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Does the Market Need a Heimlich Maneuver?

November 21, 2018

For all we know, the panic selling is Wall Street's way of forcing the Fed's hand: stop with the rates increases already or Mr. Market expires.

Markets everywhere are gagging on something: they're sagging, crashing, imploding, blowing up, dropping and generally exhibiting signs of distress.

Does the market need a Heimlich Maneuver? Is there some way to expel whatever's choking the market?

So what's choking the market? There are a number of possibilities: somewhere near the top of most observers' lists are: rising interest rates, weakening credit growth in China, the slowing of China's economy, trade wars, European uncertainties, currently centered around Italy but by no means restricted to Italy, Japan's slowing economy, an over-supply of oil, the rolling over of global real estate markets, geopolitical tensions and various technical signals that suggest the 10-year Bull market in just about everything financial is ending.

That's a lot to gag on. Take a quick glance at the effective Fed funds rate chart below: the Fed funds rate is up, up and away, accelerating to the moon. No wonder Mr. Market is holding his throat and making panicky motions of distress.

Which is worse--too much oil or a scarcity of oil? Depends on who you ask. Suppliers are panicking with prices pushing $50/barrel while consumers were anxious when prices pushed $80/barrel.

Who can perform the Heimlich Maneuver on Mr. Market? The European Central Bank has been "doing whatever it takes" for 6+ years, and the central banks of Japan and China have had the pedal to the metal of credit expansion / asset purchases for years.

That pretty much leaves the Federal Reserve as the only rescuer who has a chance to perform the Heimlich Maneuver, which in this case would be some forceful ejection of the fear that the Fed will keep raising rates aggressively even as Mr. Market is writhing on the floor gasping.

For all we know, the panic selling is Wall Street's way of forcing the Fed's hand: stop with the rates increases already or Mr. Market expires. And as we all know, Mr. Market is everything to those managing perceptions of the economy.


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Recent entries:

Does the Market Need a Heimlich Maneuver? November 21, 2018

Hell Hath No Fury Like a Liberal Scorned: The Media Turns on Facebook and Google November 19, 2018

The Political Rebellion Gathers Momentum November 17, 2018

Does Any of This Make Sense? November 16, 2018

The Implicit Desperation of China's "Social Credit" System November 14, 2018

Understanding the Global Recession of 2019 November 12, 2018

Why Are so Few Americans Able to Get Ahead? November 9, 2018

Is This "The Most Important Election of our Lives" or Just Another Distraction? November 6, 2018

Turn Off, Tune Out, Drop Out November 5, 2018

What's Behind the Erosion of Civil Society? November 2, 2018


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"There is no security on this earth; there is only opportunity."
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Smith's Law of Conservation of Risk: Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some consequences will be intended, some will not. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences. (July 8, 2014)(thanks to Lew G. for retitling the idea.)

Smith's Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic authoritarian government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

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