When we left town on Friday, trading was as slow as the traffic on the interstates. Labor Day is America’s last holiday of the summer season. No one wants to miss it.
In lacklustre action, the Dow fell 30 points on Friday. Gold, however, dropped $16, putting it once again below $1,400.
But that is history. That is summer history. And now we’re in the ‘R’ months. September. October. November. December. We had our crabs. Now is the time for eating oysters, and having a good, old-fashioned market crash.
Not that we’re predicting it. But we have our black-and-blue ‘crash alert’ sign up anyway. As a warning.
Yes, dear reader, a lot can go wrong this autumn. And you should be prepared for it. If it doesn’t happen, well, be thankful. Because at some point this whole monetary system is going to come crashing down. For most people, it’s not going to be much fun. Savings will be lost. Businesses will go bust. Debtors will default. Stocks and bonds will plummet. And those are the good things.
If you’ve been reading these articles you know why already.
A stream of income – either from a stock or a bond – is a promise. The value of it depends on how much you trust the promisor and his money. That is the problem. As much as we like Ben Bernanke as a human being, we find grave fault in him as a god. Only a god could know more than the sum of all the knowledge held by all people who are active in the world economy. Only a god could select an interest rate better than the one they select for themselves. And only a god-awful economist could claim to do such a thing with a straight face.
Bill Bonner on markets, economics & the madness of crowds
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The galling thing is that he may be able to keep the whole shebang going for many years more. Instead of seeing the mighty Ben humbled and fallen, we might have to put up with this for a lot longer, seeing journalists and economists suck up to him, flatter him, and act as though he knew what the hell he was doing.
But heck, we’re in the ‘R’ months. And anything could happen. Congress will soon bump its head on the debt ceiling; that’s always good for a few laughs. Speculators are running up margin accounts again – just like it was 2007.
Syria and Egypt are in the headlines today. Iran or Venezuela or Argentina could be in tomorrow’s news.
Often, the headlines are just an excuse for something to happen that was going to happen anyway – one way or another. Things that have to happen sooner or later nevertheless need a reason to happen sometime. But the real trend needs no ‘reason’ at all. It just happens.
Trust increases, and then people take advantage of it. They speculate on stocks, counting on the feds to protect them from their own bad trades. They go on ‘disability’, counting on other people to pay their living expenses. They move to Washington and become lobbyists, counting on the fool politicians to send the taxpayers’ money in their direction.
The great tower of trust was built up over many, many years – by people who worked hard, honoured their commitments, paid their bills and made sure their money was solid. But then, with so many people burrowing into it from all sides, it becomes unstable. Untrustworthy.
Then, an ‘R’ month comes and watch out!
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