Panic Soccer

The Fed has shown that by taken on an uncertain policy, it does not have a healthy view of the financial market. Due to the major upheaval of its rate increase announced in 2018, the Fed is playing panic soccer because of uncertainty. The ball is played back to defense, causing the Fed to show it lacks confidence in the current market.
According to media reports, the economy is running at full speed, especially in the United States and Europe. Many companies would struggle to find people who are sufficiently suitable to fill vacancies.
A simply solution to this problem seems available.
Ensure that large companies such as Proximus, Bpost and other large companies have to reorganize. Once again there will be a limited number of people on the labor market who have the required capacities.
Obviously, this is not the intention of this current economic story, but it comes across as such.
In the United Kingdom, Nissan cancels the production of a new model due to a bad Brexit deal. Or perhaps another example, Audi, where no less than 14,000 jobs are at stake.
It may sound somewhat simplistic, but who talks about A should also talk about B.
The economy is not doing well at all..
If things went well with the economy, the fed would not change policy with the wind and suddenly lower or stabelize interest rates again. Companies such as Audi, Nissan, Proximus, Bpost and many others would not be forced to reorganize.
Quantitative easing, which is now used as a standard solution since the economic crisis of 2008, is a patch that is gradually losing its luster.
It is pretty much like a bicycle tire. When you have a leak, you can repair it by providing the inner tube with a patch, but at one point there are to many patches that it is no longer possible to repair it again. The whole tire then collapses.

The same is waiting for us with the current monetary policy.
The Fed will drop interest rates again to absorb economic shocks.
The European central bank, on the other hand, announced at the end of 2018 that it would raise interest rates somewhere in the end of the third quarter or in the fourth quarter of 2019.
Due to the economic prospects as they are now, the European central bank will not be able to keep their word and probably let go this monetary policy.

The European central bank has ignored the possibility of increasing its interest rates throughout 2018, which means that large, heavy storm clouds are now merging above the European monetary policy.
If the European central bank now should have plans to lower interest rates, it would be detrimental for small and medium-sized companies. Savers, who now almost have no return on their saving accounts would be milked out even further.
Quantitative easing is also dangerous for Multi Nationals.
AB Inbev and Greenyard have massively loaned cheap money to realize business growth trough aquisitions. Due to increasing of interest rates and a slowdown in growth in the emerging markets, the borrowed dollars suddenly became a lot more expensive.
AB inbev came into trouble and its dividend return became under pressure.
The rate cut by the Fed is given the company some breathing space again.
Quantitative easing can cause enormous havoc in large companies and even lead to company failures, when not used properly.
What happened in the 2008 crisis in the housing market in the United States is now about to happen in of the enormous operating expenses of several multi nationals.
At global level, the debt burden has increased to such an extent that as soon as there is a slight economic slowdown, the central banks and governments panic.
A multi-national that goes into bankruptcy, could have a negative effect on the economy, and can cause a domino effect. The economy can fall over as domino blocks.
Due to the lowering of interest rates, bank products and government bonds end up in a negative spiral  again.
Pension funds are once again in jeopardy and the savings accounts are once again in the limelight of the government.
What happened in the 2008 crisis with the bank freeze in Cyprus is now becoming an option in the rest of Europe to keep governments out of trouble.
Belgian savings accounts have now allready been divided into regulated and unregulated savings accounts.
If there is no confiscation policy at play, then why is this measure necessary?
Fortunately, there are other forms of investments that are far better and safer than the current saving accounts or any other banking products.
Gold and silver contribute to your assets being protected against inflation.
Investment forms such as numismatic gold coins can offer a nice added value in the long run, without having to worry about inflation and recessions.
Investing and creating added value without banking products, it is possible.
For more information, please contact us at eddy@blackbullassets,comeddy@blackbullassets.com
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