Friday, October 8, 2010

Once in a Lifetime Madness

On August 11th I commented on the historically low yield of 1.46% on the 5 year treasury bond. At that point it was 21% below the historic low of the past 70 years set back in 1954. Here is the post:

Now There's Something You Don't See Every Day

Well today the yield on the 5 year treasury sailed below the 1.1% mark which is 42% below the lowest yield in the past 70 years. This insanity by The Federal Reserve is being applauded by the stock market as the Dow spiked over the 11,000 mark today.

Investors have very, very short memories I suppose.

We are destined to have episodes of once in a lifetime madness every few months or so.

I feel it is appropriate to completely remove myself from the 50% long position that I accumulated during the market swoon to 1022 in the S & P in July.

It is very likely that the market will go up in the next few months driven by the speculative madness that is being induced by The Federal Reserve.

But for me the rewards at the end of this market run don't seem to warrant the risks.

The markets are being driven by rumors that our government will continue to sell our kids down the river with a never ending stream of currency debasement, market manipulation and intergenerational theft through massive unsustainable government debt.

We are trying to grow our economy by starting a currency war with the rest of the world.

By borrowing trillions of dollars that mathematically our government can never pay back.

By using this borrowed money to make the government bigger and thus starve the private sector.

By creating the most unsound investment markets in the history of our country.

By bailing out wild speculation at the expense of prudent savers.

And by funneling ever more money to the wealthy and away from the working classes.

All of this at the direction of our government subsidized political economists that don't understand what is happening, but are happy to suggest that ever more borrowing and speculation are absolutely the solution to our country's historically high level of debt.

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