Juggling Dynamite

Danielle was a guest today on the Financial Survival Network with Kerry Lutz discussing recent trends in the world economy and markets, and what individuals can do to empower themselves. Here is a direct audio link.

The US dollar has weakened off today which may reflect a belief that this morning’s US recession warning from the Chicago PMI at 49 will prompt even more “support” from the Fed. The Canadian dollar has rebounded a bit the past 2 days in hopes that more stimulus will lead to more growth? or inflation? or BOC rate hikes? Not likely; 5 years of monetary mayhem haven’t delivered so far. Treasuries remain unconvinced with the US 10 year yield hovering slightly down on the day at 1.67. One thing for sure, the Canadian TSX composite is not looking strong here, as prices and buyers continue to retrench with the global economy.

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Meanwhile, the S&P 500 is looking positively crack-whacked with QE tortured pricing, poor participation and highly levered traders gunning for the sky. Jeremy Siegel must be right this time, what could possibly go wrong here??

The world’s central banks have printed unimaginable amounts of money in recent years. Neil Macdonald explores what this means for the global economy and for your financial well-being.Here is a direct link.

This is an excellent piece. “Mark” comes off a bit agitated and a little smarmy with a condescending tone to interviewer “Neil”. But truthfully there have been many actors in this play. The bed we were making has been obvious for a long time. I wrote the following in Juggling Dynamite in 2007 before the credit bubble first burst:

“Those who spend more than they earn need to maintain excellent relations with their bankers. Over the past few decades, North American governments have become increasingly dependent on the kindness of lenders. Such support now forms the bedrock of our incredibly indebted nations. Spendthrift leaders are repeatedly elected to help the masses spend our way to prosperity. The majority is evidently not keen on electing fiscal restraint. A leader who suggests a life of restraint and paying down debt is, so far, unlikely to win the popular vote. The financial machine provides the products and the funding to support the vision of the have-mores. And so the vested interests favour the continued borrowing and spending of today without worrying about tomorrow.” (pg 70)

“I often liken leverage to an addictive drug. Although it may feel good in the moment, it is often dangerous to our long-term peace and health. Some people will tell you that crack cocaine is the most incredible high ever. Okay, I say, let’s concede that it is. Where does that take us?” (pg 133)