Why? How ?....because I believe both scenaries could be possible in a world where we have the separation btw. the 'have and have not's'. I'm imaging a world where deflationtionary forces from housing in the US or from Energy & Food Inflation in China, US, Europe will hit the have 'have not's', where they will also struggle with wage arbitrage into the Emerging Markets and Unemployment in the western world. This is a world where Ben Bernanke tries to prop up the Banks, HedgeFunds and the global Stock Markets, but he seems to have a date with destiny. Ben works hard to keep up the Illusion that the Global leaders demand from him and his buddy Trichet. The degree of exuberance hints at a brutal date!
Why?...because the Playas have made lots of money, the optionbooks are full of wealth but each incremental Dollar of new return comes with an increasingly higher risk factor. The average investor has left the market (see flow posts of today), breadth is deteriorating and it seems like we are reaching irrational exuberance. Maybe this can go for another round, maybe not, BUT GRAVITY IS OUT THERE BEN!!
In a market with lacking liquidity (look at the 5 big figure move in the EURO last week!!), 'the haves' have hedged or are in cash or waiting for corrections in Gold to follow the Chinese, the Indians and half of Switzerland and the Middle East.
This is why I'm a schizophrenic Deflationists.
Wow. I am back here after a long while and suprised to see you still alive. :-) Just kidding.
ReplyDeleteAs i stated a while back, i am not trading anymore. I have invested in short etfs that have gone down almost 30%+ and i am not even looking at them. Why? Cz, when this bubble bursts there won't be Ben to rescue it @ 666. There isn't anymore money printing available. However, what triggers a correction? Dunno. May be the failure of debt ceiling passage on the floor is the key because if that fails, printing press has to stop and ben has to attend to other immediate issues than to prop up the market.
BTW, we are in deep deep stagflation where certain sectors are in deep inflation and while others in deep deflation. Not knowing what to do, Ben is trying what is writte in sand in FED's books as the ONLY way out. :-)