The current looting of bailout money by the very people who mismanaged the world financial institutions is causing a worldwide reaction against free enterprise. In Germany a new socialist/communist party called "Linke" is growing. It is made up of former E. German Communists, W. German Unionists and disgusted Germans.
Market forces September 24
The Federal Reserve signaled that the U.S. economy’s return to growth is insufficient to withdraw stimulus as officials seek to reduce the high unemployment rate. The FED decided yesterday afternoon to continue their game of buying US Treasuries to depress the interest expenses and compensate for the decline in foreign purchases of US treasuries.
Many in the world are petrified with fear of the clear incompetence of banking and regulation personnel in the USA. In a Wall Street Journal article yesterday Barney Franks was quoted as wanting an impartial non-racist investigation of the sting operation that caught ACORN advising the stingers on "political" matters such as deceiving the IRS and setting up a regulation free child prostitution home for inner city kids. According to Barney Franks corruption redistributes wealth better than free enterprise and sting operations should be illegal because the corrupt individuals have a right to keep their conversation private and should be asked in advance if they would allow their conversations to be taped.
In any event the incompetence and corruption of bankers, regulators and politicians like Barney Frank are causing a massive reaction of revulsion in the USA and abroad. Heads need to roll. The objective of the growing American "Tea Party" is to throw all the incumbent politicians out in 2010.
The stock market plummeted almost 2% after being up prior to the Abernanke decision to do nothing again. This bungling administration would cause a great depression yet if they are given the chance but Americans are becoming impatience with the continued evidence of gross incompetence, pervasive corruption, and politician's socialist desires to get their hands in taxpayer's pockets and investigate anyone who is opposed to their nationalist socialist fascism and corruption.
When the FED buys treasuries the treasury must print the money and that will debase the dollar and become highly inflationary. Perhaps FED inaction will precipitate the overdue stock market correction.
Market Outlook
Global leaders are saddled with the weakest recovery since World War II as they will have to pay off the $9 trillion IOU they ran up rescuing the world economy from financial and political corruption. It was a corrupt Senate Banking Committee that structured the system to give people houses they could not afford. It was the bankers who structured the financial derivatives to hide the fact that the mortgage derivatives were junk. It was the Senate Banking Committee that thwarted the investigations of Ginnie Mai, Freddie Mac, and ACORN.
Worldwide credit remains tight due to de-leveraging of banks and skimming off the taxpayer bailout with IPOs and stock accumulation by financial institutions that were at one time forbidden to speculate in the stock market. Is it right to use taxpayer bailout cash to drive up stock prices while many taxpayers are frozen in fear in low interest paying Treasuries and money market funds?
Free world consumer demand continues to decline. The Federal Open Market Committee's (FOMC) provided no evidence that the Fed is about to wind down its out of control financial stimulus measures. Neither did the FED provide any evidence of a willingness to shoot corrupt politicians and bank looters as people around the world are beginning to demand as a great means to bolster consumer confidence. Many in the world would like to see the Senate Banking Committee put in front of a Communist Chinese firing squad. The Chinese take decisive action when their people fail. Instead the FED decided to let their market bubble expand and continue to destabilize the dollar.
Asian markets were mixed last night; China up 0.4%, Hong Kong down -2.5%, S. Korea down -1%, and India up 0.4%.
European markets are down about -0.5% this morning about half way through their day.
US market futures are flat again at 7:00 AM EST after the sell-off following yesterday's Federal Reserve decision.
We are very cautious now in anticipation of a sudden correction. The percentage of bullish investment advisors now rivals that seen at the 2007 market peak.
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