Now, it is my strong contention that the various interested parties and authorities finangle the “”markets”” as much as they can and as long as they can.
This is deleterious for a number of reasons, but mostly because the three key pillars of markets become deformed if not destroyed; capital allocation, price discovery, and faith/trust.
Thus, when the market jams finally fail the after effects are quite serious. 2000 was bad, but 2007 led to the US Treasury Secretary (Paulson) going behind closed Congressional doors to warn of martial law and complete societal breakdown.
This time? It should be even worse because this credit cycle was even more extreme and efforts to sustain and extend it were even more interventionist and therefore the effects will be far more destructive.
2008 “on steroids.”
In other words, angry and bulked up.
I’ve been patiently waiting for failed interventions to finally arrive. Truthfully, they were with us in January of 2016 but the central banks freaked out and went on their largest ever printing spree (see various charts in the piece above as a reminder).
Will they this time too? Maybe, but the environment is completely different now.
Today we are witenessing what appears ot be a breakdown of the market jamming efforts. They are there, but the selling is just too intense.
Now we look for the crevices and cracks where “they” cannot be due to being busy elsewhere. Places like blowouts in CCC debts even as JNK remains seemingly calm by comparison. Story stocks breaking down more than the headline index in which they reside.
I know that the authorities are truly afraid of the Frankenmarkets they have created and that everything will done that can be done to blunt, limit, contain or even reverse the downside movements of stock and bond markets. Heck, I’d be worried if I had their job too.
But prosperity cannot be printed, and every dumb bubble has to burst. Either that or the laws of economics have been fundamentally repealed and it is possible to have your cake and eat it too.