Most of the rally in the stock market since 2009 can be chalked up to the Federal Reserve’s attempt to create a ‘wealth effect’ through higher stock market prices. This only exacerbates the downside risk. Why? The stock market no is longer a lead indicator for the economy. It is instead reflecting Fed manipulation. Pushing the stock market higher while the real economy languishes has resulted in another bubble.
“The next leg down will not be a partial correction of the advance since the 2009 lows. It will be another major financial crisis. The worst is yet to come.”
If I knew anything about the stock market surely I’d be retired by now, so the fact that I’ve been predicting doom for five years should let you sleep in peace – I’m wrong. But still, I’ve yet to understand Wall Street’s bullishness in the face of ever-deepening disaster, from Europe to Asia to here. The United States is led by a president determined to shut down cheap energy, stymie development and pile up massive, unheard of levels of debt. How does that work, long term?
Zimmer blames the fed’s manipulation of interest rates for the coming bust and certainly that’s part of it, but I think the systemic rot goes deeper. Our leadership is at best inept, more likely corrupt, our voters are low-information dolts, and the media that supplies them their view of the world is in the pocket of the president. Doesn’t sound good to me.