Juggling Dynamite

Danielle was a guest today with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

Yesterday on day 3 of another sharp rally, my partner Cory Venable observed that short-covering might push the S&P to near term resistance in the 1925 area (mid dotted line below).  Today, that seems to be holding (so far at least).  We should remember that short, violent rallies that fail and fall to lower lows, are actually a hallmark of bear, not bull, markets.

Today he added the following long term candlestick study of the Canadian TSX 60 ETF (XIU) since 2006 and points out that it too is exhibiting the lower highs and lower lows action consistent with bear markets.  Take care of your capital.

First we had 30 years of slashing policy interest rates and lending requirements every time consumer spending slowed (1980-2010). When low rates stopped driving spending at the targeted rate, policy makers led 7 years of holding rates near zero (ZIRP) and counting… Since that also failed to prompt demand and inflation, central banks in all the leading economies have now tried 6 years (more than 15 years in Japan) of repeated monetary experiments (QE) swapping more than $12 trillion in risky financial assets off banks and on to central bank balance sheets.

Since ZIRP and QE also failed their goals, central banks in Europe and Japan have now adopted negative (sub-zero) policy rates. More than $8 trillion of government debt is now yielding less than zero and North American central banks have recently said negative rates could be their next ‘big idea’ as well.

Lately some policy advisers have begun saying that paper currencies are the problem and banning them would force all money ‘liquidity’ out of people’s hands and into financial firms and government coffers.

Ok.  Time to stop.

This is madness on a global scale. Thinking people have to take the reins off monetary theorists and help to steer the world toward solvency and sanity.  It has to happen.  The current path leads to only more madness, destruction and misery.  A new ‘old paradigm’ is needed.  We don’t need to reinvent the wheel, we just have to use the designs that have served for centuries.  We know what sane, sustainable financial policies look like.  It’s time to make our way back.