[Marxism] Prelude to a Crash » CounterPunch: Tells the Facts, Names the Names

Louis Proyect lnp3 at panix.com
Mon Feb 3 13:17:18 MST 2014


Margin Debt Hits All-Time High in December
Prelude to a Crash
by MIKE WHITNEY

The Fed’s easy money policies have pushed margin debt on the New York 
Stock Exchange (NYSE) to record levels laying the groundwork for a 
severe correction or another violent market crash.

In December, margin debt rose by $21 billion to an all-time high of $445 
billion.

Buying equities on margin, that is, with loads of borrowed cash, is a 
sign of excessive risk taking the likes of which invariably takes place 
whenever the Central Bank creates subsidies for speculation by keeping 
interest rates pegged below the rate of inflation or by pumping 
trillions of dollars into the bloated financial system through misguided 
liquidity programs like QE.

Investors have shrugged off dismal earnings reports, abnormally-high 
unemployment, flagging demand, droopy incomes, stagnant wages and 
swollen P/E ratios and loaded up on stocks confident that the Fed’s 
infusions of liquidity will keep prices going higher. It’s only a matter 
of time before they see the mistake they’ve made.

full: http://www.counterpunch.org/2014/02/03/prelude-to-a-crash/




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