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Today, Reuters reports that "Asian stocks were set for a record rise and a third straight day of gains on Thursday as lower borrowing costs and international efforts to provide liquidity to emerging markets coaxed investors from safe havens like the yen."

Asia stocks surge 10 percent after rate cuts

Investors, as a direct result of lower interest rates which reduce the cost of borrowing money, are now quite happy to balance the scales of Risk and investment cost. "Safe havens" are now seen as too safe and not able to generate the giant profits that they are running after. But in their quest for profit, they are about to restart the game which blew up in their faces quite recently. This signals an alarming return to insanity in the stock markets and increases the chances of a complete market meltdown. So what if the Interest rate is cut ? It will not bring any improvement to the real economy as we have seen over the last few months, indeed everything has got steadily worse. Unemployment, foreclosures, reduced consumer spending, falling corporate profits continue to rise unimpeded.
"Markets in Japan, Hong Kong and South Korea rocketed 10-12 percent higher, dragging along commodity prices in the wake of the Federal Reserve's cut in rates to the lowest since June 2004, aimed at softening the blow of a potentially deep U.S. recession."

So by softening the blow, what are we talking about here ? If commodity prices go up as the stock market, who is this good for exactly ? Corporate profit, maybe, but with reduced sales this is wiped out and the net results for practically every industry, except Big Oil and the Arms industry of course, get grimmer and grimmer on each passing day. Rocketing commodity prices certainly do not help the consumer, who IS the real economy; a fact that the Twilight Zoners in Finance seem to have completely missed.

"The avalanche of government measures taken to increase bank liquidity, including $120 billion of currency swap lines opened between the Fed and four developing economies, and global rate cuts have prompted investors to make room in their cash-heavy portfolios for riskier assets. Credit availability and risk taking are essential to the functioning of the financial system."

This illustrates very concisely the madness that passes for Economics these days. If Economics is defined as "the science that deals with the production, distribution, and consumption of goods and services, or the material welfare of humankind", then what these guys are talking about has nothing to do with "Economics". They are running a scam known as.. "Speculation : An engagement in business transactions involving considerable risk but offering the chance of large gains, esp. trading in commodities, stocks, etc., in the hope of profit from changes in the market price." Is this the kind of policy we want to encourage when we are in A Financial Meltdown in the real economy. If the purpose of all those bailouts with taxpayers' money, the interest rate cuts to "stimulate" the economy, then we are all truly in for an extremely painful reality check.

"Despite the welcome responses to policy actions, risk from slower global growth has not been extinguished and still points to potential underperformance for much of Asia," Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong.

So the insane response from the Stock Market is actually welcome. No worries then; we have been assured by an Investment banker. Doh ! Aren't these the guys, along with accomodating Governments, who got us all in to this mess? What "Risk" of slower global growth and underperformance is this guy talking about ? Man, that's old news at this stage, it's laready happened and continues to get worse by the day. Does the Real Economy even figure in to this guy's equations ? I think it's beginning to dawn on everyone that the people that have received the Taxpayers' money have really only one purpose in mind and that is to use the money partly to cover their own big mistakes but also to feed the Gamblers Anonymous that make up their ranks. This, indeed, spells doom for the rest of us.

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