Equity vs. Credit Markets: The Divergence Grows Ever Larger

Given that each market is essentially a barometer of the economic well-being of corporate America, the yawning gap in performance that has opened up between the stock market and the credit market suggests that one or the other is out of synch.

While there are not enough data points to make a definitive statement about which is right and which is wrong, I would note that the last time we had the kind of disparity we have now was in late-2007.

Of course, things are different this time...right?

Comments

[Gregory P]

As much as I like patterns repeating and history rhyming, I think this time is different. We have the reserve currency of the world being printed to obliviion, and the leading contenders to a world reserve also attempting to destroy the fiat money system. A breakdown in the system itself might make that divergence irrelevant.

[Marion Shaw]

It seems that if world governments
succeed in destroying (on purpose or
unwittingly or both) the fiat money
system, the only known path would be
to return to the gold standard. The
US passed the Gold Standard Act in
1900 , shortly after the rousing
election between William Jennings
Bryan and William McKinnley in 1897.
Most know of Bryan's famous statement

"not to crucify mankind of a cross of
gold" or something close to that.
Japan, also enlarging her imperial
ambitions went on the gold standard
about the same time, although she was
barely into the modern world in many
aspects.
What people do not understand, is
that the gold standard violently con-
tracts credit. In other words, there
can be no more money in circulation
than that which is backed literally
by said amount of gold. In the 19th
Century, France, England and Germany
held the largest gold reserves and
were the lenders of first resort(and
subsequently financed The Russo-Japanese War, which nearly destroyed
Japan in the end, as Russia refused to
pay the gold indemnity (customary form
of war reparations to the victor)at
the Treaty of Portsmouth. This was
an accelerating factor in Japan's
forced takeover of Korea in 1905, as
her prime minister, Matsukata, had
published a book in English frankly
stating, that although Japan had little gold, Korea's known vast gold
mines would solve Japan's problem.
And indeed, Japan took millions of dollars worth of gold from Korea
throughout her colonial rule and
imperial attempt to conquer Asia.
The gold standard act also nearly
brought the US to its knees in 1907
in a panic when money almost disappeared from the economy. The
Federal Reserve, founded in 1912, by
the same bankers that wanted the gold
standard in the first place, thus was
born to try and regulate the money
supply, etc.
In summary, the wealthy benefited
beyond compare on the gold standard,
but the farmers, tradesmen, small
businessmen and average persons
paid a terrible price for not being
able to obtain credit.
I also believe President Andrew
Jackson (I could be mistaken but dont
think so) attempted to abruptly put
the US on the gold standard and there
was such a violent contraction in the
economy (1840S),that it had to be
quickly scrapped.
So, if it comes to a return to
the gold standard, let the people
beware: If you think the wealth is now
with the one percent, it will eventually be with a fraction of that,

[Tom]

i see revolution coming if either the gold standard is re-established or the fiat money system goes to scrip. People will freak out if they're faced with a complete shunning by the powers that be and a repeat of the French Revolution, only this time with bankers and the super wealthy would be the result. Think about it for a minute: if you and everyone you know, everyone in your neighborhood and the surrounding towns and cities are suddenly facing certain starvation due to the shenanigans of the banks and the super wealthy - would you just sit there and starve or would it be more likely that everyone (that's hundreds of thousands to millions of people) revolt and turn to violence, looting, and pillage of the homes of the wealthy for anything of value?
C'mon - this is humanity we're talkin' about: violent, ignorant, hateful, greedy and prone to mob behavior when stressed. The police and the military would be in the same boat - thrown under the bus so that the 1% can have even more, and just like with the French, they'd side with the "rabble" if they wanted to save their own skin.

i think that at the same time it is becoming painfully obvious that climate change, due to our reliance on fossil fuels and rampant pollution, is killing us by making the conditions for growing food almost impossible and that fresh potable water is becoming scarce.

[Marion Shaw]

What you are talking about here
Tom, is not a rerun of the
French Revolution, but the
imposition of total martial law.
Shoot to kill and summary
execution are the first two
rules in martial law practices. There would be
plenty of former and present
military (especially foreign
born military) who would side
with the one percent for the
price of assured food and
some money for the black
market that would enevitably
emerge. Ironically it was
only in the American Revolution that the wealthy
lost their weath and heads
and the ruling King George
remained nicely perched on
his throne in London. This
unique outcome to rebellion
against imperial authority
is what laid the foundations for that which
once made America the hope
of the world.

[Tom]

You may be correct Marion, but it will be short-lived as the collapse of civilization due to climate change continues to degrade living conditions to zero.

[Geko]

Hey Marion what evidence is there for catastrophoc climate change aside form that in GIGO climate models??

I can't see any.

BTW
The CIA was hoodwinked by and fretted about THE GLOBAL COOLING SCARE in the seventies.
You should learn something from this.

The Great Global Warming Scam seems set to go the same way.

Here are the CIA's global cooling files ....

http://www.climatemonitor.it/wp-content/uploads/2009/12/1974.pdf

Here is part of an article ....

Mentions of a global cooling consensus appear as far back as 1961.

I found the CIA report referred to in a 1976 newspaper article and was doubly amazed to discover it was available as a microfiche in the British Library.

So what would have prompted the CIA to compile such a dossier?

The most likely explanation is what it describes as the loss of ‘a significant portion’ of the USSR’s winter wheat crop in 1972. The harvest was so poor that the CIA saw geopolitical ramifications. Its report says that ‘the politics of food’ is a complex business, which cannot be understood by ‘existing analytical tools’.

So to address a political problem, they asked scientists to come up with a solution. Precisely the same thing is happening today. One might almost conclude that, in the world of climatology, theories are made to order.

Or is the problem with the general public, who cannot talk about climate except in doom-laden terms, and for whom the sky is the last animist god?

This might be the most important lesson of the 1974 report on global cooling:
that we need to grow up, separate climatology from fear, and recognise — much as it pains politicians and scientists — that our understanding of how climate changes remains in its infancy.

http://www.spectator.co.uk/essays/5592803/the-cias-global-cooling-files.thtml

[Marion Shaw]

Hey, Geko, it is Tom, not
I that is informed about
and believes that climate
change will doom us.
I have not sufficiently
read enough credible work
to come to any conclusions
and probably won't. I
leave it to others to
work that one out. I do
know, however, it has been
raining a week and my
100 year old cottage has
a basement full of water.
If that qualifies as a
climate issue, it is definitely going to change
the stability of my
basement and everybody
else's stuff that is
stored down there and now
increasingly covered with
mold.

[Antny]

i dont mean to get philosophical, but if fiat systems are destroyed, the Gold Standard is not the only solution for world power, this is the techno age, & his number will be 666, those who dont accept his number will not be alowed to commerce, it would
simply go from paper fiat, to electronic fiat, not immediate or in our life time maybe, but its coming

[S.I. Fishgal]

The real problem is air, water and even light pollution, but not CO2 without which anybody and anything survives.
The conventional wisdom is that the burning of fossil fuels is leading to a global catastrophe. The clowns who cannot predict the weather next week predicts it forever.
The earth’s oxygen is not a product of planet formation but has been and continues to be a product of primitive organism metabolism. Plants and other organism’s convert carbon dioxide into the oxygen we breathe. Carbon dioxide (CO2) is a food to this ecosystem. In some ecological sense the burning of petroleum is a symbiotic relationship between man (no other animal consumes the petroleum found in the crust) and the plant world. Mankind produces CO2 as a byproduct of petroleum consumption and the plants respond by producing oxygen.
Temperature data over the last 150 is a worthless statistic. For millions of years a massive ice sheet that prevented sunlight from striking the ground covered the Earth. In the last hundred thousand years, there have been multiple ice ages and warm periods, yet life prevails.
Tying CO2 to global warming violates the First and Second Law of Thermodynamics. The heat flow from atmospheric greenhouse gasses to the warmer ground violates the second law of thermodynamics.
The CO2 concentration increase leads to the negligible raise of the thermal conductivity of air. Carbon dioxide in the cooler upper atmosphere has no effect on the warmer surface below (the First and Second Laws of Thermodynamics). The earth’s excess heat escapes into the space. Therefore, there is no glass greenhouse roof on the earth.