Look Behind the Scenes

The market plunges almost 8% today and the consensus is that the recession has 'officially' been announced and it started a year ago.  I don't agree with this since we all new that we have been in a recession long before it became official and the market has reflected this psychological impact.  I think something else is winding its way through the system that even the experts are unaware of. 

Look at Russia and Putin trying to convince the residents not to withdraw their money and send it to other countries for safety.  As a result of this action, the leaders are forced to spend less on military.  As I have said before, Russia will be reined in from spending aggressively on the military because the economic concerns will always take precedence.

The leaders of China are saying that they aren't keeping up technologically.  What are they really telling us?

What is the truth ?  I think the example given here plus other countries and what they are saying and doing lead a direct path to us to see why this market  fluctuates in the extreme.  It goes beyond the Bear having its way.  When I see it, I'll post it here.  If you see it, please let me know.

Inflation

GDP contracted, a given.  The Feds loaning and giving billions to the top banks, backing commercial paper and money market funds.  Banks holding the money, doing the opposite of the intention of $700B bailout.  How long has it been since it was shoved through congress with the warning that there would be a financial meltdown without it?  There's a credibility gap with the Treasury with them using the 'cry wolf' approach.

Everyone is focused on the trees as inflation moves silently through the forest.   I can see a headline on the near horizon:  The world struggles to contain inflation that has jumped into the double digits.  People would argue that commodity prices are falling.  I am looking at the massive printing of money to meet the trillions of spending set in motion by Congress and the Treasury Department.  And if we end up with a Democratic controlled House of Representatives, Senate, and Presidency, then the momentum will continue with deficit spending to rescue the 'American people.'  

The good news is the stock markets don't mind inflation because prices can be raised to offset it.  The bad news is the consumer's money is worth less unless they are receiving raises or creating money to meet or exceed the inflation percentage increase.

What I find unfortunate is that we have had a check and balance for the last 8 years with a Democratic controlled Congress and a Republican presidency, and still we increased our debt by the trillions.  It appears that regardless of who is in control, the same path is continued.  I know that, at the world level, we will reach a peak regarding the debt level because there will no longer be willing and eager buyers without huge interest returns.  There will be a point where the answer is 'no.'  That will be a good turning point and also a painful one for those of us who participate in the financial system; virtually all of us.