24 March 2011

SP 500 and NDX Futures Daily Charts

When the Wall Street liquidity addicts get their daily fix from Bernanke, they can ignore the news from Portugal on sovereign debt default, and the other ominous warning signs in the financial and political systems.

It's a cynical game, in the vein of the financial fraud that has replaced an efficient capital allocation system in the US.

You will not hear economists talk about this problem, just as they did not discuss the pervasive fraud in the mortgage backed securities market before it caused a financial collapse. It is safer to explain what just happened after it is completely obvious to everyone, over and done. And yet they still call for the same old remedies, of either stimulus or tax cuts for trickle down effects, both pointless options when the system is broken.

The Fed and the Treasury think they can support the economy by keeping the stock market up.   The wiseguys on Wall Street will continue to encourage and take advantage this policy error, transferring the wealth generated by debasing the public money into their own pockets, while the regulators are paid to look the other way. It is very remniscent of the failing Soviet empire and the rise of the oligarchs.

That is what is happening now.  This is why gold and silver continue to rise despite the best efforts of the financial engineers to halt this 'alarm system.'

There is a day coming in the not too distant future when many will realize the situation as it really is, and then there will be a panic.