12/11/2013 Tuesday
Hi,
All the news of Tapering and US deficits, Europe etc are summarized as...
Fed is buying some 85 billion worth of US treasuries every month, this money is used to keep US Companies, US Market, US Economy, even the US Government in (so to speak) "Good Shape." But are they really in "Good Shape"
US Gov, in essence is trying to revive something which is dying a slow death, the death blow came in the form of "Mis-handled Property related Exotic Financial Securities" which had no backing of real property what so ever.
The US Gov is bulging it balance sheet with "Trillions" of $$ in form of debt. The question is, How is US going to pay for all those debt and that too along with interest.
If you go thru some of the US Financial, Stock Market, Hedge Funds and other related web sites, the answer found was in the form of "jalaybe" but summarized below.
US gov is and will not be in a position to be able to re-pay all the debt that it is taking on its balance Sheet. It will default, much sooner then later. And Tapering is 1st step in the direction of default.
About India
A Fraction from those 80 Billion also keep's (popat) market like our's in "Virtual Good shape", all thanks to the ("Dreaded FII's) which are wickedly and infamously backed by Chiddu. We needed FDI and Chiddu gave FII's.
But are we in "Good Shape"?
- More the 80% of our Mid-cap Companies are 50% - 90% down from their original High.
- Sensex and Nifty are dancing on a handful of "A Grade" Companies in which FII's are present.
- FII's have money with "Zero" % interest and they are stuffed with this easy money.
- Even if they park this money as FD they'll get 8-9% yearly, deduct expenses still they get 4%
- Indian stock market gives them return's in multiples of % every quarter.
- What will happen when these wicked FII's presses The Dreaded "Sell Button"
- How many of us (Indian Traders, Investors, DII's can stand with that kind of "Sell onslaught"
- All the "A Group Darling" companies will over night become "D Company"
Conclusion
Dear Traders: It's "Deflation" we are talking about. The inverted cousin of "Inflation"
Right now we are crying against high onion prices, but "Deflation" will rot those onions as there won't be any takers even if they are given free.
Nothing will be safe in Deflation, as price of nearly everything will collapse, when "Real Deflation" start's showing its "Not so Good but Ugly Body"
Bye