This post on Zero Hedge should serve as a reminder that people who use one “less bad” statistic to support the case for economic recovery are metaphorically bringing a knife to a gun fight. Economic performance, market performance, and fiscal and monetary policy are incredibly complex subjects that are both interconnected and operate on their own trajectories, but as is usually the case every snapshot in time usually reacts disproportionately to one of the above factors and right now what the Fed is doing certainly seems to be the critical set of actions.
And the scariest part of the chart is the tail end: even with the unleashed dam of liquidity, the market still has a massive retracement ahead of it before it can recover the adjusted losses it has suffered since the last credit bubble. Ironically a 50% run up in the S&P has not been enough to offset on an apples-to-apples basis the unprecedented liquidity efforts let lose by Chairman Ben.
The bottom line is that when viewed from the perspective of liquidity fueling the market, the S&P 500 has never been in a worse situation. And alas, as the Fed’s balance sheet climbs to $4 trillion +, absent a multi-year parabolic rise in stocks, liquidity will increasingly lose its power to sustain markets to historical overbloated levels. But Ben Bernanke will go down in flames, and take down America with him, trying to disprove this hypothesis.
[From Presenting The Liquidity Bubble | zero hedge]
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About Jeff Nolan
My name is Jeff Nolan and I write Venture Chronicles. What started, in 2002, as a simple initiative to understand this thing called “blogs” that I kept hearing about has evolved into something much more significant.
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About Venture Chronicles
About Venture Chronicles
My name is Jeff Nolan and I write Venture Chronicles. What started, in 2002, as a simple initiative to understand this thing called “blogs” that I kept hearing about has evolved into something much more significant.
Along the way to becoming a bona fide blogger I started to understand the implications of user generated content. At the time I was a venture capitalist for SAP, the enterprise software company, and in my travels in the enterprise software market it became evident that blogging would be a powerful communication channel for enterprises to use, what we now call social media, and a powerful information collection mechanism for bottom up corporate intelligence. Combined with search technology, social networking software, and wikis, I was witnessing the inception of an entirely new generation of knowledge management software.
I am currently the VP Product Marketing for Get Satisfaction, the simple and effective way to build online communities that enable productive conversations between companies and their customers. Over 50,000 companies use Get Satisfaction to create a social support experience, build better products, realize SEO benefits, and take advantage of brand loyalty behaviors that results in strong word of mouth marketing experiences in the market.
I can be reached at jnolan-at-gmail-dot-com.
