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San Fran Fed Analyzes The Ultimate Irony: Can Asset Bubbles Be Foreseen?
When the Fed spends the time and money to provide an "in depth" analysis of whether the asset bubbles it itself creates over and over are predictable, you know you have reached escape velocity.
Predicting Crises, Part I: Do Coming Crises Cast Their Shadows Before?
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I think "LOL" about covers it...
Somebody asked me one time; "do they think we are stupid"?
My reply was; "they count on it".
Papers like this prove the point.
This type of presentation isn't designed to convince the 5% that understand what's going on. It's to convince the 95% that don't want to know what's going on that it's OK to remain asleep at the wheel.
Knowledge is responsibility. For the vast majority of "we the people" knowledge is something to be avoided at all costs because knowing what's going on leads to the next step, feeling compelled to do something about what you know.
Can't have that so for the average person ignorance really is bliss.
If you take the time to look, massive crimes are documented for all to see if we would simply read what's in front of us. But as former CIA Director William Casey once famously said "Americans don't read."
I wonder why? As Sgt Schlitz often said "I see nothing."
+1
If it weren't for blogs like this, there is no one among one's personal acquaintances who will discuss these issues at any length.
That's why they invented youtube.
(I say that only half joking. It is a medium which can be used to the advantage of patriots. How many people saw the original "dark side of the looking glass" by Patrick Byrne? Though not youtube per se it is was easy to follow and learn without 'reading')
Well, no we can't foresee anything, until we sign over regulatory power to the fed, who is writing this paper. Clearly they have made an air tight case for why they are capable of foreseeing that which has not been foreseeable for millenia. forsooth!
Twixt dost thine behest, oh omniscient soothsayer of hollow globules of gas?
If the Federal Reserve wants to monitor and be informed about the formation of asset bubbles several years in advance, all that they have to do is read some of the top Internet sites, like ZeroHedge, HousingBubble, etc.
Simple!
Janet Yellen looks to me like she could suck the chrome off a trailer hitch. Bark like a dog for me Janet, oh yeah, you know what I like. A roo roo roo!
This irony is delish. I saw someone post this Monty Python clip recently, of which I have a corollary to this thread:
http://www.youtube.com/watch?v=GJoM7V54T-c
So, the guards are in effect like the J6P and the "Bubble" (whatever flavor is in effect at the time) is Sir Lancelot. The unseen component is the Fed as the film editor. The Fed knows all-the-while he is getting closer, but all the guards see is the re-run footage the Fed is putting before them. Only until it's too late, a J6P gets shanked by the Bubble and the on-looking can only muster a "hey".
I unfortunately see our current situation with the Fed very similarly. Thankfully we have people asking what is going on with the same footage (POMO, 3:30 run-up) being shown...
if we're mining monty python for analogies, "the black knight" seems apropos:
http://www.youtube.com/watch?v=2eMkth8FWno&feature=related
"it's only a flesh wound!"
"i'm invincible!!!"
This is the usual FED BS. For all their academics & scholars, their arcane theories & models, their learned research and conclusions like this they are deaf, dumb, & blind. They can't see a simple parabola on a chart? They still really believe that all markets are efficient? They still believe that markets move in a linear fashion?
They can't read the history of the 1929 crash and see a credit bubble on a chart? Bernanke is acclaimed as a scholar of the Depression, yet he applies remedies that a proven wrong?
And the worst part, is they expect folks to believe them because of their expert status and credentials. Rubbish!!
They are failures, and may proclaim themselves as academics, yet they have learned nothing about history, human nature & market psychology.
Not failures at all; they have performed their core function of wealth transfer very effectively for almost 100 years. That they look stupid now, is merely the awaking of main stream critique. By the time a person actually understands how our fed operates, they are supposed to be fully captured by the perks. That's how it's supposed to work, and in the great undertaking of recent they realized why just enslave US worker bees when you can go global. A victim of their own success.
-Clampit
The purpose is not to tell the truth to those that know but to lie to those that don't.
Lionhead+1
Do you really think it is me honey? Let's go into therapy.
My "Arrested development" theory says they are hapless. Notice that the first referenced article has Tobias as an author. The real power brokers hire hapless academics to creative pseudo-economic intellectual drivel which is cover to the real machinations. Having been in academics, I can safely say that some of the insiders who do these science projects have no idea how much of a side-show they are - "finding indicators" with their pet-projects - while the country sits quietly in the eye of the hurricane, about to enter the swirling vortex on the other side.
I'm going to analyze why, when I eat beans, I fart.
putting the BS in FRBSF since 1929...
fedres board of governers must have piles of this propaganda in boxes just waiting in line for the appropriate release timing.
can hardly wait for the finale of this 2 part series...
most definitely a source of amusement for the indsiders behind the puppet insiders.
hmmm, shall we release part 2 before are after the next debasement? what is this you say? stealth top to print sometime in mid-October around 1111ish?
stay safe ye equinox survivors - stay safe.
Your fired. Clean out your desk your services are no longer needed, you have five minutes. That is what the real world does. The issue is always the same: the government or the market. There is no third solution.
Janet is about the job of wasting quality paper and O2 once more. On the topic of waste, I have to wonder if Janet has many more 250 Montgomery's up her sleeve.
Stop the world I wanna get off. If you yanks don't bring the Fed down we're all doomed. For christs sake don't audit it - thats exactly what they want for that will mean more politics in the Fed. It must be ended .
we're not getting out of this.
The housing bubble was pointed to by The Economist MANY times before it burst.
The one angle I liked the most, was looking at P/E for houses. Price => Price, while Earnings => Possible Rent.
These factors have apparently been pretty much in steplock for decades backwards, while they suddenly started to diverge HEAVILY during these later years, thus throwing the P/E ratio skywards.
And The Economist, as mentioned, warned about this several years before it burst.
So it is not like it wasn't seen. At all.
But, OTOH, The Economist didn't, ever AFAIK, manage to explain HOW that much money was "generated". That this came to be because of leverage ratios of 50:1 and such should have been pretty easy for such an expertise crowd to see, and to warn about. But alas, apparently that was too opaque. Or they too dim.
The following is an absolutely true story, its relevance to this post is not immediately clear, but it is there:
When I was 13 years old (1999) I saw my next door neighbor make $400k and my uncle $1m or so of "free money" in this thing called the stock market. I, of course urged my parents to put all their money there too, after all, you can get money for doing NOTHING!!! They wisely ignored me, so I kept badgering them to put my entire life savings (about $1,000 at the time into a stock (RFMD, which my neighbor recommended as a good company as he had done some consulting for them, and he must be right since he made $400k!!) at a P/E of about 50 (I didn't know what that was at the time but calculated retrospectively).
It doubled after a few months, and over those few months I had been checking the price every day in the business section of the local newspaper, which was a section I had never read before. Over that time I read some articles in addition to checking the quotes and learned what a P/E ratio is, and what a stock is (at a very rudimentary level). By the time I knew this stuff the stock had doubled and the P/E was at close to 100.
By my reasoning, the earnings per share was simply the money I was entitled to as an owner of the company that earned it. So the trade off from buying a stock was you pay a dollar and then get your money back over time, and then some. With a P/E of 10, I thought, that would mean it takes 10 years to get your money back and you start to profit, not a bad deal (I knew nothing of discount rates, etc.). But P/E of 100? 100 years to get my money back. Screw that! I told my parents to sell and doubled my money. (My neighbor and uncle were wiped out.)
So, yes bubbles can be predicted. They can even be predicted by a reasonably intelligent, though uninformed 13y old kid.
But they won't be, because "it's different this time" and the "sophisticated" investors will use their fancy models and math to tweak their models and justify anything. I predicted the bubble this time too, but being in college, had no money to profit from it, but I told everybody I knew who traded to get out of being long anything in 2006, few listened. I did it by remembering how I thought as a kid. I'm far from perfect, though. I lost $25K entering the oil bubble with options (using borrowed money) because I had read a lot of info about world oil production and thought we were reaching peak. The urge to get in before the price kept going up was to strong to resist. I was wiped out by my greed, and my thought that "it's different this time," the supply is finite amd running out (someday it will be "different this time" for oil but I won't be the one trying to call it).
Human nature being what it is, we will always have bubbles, and they will always look obvious and stupid in retrospect.
that's a great story
thanks for sharing