Yet Another Market Melt Down

Posted by Jeff Carter
on September 22nd, 2011

In what’s becoming a monthly occurrence, the market is melting down again. It seems to me a lot of bad policy decisions, combined with the European crisis, are all coming to a head.

This morning what is really interesting to me is to see Asia and Europe down significantly, with the futures in the US down significantly. Then, look at Gold ($GLD, $GC_F) and it’s getting thrashed too! With the Dollar ($USX) higher?

Makes no sense.

Operation Twist is another mistake in Fed policy. The market wants an answer. But the market shouldn’t have expected the Fed to come to the rescue of the European banking crisis. Until they break up the Euro and take the pain that comes with that, the Europe situation won’t be resolved. Right now, Europeans have calculated that the opportunity cost of breaking up the Euro is lower than trying to spend money to hold it together. Markets will react quickly to change that equation. The question is will the intellectual elites in Europe that love the idea of a joint currency give it up fast enough before their economies are permanently damaged.

All I know is that when I watch TV commentators are looking to China to bail everyone out, we are in a heap of trouble. Their aid comes with lots of strings.

If you are the average Joe on the street, there isn’t much you can do. If you have a job, keep your head down and keep working. If you don’t have a job, try to create one for yourself. No one is going to be hiring anytime soon.

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