Small investors have lost faith in the Western stock markets…and the banks are starving the last, slim chance of US recovery.
The small investor panic retreat of September 2008 which prefaced the last bust is under way again….and this time, earlier in the year.
The data (left) from the ICI also reflects figures in the UK, where not surprisingly individual investors dependent on income as well as capital growth have grown wary, given the long absence of any real signs of recovery.
There is also a suggestion in much of the data that such people in their fifties are choosing to pay off mortgage debt. In former times (and even last year) they kept a fragile UK property market going by investing in that asset class as pretty much the only one left not either falling apart (sovereign bonds) or delivering no interest (the banking institutions).
Some are retreating because they need to convert liquid capital into cashflow reserves – in expectation of rising bills, rising taxes and moving into survival mode.
These remain very firm bear signs; and in the US itself, the banks are reverting to full-on nervousness about lending to homeowners, small retailers and other entrepreneurial businesses. Ben Bernanke declares (following a nationwide tour) that he has no idea why. That would be a reason for everyone to get really worried if Ben El Fed was telling the truth, but thankfully most people know he isn’t: the banks are scared again….and have no interest at all in protecting small American business or the small property owner – or the small anything really. They work for the Government and multinational business, so why should they care about the little bloke?
People are honing their bollocks-discernment skills – a most encouraging sign for the human race, if not for the ‘global’ economy.