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Thursday, August 4, 2011

Government Will Have No Ammunition to Counteract the Next Market Collapse

Mac Slavo
August 2nd, 2011

The debt ceiling debate has been blamed for the stock market drops around the world over the course of the last two weeks, and many Americans likely believe that once that debate is resolved stock markets will bounce back. But what if the news surrounding the debt ceiling debate and the subsequent market movements has been a smoke screen? What if stock markets have been dropping for other reasons that have been obscured by the mainstream financial media?

If you’ve been following economic reports over the course of the last month, you’d have realized that things are not exactly as they seem. A host of economic data is suggesting (proving?) that the entire recovery is nothing but a cover up – something we’ve vehemently argued for the last two years when supposed green shoots first started to appear. Despite expert opinion that spending more money was necessary, that it would create 200,000 to 500,000 jobs per month, that consumer spending would return, that home prices would stabilize and prosperity would reign, exactly the opposite has happened.

While the US debt debate has led to investor anxiety and uncertainty, the real reason for why markets are not fairing well has to do with the underlying fundamentals of our economy and a clear indication that all the “tools” in the Fed’s and government’s tool box don’t seem to be able to fix it. The big money has been quietly selling stocks, especially the big wigs at the upper echelons of the corporate hierarchy. Considering that they are in the know about where their companies are headed, it should alarm anyone invested in the stock market that they are selling at a ratio of over six sellers for every one buyer – which according to a recent report is 95% higher than other weeks over the last decade.

This, along with other economic, monetary and financial indicators, suggests that a major market crash is imminent. And if that’s the case, then we may have some serious problems, as the government may not have any way to force a “recovery” the way they did in 2008:

Just be aware of one thing: The next big collapse in the markets leaves The Fed and government with no ammunition to counteract it – rates are at zero and QE didn’t work except to crank up the price of food and energy.

Let’s be realistic. The Federal Reserve, the US government and the governments of the rest of the world will keep doing what they are doing. Nothing – absolutely nothing – is going to change. We hate to be pessimistic about this, but is there anybody who really thinks these people have our best interests at heart, when they have repeatedly lied about the problems, distorted the truth and manipulated the people?
Like Greece, the middle east, and now Europe, the people of the United States will be rioting in the streets. All we can do at this point is prepare for worst case scenarios, because the best case scenarios touted by the experts are nothing but conjecture.

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