Is the Last Great Bubble bursting? (The central bank bubble)

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If it does, and eventually it will, watch out. We will enter completely new economic territory. You think things have been wild since 2008? If people truly call out the emperor as naked, if that becomes the consensus, holy moly, are things going to get interesting.

The Dow was down again today by over 150 points, the S&P was off 3/4 of 1%. This is the first real notch down since the voodoo which was conjured by the Fed on Wednesday.

I submit this as FYI.

(From Market Watch)

I know people are blaming this on Ebola and Europe, but I think what’s happening is severely underappreciated. This is not a traditional “correction” because inflation expectations have collapsed alongside yields, in the context of trillions of dollars of stimulus. Mario Draghi put tremendous confidence in markets when he said he would do “whatever it takes” to save the euro, and now bond yields in Spain and Italy are diverging from U.S. Treasurys and German bunds. Something fundamental has changed in the market’s perception.*

Click here for the article.

*I personally think Ebola has quite a lot to do with what’s going on in the markets. Let’s keep hoping (and praying) for the best.

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