We had strong downgrades all across Europe and a total jettisoning of risk trades in Tuesday's session with the result that we had a sinking Euro and a surging Dollar. Overnight we learn that now China promises to join the money rain parade and pour its wealth into bailing out Europe to protect its export markets.
What do we get as a result of this? A complete reversal of the risk aversion trades with all the money that came pouring out of the markets Tuesday now turning around and flooding right back in again.
Up goes gold and silver after both sold off on Tuesday and up goes the Euro and down goes the US Dollar. Presto chango; wave that magic wand and all the woes of the financial world have just disappeared.
The promise of more bond purchases by China of European debt has sent the S&P 500 futures through very significant chart resistance at the 1350 in the Asian trading session. It looks like the drunken binge continues with no fears, no worries in sight now that China has become the lender of last resort. Apparently what the Central Banks could not do, China has.
I wonder how history is going to record all of this madness. I just hope we all live long enough to be able to tell what it was like living through it and watching it unfold day by day and week by week. No one from the future will likely otherwise believe that a generation of humanity was this ignorant. On the other hand, maybe it is those of us who actually believe DEBT is generally something to be avoided unless it is carefully managed and respected who are the fools here and those who just shrug it off as nothing to be concerned about are the truly wise among us.
Up is now down; down is now up; light is now darkness and darkness is now light; bitter is now sweet and sweet is now bitter. Welcome to the brave new world in which prosperity can be created by piling up massive loads of debt without the slightest bit of concern for how that debt will ever be repaid.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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