If The Fed Has Lost Control, Will The Government Impose More Control?
SilverDoctors.com
January 14, 2016
As the Fed loses control of the financial markets, I fully expect that the Government will impose tighter Totalitarian control over the country.
Submitted by PM Fund Manager Dave Kranzler, Investment Research Dynamics:
I stand by my prediction that 2016 is going to be a horrible year for the world in general. I am a great fan of both David Stockman and Paul Craig Roberts and if you conflate their views the world is going to be a disaster economically, financially and geopolitically. – John Embry (email conversation this past weekend)
I find it fascinating that, sometime between the close of trading on December 31st and the start of trading in 2016, the JP Morgan’s equity Einsteins all of a sudden decided that the stock market “might” be overvalued. Per Zerohedge, JPM released a strategy report suggesting that the new robo-trading trading them in 2016 might be “selling any rallies.”
But what changed? The stock market has been overvalued for several years. It was still overvalued from a strict fundamental standpoint when the S&P 500 bottomed out at 666.79 in early 2009. It has been insanely overvalued for the better part of the last three years. No one could see that until Sunday night? All of a sudden JP Morgan has decided that “equities are not attractively priced anymore?”
I suggested in my blog post this past weekend that Thursday’s Fed funds event might be indicative that the Fed is losing control over the markets – Is The Fed Losing Control? I’m wondering if what happened on Thursday with Fed funds rate contained more predictive power than any of us imagined possible…
I opened up the latest issue of my Short Seller’s Journal with this comment:
The current stock bubble is now about 30% bigger than the previous two bubble tops – 2000, 2007. One difference between now and the last two bubble peaks is that the underlying fundamentals are significantly worse now. Just one example is the amount of Government debt outstanding. At the 2000/2007 peaks, Treasury debt as a percent of GDP was 55% and 57%, respectively. Currently, Treasury debt as a percent of GDP is 109%. Keep in mind that the Government also now guarantees FNM/FRE debt, which would add another $7 billion, roughly, to the $18.8 trillion in Treasury debt.
The point here is that the “gravitational pull” from the underlying fundamentals will eventually override the Fed/Government’s ability to keep the stock market propped up.
The Rest…HERE
