Small investors have pulled 33 billion from the stock market so far this year when you would normally expect at this point in the “recovery” to have 10 to 20 billion flowing in. Where is the money going? Some of it simply doesn’t exist anymore as many in the middle class have stopped being middle class but much of it has been shifted into Treasury bonds driving the prices up and yields down.
Stock market salesman (oh I meant financial advisors) are pointing out that some blue chip stocks are paying bigger dividends than the return on bonds. They don’t mention that dividends can dry up overnight at the whim of corporate CEO’s who put their own paycheck at the top of the “to do” list and paying your dividends at the very bottom. Your investment can also evaporate with the next flash crash and take decades to “recover” not counting inflation and if you are in managed fund, it can disappear completely.
Basically it’s all a rigged game to separate the middle class from its wealth and redistribute it to the top one tenth of one percent. There is no way to out-smart the system, the wheel will never stop on your number. Even putting all your money into gold won’t protect you, although I’m not opposed to owning some if you don’t have room for anymore canned goods.
Oh, and eight more banks failed on Friday, the FDIC said early in the year that they expected the peak in failures would come in the third quarter. There are about 2000 banks that are on shaky ground so the peak isn’t anywhere in sight. It’s commercial loans dragging these banks under and not mortgages. Small business is still in full decline, none of the policies of the last thirty years have been changed and if the neo-austerity that is being contemplated in Washington comes to pass, the work of Ronald Reagan will be complete. That pesky middle class who thinks they should live the American Dream will become extinct once and for all. www.prairie2.com