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DOW
THEORY Abstract The stock market has made new all-time highs this year. All one could do was to stand in awe at the powerful performance it displayed. There are those who contend that a new bull market has begun, rising phoenix-like from the ashes of the 2002 decline that saw the market give up nearly a third of its value in less than a year. The following paper will examine the question as to whether this is a new bull market or something else. History doesn’t necessarily repeat note for note, but is sure does rhyme, often times in a different key. A few markets from the past worth noting are: the bear market of 1973-1974, the panic fall in 1984 that was precipitated by the Continental Illinois bank failure that almost took the system down, the precipitous crash of 1987, the bear market of the early 1990’s that was in response to the fall in the real estate markets, and lastly the Long Term Capital Market crisis where one failing hedge fund sent shivers through the entire world’s financial system, threatening it to freeze up and shut down. Markets look most bearish just before they turn bullish; and conversely they look most bullish just before they turn bearish. High to Low The Dow Industrials made a high early in 2002 of 10673.10 and then fell sharply to 7197.49 in October of the same year for a loss of just over 32% - all in less than a year’s time. That’s a lot of hard earned gains gone very quickly. The very next year (2003), the Industrials and the Transports registered higher secondary highs confirming that the intermediate term trend was up. This was an intermediate term signal; the long term trend was still bearish and pointing down. Since making the October 2002 low the Dow has advanced to a new all-time high of 14,021.95 – a gain of almost 95% from its 2002 low. From its 2002 high to its 2007 high it has gained 31%, still a very good gain. Prior to the stock market bottoming out in 2002 both the commodities market, as measured by the CCI index and gold had already begun their bull market moves up, starting in late 2001 and early in 2002 respectively. The following chart shows the relationship of the three markets:
Interest Rates The next chart shows that the Fed started to reduce the Federal Funds rate in 2001 – prior to the stock market fall. Despite the Feds repeated cuts in interest rates the market continued to fall, which shows that lower interest rates do not always stop a stock market decline – at least not immediately. If one goes back to the bear market of the 1970’s they will find a similar occurrence, and the infamous crash of 1929 is another classic example. Interest rates continued to fall into 2004 at which time rates began to rise, and by 2006 they had gained back most of their former decline. Yet the stock market continued to climb higher and higher into 2007. Since interest rates were rising during a large portion of the Dow’s advance, it appears that higher interest rates did not stop the markets advance dead in its tracks, nor did lower interest stop the previous fall dead in its tracks; which begs the question – what did direct the market in both instances; and what may lie ahead?
Interest rates basically represent the cost of money – the rate at which money can be borrowed, as such it has an affect on the capital markets, however, the demand for money and the supply to meet that demand play an even larger role, as the adjacent chart of the M3 money supply clearly shows. And then there is what is known as money substitutes: credit and debt obligations of various sorts. In today’s brave new world it is the latter that weighs heaviest on the market scales. Money Supply From 2003 to 2006 M3 expanded by approximately 20%. This increase in the money supply was one of the excellerants that fueled the bubble-like rise in the stock market.
Structured finance is now in vogue and the name of the game is credit and debt, under any guise that can be dreamed up: collateral debt obligations (CDO’s), mortgage backed securities (MBS), special investment vehicles (SIV’s), swaps of just about anything, and a host of exotic derivatives whose name is legion: priced at $450 trillion dollars according to the Bank for International Settlements (BIS). Structured Finance Structured finance has resulted in a huge hazardous waste site of lethal debt, wrought from the souls of hapless victims who wandered too far from the beaten path and were fed upon by the Vampires of the New World Order, leaving one hell of a mess that will never be fully cleaned up. The gigantic accumulation of these toxic obligations will not be kept or honored – they are worthless promises blowing in the wind. From 2000 on the market has been flooded with money, credit, and debt. Anyone that could fill out the forms was extended credit, and in many instances money was loaned to many individuals that it should not have been offered to.
The results of this profligate credit creation are debt levels that have soared, as the nearby chart illustrates. From 2000 – 2006 debt grew by more than 30%. Consumers ran in droves to extract cash from the equity in their homes via loans of various colors and denominations. The real estate market was tapped and bled dry for all it was worth and then some. This was the source of liquidity that fueled the asset inflation bubble in the stock and commodity markets. And it was Alan Greenspan who was on watch as Chairman of the Federal Reserve that oversaw, initiated, and approved of such exuberant credit and debt creation. He should have known better, and he did – but he chose to turn and look the other way and inflate nonetheless. Ayn Rand had him pegged from the start. The maestro will go down in history with John Law as two of the greatest inflationists of all time. The wealth transference and destruction they orchestrated is beyond comprehension. Never a lender nor a borrower be – never entered their minds. Liquidity Bubble The extraordinary efforts by the Fed to pump up the money supply, coupled with the rise and allowance of structured finance to extract equity or liquidity out of the real estate market, and the unprecedented successive lowering of interest rates towards zero, concocted a most strange brew. And then came the private leveraged buyouts (LBO’s), financed with commercial paper leftover from the sludge that came before. The liquidity extracted from real estate saved the stock market from continuing down in what would have been one of the worst bear markets of all times, similar to the one Japan experienced. But the infusion has only put off the inevitable, it has not balanced the books for good – the reckoning still waits, and will not be denied. The market’s rise from its lows in 2002 to its new all-time high in 2007 is not a new bull market – it is a record breaking extension of the bubble of all bubbles and nothing more. It will not end nicely, the gnashing of teeth and the howling of wolves will be heard as the sheep are led to slaughter. Remember well that a shepherd oversees and protects his flock so that he may slaughter them and feed himself. Is he watching out for the sheep’s best interest when he protects them from the wolves or his own? The one cycle that always remains constant in the markets is the cycle that takes it from overvalued to undervalued, as the psychological emotions of greed and fear drive the markets to their ultimate destiny. It can be no other way – it is what it is. Where Are We Now The stock market sits within close proximity to its recent highs, at least for the present time. Commodity prices may or may not have peaked – time will tell. Real estate has unquestionably peaked and has started down the long arduous road it has set its course upon. Whenever it reaches bottom a Sisyphean task of unfathomable proportions will rise high above it, casting its shadow far and wide. It will be a long hard journey back up the slope. And the subprime mortgage market is but the tip of the iceberg of what lies ahead for the housing market and those who financed it – or so they thought. Also, one of the keystones to Dow Theory is confirmation of both the Dow Industrials and the Dow Transports to one another. If one makes a new high the other should follow suit within a reasonable amount of time; otherwise a non-confirmation arises leading to a negative divergence, as the two averages are not moving and tandem and hence one or the other is wrong regarding the primary trend. So, let’s take a look at the recent charts of both averages and see what they are saying.
As can be seen on the two charts above, the Industrials have made a new high, while the Transports are well below their July high and have only recouped half of the loss from that high. This is a blatant non-confirmation and a negative divergence that for whatever the reason is being ignored by some Dow Theorists. But the greatest concern and most critical of all issues are the debt levels that exist in all three segments of the economy and the composition of this debt, which may decompose faster than it arose. The following shows the appalling details. For an in depth study click on the following link: Social Security: The Whole Truth, Part 1. GOVERNMENT DEBT
UN-FUNDED OFF BUDGET DEBT: $62 TRILLION PRIVATE DEBT
SUM TOTAL DEBT:
Total Debt: $111 TRILLION The Fall Out As the above figures clearly show, debt levels have exploded exponentially. Soon, just finding the wherewithal to service the debt may prove to be unmanageable, let alone ever paying it off. The horrid condition of our financial house is a national disgrace. It is scary to realize individuals that call themselves professionals have allowed this to happen. Such reprehensible and irresponsible behavior is irreparable without a complete overhaul of the monetary and financial systems – or a cleansing by a severe deflationary or hyperinflationary bloodbath that wipes the slate clean. For details click on the following link: Scylla & Charybdis: The Scourge of Mankind. As the skeletal remains of the subprime mortgage market wash ashore, it will bring with it a host of other related problems – offspring of the original creature. The writing is on the temple wall and some are beginning to sense it. Volatility has returned to the markets with a vengeance. Credit spreads are beginning to widen. Lower quality instruments are no longer pursued with reckless abandonment; now risk is starting to be avoided at all costs, and risk insurance is getting costlier and harder to obtain. Market players are in the early stages of realizing that extreme over valuations are not the stuff of dreams, but the harsh reality of paper fiat land – where money is debt and debt money. Infectious Disease As the second week of August 2007 unfolded, it became obvious that the subprime mortgage debacle had stepped up to the level of a contagion, as just about anything connected with it in any way, shape, or form was under attack, including mortgages rated higher than subprime, mortgage backed securities, asset backed securities, and collateralized debt obligations. All of the derivatives of structured finance are now viewed as radioactive waste to stay clear of; otherwise one becomes infected by mere contact, even through association. Perceptions have changed overnight. The market is starting to figure out that the sophisticated derivatives that were supposed to control and mitigate risk are doing just the opposite in live markets. Exotic derivatives sitting unused and untried on the electronic ledger book during quiet markets have never had their ability to perform as stated tested, they are unproven under fire – how they will respond and act or not act to hedge risk when called upon are unknown, especially in a real time market environment – let alone in a fast moving or collapsing market. Recently, and for the first time, these supposed hedges to control risk were called upon to perform and they failed miserably. These derivatives are creating more risk, as they seize up and become totally illiquid. Not only do prices drop dramatically – some markets literally freeze up, as there aren’t any buyers with any liquidity to bid with. When real estate prices kept rising it didn’t matter if homeowners couldn’t meet their payment, they had recourse to take out more loans based on the increased equity in their houses. For a short time this seemed to work, but slowly it became apparent that this was just the greater fool theory raised up a notch or two. At some point in time someone has to pay the tab. That time has now come. Slowly it is beginning to be understood that housing prices kept rising because they were being floated higher by the Greespan put, the unstated promise that interest rates would continue to fall providing a rising tide for all buyers of real estate and the bond market. This worked for quite a long time, until housing began to finally slow up and contract. Homeowners suddenly became either delinquent or late in their monthly mortgage and other related debt payments or they simply defaulted on them. Mortgage defaults are up 93% from 2006 levels. In steps the lenders of last resort – the Central Banks, and one must admit, they did step up to the plate, however, it remains to be seen if throwing more fuel on the fire will put it out or not – I have my doubts. But they wasted no time and acted in unison, opening wide the credit spigots to all who asked for a drink. Band-Aid Approach The first major domino in the latest series of events was when BNP Paribas, the largest listed French bank announced they had frozen $2.2 billion worth of funds hit by U.S. subprime mortgage problems. This in turn started to make some of the bigger players nervous that perhaps this subprime contagion could and would squeeze credit markets around the world. No one knows for sure because it has never been like this before, which is the point those few voices in the wilderness have been making for years now, but no one wanted to listen – until now and still many are in denial. In steps the European Central Bank (ECB), injecting a large 94.8 billion euros into the European money markets to assuage any liquidity fears. The Bank of Japan (BOJ) kicked 1 trillion yen into their monetary system, while Australia added $4.2 billion. Not to be outdone, Bernanke and company first released a statement that the Fed would “facilitate the orderly functioning” of the markets, and the floodgates were thereby opened wide. The New York Fed first bought $19 billion of mortgage-backed securities. This is far different from how “normal” repurchase agreements (repo’s) work. Normally a repo is done using U.S. Treasury paper that the Fed buys – not mortgaged backed securities. By doing this the Fed monetized the mortgage debt it purchased with the $19 billion. The bank later did a second operation, purchasing another $16 billion worth (for a total $35 billion in monetized mortgage backed securities). This is an animal of a different sort, one that rumors and sightings have been heard of, but now there is no doubt that it exists, and that it hovers over the markets. What must not be forgotten is that sometimes the cure can be worse than the disease. Hopefully this is not one of those times. On Thursday the Fed injected another $24 billion into the money markets for a collective quick fix of $59 billion. A statement was also issued that the Fed’s discount window remains open, as always, for those in need of money. The spigots were turned down, but are manned and primed – ready to go at a moments notice. Hiroko Ota, Japan’s minister of economic and fiscal policy summed things up quite succinctly when he said: “the effect of U.S. subprime loans is spreading to financial markets around the world… we need to carefully monitor how this will affect the economy.” Yes, indeed we do. On August 17, 2007 the Fed decided it had heard enough wailing and gnashing of teeth within the subprime markets and they cut the discount rate by .50% down to 5.75%.
During the third week of August of this year, players cut bait and ran like hell from any and all perceived risk, causing the 90 Day T-Bill Yield to drop like a rock to an intraday low of 2.40%, which was 50% below its rate earlier in the month at 4.835%. It has now gone back up above 4.2%. Volatility reigns supreme. At the recent summit in Jackson Hole, Axel Weber, President of the German Bundesbank made the following statement regarding the subprime contagion: “What we are seeing is basically what we see underlying all banking crises”. During the same meeting James Hamilton, professor of economics at the University of California, stated: “The concern that I think we should be having about the current situation arises from the same economic principles as a classic bank run…. The problem arises when the losses on the institution’s assets exceed its net equity. Short-term creditors then all have an incentive to be the first one to get their money out. If the creditors are unsure which institutions are solvent and which are not, the result of their collective actions may be to force some otherwise sound institutions to liquidate their assets at unfavourable terms, causing an otherwise solvent institution to become insolvent.”
The markets were elated, the cost of money or credit just got cheaper – or so it seems, but appearances can be deceiving. The price paid is not always the price exacted. It is this writer’s opinion that the Fed moved to lower rates to the degree they did because they were scared – scared of the possible downside ramifications of the unfolding subprime market contagion and the repercussions it would engender. Asset Backed Commercial Paper The Fed did act promptly and fairly affectively, injecting liquidity into the system, including the purchase of mortgage backed bonds, which is a big departure from its standard of buying back Treasury Debt via repurchase agreements (repos). To monetize toxic slime that no one else would touch with a ten foot pole tells us something of what is to come. Future problems will not remain isolated to the subprime market mortgage, the disease will spread to other hosts; the commercial paper market has already been infected and tribute is being paid. On August 30th, 2007 the Fed reported that commercial paper had declined by $244 billion since August 8th, to a total of approximately $2 trillion dollars. That’s a loss of 11%. Asset-backed commercial paper has dropped by more than 15% in the last three weeks to approximately $1 trillion dollars. The above is not an insignificant amount of liquidity that has been removed from the market. The problems have only grown worse. Asset backed commercial paper (ABCP) has grown into a multi-trillion-dollar asset class in North America and Europe. Prior to the recent subprime debacle, the global banking system had pretty much followed the Basel Accords of the Bank for International Settlements (BIS). However, the recent spew of leveraged buyouts was financed with predominantly commercial paper, the latest tranche to hit the market, which was the straw that broke the camel’s back, was for $300 billion worth of ABCP’s. Now, however, the defaults and lack of liquidity within the asset backed commercial paper market has caused the Fed to step in as the lender of last resort and to purchase mortgage backed securities that NO ONE else would dare touch or buy. This is the epitome of monetizing toxic waste – unwanted and worthless junk. It is imperative to understand the importance of the asset backed commercial paper market, not only because of its size (multi-trillion), but because it tends to operate outside the spheres of regulation by the Bank for International Settlements. Euro/Yen Cross The advent of the Euro has greatly expanded global liquidity. Add in the yen/euro cross, euro/dollar cross, yen/cad cross, etc. and you can sense the sea of liquidity that has been created to fuel the many fires around the globe. So dominant have these forex crosses become that the easiest way to determine what the U.S. and other major stock markets are going to do is to watch the Yen. If the Yen moves up, stock markets move down. If the yen falls, stock markets move up. Slowly we are beginning to see a decoupling of the gold market from the stock market and the yen/euro cross market.
In the next two years, many of the teaser rate mortgages and arms (adjustable rate mortgages) are going to be reset at a HIGHER rate of interest than they are presently at. Homebuyer’s backs are already up against the wall – how are they going to come up with extra cash to pay the increased interest rates? Mostly likely they won’t be able to, thereby causing further deterioration and losses in the mortgage markets. Many people are going to lose their homes. Then what is going to happen? It is going to get much worse before it gets better. Approximately 60% of all homes have an outstanding mortgage. The estimated total of all of these mortgages is approximately $11 Trillion Dollars. Fannie Mae and Freddie Mac are on the hook for 40% of all residential mortgages. As housing prices fall, the collateral that was used to back these loans is starting to disappear. A 10% drop in housing prices will evaporate $1 Trillion worth of collateral or PERCEIVED WEALTH. How the System Works The existing paper fiat debt-system works according to a triple-tier system of finance.
Here’s the important part: banks that need cash borrow from the interbank system. The interest rate they pay is called the three-month Libor (London interbank offered rate). Recently it jumped from 6 percent to 6.8 percent (a very quick 10% increase). This rate is usually 0.15 percent above the base rate which is 5.75 percent. On Sept 5, when the rate jumped to 6.8 percent, it was 1% above the base rate, which is the largest disparity in 20 years. Something out of the ordinary is occurring within the money markets; and it has only just begun. Now here’s the part they don’t usually explain very clearly: most mortgages are adjustable not to U.S. interest rates but to LIBOR plus points. Slick – very slick. And we all thought the Federal Funds rate was so important. From the above we can see that is it very important that we are all reading from the same play book, using the same rules and regulations, and keeping score in the same unit of account. The last point is the most critical and goes right to the heart of the matter. First, let’s be honest and call a spade a spade. The entire world’s monetary and financial system is based on paper fiat debt-money – no if ands or buts, no exceptions – that is all there is – make no mistake about this very important point. Almost any analysis of the markets never mentions this issue, let alone is it factored into the equation. It is the most important factor bar none. Even the most harden gold-bugs do not understand the unalterable repercussions that this nefarious system imposes. Everything is priced in paper fiat debt-money, especially in U.S. Dollars, which is still the reserve currency of the world. Regardless of the fact that the dollar’s position is waning – it still is top dog as of now, not that it ultimately matters, as they are all pieces of paper fiat – the Euro, the Yen, even the Swiss Franc. All paper fiat debt currencies are on the same path – the path of debasement whereby they become worth less and less until eventually they become worthless. Even the International Monetary System’s Special Drawing Rights has a higher weighting to the dollar than any other currency. This is not by mistake but by design – do not be deceived. Some of the most experienced gold bugs do not understand that to sell gold and silver in exchange for paper fiat debt-money is a LOSING proposition. Even if the “price” of gold has gone up in the quantity of dollar bills needed to procure one ounce of gold, this does not mean a profit is being made. A profit is only had when one’s purchasing power increases. See the following link for a detailed account: Gold & Silver: Up In Price - What Does It Mean? What is meant by price? Is it not simply a number of monetary units (dollar bills) that a seller is willing to accept, and a buyer is willing to give – in an exchange to facilitate the buying and selling (transfer) of goods or services. The main driver behind the aggregate rise in the price of anything is loss of purchasing power of the dollar. As the unit of account (dollar) loses purchasing power, more units (quantity) of the currency are needed to purchase the same amount of goods, hence the price (number of units needed to purchase) of goods goes up. Price inflation is an effect or result, it is not a cause. Monetary inflation is the precipitating cause and the resulting debasement of the currency (loss of purchasing power) is the secondary cause. The final result is asset inflation or price inflation. Inflation
The point being that any valuation of things that uses the U.S. dollar bill as the basis of that valuation is completely fictitious. The dollar changes “value” from day to day, such action is the antithesis of a sound and stable monetary policy. It is no different than if you were to accept that the amount of ounces in a gallon changed throughout the day and from day to day. This would result in trying to price milk or gasoline or any other commodity denominated in ounces/gallons as pretty much meaningless if not impossible. The standard of any measure cannot continually change; as such change causes the standard not to be a standard by the very fact that it is continually changing. A standard must remain fixed, providing stability and soundness to the system. Dow Theory Revisited We have seen that valuation is a very important concept that provides a means by which we measure the utility of any particular good or service available to us to purchase or sell in the marketplace. Valuation is, however, subjective and therefore subject to change. The standard by which any valuation is measured or compared, however, must remain constant and fixed; otherwise any comparison or valuation is meaningless. The one cycle that Dow Theory considers unalterable is that the market goes from undervalued to overvalued over the course of time. The US Dollar is used to price or value all goods and services in the United States and most places outside the U.S. as well. When we talk of the price of gold or the price of a piece of real estate or the price of the Dow, we are using the standard unit of one dollar bill to denominate the price or value of the particular item. The dollar is the basis of our entire monetary, financial, and economic system. But the dollar is constantly changing in value or the amount of purchasing power that it has. This is not how a standard of valuation is supposed to work – it should remain stable and sound without change. According to the Constitution of the United States the monetary standard is one ounce of pure silver. According to the Constitution and the Original Coinage Act of 1792, our currency consisted of silver and gold coins and no bills of credit (paper money). Clink on the following link for details: Honest Money, Part I: The Constitution and Honest Money. With the advent of the Federal Reserve in 1913 the monetary system turned to the use of paper money backed by gold and silver in the beginning. Slowly over the course of the next 20 years this backing was removed and in 1933 President Roosevelt called in all gold currency and made it illegal for private individuals to hold the gold coin that is one of the two mandated currencies of the Constitution. For the complete story click the following link: Letter to Congress. Presently, the Federal Reserve Note is the currency in circulation – the dollar bill as it is known. But make no mistake about it – a dollar bill and a dollar according to the Constitution are two entirely different things. The first is a mere paper promise to pay, while the second is a specific weight of silver: 371.25 grains of silver – the silver dollar. The first is a debt obligation that can only roll over or discharge debt; it can not pay debt off, as it is a paper debt itself. The second is Honest Money that can pay off debt – the hard currency mandated by the U.S. Constitution. Because today’s dollar bill is continually losing purchasing power or value, anything measured or “valued” using the dollar as the basis or standard of value is being FALSELY VALUED. We are accepting the unacceptable. We can NOT use as a standard of value, a paper fiat debt instrument that is constantly losing purchasing power. To do so is madness – it is allowing our wealth to be siphoned away from us a little at a time – day by day, just as any chronic and terminally ill disease slowly drains the life away from its unwary host. To value gold in U.S. Dollar Bills is to accept turning the original hard money system of the Constitution upside down. A dollar is a weight of silver – not a paper promise to pay. The definition of a real honest dollar is a silver dollar – not a Federal Reserve Note. In the beginning of our country gold and silver coin were not defined or denominated in paper dollar bills, they were defined by Honest Weights and Measures, and a dollar was one such specific weight of silver: 371.25 grains of fine silver. See the following link for an in depth study: Gold's Hidden Secret: The Moral Hazard of Fiat Money. To value the Dow Industrials with paper fiat debt-money is an invalid measure of value. The dollar has lost 95% of its purchasing power since 1913. Likewise, any profit on the Dow from 1913 to the present that is denominated in U.S. dollar bills, has also lost 95% of its purchasing power. And the same holds true for gold and silver. This is why what is needed is a return to the hard money system mandated by the Constitution – Honest Money of gold and silver coin and no bills of credit. When paper money, which is a form of debt, can be continuously and endlessly created by one man’s decision and the mere stroke of a computer, such monetary policy is nothing but a prescription for the total debasement of the currency and continuous loss of purchasing power and hence wealth. All that is created is more and more debt, as debt is actually the currency in circulation, which then acts as a wealth transference mechanism – extracting wealth by the insidious means of currency debasement and loss of purchasing power. Click the following link for more detail: Can the U.S. Return to a Gold Standard? The stock market is overvalued at best, and an empty shill at worst. It is one of the many asset bubbles present in the world, all fueled by excessive issuance of money, credit, and debt – conjured up by the many ways of structured finance, especially the liquidity extracted from the real estate market like blood from the victim of a vampire. The entire world is not in a global boom that can sustain – it is near the end of a wild drug induced orgy that will soon end in total exhaustion. The question is not if but when. Is Dow Theory alive or dead – perhaps it no longer matters; unless what truly matters is the one cycle of overvaluation to undervaluation, driven by the two dominant human emotions of fear and greed? I think it does, just take a look around and what do you see: the greatest accumulation of DEBT ever known to man. It really is that simple.
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INFORMATION About the author: Douglas V. Gnazzo is CEO of New England Renovation LLC, a historical restoration contractor that specializes in restoring older buildings that are vintage historic landmarks. He writes for numerous websites and his work appears both here and abroad. Just recently he was honored by being chosen as a Foundation Scholar for the Foundation for the Advancement of Monetary Education (FAME). Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
We
are currently beginning to see the mutated results of such greedy
indulgence, as the subprime contagion is spreading like wildfire from
one debt obligation to the next. 
The
Fed did not change the federal funds rate which remains at 5.25%. 
