Larry Levin NewsLetter: Rate Hike!

[metalsguru 10]

The markets were shocked today when Ben “Benron” Bernanke announced a ¼-point rate hike! The S&P500 suffered a 2.5% drop on the news.

 

Well, uhh, by “shocked” I meant took it in stride. And by Ben “Benron” Bernanke I really meant the Bank of China. Oh yeah, and by “2.5% drop,” I really meant a 1 point GAIN for the S&P500.

 

Oh sure, the European markets were slammed on the news but this is the land of the free…free of economic & financial gravity. At the shores of the USA all economic & financial truisms, like spending more than you make is a bad thing, stops cold. It doesn’t apply to us.

 

Why would China raise interest rates? Don’t they know that rates can be at ZERO 4evaaah? Apparently not. The Chinese central planners must be far behind the curve of American central planners because it looks like the Chinese actually compute inflation based on things that go up in price. Said another way, they should make like an American economist and simply exclude everything that rises in price like; oil, medicine, food, tuition, health care, etc. (When home prices are rising US economists do not include price increases, but rather decreasing OER.)

 

Specifically, China has a property bubble on its hands and wants to deflate it slowly; however, ¼-point hikes won’t do a thing. Although consumer prices are rising in China, its real problem is asset inflation – commercial and residential property.

 

Sound familiar? Check out this article and the staggering amount and size of EMPTY buildings…and whole cities in China that are vacant. Here’s a thought: stop overbuilding.

 

http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html

 

No worries though folks; if China’s bubble pops and brings the global banksters Round II of Financial Armageddon, Zimbabwe-Ben will just print more money.

 

No worries, indeed.

 

Trade well and follow the trend, not the so-called “experts.”

 

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

 

Larry Levin

larrylevin@tradingadvantage.com

Trading Advantage

(888) 755-3846__