More Economic Straight Talk
Economic conditions are dismal.
by Stephen Lendman
There's far too little of it around. TV talking heads shun it. All's well in the world, they say. They don't dare report accurately. Their jobs depend on manipulative deception.
Financial truisms bear repeating. Money creation madness assures trouble. Irrational exuberance follows. So do bubbles.
Imploding is just a matter of time. The bigger they are, the harder they fall. It happened in 2000 and 2008. Perhaps this year or next is 3.0. The fullness of time will tell. Excess creates its own demise.
New era rhetoric doesn't wash. Market analyst Bob Farrell's Rule Number Three says "There are no new eras - excesses are never permanent."
Reality has final say. It arrives in its own due course. Often it's when least expected.
On February 22, market analyst Marc Faber said stock markets peaked. At the same time, bonds may rebound. "I think we have made an intermediate top, and it could be a longer-term" one, he believes.
Markets are "significant(ly) overextended." Bullish sentiment is extreme. "Everybody says 'sell bonds, buy equities.' And when everybody thinks alike, one has to be careful."
Recent Fed minutes gave readers pause. Divisive opinions were expressed. Hawks want QE ended or at least substantially reduced.
Concerns were raised about "potential costs and risks arising from further asset purchases." Complications may result.
Longterm policy accommodation risks inflation. "(F)urther asset purchases could foster market behavior that could undermine financial stability."
"(I)t could expose the Federal Reserve to significant capital losses when these holdings (are) unwound."
"Several participants emphasized that the (Open Market) Committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved."