Calling All Crash Test Dummies: Big Crash Ahead
by Charles Hugh Smith
by Charles Hugh Smith: Why
Isn't Anyone Talking About Writing Off 3 Trillion Euros of Bad Debt?
stock market can never crash again due to the Bernanke Put, then
why have all the crash test dummies been ordered up?
I know: the stock market will never go down because Ben Bernanke
and the other central bankers won't let it. 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.
test dummies know better: they've been called up for a humongous
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
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 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.
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