friday brainstorming

1. Lets start with a minor story but still crucial for ongoing central bank stupidity around the world. This time from a different angle as the Turkish one woke up and recognized that deep negative interest rates do not work for emerging market countries and they raised surprisingly sharply the interest rates by 350 BP to 12,5% overnight lending w- which was quite a blow to banks riding the yield curve on the long end. Turkey stil has negative interest rates as the real inflation is rather above 20% with the recent hikes of taxes (prices) the government not only for luxury goods like a 2 litre engine car and cigarettes and alcohol but also electricity bills and gas for heating were raised again sharply. Which pushed prices for all goods higher basically as the dropping currency makes most raw materials more expensive. Now the one booming sector besides the banks who only do not charge you for breathing within their buildings the real estate and constructing sector which is clearly in a bubble will have a hard time to sell all the space they are building going forward.

Back to the big picture as more pathetic EU politicians, always behind the curve and liars on a poor level keep runing daily rumors to save something which is not ment to be. Taking up a EURO union of countries with such huge economic differences and cultures does not work on a pure monetary union anyway. National interest will be always the bottleneck and in a crisis one can not convince to bail out weaker partners who abused the system for their own benefit. Greece ( the much poorer economy ) pays far higher retirement packages than average Germans will ever receive – who would bail them out. Since everybody knows they are bailing out the banks again.

First of all every banker who has received a cash bonus in the last 8 years should return it to taxpayers or be forced to buy stocks of the banks. Most bonus were anyway in stock bonus and except for a few banks like JPM and Goldman not worth a lot anymore. Still the earnings banks make these days are due to any talent but due to insane negative interest rates and other backstop taxpayer financed gadgets . While mainstreet is losing money on a daily basis on those policies banksters  generate earnings on artificial government sponsored policy. That has nothing to do with capitalism anymore by any means. Comunsim in the worst shape has found its backdoor into America finally where a few priviledged ones get perks for no good reasons.

Before expiration they would not let the market slip below 1200 and we will stay in a trading range 1190 to 1230 for now but will extend that range on both ends to  1170 and 1250 and some point. Roller-coaster within this bigger band is the most likely space for the next 3-4 weeks.

~ by behindthematrix on October 21, 2011.

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