Europe is bankrupt. The U.S. is bankrupt.
Germany, Russia and China cannot bailout the rest of the world.
A few weeks ago, at a time when the market appeared to the calm and the economy appeared to be at least holding its own, the global central bank - the Federal Reserve – made a move to aggressively inject money into the financial system that only a desperate situation would call for.
The decision to start QE2 is a clear sign that something is in the water.
QE2 is about as stupid as if someone were to use their credit card to pay for their mortgage.
The benefit of paying your mortgage with your credit card is to delay the foreclosure process of your home. But it will also greatly increase the risk of your complete financial collapse.
QE2 greatly increases the risk of the U.S. financial collapse, yet the Fed did it anyway. Clearly they are worried about something bigger and more dangerous – like the financial meltdown of Europe that is underway.
As the bond prices climb, one-by-one nations are becoming insolvent. And when U.S. bond prices rise, the U.S. will become insolvent.
At some point, global investors are going to be forced to sell assets to cover losses on other assets and a global financial panic could quickly ensue, like we saw in 2008.
Only this time, there is no wealth left in the dollar to re-inflate the markets because the Federal Reserve has already spent the wealth and public trust in the dollar to the point of no return.