Investing Is Now Just a Word for the Dictionary

Whoever has a wee bit of interest would know the times are quite frustrating.

Folks are already divided into two by a thing fine line, one side of which count heavily on the deflationary forces overpowering the credit operated economy. While on the other side are people who rely on hyperinflation that might be the result of the grand printing experiment of US.

There are also people being in the middle, who lean towards one side for once and then move to the other side for the other instance. They do not seem to commit to any particular outcome as they are nervous; all set to jump to the right side when time dictates it.

Counting on an imminent recovery and very vague one, we have this other type of people as well. Some of them believe it’s also process some consider it might be rather rapid.

None of these views can be considered right or wrong. People are intellectual enough to have views. But let’s consider why most of the people are counting on inflation, despite the fact the massive credit bubble is ready to burst. The reason might be that no one will recognize a defaulted debt unless it shows on their balance sheet!

If we suppose we live in a world where banks are allowed to pretend that default loses are nonexistent or maybe a more weird idea would be that they are allowed to sale the huge default loans to the central branch at almost the real price. What would inflation be like in such a world? Nothing at all! The reason being the money is not being ruined half of the extent as it might be expected from the size of the defaults.

Our real world, colossal numbers of losses already have a quite existence. If they ever manage to come to the front the deflationists will have the opportunity to prove themselves right. But will they ever come to the front?

Do you not wonder why they are out of sight anyway? Why they remain their thanks to the authorities without press hardly making any noise about them? Fearsome thought it is if it stays the same forever. Losses are easy to ignore for federal authorities, while they are busy repairing their balance sheets not the financial system has not really collapsed anyways!

Recently they were engaged with almost all the huge companies and banks doing $1.5 trillion transactions in total in an effort to avoid the expected bad investment decisions that might result in defaults, it can be considered safe as what might have happened did not happened at all.

In Washington as the financial markets were already rattling, Fed has opened its treasure for the world on a great span this time, on the orders from the congress. The details were given for the 21,000 different transactions they made under the head of emergency loans. And by the end of 2008; they already had $1.5 trillion as outstanding balance in their books. And finally the central bank made a move in the form of liquidities assets saving an almost dying economy.

In a recent event heavily packed by the politicians as well as market giants gave their view of money as “extend and pretend” strategy always works. One wonders if in their words fed plans to take many roles, doing not a single one out of them as required and risking their repute.

It’s quite simple to understand when the going needs change, the rules can always be changed, amended broken or bent. For the same reason the expected does hardly ever happens or at least not the way it is expected. Investing is now only reserved for dictionary; speculation is the real term now, unless of course you are a huge bank backed by the Federal authorities as their special favored ones.

It was expected that the losses will be all piling up almost swamping the banks in balance sheets. But as they are not it’s because the great banks are reporting record revenues and profits, all due to Ben Bernanke’s unshakeable decision to prop them up and bail them out.

The greatest banks of  the Wall Street recovered from the recent bail out are ready to have their best years of investment. It’s expected their revenue and profits might soar beyond the result of 2009.

Soon after a few banks collectively took from the treasure department a huge sum of $135 billion as a troubled asset relief ,every firm has started to benefit from the low interest rates as well as the authorizes make income securities purchase. Banks already know it is a life time opportunity and making great use of it. This is going to help to re fill their capital and pay attentions to others thing that they need to do.

It’s apparent that if you make a bad investment you have to deal with yourself. But when it comes to big banks the scenario entirely changes. They have a free pass for all the free money, who would not love to borrow money, government lends and also at a very low rate and lend it back to government with much higher rate but only banks are that fortunate.

It’s unclear if the federal authorities are breaking rules. But they definitely are bending the rules forbidding the federal authorities from being directly part of debt auctions. And it’s the change in rules that the impact of deflation is yet nonexistent.

Concluding here, the worst that was expected did not happen and we should be thankful to for that. But the alternative will make us pay for it as all the rules that are being bent are only favoring the banks. while huge number of people lost their unemployment benefits banks continue with their fraudulent practices and nobody sees to go to jail for nay of this. But anything that is on shaky grounds will someday stop, bent rules or not