Wall Street: End of rally? 3 July 2009 this bear market rally spring in United States seems to have come to an end. Bullish acceleration from the minimums of March of this year (minimum in 13 years for the S & P500), hardly responded to a deceptive movement of suba, without solid and very characteristic of the market in low foundations. The U.S. financial system needs a genuine revival, more than an injection of funds. A deleveraging (reduction in the level of indebtedness) and not the generation of stimulus packages to inflate assets is healthy. The banks have been massively subsidized by the U.S. Government. What inevitably leads the printing of currency in excess is higher inflation, a weakened currency and higher interest rates.
The financial system is falling down and the U.S. Government should react and convert debt to equity (equity) to produce a more stable environment, said yesterday on CNBC Nassim Taleb, author of the book The Black Economist Swan, a classic in the financial literature that describes the catastrophic effects of improbable events. If banks go to visit mortgage borrowers with a smile and pose them a drop in your monthly payments in exchange for taking the 60 / 70% of the property, that would facilitate the orderly process of debt relief (deleveraging). That each sector that has a lot of debt turn it into equity. Taleb added that that has been done, but requests that it is done systematically and at a mass level to clean up the system. You can have green shoots, or as you want to call them, you can have a temporary relief, but we are still in a world that is breaking. We are in the middle of the crash. So if I have to predict anything, it is that this will be worse, not better. Economic indicators in the United States – although some not so negative – are still very weak and the fall of activity in Asia, in Europe, in world trade remains strong.