Suspicious minds

Photo: AP/WWP, courtesy U.S. Department of State

The very foxy Glenn Kellis, in his most recent post on his Ob:Blog, reveals the secrets of the recent interplay between the markets and and interest-rate woes:

What's really going on -- and it has become grossly obvious lately -- is the global stock markets are running purely on artificial liquidity supplied constantly, but unevenly, by the central banks. When there's an injection of cash, the markets rally. When the magic spigot is closed and the liquidity dries up, the markets drop.

Most recently, the cash injection from the Bank of Japan (BOJ), Japan's central bank, has been calling the shots. It's no coincidence that when the BOJ announced, in the middle of May, that the it would begin raising rates, the markets tanked....

So, now we know why Japanese Prime Minister Junichiro Koizumi got that special tour of Graceland, with the U.S. president as his guide. Continues Mr. Kellis:

As long as the cash injections keep coming from one central bank or another, this addict will keep stumbling along, but when the dope runs out, it's going to be a painful withdrawal.

Or maybe we'll just go the way of Elvis. (Le roi est morte; vive le roi!)