Archive - Sep 15, 2012

Tyler Durden's picture

'Zee Stabilitee & The Wealth Effect' - Name These Two Charts





UPDATE: Answers Provided

A century apart and a continent apart. With Bernanke's fingers now glued on CTRL-C, perhaps the reality of these two charts suggests it's really not different this time at all...

 

Tyler Durden's picture

The Fed May Be Pumped Up





“For every action there is an equal and opposite reaction,” Isaac Newton tells us. It is within this context that we also account for “unintended consequences;” those nasty things that no one thinks of that tend to jump out of the bushes at you when you thought you had everything figured out. In Bernanke’s rush to increase employment and raise asset prices and lower mortgage rates, if not to help the President with his re-election; we would assert that the Fed did not go far enough in its thinking and that they may get stung by what they have not considered. The issue here is gas at the pump. Far more important to most Americans than the interest rate on their mortgages is how much they have to pay to fill up their cars. The recent position of the Fed was spelled out and will be enacted. The ECB, though, waved the banner of “unlimited” and “without cap” subject to the CONDITION of the EU’s acceptance and audits and the approval of any nation applying for aid. If 'A' depends on 'B' and 'B' is not forthcoming then 'A' is a worthless proposition. Tell no one that we told you though. After this weekend’s meeting of the European Finance Ministers it is crystal clear that no new banking oversight authority is imminent.

 

Tyler Durden's picture

Guest Post: Janet Tavakoli: Understanding Derivatives and Their Risks





Global financial markets are awash in hundreds of trillions of dollars worth of derivatives. By some estimates, the total amount exceeds one quadrillion. Derivatives played a central role in the 2008 credit crisis, as they had a brutal multiplying effect on the magnitude of the carnage. As a bad asset was written down, oftentimes there were derivative contracts written against it that resulted in total losses 10x greater than the initial write-down. But what exactly are derivatives? How do they work? And have we learned to treat these "weapons of mass financial destruction" (as Warren Buffet colorfully coined them) any more carefully in the aftermath of the global financial crisis? Not really, claims Janet Tavakoli, the danger behind derivatives doesn't lie in their existence, she stresses, but when abused, derivatives can create massive damages. So at the root of the "derivatives problem" is control fraud - the rampant unchecked criminal action by influential players on Wall Street.

 

Tyler Durden's picture

Visualizing Japan's Debt Crisis





From the largest Japanese pension fund unwinding its JGB holdings to Kyle Bass' infamous 'debt-saturation Japan Trade' and Dylan Grice's original Japan funding crisis discussion, the nation - now facing Chinese dis-satisfaction over the recent island-purchase - continues to stagger with its Keynesian-endgame heading to a Koo-nesian disaster. The following info-graphic, via Informed Trades, provides everything the savvy investor needs to know about Debt/GDP, balance of payments, energy imports, demographics, and currency debasement.

 

Tyler Durden's picture

On Bernanke's Columbus-Like Voyage To The End Of The Monetary Policy World





Whether the optics of a jobs-related target for the Fed's QEternity are election-based public relations, from-the-heart sentiment of an ivory tower academic neck-deep in the reality of his failed ethos, or well-intentioned more-of-the-same Krugmanite 'we need a bigger boat' print til-we-stink policy; it is relatively clear that the Fed has changed course. The longstanding problem at the Fed has been that while each policymaker more or less agreed that guiding policy by a rule made sense, they could not collectively agree on the rule. Morgan Stanley's Vince Reinhart notes perfectly that at its September meeting, the Fed effectively evaded the issue by setting QE off in a general direction, much in the same way Columbus pointed his three ships West and expected eventually to land in India. The history books admire the audacity of a man with a vision. Columbus sailed in the direction toward the known world’s end. Of course, he also sailed further than expected and landed on a completely different continent than planned. If the Fed has not acted consistently over the past few meetings, how will market participants infer future action?

 

Tyler Durden's picture

The Global Central Banker Directory





If there's printing going on in your neghborhood
Who you gonna call?
CENTRAL BANKERS!
If a loaf of bread costs a trillion bux
Who you gonna call?
CENTRAL BANKERS!

 

williambanzai7's picture

AMeRiCaN LeHMaN 2012





Four years on: bailouts ad infinitum, a ponzi-panoply of closed investigations, endless political bloviation...zero convictions.

 

Tyler Durden's picture

From The Last Sane Person At The Fed: "More Easing Will Not Lead To Growth, Would Lead To Inflation"





There are two key sentences which explain why there is now only sane voice left among the FOMC's voting members (recall that back in December 2011 we explained that more QE was only a matter of time now that the Doves have full control). From Jeffrey Lacker: "I dissented because I opposed additional asset purchases at this time. Further monetary stimulus now is unlikely to result in a discernible improvement in growth, but if it does, it’s also likely to cause an unwanted increase in inflation.... Channeling the flow of credit to particular economic sectors is an inappropriate role for the Federal Reserve. As stated in the Joint Statement of the Department of Treasury and the Federal Reserve on March 23, 2009, 'Government decisions to influence the allocation of credit are the province of the fiscal authorities.'" That, however, is no longer the case, as the only real branch of 'government', accountable and electable by nobody, going forward is that located in the Marriner Eccles building, named ironically enough, for the last Fed president who demanded Fed independence, and who was fired by the president precisely for that reason. It is in this building where the central planners of the New Normal huddle every month, and time after failed time, hope that "this time it will be different" and that wealth can finally be achieved through dilution of money.

 

Tyler Durden's picture

Meanwhile In Beijing: "For The Respect Of The Motherland, We Must Go To War With Japan"





Anti-US protests sweeping across the entire Muslim world (which are continuing today), besieging, attacking and burning down US embassies, are not the only thing that the central banker policy vehicle known as "the markets" have to ignore in the coming days and weeks. Cause here comes China: "Thousands besiege Japan's embassy in Beijing over Tokyo's assertion of control over disputed islands in East China Sea." And China is not happy: "For The Respect Of The Motherland, We Must Go To War With Japan." Sure enough, where would the US be if the focal point of this escalation in militant anger - the Senkaku Islands - was not merely the latest expression of Pax Americana, and America's national interests abroad.

 

testosteronepit's picture

A French Rebellion Against Unelected Bureaucrats: “European Coup D’Etat And Rape Of Democracy”





“The worst enemy of France and of all nations that aspire to prosperity and liberty.”

 

Tyler Durden's picture

Anti-Austerity Protests Return To Spain





In two weeks the Greek economy will once again suffer the consequences of European indentured servitude when it two main labor unions will grind the system to a halt with a general strike against planned austerity measures on September 26. Spain, however, can't wait, and is already out in the streets (video of today's protest can be found at BBC). From Al Jazeera: "Thousands of Spanish anti-austerity protesters have taken to the streets of Madrid to rally against government cuts aimed at cutting the public deficit. The demonstrators assembled in groups at noon on Saturday along the central streets of the capital city in a protest against spending cuts and tax rises. The developments came as Luis de Guindos, economy minister, said that Spain's borrowing costs still do not reflect the country's economic and fiscal adjustment, despite their recent easing." The key word uttered that makes this whole protest a moot point: "referendum" - silly Europeans don't seem to get quite yet that Democracy has been dead for decades, supplanted by kleptofascist globalization with just enough handouts for the lower and middle classes (usually in terms of welfare promises) to keep everyone happy. Actually make that silly Americans and Asians too.

 

Tyler Durden's picture

Guest Post: We Need a New Stock Market





Here are some common-sense rules for such a "new market":

  1. Every offer and bid will be left up for 15 minutes and cannot be withdrawn until 15 minutes has passed.
  2. Every security--stock or option--must be held for a minimum of one hour.
  3. Every trade must be placed by a human being.
  4. No equivalent of the ES/E-Mini contract--the futures contract for the S&P 500--will be allowed. The E-Mini contract is the favorite tool of the Federal Reserve's proxies, the Plunge Protection Team and other offically sanctioned manipulators, as a relatively modest sum of money can buy a boatload of contracts that ramp up the market.
  5. All bids, offers and trades will be transparently displayed in a form and media freely available to all traders with a standard PC and Internet connection.
  6. Any violation of #3 will cause the trader and the firm he/she works for to be banned from trading on the exchange for life--one strike, you're out.

Is such a retail-trader friendly exchange possible? There would certainly be a nice profit in it, for everyone who is tired of providing liquidity for HFT firms would flee the existing exchanges in a New York minute.

 
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