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Stock Market, A Peter Pan Market
Brian Bloom, The Market Oracle
Only in Never Never Land can age and gravity be defied. In the real world such ideas may be described as “escapist fantasies”.
There has been much debate in recent weeks regarding whether US Equities have entered a new Primary Bull Trend or whether we have been witnessing a bounce in a Primary Bear Trend.
Let us not mince words. In the view of this analyst we have been witnessing a bounce.
Clearly, anything that one reads in the media may be regarded as history. In this case, however, it is arguable that the media stories are so bleak because the economic outlook is in fact bleak. Arguably, the typical investor is rationalizing that things cannot get worse and that, therefore, now is buying time.
Again, not to mince words: In this analyst’s view those who are arguing that the markets have bottomed are guilty of selective perception. They are ignoring some very important facts.
Below is factual evidence that the world economy is very likely still contracting and that, in the USA in particular, further economic contraction may be expected and, finally, that the US Equity Market is an accident waiting to happen…
(24 Sept 2009)
Financial crisis, imperialism and environment — `Socialism is humanity’s best chance’(interview)
John Bellamy Foster/Farooque Chowdhury, New Agevia Znet
Farooque Chowdhury: What is the likely impact of the present financial crisis on geopolitics, especially if the crisis is considered in the context of the energy crisis, including the peak oil issue, the food crisis, the environmental crisis and the declining US dollar? Will the world experience war(s) as an effort to survive? Will monopoly-finance capital attempt to create another bubble, as capital is gripped with contradictions within and without?
John Bellamy Foster: The “Great Financial Crisis” and the “Great Recession” that followed close upon it has uncovered the depth of the contradictions facing capitalism in this phase, labelled “monopoly-finance capital”. Specifically, the overall crisis has revealed that capitalism, at its vital core, is caught in a stagnation-financialisation trap with no visible way out.
The geopolitical implications of course are vast. Not only is capitalism weakening in many ways at the centre but US hegemony is also compromised. The US dollar at first strengthened in this crisis, but the long-term implications for the dollar are negative. On top of the worst world economic downturn since the Great Depression, we are also facing, as you indicate, the worst environmental threat in history (indeed what might be viewed as the ultimate environmental threat, with the destabilising of the climate), the rapid growth of world hunger and the prospect of peak oil.
Inequality in the world (both between rich and poor countries and within states) is increasing. The occupation in Iraq continues, while the United States under the new Barack Obama administration has expanded the war in Afghanistan, further destabilising Pakistan. Militarisation is growing across the planet. Washington is acquiring seven additional military bases in Colombia alone — aimed at the Bolivarian Alliance for the Peoples of Our America (ALBA) countries…
(23 Sept 2009)
The Blob That Ate Monetary Policy
Richard W. Fisher and Harvey Rosenblum, The Wall Street Journal
Fans of campy science fiction films know all too well that outsized monsters can wreak havoc on an otherwise peaceful and orderly society.
But what B-movie writer could have conjured up this scary scenario—Too Big To Fail (TBTF) banks as the Blob that ate monetary policy and crippled the global economy? That’s just about what we’ve seen in the financial crisis that began in 2007.
While the list of competitive advantages TBTF institutions have over their smaller rivals is long, it is also well-known. We focus instead on an unrecognized macroeconomic threat: The very existence of these banks has blocked, or seriously undermined, the mechanisms through which monetary policy influences the economy.
Economics textbooks tell us that when the Federal Reserve encounters rising unemployment and slowing growth, it purchases short-term Treasury bonds, thus lowering interest rates and inducing banks to lend more and borrowers to spend more. The banking system, and the capital markets that respond to these same signals, are critical to transmitting Fed policy actions into changes in economic activity…
(27 Sept 2009)
Hmmh…Is there a certain irony in the phrase “inducing…borrowers to spend more?” -KS
G20 Schemes Threaten Democracy, Sustainability
John Nichols, The Nation
The G20 Summit that opens Thursday is unlikely to achieve much when it comes to restructuring the global economic order. That’s good news for workers, farmers, consumers and citizens.
What’s good about inaction on the part of the leaders of the world’s wealthiest nations? While there is no question that a radical restructuring is needed, it must be the right restructuring.
In the midst of the nastiest economic downturn since the Great Depression, and with so many unaddressed social and environmental challenges weighing on the planet, the necessity of finding new ways of organizing and managing the economic affairs of nation states and global trading and regulatory regimes should be evident to even the most nearsighted neo-liberals.
But multinational bankers and corporatists that contributed so mightily to the current crisis are busy peddling more-of-the-same “solutions” that could actually make matters worse. For instance, one of the great debates going into this week’s meeting of leaders from wealthy nations such as the U.S., China, Germany, Japan and Great Britain has been over how to develop an international framework for what the powers that be define as “sustainable development.”…
(23 Sept 2009)
