Like the stock market, the cycles of decision making stupidity are attenuating. The time it takes from the inception of a bad decision until realization of the bad outcome is now becoming inescapably immediate. Obama commissioned the Bipartisan Deficit Reduction Commission and yet before the ink was dry he had already completely ignored the recommendation. Meanwhile, Republicans who still pretend to be fiscal conservatives after decades of Supply Side profligacy, by no surprise, completely ignored the same findings and fully endorsed extension of the Bush tax cuts and the additional payroll tax cut. The Commission recommended a combination of reducing spending and raising taxes. So, what did the Government do, just days later? They passed a new bill to increase spending and lower taxes !!!
Welcome to the era of the Dumbest Generation. You can't make this shit up.
All the while, European countries such as Germany, often derided in the U.S. as "socialist", have exhibited far greater fiscal discipline for the past decade and to a stark degree since the financial debacle. So much for all of the "capitalist" propaganda and hollow sloganeering by Faux News.
Cynics would say that the U.S. Dealers (aka. Leaders) already have figured out what I explained recently, that the U.S. is already beyond the point of no return debt-wise, so why not just party-on a while longer. So either they are morons with bad math skills, or liars who understand the gravity of the situation and are just propagating the illusion of solvency - either way, the situation is not good.
Since Bernanke's Fed enacted QE2 in November, the program of further "easing" borrowing costs has had the exact opposite effect. Over the past 5 weeks, the 30 year mortgage rate has risen from 4.17% to 4.83%. In addition, oil prices have increased, as have food prices. Meanwhile, core CPI has been stagnant and or falling. Core CPI tracks very closely to wages. Therefore, what has happened since QE2 was launched is that wages have stagnated, whereas the real cost of living has increased across every major dimension - food, energy and housing. This is by far the worst of all possible worlds for the U.S. economy (outside of Wall Street). This is Deja Vu, because we had the exact same scenario back in early 2008, as I wrote here. The Fed back then was a on a rate cutting bonanza to bailout banks and fund speculators all at the expense of average Americans. We all remember how that worked out.
1)Prechter & Co got back on board the all-out bearish bus this week with the latest EWT. (After a brief flirt with bullish lunacy...)
2) The Arms Index (Trin), reached its most overbought reading in its 50 year history, despite the market still being 20% below its all time peak and unemployment at 10% !!!
3) Silver and Gold look to have put in a solid reversal on extremely high volume.
4) The Euro is impulsing lower.
5) Long-term treasury bonds look to have put in a decent bottom on a five wave impulse and massive volume.
6) Various other sentiment indicators ISEE/II/AAII at multi-year extremes; mutual fund cash balances at decade lows etc...
So...the risk trade is slowly but surely "coming off". Let's see if the Big Money boyz make it to 12/31, bonus time this year before the wheels come off for good, it's going to be very close...