A few comments on the precious metals by Jessie.
Gold and silver have broken out, as the weak employment report and the debacle in Europe have renewed ‘investors’ expectations in additional monetization by the ECB and the Fed. I say ‘investors’ in quotes because there are no investors anymore, only speculators and gamblers.
However, to say that this may end badly is an understatement.
Intraday commentary on the Non-Farm Payrolls report and the state of the economy is available here. It is not particularly upbeat, but it is not downbeat either. Rather, the forecast is for greater uncertainty, and therefore, risk.
“Efficient market theory is a fraud, and further deregulation is little more than a license to steal. It is no coincidence that the gap between the wealthy few and the public is at levels not seen since the last Great Depression. This is the mark of a very unhealthy kleptocracy based not on merit but on position, power, and payoffs.
The corruption in the system acts like a huge tax on the real economy, diverting resources, labor, and investment away from productive activity and towards monopolies, cartels, and the fraudulent accumulation of wealth through the manipulation of financial assets, making money from money.
There will be no sustainable recovery until there is substantial, genuine reform of the financial and political systems, both of which have been tainted by big money and corporate power promoting a very narrow and self-servingly destructive agenda.
Agree or not, things will continue to get worse, even if in a long, dwindling cycle of decay and despair, until change comes. And it will come, one way or the other. And the longer it takes, the more volatile the outcome.”
I am not sure how far they can take the equity markets in expectations of more QE. But at some point, even if it is after that QE arrives, the markets will begin to sell off, slowly at first, as the focus on the candy delights of monetization turn back towards the decline in earnings and median wage, and the malaise that will continue to grip the broader economy.
Guest post by Azizonomics.
If the point of the earlier rounds of quantitative easing was to ease lending conditions by giving the financial system a liquidity cushion, then quantitative easing failed because the financial system already has a huge and historically unprecedented liquidity cushion, and lending remains depressed. Why would even more easing ease lending conditions when the financial sector is already sitting on a massive cushion of liquidity?
If the point of the earlier rounds of quantitative easing was to discourage the holding of treasuries and other “safe” assets (I wouldn’t call treasuries a safe asset at all, but that’sanother story for another day) and encourage risk taking, then quantitative easing failed because the financial sector is piling into treasuries (and anything else the Fed intends to buy at a price floor) in the hope of flipping assetsto the Fed balance sheet and eking out a profit.