Loading ...New participants to the financial markets are taught that prices always go up and to never even know there are wires, let alone ever thinking about tinkering with them. Wizards who are custodians of the ancient financial theories boast that nothing can go wrong. Recessions can be prevented by manipulating the secret wires. People from veteran bond investors to novice day traders need not worry about risk. With no visible threats, and the Fed controlling things bull markets run forever.
With always outstanding corporate management and the genius of central bankers, adversity is limited to minor setbacks.
In December 2007, Harvard’s Greg Mankiw boasted that nothing could go wrong. Because the Fed had a “dream team” of economists.
In 1929, John Moody boasted that nothing could go wrong. Because the Fed was “new and scientific”.
You get the picture.
Considering how intense the speculation has become, when it comes out it won’t be just puff of white smoke equivalent to signaling the election of a pope.
Fortunately for market veterans, there are technical measures that are warning that the financial wires are getting very hot. The hottest since the popular manias that climaxed in 2007 and 2000. Bubbles, in any century, are dangerous and failure has been signaled by changes in the credit markets.