Saturday, June 2, 2012

Friday Was a Very Scary Day

I've got to tell you that there were times on Friday that I thought the Big Collapse was upon us. 
  • DJIA was down, but only 2.2%
  • Dollar was down a few tenths of a percent.
  • Oil was down 3.8%
  • Gold was up 4.2%
  • Silver was up 3.5%
Oil being down (it's $83/bbl now, down from over $100 a few months ago) says that the speculators believe that the future needs are low - which means global slowdown/recession.  Probably the spookiest thing was that the yield on Swiss bonds went negative.  That means you had to pay the Swiss government for the privilege of loaning them money.  Since the dollar was down (with so much bad news in the Eurozone, I would think money would flow into the dollar) the world's view of the dollar as a safe haven doesn't seem to be there any more...for good reason.  Apparently, they seem to think of Switzerland as that safe haven.  But things stabilized as the day ended, and the financial EOTWAWKI didn't materialize.  

Make no mistake, it's ugly out there, though, and only going to get uglier.  The world's central banks are in a vise, and even Fed spenders say they can't do a round of QE because of the inflation they're causing (see below - about 10% year to year). Phoenix Capital Research, the guest contributors of that piece on Zerohedge, also penned this one:  Why This Time IS Different and the Central Banks Won't Be Able to Stop The Crisis
  1. The Crisis coming from Europe will be far, far larger in scope than anything the Fed has dealt with before.
  2. The Fed is now politically toxic and cannot engage in aggressive monetary policy without experiencing severe political backlash (this is an election year).
  3. The Fed’s resources are spent to the point that the only thing the Fed could do would be to announce an ENORMOUS monetary program which would cause a Crisis in of itself.
With regard to number 2, you might say "since when did the Fed give a damn about the little people?"; I would just say it's not so much that they are concerned about political backlash (although they might like the power Obama has granted them) as much as being lashed to the back of truck and dragged through the streets - or lashed to the nearest streetlight or phone pole.  You should RTWT.  If you've got the nerve.  
courtesy of Shadowstats

2 comments:

Borepatch said...

Damn, I hope you're wrong. But there's a run on the Spanish banks.

Graybeard said...

Nobody hopes I'm wrong more than I do.