Wednesday, April 8, 2015

Why Bear Returns: Misc. Factors

This part may fall under the last reasons, but it is very scary all by itself. There are so many intangible aspects as to why an outside event could disrupt the global economy and thus, find its way to the US stock market that I will probably miss a few. This revelation in itself should send up your red flags. The dominoes are all lined up and the recent fracking worries pertaining to earthquakes could topple the first chip.
Our western civilization begins there and it is the center for the rollover Ponzi schemes of central bankers. Tomorrow, the Greek government must repay a loan to the IMF which will empty its coffers. Then, they will ask the EU for more money just to keep the lights working and the doors open. You rob Paul to pay Peter and look for some white knighted saint to make amends with Paul.
Then, there is the geographic hot-spot in Europe. It is unresolved. From my perspective I see these hard-luck people having their nation split in two like Korea. This is another Berlin in the making.
Then, there is this desert fun spot. You see, dear reader, we could keep saying, "Then, there is..." almost all day. This explosive situation will only get worse. It is a civil war just like our north and south entanglement except its Shite v. Sunni. In the US today, there is still lingering resentment by southerners towards northerners. These situations get their feelings compounded when lives are lost. Healing is never easy or quick.
Then, there is the largest economy in the world. We all know that the "Red" Chinese government built "ghost" cities and thus, their real estate is a huge bubble that could burst any day. However, their stock market is just as bad, maybe worse. Their tech stocks are valued higher than NASDAQ 5000, back in 2000. The average P/E ratio is 220 to 1. Are these people insane?
China has two parts of its economy set to implode. If it does, the world economy sinks with it. People, it is baseball season and here is your correlation. China has two strikes on its batter. If you play the percentages, this batter will more likely make an out than get a hit.
Then, there is Economic Instability. No, this is not a repeat of troubled hot-spots like Syria and elsewhere. This is governments that face domestic unrest due to economics. Places like Venezuela, Brazil, Argentina, Nigeria, Kenya, Thailand, all over the world. A common suffering is from the recent currency evaluations and volatility. These nations feel inflation, especially with food prices. This could also find its way in the US with the severe drought in California. Have you purchased any eggs lately? Yes, Virginia, the price is high. 
Finally, there is a disconnect within the world which is directly caused by the Federal Reserve. The rise in the dollar while at the same time, low interest rates effect bond prices. The Fed engineered this manipulation of interest rates to save the banking industry and at the same time allow our government to continue to run up deficits. Low financing for our national deficit. Now, Japan and the EU are boarding the same ship of fools. The collateral damage will be felt by merging markets, but they are not liking it. The US could feel a severe backlash if all these nations form trading alliances to circumvent the dollar. If that happens, we will suffer, big time and it will all be the Feds fault which is why I say, End the Fed!