Friday, June 10, 2011

The Time Has Come


This past week, the market, in my opinion, is finally starting to face reality.

In the last week, the DOW has fallen about 500 points, approximately 4%.  That's a pretty decent shift in a week's time, especially since it has been consistently negative.

Well, remember way back when I mentioned that the Fed will stop buying US bonds?  Some may remember that as "Quantitative Easing 2".  In layman's terms, it's called the second bailout of the US economy.

Fellow party animals, the hangover is about to occur.  The Fed has announced the final bond purchases today.  The first round of bond purchases by the Fed was about $300 billion.  The second round $600 billion.  Lord Keynes would approve.  QE2 will be in the rear view mirror.

Well, time to see how the medicine worked.  My opinion?  The medicine was snake oil.  We're getting ready to see the big adjustment...the reality...very soon.  It will be interesting to see how low the market goes.  

And how expensive life is going to get.

Part of me says, about time.  Time to face reality and let Professor Hayek improve the economy.

But, it's going to be a bumpy road.  Hope the economy has good shocks.

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