vincecate wrote:
To me it seems strange that the stock market is up when people are in such bad shape. Do you think these people behind on their credit cards have stocks and are just planning on defaulting on the credit cards? Or do you think they have IRAs and have not gotten so desperate that they want to take money out on the "hard times withdrawal" feature? Or do they have no stock market investments?
The "spend spend spend" comes from a sort of panic that prices are going up so they should convert from any sort of financial asset to physical goods. It is when they are no longer confident money will hold value and interest rates are clearly going up. The rising interest rates, the loss of confidence in money, and people start buying cans of tuna. I believe the stock market has to crash before the hyperinflation really gets started.
It's pretty clear to me now that we're in some version of 1929 with regard to the stock market. I've said that before but didn't completely understand it. In the mid to late 1920's there was a real estate bubble that popped but it wasn't as big as the one that recently popped. So it may have registered a blip in the stock market around 1927 and the stock market roared higher as that's where the speculation was. In the meantime, the country wasn't really doing so well, but it would seem to me that things were a lot better in 1928 and 1929 than in 2010 and 2011, let's say.
As for your questions, I don't have the exact information in front of me, but have read much of it. The bottom 50% in the US own very few stocks either directly or indirectly. Another interesting feature is we see the Fed doing $100 billion in POMO per month. Comparatively speaking, the ICI figures show the public withdrawing from domestic mutual funds in 2010 and about $3 billion per week coming in lately. Pensions funds seem to be mostly reducing allocations to domestic equities so far as I have read.
As usual, the top 5-10% in the US, and the top 1% in particular, seems to be doing well. The late 1920s were similar. That doesn't explain why consumer spending has been holding up, but consider the transfer payments that are coming from the government to the unemployed and those who can't feed themselves (44 million are now on food stamps in the US). That's reported in GDP and is considered to be "economic growth" if I remember right. That's off the top of my head but I can look it up. I read something today that said private GDP has not grown in the US since the year 2000 (after government spending is stripped out). I didn't even know things were that bad. The second component of distress spending is many aren't paying their mortgages - they are spending their mortgage payments instead. I read an estimate that 3% of all retail spending is due to people not paying their mortgages.
Silver is poor man's gold and the man on the street in the US has been buying a few silver coins because he thinks the dollar is going to collapse. Silver has been going up about 3% per day for the past week, faster than gold. That's not scary in and of itself but when Bernanke states he doesn't really understand gold or why it's going up, that adds a whole different dimension to the situation. Whether Bernanke really doesn't understand gold or whether he is once again lying, he is a moron to be saying something like that. It vastly reduces my confidence in the dollar to be reading that. We are tilting toward inflation now and if Bernanke continues to successfully employ the same solution of pumping money into stocks to maintain the 1010-1040 "floor" on the S&P 500 then confidence in the dollar could be lost, I think. I still don't think he can because the higher stocks go relative to their real value, the faster and harder they can crash and eventually Bernanke won't be able to pour the money in fast enough. The smartest thing that can be done at this point is to admit the QE2 didn't work to revive the economy, recognize that much of the money went into stocks, and to let the market crash to wipe out the excess money in order to prevent hyperinflation. Ben Bernanke appears to be too stubborn to realize his lifelong study is a farce, so now it's up to the politicians or the citizens to stop him. By the way, there's an excellent article in Time about Thomas Hoenig and why he voted against QE2 at every Fed meeting last year. Since we no longer generally have the caliber of individual like Hoenig in the US, there is nothing that can be done to avert a Roman, 14th Century Europe, or Soviet style collapse. The few competent and moral individuals like Hoenig have been overcome by the incompetent and degenerate rabble and there is no way to reverse that without a complete breakdown and massive dieoff.
http://www.time.com/time/magazine/artic ... 36,00.htmlWhile the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.