Essentially we got a globally co-ordinated can kicking bail out by the worlds central banks.
Short term it obviously changes the landscape, but only short term, in the end it changes nothing, so it will remain to be seen how long the effects of this action last.
As pointed out by Zerohedge, the last time we had a globally co-ordinated action similar to this, the effects lasted only days. If a large bank is truly on the brink, I'm not sure how much lowering overnight lending rates by a half a point is really going to help. I would suspect that money is being diverted to them, probably from US tax payers, as we speak.
Sad... what the world is becoming... one giant global ogliarchy spending massive amounts of money to avoid deserved failures at further expense of the suffering tax payers.
In the end,.. nothing good will come of this.. nothing. Only worse and worse eventual outcomes will result.
We now have global moral hazard. And a global backstop coming from your pocket dear reader. If only most of the American middle class had the education to realize what is really happening. How their children are being robbed to save some bank in France or Italy. They don't teach concepts about money in public school for a reason I think. Only thing you learn in public school is one short class about how to balance your household budget and checkbook. This is not by accident.
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Key Levels
Upside -- 1252, 1265, 1280
Downside -- 1227, 1214, 1208, 1173, 1150
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SPX Daily;
So this is what we have now I think after our global salvation.
It will be very interesting to see how long this lasts. We are still under the 200dma and despite the tremendous 3 day rally, we havent really broke out of anything. It only looks like a very severe bounce at the moment.
We shall see...
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What is incredible these days is how starving the investment world seems to always be for good news. Anything really, rumor, whatever.. if it sounds even a little bit good it will ignite a rally, even if for only an hour.
There's 2 ways to look at todays news..
1) WOW! Global bailout,.. everything will be saved by the worlds central banks! All debt will be forgiven! The world is saved! Look up.. Unicorns are shitting skittles in the clouds!
or
2) holy shit.. things are bad enough that something was about to explode that required the co-ordination of several nations central banks to avert a global disaster. it stopped it for now.. but how much is a half point cut in overnight rates really going to help and it can't be the only bank in trouble as we've already seen the collapse of MF Global here and Jefferies been in danger.
Clearly.. the markets are only thinking #1 right now when any of this happens. Obviously there is no fear at the moment that maybe a half point really isnt enough or that there might be more dominoes waiting.
The only question here is how long it takes before the market begins to look at it more like #2.
Which is what all this is.. a big stinking pile of #2.
GL
CJ
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