I’ve continuously written how specialists live and think in a vacuum. I’ve also written to explain why this is so deadly in a decentralized political economy that the U.S. has morphed into.
Why will stocks rise in the immediate future? Its simple to forecast.
The bad news about joblessness and the general overall economy will impact the Obama administration toward more quantitative easing. THIS IS THE LAST BULLET THE FEDERAL RESERVE HAS IN ITS MACRO-ECONOMIC ARSENAL. I’ve written extensively in other posts explaining exactly how this Congress and Executive have the authority to reverse our current malaise. They just don’t have the political fortitude.
Now would be a good time to read up on Hayek and other classical libertarians who have extensively written on how our government is preventing a recovery. Printing money will not work. Generating larger credit will not work. This only thing in the near future that will rise is stocks. How? With quantitative easing, the monolithic institutions of ‘to-big-to-fail (TBTF) will continue to borrow short and lend long.
But first some recent history.
Unless you’ve forgotten, the fist quantitative easing didn’t work. The banks kept the money and did not send it into the economy. When will the specialists in Washington realize that a ‘command economy’ is long over. Their still thinking in Marxian terms.
Eventually Wall St. will notice falling corporate profits. This is the wall that quantitative easing will hit very soon. Probably around November.
The fundamental macro-economic problem will be inflation when this economy begins to recover. Its a deadly impact that must be faced! Their is a way out of this mess, read my other posts in the category of ‘money’ to discover which ‘political craft’ will succeed in turning America around.