The idea that Bernacke that kind of control... Is completely insane... And exactly why guys like you always blow-up. The Fed will eventually be overwhelmed my market forces... The longer Ben can dance on a pin... The worse the fallout will be.
The idea that a Reserve Bank of any country can stop a market correction or crash is absurd. The most the US Federal Reserve can do is to get a little co-operation from Brussels and Tokyo and to a limited extent Beijing. The crash (like in 2008) will happen quite soon and will take out a hell of a lot of countries and multi-nationals. The US economy (and China!) will contract considerably. (I'm short the Australian housing market, the A$ and the ASX S&P index It is the most compelling shorting opportunity in decades!)
NYSE Reports Third Highest Net Margin Debt Amount Ever Total margin debt jumped by a whopping $21 billion from $289.6 billion to $310.3 billion, the highest it has been since July of 2008. http://www.zerohedge.com/article/ev...rts-third-highest-net-margin-debt-amount-ever
Great news. F'ing people have short memories....maybe they don't have any brains. FED provides risk free cost free $$$. Investment banks go ahead and buy anything and watch price go up ....rinse and repeat.
In 2007/08 there was general complacency and not many traders really believed things were going to get as bad as they did. Now many believe equity and property markets are headed lower worldwide. So the two situations are not at all similar with regards to this crucial point. Shorts beware!
That is a strong opinion considering how much evidence there is to the contrary. By most accounts, the current groupthink is that Quant Easing will continue indefinitely (regardless of the tough talk on occasion). By extension, the pursuit of dollar devaluation and the boost of commodities and precious metals will continue unabated, hence the intense leveraging in line with this line of thinking. In 2007/08, the policies were similar BUT the major difference was that nobody knew the extent to which central banks would act on behalf of the shadow banking system and/or purchase all the troubled assets. 3 years later and there is a tremendous amount of complacency with regards to the lengths they will go to in an effort to promote asset inflation. I think you have it entirely backwards.
Your analysis of 2007 is not relevant for the purposes of this discussion. What is important is what the sentiment was before the crisis started, not as it was unfolding. People are saying the next huge downleg is about to start, so we look at the sentiment just before the banking problems precipitated. Back in 2008 when citigroup had gone down only a little bit I was openly laughed at when I said they were going bankrupt. Now my local nightclub doorman tells me the FTSE is going to break the 2008 lows and my uncle who knows less than zero about stocks or economics and once invested in a tech stock at the top of the dot com bubble says the economy is in trouble.. I do not have anything backwards. I am a contrarian trader so I make it my business to know these things.
How can stocks prices go down when the Bernank is printing $75 billion a month? And what's all this stuff about economy and stocks? Is there any correlation? Buy stocks on the dips, sell when the Bernank says he's no longer going to print any more money (that day will never come!).
FWIW, at least from my perspective, I don't recall too much complacency just before the top. I recall there was still a heavy wall of worry as there were many sites/blogs complaining about mortgage/housing problems (I even recall mentioning some articles on toxic CDOS); financials started to fall first. But the main thing I recall is that shorts --on this board-- were so dejected that they would get shot down in flames any time they would even mention the market was overbought, it was as if they'd thrown in the towel and finally joined the party long (stock trd3r's buy the dip mantra just wouldn't end to shorts chagrin). I was a bit reluctant to post that the four horsemen were strongly overbought. I did make an observational post on that, and no one really said much of anything about it. So at least, from my perspective, I don't think the perception was so much complacency, but more of a fear of getting short squeezed... One other observation was that volatility, particularly in overnight gaps was picking up, similar to now. Does that mean it will cascade into a waterfall down? Of course there's no guarantee... But that's a sentiment perspective. We also didn't have the type of yield curve differential and stimulus that we do now. And in my experience, that's a very powerful argument to corroborate the don't fight the Fed expression. 2c