As the Federal Open Market Committee meets, traders appear to be less nervous about a sudden decline or end to the $85 billion per month in monetary easing the Fed has been injecting into the U.S. economy.
Traders are a skittish group and any small upset sends them scurrying for the exits. With fear of the Fed overcome for the moment, they have scampered back into the market.
Just about everyone is stimulating these days except for the churlish Europeans who can't seem to take a lesson from other leading economies. Inflating the hyperbole balloon about as far as it can go without popping it, French Labor Secretary, Michel Sapin said his country was "totally bankrupt," then walked his comments back by explaining later that he was being "ironic." Of all the things it is, money is not ironic.
Sapin said he was underlining the fact that "there's a social and economic emergency," requiring the government to act quickly to boost growth and address an unemployment rate that's at 10.3%. France's jobless claims rose to a figure staggering in a country with 65 million people: 3.13 million in November, the highest in 15 years.
How Europe was hijacked by the Austrian School (of economic thought) is a miracle, and not a good kind of miracle. Moreover, in an interconnected economic world, a bloc as large as the E.U. places serious drag on the rest of the economies it trades with.
If Europe were growing at a similar rate as is the United States right now, the Great Recession would be over.
Stimulus is frightening to some people. However, contraction that goes on year upon year upon year should be more frightening. Especially to gold and silver traders. Deflation is our real enemy. The wild-eyed austerity programs in Europe and the U.K. are proven to not have worked. In spite of Germany's resilience, the E.U. is dead in the water.
Cutting budgets from the 5-star general down to the dogcatcher and raising taxes willy-nilly is practically the work of the insane at this stage.
The Fed, for all the grief it takes from home-grown deficit/debt hawks, is on the right track. Can they bring us in for a smooth landing?
As always, wishing you good trading,