The Runaway Money Printing Policy of the Fed(eral Reserve Bank)

Fresh on the Heels of the Government Shutdown and the painful Necessity to raise the Debt Ceiling a surprising but not unexpected Announcement from the Fed, in the waning Days of the Chairmanship of Mr. Bernanke:

http://www.nbcnews.com/business/fed-says-it-will-keep-stimulating-economy-leaves-rates-unchanged-8C11498307

Basically, the Fed, under Mr. Bernanke's Policy of so called „Quantitative Easing” just announced that will be pouring another $ 85 Billion into the Stock Market, buying Bonds, each Month, for the foreseeable Future, until at least March ofr 2014.  This is Money which is not reflected in the Federal Deficit and Money which the Government neither has, nor has authorized through Congress.  The Report further states and we are quoting here,

Wall Street had expected the Fed to refrain from tapering its so-called Money Printing Operation. (Emphasis added).

According, to The New York Times,on the other Hand,

The statement contained no surprises, and the stock market barely budged. The Fed was widely expected to continue adding $85 billion a month to its portfolio of Treasury securities and mortgage-backed securities, particularly in the aftermath of the disruptive partial shutdown of the federal government in the first half of October.

The Fed maintained a relatively optimistic economic outlook in the statement, released after a scheduled two-day meeting of its policy-making committee. It said the economy continued to expand “at a moderate pace” and that the availability of jobs continued to improve.

Now, as Mr. Bernanke prepares to clean up his Desk and leave his Office at the Federal Reserve, the several Trillion Dollars that he has spent, under this ill advised Policy will, of course, remain on the Books backed by Bonds.  What Kind of Bonds?  Goodness only knows.  It will be Mrs. Yellen's Job, presumably, to find out.

This stubborn Policy, pursued by Mr. Bernanke, to „Lift the Economy by the Bootstraps” under some strange Trickle Down Theory strongly reminsicent of „Reaganomics” has been conducted by Mr. Bernanke, if not singlehandedly, because he has had the Concurrence (although not unanimous) of the Federal Reserve Board Members, certainly without the Approval, Appropriation or even Advice of Congress nor that of the President of the United States.

It is true, that the Federal Reserve Board is supposed to function independently.  One wonders aloud, however, if under „independently” the Framers of the Law setting up the Federal Reserve Bank had in mind it spending $ 85 Billion per Month without any Accountability whatsoever.  No such Thing has ever been done by anyone else, anywhere, ever, with the one notable Exception of Vice President Cheney, who spent Billions on the War in Iraq, also without Congressional Approval.

It must be said, in Defense of Mr. Cheney, that the Sums of Money he spent pale in Comparison to the Amounts being spent by Mr. Bernanke.

This is also coming at a Time where incalculable Effort has been spent on showing that there has not been and there is going to be Little if any Inflation in the Consumer Price Index.

It would take too long to fully examine what that Statement is supposed to mean.  However, in Shorthand, it can safely be said that „No Inflation” means „No Inflation” except that certain Things are not to be included in the Equation, to mention a Few, Energy (Fuel and Utilities), Housing, Commodities (Food) plus a Couple of other Things here and there...

Even that Theory, as flawed as it is, has come under Scrutiny by the Mainstream, although many Economists have questioned ist Wisdom for a long Time.

See...

http://www.nytimes.com/2013/10/27/business/economy/in-fed-and-out-many-now-think-inflation-helps.html?nl=todaysheadlines&emc=edit_th_20131027&_r=0


Janet Yellen, the presumptive incoming Chair(wo)man of the Federal Reserves disagrees with Mr. Bernanke and believes that a draconian Control on Inflation (while notably excluding the Categories noted above and more) is not necessarily a beneficial Policy.

But the Consequences will be for her to sort out, once Mr. Bernanke leaves.

We are not sure where Mr. Bernanke is headed; Rumours have persisted and it appears that it is his wish to return to teaching at Princeton University; we simply don't know.  Earlier, we mentioned, we believe more than once, that President Woodrow Wilson (who was also President of his beloved Princeton University), may have rolled in his Grave (more than once) at the Thought of some of the Things that Mr. Bernanke did; to this, we need to add that he surely would have also scratched his head, if he would have been able to.

The Need for a Positive Approach to the Medical System in the United States

The First Thing that needs to be said here is that the Medical System in the United States does need to be drastically reformed.  It is the most expensive Medical System in the World and No. 2 does not even come close.  To make Things worse, someone who lives in the United States has about the same Life Expectancy as one does in Cuba, Way behind Places like Japan, Italy, France, Switzerland, Germany or, say, even behind Singapore or Cyprus.

 

Chart showing the astronomical Rise of Health Care Costs in the United States

The Health Care Reform Act (so called „Obamacare”) is an Attempt at doing precisely that.  However, what started as a well intentioned and even noble Effort was deteriorated by Compromise after Compromise and became filled with Loopholes which, not unexpectedly, Health Insurance Providers are eagerly trying to exploit.

Just to set something in Perspective:  the United States has the highest paid Doctors in the World.  Many Doctors who graduate from Medical School in Foreign Countries, where the Cost of getting this Education is Zero or near Zero, trek over as soon as they can to the United States where they can earn 100 Times or 1.000 Times more than they can in the Country where they went to School, leaving their Governments angry at having invested in their Education but not being able to retain Doctors in their own Country, where they are so desperately needed.

Doctors are just one additional Problem.  Hospitals have in place Elaborate Systems to extract the Maximum possible Revenue not only from Insurers but from the Government as well, when providing Medicare or Medicaid covered Services.  Both the Government and Insurance Companies fight back.  Some think, Hospitals know how to outsmart not only the Insurance Companies but, more importantly, the Government.

If you are an Individual who would pay out of your own Pocket for Medical Care without having any Insurance, forget it.  The so called „List Prices” for Facilities and Services could be (and generally are) several Times higher than what the contracted Prices which the Insurance Companies or the Government pays are.

One Example that has been used alegorically over and over is the Cost of an MRI, which is the modern Version of a simple X-Ray.  Sometimes, just an X-Ray might suffice but, not surprisingly, Hospitals almost exclusively do MRI's which can be/are far more profitable.  Just how profitable?  The List Price for an MRI can vary, are you ready for this, anywhere from $ 800,00 up to $ 17.000,00 at some Hospitals.  And that, according to a recent investigative Report, for the same exact Procedure.

Ever wondered what an MRI costs in Germany?  We can end your Suspense:  $ 160,00.  France:  $ 160,00.  Italy?  $ 140,00.  Japan, which has one of the highest Cost of Living Indexes in the World?  $ 60,00.  All, using the same Equipment.  Now, an MRI is no indication of how long you are going to live but it can be more than a Coincidence that People in Japan live the longest followed by those in Italy.

There have been well publicized Problems with the Federal Government's Health Insurance Marketplace Website; These were not to be unexpected and certainly will be resolved, probably sooner rather than later.  The Problem, however, lies deeper than that.

Most People are clearly dissatisfied with the Situation as it currently stands and is developing.

http://firstread.nbcnews.com/_news/2013/10/30/21252291-poll-majority-think-health-law-needs-overhaul-or-elimination?lite

The Question, we believe, is just what Kind of a Path is necessary to go forward, whether Congress, the Health Insurance Industry, Hospitals, Doctors and Health Workers want to hear it or not.  Health Care in the United States consumes, if one includes the Cost of Litigation (such as Malpractice) associated with Health Care to more than 18% of the GNP, a staggering Amount.  Even without the Cost of Litigation, it is in Excess of 16%.  Some sort of National or quasi National Reform which would include Coverage ensuring reasonably unform Health Care for all Americans is not only necessary, but also overdue, way, way, way overdue.  Bismark figured this out way back in the 1890's.  Every other industrialized Nation and many others in the lower Tier have some System to deal with Health Care for its Population in some Form or another.  There are Similarities as well as Differences between the Systems that various Countries use.  That is not only understandable but to be expected.

And, as President Obama stated (and conceded, although others did not), one must start from building by drawing on the System that is already in Place.

Looking at the American Precedents already in Place, why not keep everybody's Insurance where it is (which is what was originally envisioned), take all the uninsured under the Threat of a Penalty (as the Legislation does now) and throw them into a Medicare/Medicaid/quasi Medicare/Medicaid Program and then, based upon Verification of Employment or Self Employment, charged them a Premium based on Income/Ability for Coverage.  Then take the Insurance Premium which would be actuarially appropriate for that Individual and throw it on an Insurance Company based on a statistical Pool.  Insurance Companies which throw Individuals out of their Plans hoping to cash in on the Bonanza, would be discouraged in doing that because all that would happen to those Cases is, the Government would turn around and throw the Policies back at them through this Assigned Risk Pool and charge the Premiums which should prevail; they would be the same or lower as what the Individuals would have had under their previous Plan, since the Insurance Companies would try to change the Insurance Plan only for those who they thought they could get more Money from.

Bottom Line, except for General Rate Revisions (which is not what one should be talking about right now), all Insurance Health Insurance Policies which are already in Place, should not be changed based on „Technicalities” (Change in Provisions, number of Insured Covered and so on).  This, however is not what is happening right now and, some say, 14-18 Million Americans could be either left without Health Coverage or be forced to pay significantly higher or exorbitant Rates or, worse, be thrown out of the Insurance Pool altogether.  This is the very opposite of what the Law is trying to accomplish.

http://investigations.nbcnews.com/_news/2013/10/29/21222195-obama-administration-knew-millions-could-not-keep-their-health-insurance?lite

Another Thing that would resolve the Mess (this, based on Systems used in other Countries); if you are unemployed (with insufficient Assets), then the Government picks up the Insurance Premium until you are re-employed; if you are married, then the whole Family is covered under the Premium, even if Wife (oops! Or Husband)/Children are unemployed/not working and if your Wife/Child/ren seek/obtain Employment, they do have to pay their Premium and so do you.  Translation:  everybody working pays a Premium and everybody not working has Insurance based on working Family Member(s) or the Government.  Retirees would continue to get Medicare as they currently do.  Medicare Part B is already based on Ability to pay, since the Cost incurred by the Government per Beneficiary is $ 400,00 or so.  Most pay $ 100,00 or so but, even if on Medicare and having Part B, if someone has or is making abover certain Thresholds, they have to pay more, up to the entire $ 400,00 or so.  Finally, for Retirees, the Concept that Medicare Part A is paid 100% by the Government for all, then Medicare Part B is paid partially by the Government for most and that, regardless, on Top of that, one needs still additional Insurance in Order to reach a Deductible Level which they can afford...well...that sounds, no it doesn't sound, it is a Can of Worms in which Doctors, Hospitals, Clinics and Insurance Companies only see Billions and Billions of Dollar Signs.

 

Finally, someone woke up and removed the Cap on the Medicare Tax.  That is a good Thing.  Currently, however the Medicare Tax Rate is 0,9%.  Why the Medicare Tax Rate (which is supposed to cover  Medicare Costs on a current Basis...those working today pay for the Health Care of Retirees) does not even come Close to covering what it costs the Government to provide Medical Care to Retirees defies Credulity.  Keep in Mind, this is just to draw a Parallel on Priorities, The Fed(eral Reserve Bank), (Mr. Bernanke), is spending $ 82 Billion a Month (a Figure not included in the Federal Deficit), simply for his Quantitative Easement Theory (he would call it a Policy), the only tangible Result of which has been to propel the Stock Market (Dow Jones) to over 15.000 Points.

 

 

Mr. Bernanke's Reaction to the Cyprus Crisis

Folks,

Here is what Mr. Bernanke said regarding the Cyprus Financial Crisis:  He said,

Bernanke: Cyprus poses 'no major risk' to U.S. banks, economy

The U. S. Stock Market reacted positively to Mr. Bernanke's Comments.

Data as of 5:16pm ET

Wednesday’s Close:

• Dow +55.91
  
  
  14,511.73
  +0.39%
• Nasdaq +25.09
  
  
  3,254.19
  +0.78%

Stocks end higher on Fed stimulus pledge

Mar 20 4:56pm:

U.S. stocks rose Wednesday after the Federal Reserve reiterated that its stimulus measures will remain in effect until the job market gets back on track

In Cyprus, Demonstrations against the now rejected Bailout Plan, linked to expropriating 10% of the Value of Savings Accounts, continued, accompanied by many Placards in English, an interesting one, stating, „Aphrodite is angry.”  Banks continued to remain closed.
 

Aphrodite, or Venus, as she is known to many of us was and continues to be, in the Minds of many, the Goddess of Love.

What we don't know, of course, is just how angry she is and just what she exactly might be thinking about the European Central Bank, which came up with their ,,Rescue Plan” or, for that Matter, Mr. Bernanke, who seems to be steering clear of her at any Cost.  In this Case, the Cost seems to be that of pumping more Money through the „Discount Window” to Financial Institutions deemed „Too big to fail.”

One Thing we know, from Greek Mythology and the Renaissance is that when Aphrodite was born, she was anything but angry.

The Birth of Venus by Sandro Botticelli

 

Her Daddy, Zeus, though, was another Story.  No one would have wanted to mess around with him, especially when he got angry.

Cyprus and the Stock Market

This Column has long been critical of the Policies of The Federal Reserve and others, but particularly those of Mr. Bernanke, by pointing out the Low Interest, Easy Money Policies which The Fed has pursued, not only under Mr. Bernanke but also before (under Mr. Greenspan, for Example), but Policies which have been exacerbated during the Tenure of Mr. Bernanke.

Particularly, in the View of this Column but not only this Column, in the Opinion of others, including many respected Economists both in the United States and elsewhere, the Policies of the Fed have made it possible for the Stock Market to propel to Record Highs, in the Face of a languishing Economy, High Consumer Debt, the Mortgage Crisis, staggering Federal Deficits and so on.

Interesting, however, have been some of the Explanations which have come forward in order to explain the relentless upward Gyrations of the Stock Market from various Apologists and Allies of these Policies, including but not limited to, that Financial Powerhouse known as Goldman Sachs which, some consider to be an Arbiter of the Financial Movements on the Stock Market.

One of the Arguments most strongly pursued by these Apologists has been the „Global Nature” of the Stock Market, meaning that the World Economies are so tightly intertwined that the Stock Market represents not only a Barometer of the U. S. Economy but of the Global Economy and Financial Movements as well.

So, along this Week comes an „Inconvenient Truth,” that of a little Insular Country in the Eastern Mediterranean called Cyprus, a place many People have not even heard of.

Cyprus

Cyprus is a relatively tiny Island with enthic Problems of its own but which joined the Euro and, because of its unique Location, it attracted immense Offsore (well, Cyprus itself is Offshore!!!) Deposits from Russia and elsewhere.  Because Cyprus has close Relations with Greece, much of these Deposits were invested in Greece and other Places where they should not have been invested and the Result has been a Financial Disaster which may cause two or more of the Cyprus Large Banks to collapse and drag the whole of Cyprus into Collapse with them. 

Unspoiled Cyprus Shoreline

The European Central Bank has orchestrated a „Bailout” of Cyprus but, mindful of the Disaster in Greece and looming potential Disasters in Spain, Portugal, Italy or even France, it has „linked” the Bailout to a 10% Expropriation to be levied on all Savings Accounts, in order to help pay for the Bailout.  Although this was later modified to apply only to Savings Accounts above a certain Limit, the Resistance to such a Plan was monumental.  After considerable Turmoil on the Streets, accompanied by a „Bank Holiday” which caused a horrifying Liquidity Crunch in a Matter of Days, the Cypriot Parliament turned down the „Help” thus forcing the Situation forward into uncharted Waters.  Whereas, earlier, Huge Banks such as Deutsche Bank and, possibly, some American Banks and other Foreign Banks were not allowed to fail because of the Greek Financial Crisis (The „Too Big to Fail” Theory), large Cypriot Banks, tiny in comparison to Multinational International Banks may be allowed to fail.  We simply don't know.

However, all this presents a Dilemma for the Apologists and Supporters of the Stock Markets in New York, where the Dow Jones Industrial Average just recently catapulted, at galloping Speed, over the 14,000 Mark, citing, „Strength in the Economy.”

So, the following Explanation came forward:  it said, the  Cyprus Financial Crisis will actually help U. S. Markets because Investors will have no Choice but to seek Refuge in the U. S. Markets.  Throw out the Window „Globalisation,” High Unemployment, Horrendous Deficits, Disastrous Balance of Payments and, lest we forget, „Derivatives” championed by many, not least of whom, Goldman Sachs, which brought the United States Economy and Banking System to the Brink, requiring huge, partly unfunded Bailouts not only of Banks, but of huge other Institutions and Corporations.

It goes without saying that Mr. Bernanke, who has announced his Departure when his current Term expires, has remained silent on this Matter.  The Fed continues, during this continuing Series of Crises, to keep open „The Discount Window” where large, „Too Big to Fail Banks,” (and Financial Institutions, such as Goldman Sachs) can borrow Money at near Zero Interest Rates, while ordinary Citizens must struggle with Mortgage Foreclosures, Credit Card Debt and Student Loans.

„Irrelevant,” one can hear them say.  The Dow Jones has pushed through 14,000 and the Economy is on the Mend.  Global Economy or no Global Economy, Cyprus is 6.000 Miles away from New York.  We simply wonder, how are they measuring the Distance?  Globally, as on a Globe, or Flat Distance, as they did at one Time when everybody thought the Earth was flat and all you had to do in order not to fall off is not go too close to the Edge.
 

Spending $ 1.250,00 per Month for every Man, Woman and Child living in the United States

The Federal Reserve Bank has just announced that it will be spending upwards of $ 40 Billion per Month on a Going Forward Basis, for an Indefinite Future, purchasing ,,Mortgages'' from ,,Banks and Financial Institutions.''  This, in the Opinion of the Federal Reserve Bank, is going to stimulate the Economic Recovery in the United States because the Economy has been ,,growing'' according to the Chairman of the Federal Reserve, Mr. Ben Bernanke, at an ,,Unsatisfactory Rate.''

http://www.nytimes.com/2012/09/14/business/economy/fed-announces-new-round-of-bond-buying-to-spur-growth.html?_r=1&nl=todaysheadlines&emc=edit_th_20120914

First of all, it should be noted that a reasonable Assumption would be, the Decision, as ratified by the Federal Reserve Bank is the Brainchild of Mr. Bernanke, who was a Professor of Economics at Princeton University specializing in the 1929-1933 Great Depression.  Mr. Bernanke, we have noted elsewhere in this Column, has just returned from a Conference in Jackson Hole, Wyoming, a Place renowned for its Beauty and known to most Americans from Photographs and Motion Pictures.

http://economywatch.nbcnews.com/_news/2012/09/13/13846702-bernanke-aims-at-job-market-in-latest-bid-to-revive-faltering-recovery?lite

The Stock Market reacted jubilantly to the  Fed's Decision by immediately jumping more than 200 Points to an All Time High.  Some Financial Analysts characterized the Decision as a ,,Sugar Pill for the Stock Market.''  Others, characterized the Short Sightedness of Mr. Bernanke's Decision and the Disconnect which appears to exist between his Area of Academic Specialization and the Decisions which he appears to be making.  It should be noted, this Action comes in the Heels of the Fed's Program of ,,Quantitative Easing'' a Term coined by Mr. Bernanke as well.  The Results of the Quantitative Easing Plan have been described by many as highly questionable in Value.

These Actions could remind one of some of the Words used by former Secretary of the Treasury Henry Paulsen, of Goldman Sachs Fame, who alluded, no, not alluded, emphasized that the Fed had at its Disposal ,,Tools'' (words reminscent of some Kind of an Auto Mechanic or Woodworker's Toolbox) in order to handle Financial Situations.

Those of us who are far less well versed than Mr. Bernanke on Economic Policy Matters can likely make a following simple Arithmetic Calculation:  the Money that the Fed would be giving Banks, in exchange for purchasing Mortgages of Questionable Value (most likely, at full Face Value or possibly even at a Premium - Hey!  It's not easy to spend $ 40 Billion per Month when you've got only one Month to do it!), that Money actually amounts to roughly $ 1.250,00 for every Man, Woman and Child living in the United States, rich or poor, young or old, in one Word, everyone.  Unlike Banks, many of these People would spend their Money, creating Jobs, rather than use them for questionable Financial Investments, Executive Compensation or ,,Conferences'' in Exotic Locales, such as Jackson Hole, Wyoming.

Of course, everyone would have to sign a Promissory Note (at near Zero Interest Rates, as the Banks would be doing) to pay the Money Back and those who can, will, just as the Banks would; those who cannot, will not, just as the Banks would not.

http://www.welt.de/finanzen/article109233809/Boersianer-surfen-auf-Monster-Geldwelle.html

Interestingly, both Presidential Candidates did not express any Concerns or Opposition to Mr. Bernanke's Decision; true, Mr. Bernanke can act independently, without Accountability to the President; however, in the Absence of the Expression of an Opinion by the President or his Opponent, Mr. Bernanke may well take such Silence as a taciturn implicit ,,Carte Blanche'' that his Decision is an appropriate one.  We are wondering if Mr. Bernanke made the Calculation, or Analysis, whether seeking an alternative Method of spending $ 40 Billion Monthly (assuming that such Money should be spent), would not do more to ,,Stimulate the Economy and create Jobs'' rather than a Plan to purchase Mortgages, including potentially worthless Mortgages, from Banks. 

From 'Quantitative Easing' to Wisconsin

As the Teachers' Protests continue in Wisconsin, the Tea Partiers march into Madison. So far, Governor Scott Walker has dug in his Heels and Democratic Legislators in Wisconsin have taken 'Refuge' out of State; thus, by depriving the State Legislature of a Quorum, they have, in Effect, dug in their Heels too, Toe to Toe with the Governor. Some Observers have gone so far as to proclaim Madison the Epicentre of the Financial Crises sweeping, some say, as many as 45 out of 50 States.

The Issues, however, may be too systemic to merit a simple Explanation. On the Side of the Governor, is not only the Argument that the Wisconsin State Budget needs to be balanced but that generous Teacher (and other Public Sector) Salaries and Benefits, not only in Wisconsin but elsewhere as well, have corrupted the Meaning of the Phrase 'Public Servants' so much more so when taking into Account inadequate Public Education Test Scores (see Justice Souter's Comments elsewhere in this Forum). This, at a Time when those who earn their Living in the Private Sector are having to make do on comparatively less, or much less or nothing at all.

In this Case, however, it may be helpful to take a Look at New York City, the Financial Epicentre of the United States and the World, where the Problem may be into somewhat clearer Focus.

5000 Teachers in New York City are not only in Danger of losing their generous Salaries and Benefits but their Jobs altogether. New York City is just flat out of Money and its Revenue Outlook is bleak. The Inequity comes more sharply into Focus there, when paragonating the Situation against the obscene Bonus Earnings continuing to be paid to various Echelons on Wall Street. Some may still remember the huge Bonuses that were paid on Wall Street at a Time when several Institutions on Wall Street which paid those very same Bonuses were 'Bailed Out' by the Federal Government. All but forgotten has been the Proposal to institute a 90% Federal Income Tax on those Bonuses paid by Institutions which had received (whether paid back or not) Federal Bailout Money.

Such horrific budgetary Straits at the State and City Level in New York, Wisconsin and elsewhere, not to mention the Federal Deficit Dilemma which has yet to be dealt with, continue against a Backdrop of a Policy of 'Quantitative Easing' being pursued by the Federal Reserve Bank through its most ardent Proponent, Mr. Bernancke.

Just where precisely all this Money is flowing remains a Mystery. However, with Teachers demonstrating in the Capitol Building in Madison, the Tea Partiers marching on them, 5,000 Teachers in New York about to march to the Unemployment Office while Stock Market Averages are catapulting to New Highs, that Question seems to merit being looked into and soon.

Egypt - Nothing to worry about?

It has become clearer and clearer in the last few Days that Mubarak's Departure is imminent. Whether he leaves Today, or Tomorrow or the Next Day, those are the only Things which various Observers and others are debating or seeking to influence. It is also evident, at least to some of us that Egypt is entering Uncharted Waters. Nobody really knows, even if they claim to know, just what a Future Egypt will look like, next Month or next Year.

It is interesting in this Context that numerous Financial Analysts dismiss the Turmoil in Egypt and describe it as being inconsequential, in Terms of the Effect in might have on International Trade and thus, the World Economy. Various Arguments are submitted in support of this Thesis: The Egyptian Economy is very small, Egyptian Trade with the West is limited, there are no huge Egyptian Mega Banks. Thus, the World Stock Markets have continued unaffected, indeed, generally advancing, totally dismissing the unfolding Turmoil in Egypt.

One wonders how many of these Analysts have taken into Consideration the Suez Canal. Acts of Sabotage have been reported both in the Canal Zone and the Suez Pipeline, which is adjacent to it. To the Extent that the Political Instability in Egypt might influence the Safe Operation or, indeed, the very Operation of the Suez Canal, some of these very same Financial Analysts would do well to take notice that the Suez Canal carries, according to some Estimates, nearly 10% of the World Shipping and a very large Proportion of the Oil produced in the Arabian Peninsula. When the Suez Canal had to be closed as a result of the 1967 War, it remained closed for 8 Years; the Consequences on World Trade, particularly Oil Trade were enormous.

The other Danger, which these Financial Analysts appear to ignore and pay no Attention to or indeed, even discuss, is the much spoken 'Domino Effect' which transferred from Tunisia to Egypt and may be headed elsewhere, to places such as Jordan or Yemen. While neither Jordan or Yemen are Oil Exporting Nations, the simple Likelihood of Instability, however slight, in the Arabian Peninsula Region is something which perhaps should not be too easily dismissed. Finally, nothing is known about what Effects all this may or may not be having on Saudi Arabia, a Giant Oil Producer and also a Country where, according to some Reports, a certain Form of Slavery is still legal.

The Question behind this Article is to ask what Kind of Logic is driving the Positive Outlook of the Stock Market Averages, in view of this Onslaught of very worrying News. The underlying Question to that Question is, that if one assumes the Obvious, that Financial Markets can only be driven by Money, i. e., more Money flowing in than flowing out, then to what Extent the Policy of the Fed's 'Quantitative Easing' is fueling all this. It has been noted many, many Times before; Markets only go up when more Money flows in than flows out; that particular Law of Mathematics has not yet been repealed.

This should bring us down to taking a Look at some other Fundamentals: Jobs, Housing/Mortgages and Health Care. Mr. Bernanke testified before Congress on 9 February and spoke about the Dangers of the horrendous Federal Deficits but seemed to be little concerned about 'Quantitative Easing' which, although it carries a different Mathematical Symbol than the Federal Deficits before the Numerals, it has the same Effect as Deficit Spending, meaning, Cash Out. It would be useful to know, it would seem, therefore, just how much of this 'Quantitative Easing' Cash Out is finding its Way into Financial Markets, whether managed or coincidental and what the overall Effect on the Economy that would produce, if indeed that is the Case.