Tuesday, November 11, 2014

Global Economy - House of Cards ?

Despite the Fed's Janet Yellen announcing a tapering of QE and assurances that the American as well as the global economy has strengthened enough to bear the withdrawal of liquidity.Doubts remain.

The biggest anomaly is that the question remains whether QE has actually been withdrawn.I see QE being shifted from the Fed to the ECB and Bank of Japan.Its now being executed by private Bankers of other countries.

Secondly,only cheap money and artificial inflation make it seem healthy.Governments across the world make it seem that making the cost of printed money zero has had had positive impact on the population.That is a chimera.An illusion to say the least.

Thirdly,the inequity in the system in the form of labour force,inflation,reforms remain a major sticking point,at least in India.

In a small example US banks have added $185.8 billion of US treasuries to their book.This sell by the Fed and buy by Banks began when the withdrawal of QE was first announced.Funnily just 7 banks comprised for all the addition.

The banks offer near zero deposit rates to retail clients,courtesy the Fed.Now by parking this money in US treasuries they stand to make a cool 2.3% in 10 year securities.So is it still a you-scratch-my-back blah blah that led to the 2008 meltdown?

These stories are being repeated across the globe by Bankers and Administrations desperate to show some semblance of growth and prosperity.

This Political - Financial systems risk going from dysfunctional to being an outright failure.If and when this whole sham fails the stock markets will implode,liquidity will die and the World economy will plunge into a worst depression than the one in 1920s.

Right now I do not think these economist-banker cabal has any answers beyond fat commissions for their respective organisations.

The World waits for another catastrophe.