Job and home losses might have gotten the middle class sick, but it is inflation that is going to kill it. Everyone is expecting the markets to head higher, dollar to head lower and inflation to be out of control in 2010 and 2011. This does not mean it will happen or it has to happen. The Fed, government and Goldman Sachs can with a flick of the lips and a stroke of the pen change the policies so inflation is kept in check. This however means a falling stock market, so not sure if Goldman Sachs who own the government will let them do that. […]

The stock market is flying up above the 10,000 mark with easy. This is not unexpected, considering the Fed, Gov and Goldman Sachs are all still trumpeting low rates and stimulus. However, for every action, there is an equal and opposite reaction. The US Dollar is taken a beating again today. Countries all over the world are now facing overvalued assets and inflation within their borders. They believe that they have no choice but to increase interest rates to fight off inflation. Of course, this is exactly opposite of what they should do. What they need to do is what Brazil is doing to curb the overheated Real from causing havoc on their exports. Tax foreign investors! This way, you maintain some foreign cash while slowing foreign inflows. The alternative to this is lower rates and print more of your currency than the Fed prints dollar, but we all know where this would end. […]

Wow, are government officials really this dumb? I guess they are now finding out what executives of nearly all publicly traded companies have known. After finishing school, McKinsey was at the top of my list for companies to apply to. Unfortunately, the more I found out about the company, the less I wanted to be a part of it. Basically, companies around the world pay McKinsey a lot of money for information (usually information that only they would know about their clients). McKinsey is known throughout the industry as a tight nit group of consultants. But what do you expect, when making a business in obtaining and selling information, you are always walking the ethics line. […]

That’s what happens when your free market capitalism is replaced by subsidized and manipulated capitalism. We in the US have banished the best and healthiest characteristic of free market capitalism (ability to fail, to deflate, to punish bad investments, reward good investments, and self correct). Yet, we have managed to keep the bad characteristics of capitalism (greed, fraud, lobbying, influencing and manipulation). […]

The inverse relationship trend between the dollar and equities is temporarily broken today. Unfortunately, the trend broke in a negative manor. Both the US stock market and its currency are trading weaker this morning. What is interesting however is how the Witty-lady downgraded Government Sachs this morning. As much as I don’t like the evil bankers, I don’t understand the downgrade. Goldman Sachs is about to give 20 billion in bonuses this morning, most of it in stocks which means buybacks. The way we see it, Goldman Sachs will head higher as long as the politicians remain in their pockets. […]