So the markets are starting to lose ground again. If the financial markets worked on the basis of supply and demand as well as the FREE market concept where the price of a security is valued at what someone will pay for it, then the market should not have rallied in August as it did. The market should have kept losing ground.
The reason being is the Reserve Bank of Australia (RBA) using repurchase agreements (repos). Many countries reserve banks are doing the same thing. These work by the RBA purchasing securities (shares) in the market with the seller of the securities (shares) agreeing to buy them back at a later date. When the RBA do this the shares will revalue higher. When the company that sold the shares purchases them back they will again rise. Companies can also obtain a loan to buy back their shares from the public which will make them rise as well.
This can be seen in the graph of the ASX 200 from 16th November 2015. The ASX 200 went down 70 points from 5050 to 4980 in about 10 minutes first thing at opening. It then took about an hour to get up to about 5030.
This will continue to happen to make the economy look much better than it actually is. Now where does the money go when the market goes down again? It usually goes to the CEO’s for a bonus because the company is doing oh so good or paid to shareholders as a dividend. How does the bank recoup the money? Through our taxes and bail-ins. A bail-in is when anyone with a bank account has money taken out of their account and given to the bank. Tax reforms are a good example of the people paying for the banks to prosper. More GST, less pensions, less disability support, less for the poor. The citizens of GREECE are worried that new laws enacted will force depositors to pay for the banks failures. The governments of the world will put in place these laws without batting an eyelid because the banks own the world after all.
Remember this from the IMF’s article IV consultation with Australia;
'Directors supported the recommendations of the Financial System Inquiry. They noted that while banks are sound and profitable, significantly higher capital would be needed in a severe adverse scenario to ensure a fully-functioning system. Accordingly, they welcomed the authorities’ commitment to make banks’ capital “unquestionably strong” over time.'