Monday Market Movement – DAX Incredible!

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by phil

Fake it ’till you make it.

That’s the credo of the World Economy these days as we’re in year 7 of doing NOTHING to actually fix the economic crisis other than throw endless amounts of money at the people who already have it (Banksters, Top 1%) in the vague hopes that they will, one day, see fit to “trickle down” some of that wealth on the people who struggle below them.

This is an economic theory that has been around since Hoover and works just as poorly now (for the poor) as it did back then, with the Top 1% now making over 150% more after-tax income than they did before Reagan while the bottom 90% make LESS money today (adjusted for inflation) than they did in 1980.  The rich have gotten far, far richer and the rest of the country has taken a wage cut to pay for it.

Not just America, of course – this is going on all over the World but, unlike in Hoover’s era, there are very few independent media outlets who are going to debunk this theory.  CBS, ABC, Fox, NBC – all owned by Top 1% companies with top 0.01% owners who benefit greatly from these economic policies – as do their Top 1% anchormen and pet politicians who support this BS:

Image result for trickle down economics

Who owns the magazines?  Who pays the Economists?  Who funds the studies?  Of course you are going to find PLENTY of evidence and “expert” opinions supporting whatever rich people want you to think – just like we heard for years that cigarettes don’t cause cancer.  Certainly Corporations and scientists wouldn’t lie about something that’s a matter of life and death, right?  That’s what we used to hear about cigaretts and now we all KNOW it was a lie that the industry and Government colluded on FOR DECADES.

Did the press save us from cigarettes or did they take the ad Dollars and keep quiet while millions of readers died?  Why would you think a similar thing is not happening right now with economic policies that are just as damaging to your well-being but GREATLY enrich the people who own the media?

If you are reading this, you are probably a member of the investing class and you do benefit from economic policies that burden the overall population of your country with mountains of future debt in order to prop up your assets – but it’s a short-sighted outlook because, eventually, the debt becomes due and the Ponzi scheme collapses (see China) and only the richest of the rich are able to maintain their ill-gotten gains.

Great wealth disparity is, ultimately, only a benefit to those few at the very top and the people on the bottom are finally waking up to the unfairness of the situation.  Bernie Sanders now leads Hillary Clinton by 10-20% in recent polls in New Hampshire and, over in England, the Labour Party just started a revolution by electing far left leader Jeremy Corbyn in a landslide victory, the biggest victory, in fact, of any party leader in British history.

This came as a total surprise to Conservatives who, much like Conservatives in the US, are firmly in denial as to the economic damage they have and continue to cause the electorate.  As noted by the Guardian:

Whatever one thinks of the wisdom of that choice, the transformational nature of it is beyond question. It has revived debates about nationalisation, nuclear deterrence and wealth redistribution and returned the basis of internal Labor party divisions to politics rather than personality. It has energised the alienated and alienated the establishment. The rebels are now the leaders; those who once urged loyalty are now in rebellion.

His trajectory these last few months has conformed to that dictum for radical reformers generally attributed to Gandhi: “First they ignore you, then they laugh at you, then they fight you, then you win.”

It’s a long way from party leader to Prime Minister but Corbyn is a warning shot across Europe’s bow that the peasants are rising up.  The main reason Conservatives were “surprised” by the results of the election were because the tightly controlled British media pretended Corbyn wasn’t happening until after the results were in.  Even on election day the British Press was calling it wrong because none of the wealthy owners of Britain’s papers (same guy that owns ours) wanted to encourage him or his supporters – so he was treated as a fringe candidate – right up until the moment the landslide vote was officially counted.

As you can see from the chart, a LOT of money is being spent telling you Jeb Bush is a contender but he trails Trump by 20% at the moment and isn’t even in 2nd place (Carson is) and Bernie Sanders doesn’t even have a Super-Pac but he’s got more cash on hand than Bush because of millions of small donations that come from actual people – not corporations.  For her part, Clinton is outspending Sanders 6:1, but he’s kicking her ass in the New Hampshire polls (up 10-20%).

Trump is no man of the people but he’s anti-establishment and that’s put him in the #1 spot ahead of Wednesday’s GOP debate.  Wednesday we also have a Fed meeting as the Banksters in power seek to remain that way as they look to placate the markets for another quarter.  Until that meeting, nothing much matters as far as market movement – except this:

That’s Germany DAX Index and it’s been consolidating along it’s 10,000 line for the past month and a pessimist would say that’s likely to be a sign it’s getting ready to move lower while an optimist would be an idiot.  We got here on artificial stimulus and you need 2x more stimulus to support DAX 10,000 than you did DAX 5,000 and Germany has already doubled their debt to well over 4 TRILLION EUROS since the crisis and there’s already no end in site at over 100% of their GDP and climbing (a bit behind the US).

We’ve spent a similar (proportional) amount propping up our markets, as did China and Japan but, since none of us actually FIXED any problems other than plugging up the gaping holes in bank balance sheets.  Our economies face the same downward pressures they did in 2010 but now it costs twice as much to prop them up.  If it cost us 50% of our GDP to get from S&P 1,000 in 2009 to S&P 2,000 in 2015, can we really afford another 100% of our GDP to get from 2,000 to 3,000?

A 20% correction on the DAX was inevitable and the S&P chart over the same period went from 1,000 to 2,100 and 80% of 2,100 is 1,680 – that would be a similar correction in the S&P.  China is already down 40% from the top and the Nikkei fell from 21,000 to 17,500 – that’s -16.666%, a devilish sign if ever I’ve seen one!

Fundamentally, we haven’t fixed anything and the anger of the people is growing with every poll.  You can ignore it if it makes you feel better but at least take these signs seriously and take what the medias says with a grain of salt – guys who have Billions of Dollars are simply not going to tell you their assets are 20% over-valued, are they?

If Japan and Germany can keep it together, maybe our 10% correction to 1,900 will hold as clearly the US economy is stronger than most but, if those dominoes start to tumble as well, then 1,900 wil lnot provide much support for us either.  Some of the puzzle will fill in after the Fed but we’re deep in the woods now and the bears are certainly all about us.

Be careful out there!

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