Archive - Jul 21, 2013

Here is what is really going on down there!

As expected, Prime Minister Shinzo Abe's ruling bloc won a decisive victory in an upper house election on Sunday, setting the stage for Japan's first stable government since Koizumi left office in 2006. The Japanese people voted for moar of the same irresponsible monetary policy and this provides a three-year window without a national election and strengthens PM Abe’s hand to supposedly deliver on the promised reforms. As Reuters reports, "people wanted politics that can make decisions", and, "'Abenomics' is proceeding smoothly and people want us to ensure the benefits reach them too." So moar trickle-down wealth-creation for the Japanese, moar surging energy prices, moar currency wars, and moar leverage. There will now be a significant tradeoff among his 'three-arrows' strategy - between monetary and fiscal/reform policy - as the reform agenda may actually enable less monetary policy, increasing the chances of higher inflation in Japan without additional monetary stimulus. This may be just what Kuroda needs to save the JGB market from failure (at least in terms of jawboning if not actuality).

We get to what is perhaps the most important topic related to the end game for the Fed.  Oh, and MMT and a Sheila Bair interview too.

Overnight there has been a flood of viral reports that 'there was a fire at JPM's gold vault' based on a self-made video showing a barrage of fire trucks located on Broad Street between Wall Street and Exchange Place, further subsantiated additionally by a @FDNY tweet around 6:30 pm on Saturday which indeed confirmed there had been a "commercial fire in a vault." So did a sweeping fire "take place" (in broad daylight and in front of video camera armed streetwalkers) provide the fire brigade a pretext to abscond with JPM's gold, or merely give JPM an alibi to say it's gold is "gone... all gone" or rather "burned... all burned" (leaving aside the propensity of a fire to propagate in the confined oxygen constraints to be found on top of the Manhattan bedrock and far below street level)? No.