The smart money had a goal, which it now reached via the “multiplier effect” by which a small number of sales can have extreme consequences in price for the rest.
“Asset prices have reached stunning levels, obviously out of line with ‘fundamentals.’ The “most dangerous” are housing bubbles; when they burst, they “wreck whole economies.”
Whipped into a frenzy by the sweet smell of usury.
Banks are again taking the same risks that triggered the financial crisis, and they’re understating these risks. It wasn’t an edgy blogger that issued this warning but the Office of the Comptroller of the Currency. And it blamed the Fed’s monetary policy.
Ah, the spine-tingling pleasures of having this delicious breed of bonds in your conservative-sounding bond fund.
Now that the Fed is pulling back from its money-printing binge, the IMF, the global bondholder bailout outfit, is starting to panic.
So what happens when these huge and reckless buyers with their nearly endless resources start cutting back after a phenomenal peak? Well, we know what happened in 2008.
I was interviewed by Jorge Nascimento Rodrigues for “Janela na web” (a Portuguese site) and the printed edition of Expresso. After what I said, he might never interview me again :-]
State and city pension plans have been in a heap of trouble for years. What they need in order to be there in the future is a booming economy year after year and endlessly inflating asset bubbles. Otherwise, forget it. And even then, there’s a $1.1 trillion hole.
Wiping out in one fell swoop six years of carefully orchestrated propaganda, St. Louis Fed President James Bullard admitted the Fed had dropped the ball during the prior bubble that blew up the financial system, and that it’s dropping the ball again during the current bubble.