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Old 04-10-2012, 10:17 AM   #9
zdo

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Re: Earth is Going to Be Next

Is Liquidity Resistance like Insulin Resistance?


Quote:
...It's funny how the "Bernanke/European Central Bank Put" is ranked alongside gravity as a rule of Nature until markets roll over; then talk shifts from purring adulation of central bankers' godlike powers to panicky calls for another flood of liquidity/free money to "save" the market from the harsh reality of global recession.


The basic mechanism that is being overlooked is Liquidity Resistance. This is akin to insulin resistance, where insulin becomes less effective at lowering blood sugars. The amount of insulin required to maintain normal blood sugar levels increases as resistance rises until even massive doses of insulin no longer have the desired effect and the system crashes.

Liquidity has the same dynamic. Back in the good old days of 2008-09, a $1 trillion tsunami of liquidity was enough to save the global debt machine from implosion and spark an enduring global stock market rally.

The current rally since late December required (by some estimates) over $3 trillion in global liquidity injections from central banks. In four years, the market's resistance has skyrocketed: where $1 trillion launched a multi-year global rally (goosed along with QE2 and Operation Twist when it began to falter), now $3 trillion yielded a 100-day rally that is already coming apart at the seams.

You see where this is going. To maintain the veneer of normalcy, i.e. a continuing Bull market, the next liquidity injection will have to be $5 trillion, and it will spawn a rally of perhaps 50 days. That $5 trillion will probably break the global market; if it doesn't, then the next tidal wave of $7 trillion (or whatever the market needs to trigger another high) most certainly will.

At some point, the liquidity injection will fail to boost the market at all, and that will trigger a panicky rush for the exits…
charles hugh smith-Calling All Crash Test Dummies: Big Crash Ahead
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Old 09-10-2012, 01:37 PM   #10
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Re: Earth is Going to Be Next

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according to the central planners, not only is debt the fix to record debt, but liquidity is about to be unleashed on a world that is, you guessed it, already drowning in liquidity. The bad news: everything being tried now will fail, as it did before, because nothing has changed, except for the scale, meaning the blow up will be all that more spectacular. The good news: at least the Keynesians (or is it simply Socialists now?) out there will not be able to say we should have just added one more [ ]illion in debt/liquidity and all would have worked, just as our textbooks predicted. Because by the time it's over, that too will have happened…
Two Days Ahead Of More QE, JPM Finds That World Is Already "Drowning In Liquidity" | ZeroHedge




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“…it may not be rational to start a bank run, but it is rational to participate in one once it had started.” Mervyn King, Governor of the Bank of England

There Must Be Some Way Out Of Here | ZeroHedge



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dear mods and members,
When I showed up in here a few minutes ago to post, why would two freakin 'guests' be reading a thread that hadn't been updated in months and months ????
thx
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Old 06-20-2013, 10:51 AM   #11
zdo

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Re: Earth is Going to Be Next

I came back early from my vacation to trade … guess I’ll start up fkn with ya’ll in these echo chambers again too…

charles hugh smith-Artificial Abundance, Moral Hazard and the Federal Reserve's Doomsday Machine

… nothing we haven’t been saying for years… just that now more voices are catching on to the con’d meme … although we still have a ways to go until it really verges past the threshold into a collective crescendo… ie real mess...
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