They have to juggle quite a few things to keep it all up in the air. I'm not sure why, but the Feds said a few years ago that they can't hold up the municipalities directly so, for example, they let Detroit go. My guess is that by doing so it would have affected the US government bond rating too much. Anyway, this is starting to look like a repeat of 2011, only a larger process at work. For example, this is a chart of MUB, a municipal bond fund.at99sy wrote:This is essentially what I have been saying for 5 years. This market will not stop until it is allowed to stop.
The flames will at some point either burn themselves out and crash organically, or reach a critical mass and incinerate everything in its wake.
In the interview I posted from Orlov last week, he said the first step in the process will be that parts of the US "go dark" while "business as usual" continues in Washington and New York. This chart would indicate that is what will happen, as the main stock indexes are being held at record highs with the municipal bonds having peaked in December 2012.
I'm not discounting the idea that it is the Chinese who are doing all they can to make the bubble larger.
http://www.forbes.com/sites/ywang/2014/ ... 80-of-gdp/Forbes Asia |5/21/2014 @ 4:16AM |1,157 views
China's Shadow Banking Sector Valued At 80% of GDP
The China Banking Regulatory Commission has shed light on the country’s opaque shadow banking sector. It was as large as 33 trillion yuan ($5.29 trillion) in mid-2013 and equivalent to 80% of last year’s GDP, according to Yan Qingmin, a vice chairman of the commission.
In a Tuesday WeChat blog sent by the Chong Yang Institute for Financial Studies, Renmin University, Yan wrote that his calculation is based on shadow lending activities from asset management businesses to trust companies, a definition he said was very broad. Yan said the rapid expansion of the sector, which was equivalent to 53% of GDP in 2012, entailed risks of some parts of the shadow banking business, but not necessarily the Chinese economy.
First thing that stands out is 1157 views on this article. Not too many aware of this new estimate. According to this, the Chinese shadow banking system has grown by $1.43 trillion in 12 months, about double what the Fed has been pumping in. Serious stuff.
I have heard Fed officials say numerous times over the past few weeks that they are concerned about the bubble. They are tapering down the counterfeiting slowly. Yet the market goes higher and higher. The growth of the Chinese shadow banking system might be what is feeding the bubble at this point.