Pumping or Propping?

Posted | 18/06/2014 / Views | 2111
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Central Bank research and advisory group OMFIF has released a report showing $29.1 trillion has been invested in equities markets which “could potentially contribute to overheated asset prices”.  Whilst on face value it could be CB’s looking for yield in the zero interest rate environment they created, it could also be part of the ‘recovery show’ getting everyone to believe that things are great because sharemarkets are booming, ironically using printed money.  

Part of the play too looks like China, the biggest investor, is strategically taking minority holdings in Euro companies which “counters the monopoly power of the [US] dollar” as China continues to position its currency as an alternative to the USD and Beijing as the global financial powerhouse.  If you consider that $29 trillion is just a tad under half of the total value of all stock markets in the world, ask yourself how this could not end in tears (for those not owning gold and silver that is….).