Bernanke got it Half Right
Creating growth and how we feel that can happen.
Long time followers of our website and blog know that we caught the 2008-2009 crash with short positions that provided us with tremendous gains. Then we caught the upside with long positions into 2010. At that point it appeared to us that the market needed to consolidate and reallocate funds to areas of the economy that would provide growth. The Great Recession happened for a reason, and that reason needed to be rectified before a growth cycle could be triggered.
The Bernanke Created Problem
The reason we backed government lending to the auto industry, a lot of jobs for the middle class. The reason we didn’t agree with bailing out the banks, and providing them an out by lending cheap funny money to them and allowing them to lend the money out to the speculator class. How can one have growth when all the money is being made through speculation? The QE’s have been a big factor in slow growth. Janet Yellen’s testimony this week indicated that the FED could not get the Federal Balance sheet down to a reasonable working level of 1.5 trillion dollars from the 5.o trillion dollar level it has created over the past seven years. The reason, the economy was not strong enough to get away from “funny money”. Understandably the stock market continued its rally, funny money is good for speculation.
Now we see new plans that do not address the Core Issue
Market Guru’s say that coming deregulation and tax code changes are the reason the market is rallying. Give me a break, “coming” might be the most exciting word in that declaration. The US is a consumer market, we will not have a solid growth picture until the tax code for the middle class is changed in such away that historic trends put in place in the early 1980’s are turned around and money flows and is held by the people who create demand. I do not see that in the information seen for the “Phenomenal Trump Plan” , or the “Republican House Plan”. It is more of the same.
What Probably Happens Next?
After the markets have a some time to digest the new plans, we will probably be seeing a market heading towards taking a long look at the 2009 Market lows as it searches for a place to start over with a “Real Growth Plan” in 2018.