I have followed the stock market since 1975, and I have never witnessed the type of event that occurred the last two days in the stock market. Either investors are all now bipolar (one day euphoric/next day in depression) or the governments/central banks around the world want to make sure they print all the money they can and give it to the world banks to prevent a global meltdown due to bad consumer and business debts. While I believe government officials want to prevent a meltdown of the world banking system, I believe the capitalist system as a result of these policies is under severe attack. The outcome will be total government control as the private sector has given up and left the mess for leaders to clean up. I did not experience the "New Deal" and feel I am too old to pick up a shovel and fix up the national park system when private businesses cannot or will not hire.
In the United States and the E.U., the printing presses have being running full blast since the 2008 peak printing money to buy all kinds of debt. The money supply has tripled in both regions. The best G.D.P. growth is behind us as interest rates have fallen. Unemployment in the United States and Europe remains high by an historical measures. When the Central banks will need to liquidate the MBS, Treasury, Sovereign debts) on their balance sheets who will be the buyer of last resort? Sorry, the private sector is tapped out. I would not look at the corporate balance sheet strength either as the cash as a percent of annual depreciation looks in-line. Yes, cash is at record highs but so are expenses.
Watch for a quick reversal during the summer and the market to head sharply lower. If not the government bought another couple of months. Sorry, as an umpire I need to call it as I see it. Out! not safe! I heard the crowd booing now!
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