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Wednesday, May 26, 2010

State of the Economy: Quantitative Easing, The Eurozone and Fear (VIDEO)

"Even a hint that the Bank of Japan may be getting near to ending its quantitative easing, and raising rates, is going to lead to large moves in the yen. People have been so positioned for it to go down." - Simon Derrick

The Euro! The U.S. Dollar! Bonds! Quantitative Easing! We're rallying! No! China! We're heading lower! The VIX is up! The VIX is down!

What's going on?

I share my thoughts, as well as what I have my eye on, in the following video ...

(Video Included. If you're seeing this entry elsewhere and cannot play the video? Click this link to go to the exact video entry ...)

Here is the link to the Fed paper that I reference in the above video. Refreshingly honest read.

Here's the YouTube video of dsglop that explains the process.

Quantitative easings biggest problem, is that it does not address employment problems whatsoever. It is simply is an attempt to soften the 'destructive' side of the creative / destructive cycle. It does nothing to 'boost' the creative side.

However, the problems themselves, remain the result of over-leverage. That's why it is so disconcerting to see that institutions, once again, geared up on leverage. Perhaps not to the extent that they had in 2006. But it's still existent in the system, and therefore ... will be dealt with by market forces.

And as I discussed earlier, the drag remains on the economy.

After all ... one way or another ... risk will price itself.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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