[email dated 30/11/2011]
Global markets surge after world's central banks increase liquidity and make money cheaper. Stocks surge. EUR is up. GLD and SLV are up, too.
What a difference a day makes.
Big break-down limits have been avoided (S&P500: 1125; DAX: 5000). Money flows in. FED, EZB, BoJapan, BoEngland, BoCanada and the Swiss guys take part in the action.
You know my bias - I guess you assume my reaction would be: see - inflation is coming. Central banks are flooding the markets. Move to gold and silver - and platinum. Raise your debt level - buy real estate.
I tell you, what worries me is: all those banks took action together now. Their thought was that the situation is serious enough to do it now. Or let me restate this: all of them thought the situation is serious enough, so that they could agree on a common action, have been forced to agree on common action now. They did see no alternative to this action ... Did try to surprise the markets today. They must really be scared.
But did that fix any problems?
Do you trust Greece more today than yesterday?
Portugal? Spain? Italy?
France?
The US?
Germany?
This is all about trust - and if there is no trust, there is no limit on how bad things can go. In the end, even Germany can not put enough austerity measures on to compensate for the lack of taxes in a crumbling economy. You cannot safe your way out of a situation where nobody lends you anything anymore. No country in the world can.
Today central bankers showed that they lost trust. They showed that they think coordinated action is necessary --- otherwise serious things would go bad.
In the short run, the money was put into action and did what it should do. Prices move up. But tomorrow folks will start to think: why did they do it?
I do not take this as a positive signal at all.
More than ever I see dangers ahead: either massive inflation - or deflation by debt contraction.
The question remaining open: which force is the more powerfull? Can trust contract faster than countries print money? Or can central banks print money faster than credit contracts because of lack of trust?
Have a good one.
And do not forget the open question: What performs well in hyper-inflation and deflation by debt contraction?
Global markets surge after world's central banks increase liquidity and make money cheaper. Stocks surge. EUR is up. GLD and SLV are up, too.
What a difference a day makes.
Big break-down limits have been avoided (S&P500: 1125; DAX: 5000). Money flows in. FED, EZB, BoJapan, BoEngland, BoCanada and the Swiss guys take part in the action.
You know my bias - I guess you assume my reaction would be: see - inflation is coming. Central banks are flooding the markets. Move to gold and silver - and platinum. Raise your debt level - buy real estate.
I tell you, what worries me is: all those banks took action together now. Their thought was that the situation is serious enough to do it now. Or let me restate this: all of them thought the situation is serious enough, so that they could agree on a common action, have been forced to agree on common action now. They did see no alternative to this action ... Did try to surprise the markets today. They must really be scared.
But did that fix any problems?
Do you trust Greece more today than yesterday?
Portugal? Spain? Italy?
France?
The US?
Germany?
This is all about trust - and if there is no trust, there is no limit on how bad things can go. In the end, even Germany can not put enough austerity measures on to compensate for the lack of taxes in a crumbling economy. You cannot safe your way out of a situation where nobody lends you anything anymore. No country in the world can.
Today central bankers showed that they lost trust. They showed that they think coordinated action is necessary --- otherwise serious things would go bad.
In the short run, the money was put into action and did what it should do. Prices move up. But tomorrow folks will start to think: why did they do it?
I do not take this as a positive signal at all.
More than ever I see dangers ahead: either massive inflation - or deflation by debt contraction.
The question remaining open: which force is the more powerfull? Can trust contract faster than countries print money? Or can central banks print money faster than credit contracts because of lack of trust?
Have a good one.
And do not forget the open question: What performs well in hyper-inflation and deflation by debt contraction?
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