Money managers called the summer market plunge

On June 8, in a financial world otherwise frothing with happy talk, money manager Michael Gayed posted a piece on financial analysis blog, Seeking Alpha, headlined, “The Summer Crash of 2011, Or the Great Re-Adjustment.” Read the whole thing here. Gayed wondered: If a bull market was truly on, why were defensive sectors — consumer staples, health care and utilities — -outperforming the broader market? Typically, these stocks are where investors run to hide in a recession. Oh, and why were bonds beginning to outperform stocks — -even as the Federal Reserve ended its QE2 bond buying program?

I thought this was really interesting as I just started dabbling in the stock market. One of the guys I have been talking to is predicting a solid rebound in 2 months time, but I have a hard time trusting anyone with my money ( even myself ). What really interested me though is this next line and I would love someone with more knowledge on this sort of thing to help me out with this.

Now, the government collects less tax revenue than in did in 2008, yet its debt is trillions higher. “They know this,” Dempsey said. “That’s why they are desperately trying to create inflation… to pay that debt back with cheaper money.”

So is that what the aim here is? To pay back our debts with money that is worth less?

Link

The markets now are in the hands of the EU banks and the votes they need next week for a bailout. The reason the markets re bounce today is due to France reassurance of none downgrading and the EU meeting next week.

In other words the EU banks and US need bailouts to keep the markets from plunging.

Sad but truth.

Already France and Germany said they will not vote.