men don’t panic anymore. In fact, knowing how to exploit volatility with huge cash reserves and credit facilities (global debt now $200 trillion), they would apparently welcome another good panic in order to put new capital to work, because they will know weather to buy or not. If the unlimited bailouts are coming buy lots – right. But what if the bailouts don’t come this time? What if Warren, Bill, and their elitist buddies don’t get bailed out this time around? Will the government be able to bailout these characters again if the world is facing a sovereign debt crisis, as Martin Armstrong is suggesting? Or, is the move to private assets from public going to be enough to keep share markets buoyant temporarily?

These are all important questions that nobody has answers to yet, however one thing is sure in my mind, it’s difficult seeing equities performing well with interest rates rising considering the present apathy towards debt – at least initially. That is to say, in the old days (think 2009 and earlier), liquidity risk due to record high excessive leverage employed in stocks (as is the case now) was viewed as negative, and a likely catalyst for a reversal lower in trend. Today, with desperation levels high evidenced in front running central planners (attempting to stay ahead of the bubble curve) and distraction by the public (anything to ignore reality), it’s different this time around according to these types, pushing the present sequence into something very ugly in terms of degree.

The Rest…HERE

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