Traders sent global markets into wild spasms Thursday on news of further monetary easing by the European Central Bank. With rates already negative and no eurozone inflation in sight, who could possibly believe this is going to end well? Far from stimulating spending and investment, increasingly desperate policy measures by Draghi & Co. are achieving the opposite, creating a climate of fear and uncertainty for lenders, borrowers and households. The only reason easing still works at all in the U.S. is that, unlike their European counterparts, American consumers are hard-wired to spend every dime they can get their hands on. Even so, this won’t suffice to prevent the tottering economies of China and Europe from imploding. Nor can the U.S. economy remain even weakly buoyant as the rest of the world sinks into a bog of deflation. Under the circumstances, an investor would have to be out of his mind to buy stocks at these levels with expectations of a rally to significant new highs. What rallies we’ve seen lately are driven almost entirely by short-covering. Be ready for a 5000-point drop in the Dow, just for starters, after the last bear throws in the towel.
ECB Close to ‘Stimulating’ a Global Meltdown
- March 11, 2016, 4:06 pm
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March 11, 2016, 1:00 pm
“American consumers are hard-wired to spend every dime they can get their hands on.”
I can see this starting to change, whether by choice or hard circumstance I don’t know. I have a couple of friends who have gone the minimalism route and after the initial shock are much happier they did and have been preaching the “good news” about it.
More kids living at home is deflationary and forces less spending.
I think there is an upsurge in people listening and following the messages of Dave Ramsey and his ilk.
Rome wasn’t built in a day and these changes will take time to build enough force to change the economy but it may be happening.
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March 11, 2016, 11:00 am
Very good thinking towards the ‘whys’ and the, ‘hows’ too in a way.
Your numbers are a bit short towards the downside, but enough about fear, all and all.
Have a great weekend and keep the work going as few today, don’t know the meaning of hard work.
Here’s one that did:
Why I Love HerYou ask me Why I Lover Her? Well, give me time and I’ll explain.
Have you see a Kansas sunset or an Arizona rain?
Have you drifted on a bayou down Louisiana way?
Have you watched a cold fog drifting over San Francisco Bay?Have you heard a bobwhite calling in the Carolina pines,
Or heard the bellow of a diesel at the Appalachia mines?
Does the call of Niagara thrill you when you hear her waters roar?
Do you look with awe and wonder at her Massachusetts shore,
Where men who braved a hard new world first stepped on Plymounth’s rock?
And do you think of them when you stroll along a new York City dock?Have you seen a snowflake drifting in the Rockies, way up high?
Have you seen the sun come blazing down from a bright Nevada sky?
Do you hail to the Columbia as she rushes to the sea,
Or bow your head at Gettysburg at our struggle to be free?Have you seen the mighty Tetons? Have you watched an eagle soar?
Have you see the Mississippi roll along Missouri’s shore?
Have you felt a chill at Michigan when on a winter’s day
Her waters rage along the shore in thunderous display?
Does the word “Aloha” make you warm? Do you stare in disbelief
When you see the surf come roaring in at Waimea Reef?From Alaska’s cold to the Everglades, from the Rio Grande to Maine,
My heart cries out, my pulse runs fast at the might of her domain.
You ask me Why I Love Her? I’ve a million reasons why:
My Beautiful America, beneath God’s wide, wide sky.John Wayne
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March 11, 2016, 12:08 am
Great piece Rick, as you’ve often said in the past we live in all too interesting times. Hopefully the aware can actually prosper (or protect at least) but what happens to the indoctrinated masses ?
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March 10, 2016, 11:27 pm
“American consumers are hard-wired to spend every dime they can get their hands on.”
Boy, you can say that again!
And why is that the case you may ask?
Because it has been nearly 50 years since there were any consequences to self destructive behavior!
Every Administration since LBJ unleashed his Welfare/Warfare economy and relentless inflation, has been worse than the one before it.
And I include the Adminstration of that old charlatan Ronald Reagan.In retrospect, he certainly fits the definition:
“A person who makes elaborate, fraudulent, and often voluble claims to skill or knowledge; a quack or fraud.”
So, yes, Rick, you can certainly say that again!
“American consumers are hard-wired to spend every dime they can get their hands on.”
Amen brother!
I just read that Italy sold 3 year bonds with a negative rate. WTF??? Aren’t they in the midst of a bank crisis? My nausea over this lack of financial reality is increasing.
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And you can bet that institutional ‘investors’ — i.e., professionals who earn millions throwing Other People’s Money at financial flotsam — lined up to buy those bonds. RA