Juggling Dynamite

Further to my articles last week here and here, gambling with large sums of money is a well worn path to financial devastation. Addictions and denial with gambling run rampant, but most people understand it is self-destructive.

The problem with playing financial markets today is that participants are spinning the wheel and calling it “investing”. Wagering large portions of life savings, many are taking credit for lucky outcomes as if produced by talent and skill. So far central banks have been able to keep the game going and attract more victims to the table, but the odds are horribly stacked and luck never lasts indefinitely. See: Is Wall Street now just a form of legal gaming

“Whether you sit directly at a casino table, or you sit at your own virtual one. The same sort of rules apply: Sure your playing against other players, but you’re all playing against the house. And today that house is Wall Street where the actual bank is now solidly owned by Central Banks.”

Good discussion of economic facts with David Stockman this morning…

David Stockman, head of President Ronald Reagan’s Office of Management and Budget, and Paul Roberts, author of “The Impulse Society,” examine the state of U.S. fiscal policy, spending and budgets.  Here is a direct video link.

Asset bubbles have a fleeting bump in the wealth of some households and thereby perversely dissuade fiscal discipline and healthy saving and investment rates as the value of assets go up. Then when price bubbles burst once more, households and the economy are revealed to be years behind the capital targets needed. Here is a direct video link.

Central banks are wrong to increase their balance sheets and try to contain inflation at 2 percent. Here is a direct video link.

Morgan Stanley and Goldman Sachs see only global strength ahead…what? the risk sellers see no signs of a downturn? Surprise, surprise…

Bloomberg’s Simon Kennedy reports on the global economy and the risk of a recession.  Here is a direct video link.

The downside of using QE to ‘stimulate’ risk assets far above global growth the past 4 years, is that it only worked on the assumption that global growth would catch up and justify the high prices. With the global economy weakening, not strengthening today, the over-valuation in asset prices grows more garish by the hour.

Many finance types today say they are confident that stock markets will continue to rise because they do not see a recession ahead. [The sell side, never does, but that aside.] In saying this they are ignoring the fact that high stock and high yield debt prices are the strongest evidence bulls point to of an economic “recovery” the past 5 years. Once prices recouple again with true global growth trends (that are much lower), the evidence of the much touted recovery evaporates as well. In other words, once the veneer of rising asset prices is removed, an enduring recession will be self-evident.