No one expected the Federal Reserve to hike short-term interest rates at today’s policy meeting. But plenty of investors were hoping Janet Yellen and her crew would acknowledge the recent downswing in the global economy and sing a dovish tune.
Market Roundup
So did they deliver?
Well, in the post-meeting statement, Yellen & Co. sounded a fairly optimistic note about strength in the domestic economy. They said that “labor market conditions improved further even as economic growth slowed late last year” and that “household spending and business fixed investment have been increasing at moderate rates in recent months, and the housing sector has improved further.”
At the same time, they underscored how “net exports have been soft and inventory investment slowed.” They also noted that inflation continues to miss their 2% target, “partly reflecting declines in energy prices and in prices of non-energy imports.”
Moving on, Fed officials said they believe the economy and labor market will improve modestly and that inflation will rise back toward 2% “in the medium term.” But officials did try to throw a bone to the market by adding they are “closely monitoring global economic and financial developments” and “assessing their implications for the labor market and inflation, and for the balance of risks to the outlook.”
My overall read: The Fed was somewhat dovish, but not dovish enough to satisfy investors. Specifically, policymakers didn’t single out the dollar and try to push back against its ascent. That helped contribute to a late-day meltdown in stocks, with the Dow Industrials dropping 222 points and technology stocks getting hit particularly hard.
But frankly, this is all very short-term stuff. My longer-term problem with this ongoing interaction/co-dependence between capital markets and central bankers is this: The emperor has no clothes!
If dovish comments from central bankers worked for the real economy, we wouldn’t be hanging on their every word. The economy would only need to hear one speech — and then we’d be off to the races.
If QE worked for the real economy, we wouldn’t need fresh doses of it every few months. The economy would surge, eliminating the need for more and more treatments.
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| Janet Yellen was dovish – but probably not dovish enough for some investors. |
If ultra-low or even negative interest rates worked for the real economy, we wouldn’t need cut after cut from the world’s central bankers. And let’s be honest: They aren’t even working in the financial markets anymore. New cuts generate a couple of hours or days of “risk on” gains … then we roll right back over.
Central bankers said all along that easy monetary policies were designed to build bridges to a better future and better global economy. But they’ve turned out to be bridges to nowhere. That’s why meetings like today’s … or last week’s European Central Bank meeting … or the Bank of Japan meeting that’s right around the corner … are no longer spurring huge, multi-week or multi-month rallies.
| “Meetings like today’s are no longer spurring huge, multi-week or multi-month rallies.” |
My advice: Stay focused on underlying corporate fundamentals, credit market trends, and global economic data, NOT central bank talk. They’re all signaling tough times ahead, and that’s why selling into rallies is the best course of action in my view.
What do you think about today’s Fed meeting? Do you think what the Fed did and said will support markets? Or is central bank talk and action wholly ineffective at this point? Is there anything policymakers can (or should) do to stabilize markets or the global economy? Let me hear about it below.
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What does the recent carnage in financial stocks mean for the market as a whole … and how is it impacting your investing strategy? You had some ideas on that overnight, so let’s get right to them.
Reader Gordon said: “Banks are pulling in their horns on easy lending. Losses are building up. Some loan insurance companies are going under, or are on the ropes. Banks are now coming under pressure in the markets as Christmas is over and the hangover is here.
“If the banks pull out the rug entirely from easy lending, things could get ugly fast. Banks do not care about the economy — only making a buck.”
Reader Chuck B. said: “David Stockman, President Reagan’s former budget director, pointed out a belief elsewhere that the world economy is going to begin to shrink, for the first time since the 1930s. He says there is just ‘too much wealth out there.’ He blames it on central banks’ creation of money.
“He says that has pulled demand from the future, and that there are just too many ‘things’ – too many gadgets, too many autos, too many big houses, too many skyscrapers in China. He might have mentioned too much debt, and now society has to begin paying the bill.”
Reader Joe added: “Unfortunately, banks and the government have trained people to confuse credit with money. When people get a new credit line, they feel good. They spend it like money, same as our government does.
“The only difference is, Washington prints it. People may have to pay it back. The real mess is just in the beginning stages.”
Finally, Reader Al McN. said: “I think you nailed it in this article Mike. Debt is the problem, which no one has been willing to face since 2000, period. It’s the reason we had huge growth in oil (i.e. cheap money).
“But now all this cheap money has created too much capacity globally – hence, the commodity crisis. Plus, the world is mired in debt so deep every central banker has tried to figure out how to avoid facing the problem.”
Thanks for the feedback. The credit/lending environment is absolutely crucial to the performance of markets and the economy going forward. So anything that suggests banks are pulling in their horns further is going to have repercussions for growth, asset prices, and more.
I believe central banks have worn out their welcome, and are largely impotent when it comes to promoting even more out-of-control lending than we already had over the past half-decade. So we should all continue to buckle down in anticipation of tougher times.
Anything else you’d like to add, but haven’t shared yet? Then use the discussion section below as your outlet.
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The law of large numbers (and the lousy performance of several world economies) has caught up to technology giant Apple (AAPL). Sales of everything from the iPhone to the iPad to the Mac missed forecasts in the most recent quarter, and the firm projected an outright sales decline in the current quarter – the first drop since 2003.
Apple officials blamed weak economies in Brazil, Canada, Japan, Russia, and China, and the strong dollar. Lackluster uptake of its iPhone 6S and 6S Plus models was also to blame, since they don’t offer much more in terms of features than previous phone models.
Speaking of earnings and overseas weakness, both United Technologies (UTX) and Boeing (BA) reported lackluster results. The strong dollar and disappointing demand hampered sales and earnings. That offset some of the positive feelings generated by more encouraging news from bellwethers Procter & Gamble (PG) and 3M (MMM) yesterday.
Large European banks continue to report massive losses, the latest being Royal Bank of Scotland Group PLC (RBS). The bank is still 73%-owned by the U.K. government as a consequence of a credit-crisis bailout. It faces 2.5 billion British pounds worth of costs for mortgage-related settlements, a pension deficit, and a settlement related to sales of unnecessary insurance. It also wrote down the value of its private bank by 498 million pounds.
Let me know in the comment section.
Until next time,
Mike Larson
Recommended Articles by Mike Larson:
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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It seems that “don’t fight the fed” has no merit anymore. they seem clueless and don’t have any more bullets in their arsenal. that goes for Europe as well. It seems we are on a slippery slope and perhaps the only way out is for the Central Banks to get out of the way and let rates normalize so Capitalism can prevail.
The U. S. Dollar will be the last currency standing! When the Dollar collapses, the World Economic System will fail. This is when the real New World Order will begin and it will not be controlled by man!!
Right on Mr. Thompson. No one with any intelligence, logic or common sense can refute your comments.
Bob Z. Naples Florida
The thing that really surprised me in the latest Fed speak is that the Fed made no effort to “talk down” the strong dollar. She is still enticing rich people from other countries to buy the dollar or export them into the US. Does she think the inflow of foreign money into dollars or American stocks will maybe prop up a sick stock market due to poor earnings by American companies and also stuff some of the financial holes in yea good ship America? By sucking up so much foreign currency into the US it destabilizes other countries but then we now live in a global community where in reality its still every country for itself.
CUT ALL THE useless VERBIAGE!!! WHAT DID THEY DO TODAY??? Nowhere did you mention the change, or non-change, in the rate……..,
All they did today was continue to TRY to PLAY WITH OUR MINDS!!!
The Federal Reserve, Wall Street and the politicians in D.C. are all a sham, a hoax, corrupt, brainwashing the uninformed public, and are contributing to the demise of our once great country.
Bob Z
Naples Florida
Dave: The Fed didn’t change rates (which was expected) BUT, they did not say anything that the market didn’t already know…..hence the selloff.
Cecil: “….TRY to PLAY WITH OUR MINDS” is exactly right…and failed miserably at that!!
Dave they just said steady as she goes. The rudder on yea ole ship America is broke so they must blow hot air into the sails. Like the galleys of old some of the crew are manning the oars. The water is calm for now but dark clouds are forming on the horizon. Also its an election year and good ole Janet wants it to look like she is remaining impartial. If the Republicans win the WH they could hoist the Jolly Roger and make her walk the plank. In the end the “Me First” syndrome extends to her as well. In this fast moving world its every man for himself and she is no different.
This appointee of the sitting president, is as clueless as the sitting president and his “Constitutional Expertise”.
Jerry
If you really want to use the word clueless wind back a bit to George Bush. He holds the all time prize for being the most clueless of the bunch. When 9/11 occurred he sat there clueless with a child’s book in his hand and the dumbest look I have ever seen on a man’s face.
Its simply ubsurd that the fed needs to constantly monitor markets because of a 25 bp increase. If our economy can’t sustain because of nonexistent rate, we are in huge trouble. Fact is the fed created massive dislocations of capital over the past 6 years, now they have live with rebalancing volatility…
Dd, I agree with you, but to be fair the Fair in march 2009 when the SP 500 was at 666,they did the only thing they could,and we did avoid a much situation, but it does we lot of side effects which we are going to see now…
JL you better hope and pray it does not happen again which looks quite likely at present as the greedy banksters are up to the same old tricks. There are no bullets left in the government gun. This time if a crisis happens the government will go directly into your bank account and lop off the amount they need. So many countries have watched the Cyprus crisis and how it unfolded. Countries are now enacting laws so that they can help themselves to your hard earned money rather than lock up banksters who if the crisis reappears will like always make off like the bandits they are. Its the wild wild west all over again.
How can the Fed possibly believe that a 2% inflation rate is rational in an economy and labor market that is shrinking. It is about as likely as the effort by politicians to legislate higher minimum wages is to increase the number of entry level jobs. There is just so much available money out there, and it can only buy so much – so much of things, services, jobs, or what have you. Yes, they can “print” more money, but that simply makes prices rise, and the total money goes no further than it did before. It merely creates a meaningless illusion of wealth. Yes, there is a delay factor from when the money first appears, and allows the bankers to buy more – since they get it first – to when the average Joe/Josie gets his/her hands on it, and the prices begin to rise. In the long run inflation of any kind does more harm than good, though.
Hi Chuck, I agree with you about the “illusion of wealth”,the best way for a government to rob people without anybody noticing is in fact to devaluate the currency…..and wealth worst ennemies are inflation and taxes.
The day the dollar lost its gold backing,is the day it became heavily manipulated paper,and is the day we lost out.
Yes Chuck prices do rise and are rising but the government has refined/tampered with the cost of living basket to the point where it shows almost zero and we shoppers know that is a lie. By doing this they keep wages for workers low pointing to the fudged COLA numbers and in turn big business points to this fact during labor negotiations if your lucky enough to have a union left to support you. Also pension increases stay low and their own huge borrowing interest rates all low. Its a win win for them and a lose lose for the rest of us. Yes it creates an illusion of wealth but there really is wealth but unfortunately it is controlled by 1% or less of the population.
Mike,
On my PHD program I was taught about Philips IS-LM curves. Monetary policy can’t stimulate an economy, so even this pearl of wisdom from politicians is a lie. Janet is shooting blanks. The best the Fed can do won’t help now.
And the worst they can do will cause great harm.
so if i gave you money, it would not stimulate your economy?
the only thing the fed has is monetary policy, nothing else.
They all got an Ouija board for Christmas.
No, you would have less money to spend. Jim
Yes, but if you gave everyone money, prices would just go up and no one would be any better off. And if you gave it to me via the bankers, they would get the goody, not me.
Rates did not change today!
I think the reality is that the USA is where every one wants to be, financially and physically.
We, at least, are keeping our heads above water individually. But, our financial markets are not sick and not well. They are now being effected by our creditors who are now trying to become our debtors. Here, we still have prosperity. Every thing is normal. This is an election year and its going along its normal chaotic course. The restaurants are full. The airports are full. Our GMP may fall, but for us, in our every day lives, except for the stock market, it seems normal. For me, I went to cash to solve that problem. Too busy to fret over something out of my control.
Victor, imho, the reality is that the USA is where few will want to be, financially and physically, in the very near future if our economy and government continue on their current course. Then it will be difficult to keep our heads above water once the dam breaks. Financial markets ARE sick and swooning as we speak. I don’t know where you live, but in Oklahoma, restaurants are NOT full and many folks’ everyday lives are quickly becoming anything but normal as they lose their jobs, cars and homes. New jobs pay 1/2 their old.
Cash is great… until it’s worthless. Maybe time to consider more durable assets while King Dollar still reigns.
Farah: “Financial markets ARE sick and swooning as we speak.” I agree completely!
After all this “economic stimulus” and nothing has changed except that it made the stock market go up (for awhile)…??
AND Walmart is closing down a bunch of their free-standing grocery stores instead of taking profits from their supercenters and MAKING their grocery stores operate….??? Not many years ago, Walmart was considered such a barometer for the economy that CNBC was having them on each Monday to report how things were doing.
Our economy is in a whole HEAP of trouble!!
You must live in Washington D.C. Jim
There are about a million restaurants in the U.S., according to the restaurant association. That means each one is supported by about 360 or so people – adults and children. If everyone eats out once a week, that means each is supported by about 50 or so customers daily. A few customers may actually go almost daily, some maybe once or twice a week, some almost never. Somehow, even if the average person eats out twice a week, the restaurant business seems pretty chancy. Maybe that’s why so few stay in business more than a few years.
Yes victor all the places you mention are full. I live in Thailand and its FULL of tourists travelling on BORROWED money. A lot of them are Chinese. They follow a scripted program while here. They follow their guides red flag and tour many places and spend time on the beaches, sleep in Chinese/Thai accommodations but keep their wallets clutched close to their chest. You made a wish move going to cash. Yes life seems normal for you but it is far from normal for many struggling to stay afloat. They are the jetson and flotsom of life.
The world economies never had more debts than right now,in their entire history.That can’t possibly be good!! Governments can kick the can down the road,only so far!!! At some point,the s— will hit the proverbial fan.
I believe that time is approaching…..may be a year or so,for the house of cards to once again crumble! I hope I am wrong.
“The Emperor has no Clothes” should be a separate sentence.
Yes Victor,I also think the US is still 1 of the best country to live in,I hope that it remains a Capitalistic country! And not another Europe,with no growth , very high unemployment rates,and people that depend on government assistance to survive…..I am 75% in cash.
JL what is the answer if you withdraw financial assistance? Mass extermination survival of the financial fittest. 62 or so families control most of the money on the planet. That leaves 7 billion plus. The world only produces a small number of geniuses so should we exterminate 7 billion? No we cannot as we must leave some consumers to buy things to enrich the 62 in control. Forward look a little to when the robots come on the scene. Maybe they in time will exterminate us. Soylent Green anyone?
Correction:”1 of the best countries “
My cannery has died a while ago! Toxicity in common sense economy killed it!
The American nightmare is the new norm!
The Fed don’;t know what they are doing. Looks they are using that medical marijuana trying to get things straight. Group of clowns in support of BIG BANKS. Banks got bailed out during the financial crisis, kept all the money in their books, never lend it out and now the Fed wants to raise rates so that Government loans and Public Debt remain a curse over the People. Fed should be abolished along inefficient Big-to-Fail Banks. Better are Credit Unions and future forms of financial sources.
Yes Manny the big banks have a vested interest in raising rates and screwing everyone else.
I’m as confused as the Fed is so let me speak too every month about economics…
If you have an inclination to REALLY know about the Federal Reserve, read the book The Creature From Jekyl Island. If you don’t already know, the Federal Reserve is accountable TO NO ONE. Support Rand Paul in his effort to audit the Fed.
The people who voted for Obama not once but twice, have an IQ below their body temperature, well below 97 degrees. Bottom line, stupid is always stupid.
They all work for the ” Cartel ” the one that has been ripping America and the World off since it was ” established” what do you expect from a CARTEL ? at a local level elect Christians to run your state , city, we can change America for the better and Pray for America to RETURN to GOD – YHWH
How could Janet Yellen—or any other Fed Chairman—possibly think that this economy is “in good shape” or even “trending the right way”? Personal savings are down, bankruptcies are up, home foreclosures are on the rise again and credit is tightening. Add to that the fact that the unemployment figure of 5% is a lie–since people who’ve given up looking for work after 2 years of futility are falsely assumed to have found employment… To make matters worse, those who are working are often underemployed–either because they’re working less than 40 hours per week or because they’re being paid subsistence wages that can’t possibly pay all the bills, let alone purchase surplus goods and services…Last, per Economics 101, it’s SPENDING by ordinary citizens, NOT artificial stimuli by Pooh-Baahs at the Fed, that’s the real engine for (and index of) the nation’s economic growth…
How stupid so they think we are??
How stupid are the people who we pay to know better??
End,
Clifford
Sta. Monica
In retrospect, we should have allowed G.M., AIG, and others to go belly up or perhaps work their own way out of their own demise. I often hear that policy was the culprit allowing companies to tread on business “opportunities” they had no business in, so we bailed them out causing trillions of dollars to shift from corporations to the U.S. taxpayers. Our federal deficit will require raising or lowering taxes and increasing or cutting spending. Hopefully, our new President (whoever that may be) and the U.S. congress can create tax and spend legislation that cuts taxes and cuts spending. You can not have one without the other so the old song goes!
This will never happen. Everyone in Washington, D or R, is perfectly happy with the way things are right now. They are pulling in $3 trillion a year. Why would anyone voluntarily change that. Government is their business and business is great. The real income inequality thrives in D.C. Jim
Al cutting taxes and spending is out of the picture they just owe tooo much dinero. Sorry its past the point of no return. Its like you having a large bank loan and taking a cut in pay and still hoping to keep up your monthly payments. If they cut spending re-election goes out the window. The masses vote Democrat the elite vote Republican soo the Republicans must lie to the undecided Democrats. But the undecided know the Republicans want to take away their government handouts so the next president will be Democrat. Have you watched the Hateful Eight up on the stage during the debates what a bunch of clowns. Hillary reminds me of an old western gunfighter. She cannot get the gun out of the holster and keeps shooting herself in the foot. She had the nomination sewed up and then self destructed. She was just to overconfident like some emperors offspring.
The Fed wants 2% inflation, wonderful. The Emperor screwed the elderly with no cost of living raise in Social Security, but some of the better off elderly were hit with a Medicare cost increase. The excuse was that gas prices are so low, which is wonderful for the few that still drive a hundred or more miles a day which is very few while a large percentage don’t drive at all, think of all the money they are saving on taxi fare,,,,,, none. Does anybody actually have an idea of what is going on? A year ago some gurus were predicting the Dow would be around 51000, then 31000. Well it is half way to the later. Meanwhile everybody just keeps printing money and spending money like there ain’t no tomorrow. But the worry is are they right about the later?
Ted F
You sound like a senior as am I. If you are move to Thailand. Your money goes twice (especially the Yankee greenbuck) as far the weather is great and if your like me 77 years old you will still get a cute smile from a passing gorgeous 20 year old. For the sake of disclosure my g/f is a cute little 26 year old been together for 5 years now so what is your excuse what are you waiting for life is just to damn short. Enjoy now and you cannot take it with you.
The U. S. Is still the strongest economy in the world. One can still achieve the “American Dream”. As long as honest people work honestly and relate fairly, America will stay in the lead. The Feds only play a psychological role!
Ninety four million Americans aren’t working, fifty million can’t feed themselves, and average wages have been in a steady decline. You are right, it doesn’t get any better than this. Jim
Your premise about honest people is too idealistic. The big question is how, if even possible, does our great country beat corrupt big banks, Wall Street, and the political machine, whether Republicans or Democrats.
Why blame the banks?
You buy a house. You go to a realty or bank The GOV. gives the printed money to the bank, which goes to the seller. The mortgage and the paperwork goes to the GOV, The small fee goes to the bank. The GOV owns your house.
If you want to find out who owns your house, don’t pay your property taxes. Jim
Did you know, there were 19 IPOs in January,2015 – there are none so far in January 2016. Some say it because companies don’t like to go public when markets are volatile, as they have been this month. Maybe so. I know there are several local companies thinking about IPOing, but they haven’t decided yet to do it. They might be wise to hold off.
Also Chuck the banks are getting a little tight fisted.
The top-down approach for pumping up economy does not work, because the money poured in from the top may flow to wrong places. But a bottoms-up approach surely helps. The central bankers should only facilitate growth of small businesses, instead of using QE or ZIRP policies. Micro-financing helps to sustain growth in longer term.
Hey Mike,
So when are interest rates on bonds going to “explode higher” like you and Martin Weiss have been talking about for 9 + yrs now ??
Money =s power =s control =s money =s power =s control ad infinitum, ad nauseam. So, if you want more power and control,,, print more money.
Mule
Hayek:” Conservatism and Liberalism have nothing in common but one word: equality. Conservatives seek equality in Liberty. Liberals seek equality in restraint and servitude.” Jim
Mike
There is an issue that is being completely overlooked in the energy debate and it affects everyone. Climate change policy is costing the little guy a huge amount of money in the attempt to change away from traditional cheap forms of energy. The reason this is making people like Mr Trump so popular is because the little guy is left out of the debate. The man in the street is being forced to pay for alternatives to traditional energy whether directly, by subsidy or by taxation. This one sided debate exists because progressives have tried to shut down any opposition to their arguments. It will lead to poverty, war and revolution around the planet. If their arguments are so sound and economically viable then why shut down debate and exist on subsidies. If they are right then everyone would be behind it, but at the moment the middle class are footing the bill and going broke doing it. It is no wonder so many are fed up with Politian’s and the lousy representation they are receiving. I hope Trump wins, not because he’s the best man for the job, but because I trust him more than any of the other career pollies in there.
Good analysis Howard. It is very troubling that the tendency on the Left is to shut down all opinion that disagrees with them, by any means. It’s ironic that the very people who accuse Trump of authoritarianism are just as guilty of it. It’s also ironic that places where dissent is not allowed are called “safe zones”. How did we get to the point that politicians can promise they will control the weather and we believe them? I’m beginning to understand the Trump appeal. Voters don’t care about party identity or ideology, they just want someone to stop what’s been going on the last seven years. It’s a dangerous time. I hope the best man does win. Jim
The issue that is being overlooked is none of the things in the comments. The real issue is that democracy has failed. It has failed, and we are electing the wrong leaders, because more people who have no stake in the economy are voting and they have become more then 50% of the voting public.
Good points Howard.
How well has the liberal policy of no budgets and endless debt worked for economic growth at this point?
How well has endless regulation helped our economic growth?
How well have liberal policies given us more freedom, they attacking us with tax revenge when we execute our freedom of speech that disagrees with them?
Human caused climate change isn’t proven. It’s opinion! Yet liberals are going to make poor pay a lot more for energy at a time when the poor desperately need to earn more disposable income.
Jim
The right is no slouch at shutting down public opinion. Look at the Governor of Michigan. He is trying to duck the SB’s and keeps shouting lets move on. Yeah sure Governor you should move on right to jail no passing GO or collecting $200
Gordon
Yes it is right to suggest that there are either Republicans or Democrats, but these people are mostly in Washington. Most people I know believe in a middle ground and don’t particularly get drawn into one side or another. We just want good honest representation, with a fair chance to bring up a family. We are in desperate need of a leader who is inspirational and can lead us all into a visionary future. A world free of the B.S. and nonsense of politics. I am just fed up with almost twenty years of POTUS windbags coming along and promising stuff and rolling over and leaving a mess. Our country was founded on many principals and Washington doesn’t seem to have any. Is this why you moved to Thailand?
That mess was started by the mayor of that city. The press never mentions his name, Dayne Walling.
Where were/are the engineers who facilitated this mess? If heads roll, the engineers who designed and permitted this fiasco should be at the front of the line. The governor knows nothing of ion transfer. P.S. I’m an engineer.
Yesterday was the first day in the last several years, in my memory, that the market tanked on a Fed Day. I have been waiting for this day and I think IT IS significant. It signifies a MOOD CHANGE. The mass of investors no longer look to the Fed as an answer to our financial problems. It also means, by extension, that this market is going down. Next stop for the Dow: somewhere around 14,800.
You are right on. The Fed has no power. The sell off is well under way . The Dow could well hit your point before a major bounce but the ultimate bottom is 4324 by 2019. So it could gyrate around for the next couple of years but massive global depression is where we are heading, so say your prayers , get your own garden growing and be totally self sufficient. Bible prophecy is playing out right before our eyes. Just like Noah’s Ark.
The world runs on sand.
It is used for concrete, for glass, for integrated circuits, as filler for plastics. The list is endless.
Nobody tracks sand as a commodity, but sand is getting scarce. There are sand theives everywhere.
China has built huge infrastucture using sand gathered from dredging operations to open their trading ports.
The problem is that the sand from dredging is salty, and they have neglected removing the sald before using it to build their highway bridges, apartment blocks, and skyscraper office towers.
It is a ticking time bomb. When the steel re-inforcement rots, the builldings will collapse.
It won’t take long, and iti is inevitable.
If you are invested in china, get out.
If you are invested in a company that has major dealings, or holdings in China, get out.
Best of luck in the future.
I wish the FED had common sense. There has been no case in history where debt creation has won in the long run. Once we had the initial debt collapse a person with common sense could take both the long term history of debt always failing to produce growth when too high, the world’s current debt situation (which was larger than ever before having already hockey sticked to the ultimate degree), the collapse of the stock market due to margin records and internet fiascos and they could see it was time to tighten belts and get through the 2000 market collapse (it was obvious the market was in a bubble) with several hard years of lessons, probably a depression. But then we would have had a long period of growth a healthy job creation for our youngsters.
But it’s hard to face reality, look at the data objectively, and choose a known tougher course forward. Besides the liberals in power didn’t want to give up all their “gains” both in terms of their positions of power and the “gains” or changes which had already occurred in most people’s minds.
On the other hand competition globally was fierce in the new world order and it seems everyone globally was so blinded by the race that they couldn’t see the negative consequences.