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Guest Post: Let's Get With The Program Already
Submitted by Bo Peng
Let's Get With The Program Already
Bernanke's 60 Minutes appearance was an unmitigated disaster. Two major
failure points, namely "QE is not printing money" and 100%
cock-sure-ness, have become an instant butt of jokes. Just because we
don't have an economics PhD from a decent department, doesn't mean he
should treat us as idiots. Yes, QE doesn't expand the M1 monetary base.
But after credit is included, it is expansionary, and this is exactly
what he was hoping for. It was embarrassing to watch the Fed chairman
talking like a disingenuous, idiotic politician.
So, Fed wants
inflation, and inflation is what they'll get. 30-yr treasuries yield has
shot up since the announcement of QE2, meaning mortgage rates will go
up soon. Coupled with the glut of supply and timid demand in housing, we
can all thank the Fed for a prolonged housing dip. Yes, the treasury
curve has flattened a bit in the last few days, but the bad news is it's
by 10-yr yield going up, not 30-yr going down. Oops. Did somebody just
say 100% sure about something?
And, the tax-cut deal without any
cuts in spending. What a wonderful win-win world we live in. $1T more
deficit in two years just like that. Well guess what, I doubt our
children will have to pay for it, because it won't drag out that long.
We'll have to pay for it. If you save, you'll be damned because
inflation will destroy your savings; if you don't save, you'll be damned
because there won't be any meaningful pension or social security when
you retire (well, unless you're a government employee of course). And
you can't move to Canada because the dollar will be worth 2 Canadian
quarters.
But there's a bright side. Europe is fine, as I've said
here repeatedly in the last few weeks. EMU will fall apart when Spain
gets to the headline in late 2011 or early 2012. But until then, life
goes on. EUR will recover. USD may or may not go down in the short-term.
But gold will no doubt go up.
I'm not so sure about silver. It's
gone up a LOT. But no, silver is not the new gold. It has too much
intrinsic value, unlike gold, therefore not a good hedge against the
collapse of fiat currency system, unlike gold. It'd be silly for central
banks to stockpile silver, which would be like stockpiling titanium.
But the trend of central bank hoarding gold is set, and still in its
early stage.
So the trade is simple, long gold and short Netflix.
I
continue to think western punditry pays too much attention to China,
both on the upside and the downside. Beijing is desperately trying to
engineer a soft landing. Growth will slow down, and housing will cool
down. The only question is how fast and by how much. But Beijing has
become quite an expert in soft landing over the past 20 years or so.
Just as they ordered shops to run deep discount in late 08 early 09 to
stimulate demand, they can now just order price freezes. Who needs the
convoluted crap like interest rates and bank reserve ratios? I'm not
saying this is good or bad, just sayin. The western world has been wrong
on China on many many fronts since forever, and there's no sign of any
improvement any time soon.
And, no, there won't be social collapse or revolution in China. Not yet.
But even if there were, long gold and short Netflix won't hurt, either.
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bernanke has 'Walter Mitty' dreams at night; he should not be Fed chariman; he belongs playing video games somewhere and bringing coffee to academics.
i dont think i necessarily agree on the Netflix short...don't bet against the american consumer - it will suprise you!
I agree. Netflix is like Autozone - a cheap, convenient alternative to traditional products that are being phased out.
Have the idiots finally done it with
their tinkering? Stagflation?
Public lies by the "leaders" are never intended to convince the skeptical or to convert the non believers. The intent of the public lie is simple and straight forward, to allow the self deluded to continue to believe what they wish to believe.
"Daddy, tell me another lie so that I may believe it's the truth."
While the sentence above makes no sense to critical thinkers or the awake, it makes all the sense in the world to those who are deeply in denial. The world in general and the USA in particular are steeped in deniers and wishful thinkers.
False hope binds us to inaction and apathy, thus assuring that we fall deeper into the black abyss. This is the only purpose of propaganda and public myth making.
Of couse QE2 is printing money. The FED buys government bonds. The funds go to pay governement employees. Those employees get paid with cash, yes? Money has to be created for that to happen.
Lookee here. If there were no problems, the Chairman of the Federal Reserve would not be on a mainstream television "news" program! How obvious does it need to get? Nothing he had to say even matters. It's the appearance itself that lowers the status of the Fed to that of a Hollywood T&A special appearance. Not much else needs saying.
Green shoots my arse.
Surely Greenspan and his second fiddle Ben Bernack are economic idiots...... and they have put the gasoline in the can, and probabilities are high that an explosion will occur..... but, for that to happen credit demand MUST accelerate and that demand MUST be accomodated by the banking system. We have very few if any data points to compare against....and looking at anything post WWII (including the '70's) is a worthless exercise.
Niether are actually economic idiots. But they are far more dangerous than idiots. They know exactly what they were/are doing and why they were/are doing it. And it has nothing to do with sound economics. It's all about protection of the ruling elite.
Especially sad for Greenspan. The man wrote articles about freedom and the gold standard. A long fall from grace...
> Bernanke's 60 Minutes appearance was an unmitigated disaster.
How about his weight loss, quivering upper lip, and wavering voice as well.... Something's got Ben spooked for sure.
The ghost of Christmas to come
I suspect Bill Gross is pulling some levers and this is just the first evidence of a much larger offensive. Remember Gross' comments about the UK banks a year ago?
Bill Gross is a terrorist (bond vigilante) and should be in a cell with Assange and anyone that doesn't let us touch their junk...
Bernanke has three choices
1)Cap the 30 year yield
2)Engender an equity selloff
3) Accept stagflation.
I'm sure Bernanke is taking calculated risks and inflation will be within the containment zone and.... WHOEHAHAHAHAHAHAHHAHAHAHAHAHAHAHA!!!!!!!!!!
Sorry for the BULLSHIT!
Does anybody have a good theory why dollar is shooting up? This is a bit of puzzle to me.
The tax deal is a much larger disaster than QE2. I had been wishing the WH and Congress could act rather than the Fed, because monetary policy is not the right tool here. Fuck, I'll try to be more careful what I wish for next time.
So now the inflation expectation is higher and pushed nearer in the future. Bonds are slaughtered. Equities are not going up. By all means there should be an unwinding of dollar longs. Why is it going up?
In the currency world there are:
1. the walking dead
2. the mortally wounded
3. on life support
4. furiously treading water
USD is #4.
HIgher mortgage rates are not inflationary
No, it just kills the recovery.
What recovery?
There never was a recovery.
Green Shoots for Housing Mowed Down - WSJ.comSilver WILL go up you moron.