What the Fed, financial markets are referring to is whether to let financial markets pulling back from upside momentum using massive debt via Treasury sellings. Frugal Americans and bankrupted Americans would not be able to spend much to support the trillions of funds sitting on the markets at the moment.
The catch-22 reality of credit market is that those who borrowed money using the recent credit crisis easy money is now facing higher rate after promotional rates, therefore, they would not be able to afford payments which the reality will push default rate higher. In addition, the Fed and banks are not lending easy money with the Obama consumer protection policy which is making harder for those who borrowed at low rates. Combining the two credit reality and policies, we are facing more hidden credit tightening.
Obviously, financial markets were playing on market momentum and betting on Asian markets within which they still have "savings accounts" while Americans are net negative savings. When the trillions sitting in the markets start to exit, it will be massive exit water fall.
The Fed is using Asian economy as smoke screen and excuses to continue to funnel money to upside momentum manipulation using Treasuries around the world, while, in reality, Americans are going through a depression. Most of Americans can not see the reality because media is brainwashing Americans with economic data based on less than half-truth economic reality. The Fed is capable of waiting for years until Americans are brainwashed to believe in media reporting as we can see what has happened in European nations going bankrupted and now the United States.
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