Market mayhem coming up
Market mayhem coming up

The market is in fine shape. Machines trading with machines to the enrichment of all. The trickle down effect is real. But its oil  leaking from the machines, not money flowing to ordinary folks. At least that’s my take after watching

Joe Saluzzi describe the character of the market on Bloomberg

Hat tip Jesse’s Café Américain.

Watch the whole clip. Capitalism has been taken out of he capital markets. That’ll work out well.

Jesse’s Café Américain has another post that is well worth reading:

“Unfortunately, the risk of the whole ponzi scheme crashing sooner rather than later is going way up, rapidly.

They want the dollar to go down by 40%, but I think they are going to lose control, and they might wind up with a 90% panic drop in a few months.

As I said, Japan, around 1995, went into a full peak cheap oil panic. A lot of the government borrowing went to what is characterized as “building bridges to nowhere”, but I would characterize it as building some bridges to nowhere, building some airports in nowhere, and fixing the entire rail and road infrastructure of the country.

… In other words, I think they knew this 15 years ago and did everything that requires a lot of energy, such as steel, asphalt, cement, and completely the public transit infrastructure. The per capital floor space in Tokyo was doubled.

So, if we really do have a decade of serious energy problems coming, Japan has become about as energy efficient as it can be, with further improvements coming as appliances are replaced, etc.

… if the dollar drops by half that oil becomes $200 a barrel? Gasoline would be over $5, and the country would be paralyzed. If the dollar drops more than that, the existing infrastructure would become nearly useless and worthless.

I am afraid that the US has already passed the point of no return. Had the cheap oil continued, the ponzi could have continued for a good while longer.

I think the realization that the cheap oil is gone is the primary motivation for the smash-and-grab behavior we are seeing in the US.

Fortunately Europe has solved its problems, or perhaps not:

Banks using guarantee to access ECB loans

IRISH BANKS are issuing bonds to themselves under the Government guarantee to borrow cheaply from the European Central Bank and to avoid drawing more heavily on emergency lending from the Irish Central Bank.

Four banks issued bonds worth €17 billion to themselves last month under the Government’s extended guarantee, the Eligible Liabilities Guarantee, to use as collateral to borrow from the ECB.

“What you have here is micro-quantitative easing, or money printing,” said Cathal O’Leary, head of fixed-income sales at NCB Stockbrokers. “The banks are issuing unsecured loans to themselves.

Hat tip The Market Ticker Guy

Meanwhile Jeffrey Sachs while making some valid points manages to miss the elephant in the room and propagate a lie.  If there is insufficient discretionary expenditure to cut then the US needs to cut “non-discretionary” expenditure. Also Jeff makes false claims about the exceptional weather in Australia. Australia is a land of drought and flooded plains. There is nothing unusual about its recent weather.

The corporate and government interests have much to gain from our accepting climate change. They dwarf big oil. Think of the money to be made trading “carbon futures”. Or the payback to politicians from global warming related environmental initiatives and concessions.



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