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TrimTabs: "No Amount Of QE Will Be Able To Keep The Current Stock Market Bubble From Bursting"

Tyler Durden's picture


It was the night before Christmas Eve, and CNBC trucked out TrimTabs' Charles Biderman to a de minimis audience, knowing full well that a man with his understanding of money flows would very likely repeat his statement from last year, that there is no real, valid explanation for the inexorable move in stocks higher, as equity money flows in 2010 were decidedly negative, and any explanation of the upward melt up would need to account for Fed intervention (and no-volume HFT offer-lifting feedback loops but that is a story for another day). A year after the first scandalous report was published, TrimTabs is sticking with its story: "If the money to boost stock prices by almost $9 trillion from the March
2009 lows did not come from the traditional players, it had to have come
from somewhere else.  We believe that place is the Fed. 
By funneling
trillions of dollars in cash to the primary dealers in exchange for
debt, the Fed has given Wall Street lots of firepower to ramp up the
prices of risk assets, including equities." And, wisely, Biderman, just like Zero Hedge, asks what happens when the buying one day, some day, ends: "...stock prices will be higher by the time
QE2 ends, but economic growth will not be sustainable without massive
government support.  Then even more QE will be needed, and stock prices
could keep rising for a while.  In our opinion, however, no amount of QE
will be able to keep the current stock market bubble from bursting
" Ergo our call earlier that Bernanke has at best +/- 150 days to assuage the market's fear that QE2 is ending (not to mention that we have a huge economic recovery, right Jan Hatzius? We don't need no stinking QE...). Therefore the best Bernanke can hope for is to buy some additional time. At the end of the day, the biggest problem is that the massive slack in the economy means that LSAP will have to continue for a long, long time, before the virtuous circle of self-sustaining growth can even hope to take over. By then bond yields may very well be high enough that Ron Paul will demand someone finally bring Paul Volcker out of the fridge.

From TrimTabs:

What Source of Money Is Pushing U.S. Stock Prices Higher?  Market Cap Rises $2 Trillion in 2010 as Buying by Companies and Foreigners Offsets Selling by Pension Funds and Retail Investors. However All of Gain and Then Some, $2.4 Trillion, Since QE2 Announced at End of August.

At the end of 2009, we published a report entitled, “Are Federal Reserve and U.S. Government Rigging Stock Market?”  We questioned whether the Fed or the Treasury were pushing up stock prices because we could not identify the source of the money that pushed the market cap up by nearly $7 trillion from mid-March 2009 through December 2009.
At the time we released our report, many people thought it was crazy to suggest that the Fed or the government would manipulate the stock market.  Yet Ben Bernanke, Alan Greenspan, and Brian Sack have all but admitted publicly this year that the Fed attempts to prop up stock prices.
The market cap of all U.S. stocks increased $2 trillion in 2010.  All of the gain and then some, $2.4 trillion, occurred since the end of August after QE2 was announced. Once again, most of the money to push the market cap higher does not seem to have come from the traditional players that provided money in the past:
Companies and foreign investors were net buyers:
·       Companies.  Corporate America was the biggest net buyers of shares, although all the float shrink occurred between January and August.  The float of shares decreased $150 billion in 2010, mostly because new stock buybacks nearly tripled from the depressed levels of 2009. However, between September and year-end the float did not shrink but instead grew by $14 billion.
·       Foreign investors.  Foreigners provided some buying power in the U.S. stock market, purchasing a net $89 billion in U.S. equities from January through October.
But the buying of companies and foreigners was offset by selling elsewhere:
·       Pension funds.  Pension funds were apparently huge net sellers of U.S. equities.  Based on Informa Investment Solution’s Plan Sponsor Network data, we estimate that managers of separate accounts pulled $169 billion from U.S. equities from January through September.  Pension funds account for about 60% of the assets in separate accounts.
·       Retail investor funds.  Retail investors were net sellers of U.S. stocks.  U.S. equity funds and ETFs redeemed $38 billion in 2010 even as a whopping $273 billion poured into bond funds and ETFs.
·       Retail investor direct purchases. We doubt retail investors were big direct buyers of U.S. stocks when they were net sellers of U.S. equity funds and retail investor sentiment was relatively cautious until late this year.

·       Hedge funds.  We have no way to track in real time what hedge funds do, but we doubt they were big net buyers of U.S. equities.  While hedge funds posted an inflow of $60 billion from January through November, the most popular strategies were Event Driven ($14 billion), Fixed Income ($9 billion), and Emerging Markets ($7 billion).  Equity Long Bias, Equity Long Only, and Equity Long-Short received a total of only $12 billion.
U.S. Stock Market in Trouble Once Fed Interventions Stop. No Amount of Bond Buying Will Keep Stock Market Bubble from Bursting Eventually.

If the money to boost stock prices by almost $9 trillion from the March 2009 lows did not come from the traditional players, it had to have come from somewhere else.  We believe that place is the Fed.  By funneling trillions of dollars in cash to the primary dealers in exchange for debt, the Fed has given Wall Street lots of firepower to ramp up the prices of risk assets, including equities.
But what will happen when the Fed stops buying assets?  If QE2 works and the wealth effect of higher asset prices creates a sustainable economic recovery, we think the Fed will stop its QE activities.  The Fed is legally mandated to manage the economy, not the stock market, and we think the Fed will sacrifice the stock market to its legal mandate.  If that happens, stock prices are likely to plunge to well below fair value.
A more likely outcome is that stock prices will be higher by the time QE2 ends, but economic growth will not be sustainable without massive government support.  Then even more QE will be needed, and stock prices could keep rising for a while.  In our opinion, however, no amount of QE will be able to keep the current stock market bubble from bursting eventually.
Mutual Fund and Exchange-Traded Fund Flows Not Dramatically Different in 2010 Than in 2009.  Bond Funds Post Big Inflows, Global Equity Funds Post Moderate Inflows, and U.S. Equity Funds Suffer Redemptions.

Mutual fund and exchange-traded fund flows in 2010 were not greatly different than they were in 2009.  Bond funds—references to “funds” in this section include both mutual funds and ETFs—continued to rake in huge amounts of money, although inflows subsided to $273 billion in 2010 from a record $416 billion in 2009.
Equity fund flows were mixed.  Global equity funds posted a respectable inflow of $87 billion in 2010, up modestly from $62 billion in 2009.  Nevertheless, global equity fund inflows were nowhere near the peak of $182 billion in 2007.  U.S. equity funds posted their third consecutive outflow, losing $38 billion in 2010, little changed from the outflows of $42 billion in 2008 and $47 billion in 2009.

Flows shifted dramatically in late 2010 as the municipal bond market tanked and bond yields backed up.  Bond funds lost $1.0 billion in November and $16 billion in December, the first monthly outflows since late 2008.  If this selling persists, the exodus from bond funds could put more upward pressure on bond yields.



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Sat, 01/01/2011 - 18:09 | 841829 Quixotic_Not
Quixotic_Not's picture

Since the incept of the U.S. *Industrial Economy* collapse that started in the 70s, the perp skool predators have been working OT to keep the *illusion* of *prosperity* alive.

A chicken/chiclet in every pot, a credit card in every pocket, a home loan for every collective of suckers (i.e. sheeple).

Starting in 2008, the Fraud St./DoC kabal began looting the U$ Treasury direct to deposit, and nary a .GOV regulator raised his parasitical head.

Until liquidity via amassing generational debt slavery stops working, the games will continue!

Sat, 01/01/2011 - 21:31 | 842072 SteveNYC
SteveNYC's picture

Snake Plissken......yes, always liked the way he just glided into lower Manhattan and took care of the criminals captive on the island. He'd have his work cut out for him in 2011, might need assistance!

Sun, 01/02/2011 - 01:18 | 842267 Things that go bump
Things that go bump's picture

I thought he was dead.

Sun, 01/02/2011 - 04:18 | 842363 gravitas
gravitas's picture


Mon, 01/03/2011 - 06:34 | 842398 benburnyanki
benburnyanki's picture

Goldman Sacks was the 'Disintegration' tool used to kill the tax protesting middle class who pay the majority of taxes relative to their income. You hi rollers on this site could give a rats ass cause you all earn so much that sales taxes and income taxes no longer eat up your 'discresionary income'. So the DHS = Stasi = Secret Citizen Spy Agency. Just like Stasi were supposed to stop external terrorists and spys, DHS is to do the same but only spys on USA citizens. When was the last time a big fat machine gun toten bro workin fer DHS was nice to your skinny white ass. If little Napolean's DHS was really DHS they would be chasin wet backs jumpin into El Paso instead of hiring her fat gay cousins to work as fanny fingerin TSA agents.

Don't you sheep get it? Oh I see, the CIA took all the E.German Stasi files in 1990. So nobody can figure out the stuff in the book NDCIC about NYC Jew Mafia funding Bolshevicks for the Rothschilds Shell Oil Co to drill in Siberia against Tzars wishes. Jews were mostly all of Stalins Komizars who killed 60 million Ruskies. Jews were running the Stasi in Poland and E. Germany apparently according to reports from me shipmates from that neck of da woods folks. When Kaptin Krunch say Jew Mafia running the world, we back up what we say with facts.

Here is Stasi in E.Germany website showing disintegration is used to destroy someone secretly. The USA middle class has secretly been killed by the Jew Mafia cause we hate the Federal Reserve the most since it makes middle class pay the highest tax (total % tax to discretionary income ratio).

Fuck and then Burn Bernanke!

Ben Burnyankee say: "We wacked Jesus & JFK for Bank Bustin' and walked, and have a 40 foot container of Gringo Bar-B-Q sauce"

Read Best Bank Book "None Dare Call It Conspiracy":

Video shows CIA & LAPD Import Cocaine:

Kennedy was right when he said to bust CIA into 1000 pieces. They the hitmen for the Jew Mafia at the Fed Reserve (aka Goldman Sackers)

part 1
part 2
part 3
part 4
part 5
part 6

Sun, 01/02/2011 - 07:29 | 842410 mick_richfield
mick_richfield's picture

I thought he was taller.

Sun, 01/02/2011 - 12:08 | 842510 mess nonster
mess nonster's picture

Like the rest of us, he's living in Slab City in a Junked out 74 Winnebago, ekeing out a living from the sale of ebay junk, illegal drugs, and SSI... it's not the 80's any more.

Sat, 01/01/2011 - 22:38 | 842126 Red Neck Repugnicant
Red Neck Repugnicant's picture

If you want to talk about looting the system, I would urge you to spend some time looking at the 1980's, and how the transformation from a "tax and spend" government to a "borrow and spend" government became the juggernaut that fueled bubble economics for three decades and will eventually lead to the collapse of the this formerly great country. 

Start with 1982 when Alan Greenspan is elected the Chairman of the National Commission on Social Security Reform.  Since Reagan promised everyone that he wouldn't raise taxes to fund government operations, he simply created another cookie jar for himself and his cronies. With the help of Greenspan, they jacked up the social security tax - of course, they put a limit on SS payroll deductions so the rich wouldn't be looted, but the middle class would - in an effort to create surpluses to pay for the baby boomers SS withdraws further down the road.


Now ask yourself, if Reagan/Greenspan jacked up the SS ponzi holdings in 1983 to pay for baby boomer retirements, why is Greenspan - two decades later - telling everyone that Social Security is broke? Those extra SS payroll deductions accounted for an extra $2.5 Trillion in revenue.  Where the fuck is it?

The reason it's broke: because Reagan and all the presidents afterwards looted the ponzi surplus in the Social Security cookie jar, and bought treasuries with them to fund an ever-expanding government. Debt goes up. Currency goes down. And middle class America who are relying on their SS benefits are told they probably will have to concede to reductions.  If Reagan reduces taxes on the rich, did you actually think wouldn't create a different cookie jar?

So, instead of "tax and spend" we have "borrow and spend."  What cocaine was to Wall Street in the 80's, the new "borrow and spend" was Washington's cocaine for the next 30 years.  

It took 200 years to reach $1 trillion in debt when Reagan began. Then, suddenly, it only took 4 years to double it. After the Bush I adminstration, our debt was $4 trillion. After Bush II, our debt was $12 trillion.   


Check out this fucking ridiculous chart:

That chart is the effect of "borrow and spend."

Ever wonder why Paul Volcker was Fed Chairman for only 8 years, while Greenspan lasted 20 years?  Because Greenspan was the perfectly complicit puppet for all those presidents to loot the system and create a pozi economy of "borrow and spend," while Volcker was increasingly reluctant to play these ponzi games. 


So, if you want to talk about looting the system, go back to Reagan. Then follow Greenspan - who Matt Taibbi appropriately calls The Biggest Asshole in the Universe - with a forensics microscope.  

Then read William Fleckenstein's Greenspan's Bubbles

Then take a Xanax - you'll need it.    

Sat, 01/01/2011 - 22:37 | 842133 tmosley
tmosley's picture

Wow, I agree completely.

How does that make you feel?

Also, maximum trolling--completely exhausting any credit you might have, then rebuilding it with a couple of insightful, if slightly biased posts (notice you left Clinton off of your list of presidents there).  Planning to gather some credit so you can start with the personal attacks again, in the hopes that some people might agree with you?  Or did you just make a new years resolution to stop being an asshole and start actually contributing to conversations?

Sat, 01/01/2011 - 22:53 | 842148 Red Neck Repugnicant
Red Neck Repugnicant's picture

Wow, I agree completely.

How does that make you feel?


It makes me feel like I probably have it all wrong.  


Sat, 01/01/2011 - 23:46 | 842189 New_Meat
New_Meat's picture


Sat, 01/01/2011 - 22:55 | 842153 taraxias
taraxias's picture

great post, tmosley, took the words out of my mouth but you expressed them a lot better

as far as I'm concerned trolls & assholes never change and he is both, so don't expect anything to change in the future

all the best in 2011

Sat, 01/01/2011 - 22:59 | 842154 Red Neck Repugnicant
Red Neck Repugnicant's picture

Hey taraxias

Why are you using a picture of your wife as an avatar?

Sat, 01/01/2011 - 23:11 | 842163 taraxias
taraxias's picture

was it the troll part or the asshole part that got to you the most?

Sat, 01/01/2011 - 23:41 | 842181 Red Neck Repugnicant
Red Neck Repugnicant's picture


Anyone who identifies with taraxias - the profoundly ridiculous Greek Hip Hop wannabe - is probably also a Eurotrash douche bag who marinates himself in enough obnoxiously musky Axe Body Spray to violate various EPA standards for pollution.

And THAT person should just keep his fucking mouth shut, especially if your wife looks like a sasquatch from Chernobyl.


Sun, 01/02/2011 - 00:57 | 842241 Calmyourself
Calmyourself's picture

You could actually be relevant.. No, no you cant.

Sun, 01/02/2011 - 19:48 | 843126 RockyRacoon
RockyRacoon's picture

You know, I don't generally like your raggedy ass, but the wife from Chernobyl part got a helluva chuckle outta me.   I hope you are as relevant and funny this next year as you have been here.  Cheers.

Sun, 01/02/2011 - 21:14 | 843253 bonddude
bonddude's picture

You suck...uh, donkey dicks!

politics is dead fool.

Sun, 01/02/2011 - 01:30 | 842279 tmosley
tmosley's picture

Well, that didn't last long.


Sun, 01/02/2011 - 04:22 | 842366 gravitas
gravitas's picture

hmmm... trite and predictable.

you can do better than that.

Sun, 01/02/2011 - 04:44 | 842365 Chappaquiddick
Chappaquiddick's picture

The tissue of lies and deceit are falling away.  The whole world has been sold down the river for a few quick bucks and bloated profit margins for Corporate America, primarily US Oil/Gas/Energy companies and the Banksters (of course).

Jimmy Carter warned us, threatened their interests and was disposed of.  What followed next was 30 years of going in exactly the wrong direction and doing everything possible to keep us on that course - capturing and stifling of any / all  alternatives:  energy patents, electric cars, government policy, all the while increasing our dependence.

What gets me is that for 8 of those years we had Al Gore at the summit of power, cloaked in his green credentials and still we got no change of direction.  Surely they knew about peak oil and the energy cliff that follows it - why didn't they act?

Its too fucking late now.

Put these pieces togther and our current circumstances are the direct result of 30years of rape and pillage of the American nation by the Corporate overlords and their political stooges.  The oil allowed for the creation of wealth and that wealth has been siphoned, now more lately openly stolen, into the hands of a select few - the ring bearers, who rule us all.

Its stuff like this that breeds civil unrest and the urge for independence.

They are of course well ahead of us on all fronts.  Their focus is now containment and control and to do that they're using money and food.  That's why we're getting penned in with Laws like S510, monstrous capitalism: Monsanto GM neutered seeds; and the exits being firmly closed and soon to be locked: capital controls.


Sun, 01/02/2011 - 06:52 | 842403 benburnyanki
benburnyanki's picture

right on matey! oh and they poisoned the GOM so we can't even fish for food after GMO kills the crop seeds.

I saw the CIA agents workin' inside USA for last 30 years 'Disintegrate' all my efforts in Earth First against deforestation and the Fed. I never knew how this was the Jew Mafia who also ran the Stasi that has done this to the USA. Nothin' scares a Jew Mafia more than 300,000,000 free fuckers with guns. So they had to hijack the CIA & NSA to rope and brand us into 'managable sized sheep herds'.

Tue, 01/04/2011 - 00:51 | 845857 Rusty Shorts
Rusty Shorts's picture


Sun, 01/02/2011 - 07:16 | 842408 Snidley Whipsnae
Snidley Whipsnae's picture

Excellent post RNR...except you didn't look back far enough. Greenspan and his presidents learned from LB Johnson who funded the rediculous war on Viet Nam, and the Great Society, with borrow and spend policy. Nixon and Ford continued and expanded Johnson's Great Society programs. The stated goals of these programs were to eliminate poverty and racial injustice. I believe that the goals were admirable (in an elusive, Don Quixotish manner) but the programs were enormously expensive and the money to fund them was borrowed through more treasury issuance and ever greater US debt. Johnson was spending enormous amounts of money and lives in Viet Nam while at the same time pacifying the home front with expanding social programs. 'Guns and Butter' was the phrase.

Of course, those that followed Johnson had learned a lesson in how to steal ever more from the US Treasury...and, they did.

Sun, 01/02/2011 - 15:26 | 842759 Ben Fleeced
Ben Fleeced's picture

LBJ learned well from FDR who in 1934 used the AAA,CCC, FERA and WPA to massively buy votes in the 1936 election cycle. In 1935 Raymond Clapper noed, "This does not seem to be government as it has been known, but it is right now the lasso which enables Mr. Roosevelt to hold the country in hand".





Sun, 01/02/2011 - 07:43 | 842416 mick_richfield
mick_richfield's picture

RNR --

I have a question for you.

What would you say is the relationship between (1)  the substitution of fiat currency for gold and silver, and (2) the rise of the Social Security ponzi, which was later looted?


Sun, 01/02/2011 - 15:29 | 842760 Ben Fleeced
Ben Fleeced's picture

FDR's cravings for centralized power.

Sun, 01/02/2011 - 12:15 | 842513 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I vape weed, don't need xanex.

1913, bubbles.

Bernanke was nominated by Bush.  Get a grip.

Always strapped, when I hit the club/Players give me daps, ladies give me hugs

And since I'm paid, dudes be muggin' me/You know I mug 'em back/Dudes be muggin' me/You know I mug 'em back

Tue, 01/04/2011 - 03:08 | 845976 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

Bush = Obama = ridiculous puppet frontman. Both resemble toy monkeys.

I bring this up only to question the meaning of the statement: "Bernanke was nominated by Bush". More like Bernanke nominated Bush. More yet like: both Bernanke and Bush were nominated by higher powers.

Not all Presidents are puppet frontmen... GHWB was probably the most powerful and savvy cat in the White House in all of the twentieth century. LBJ was powerful and savvy, too, but he was limited by the fact that he was born in the dirt in Texas. He was limited quite in spite of the fact that he was a genius political prodigy — a self-made, fascist, sheep-herding political leader if ever there was one. I don't respect LBJ for what he was. But I have to respect his ability to rise to the top of any pyramid he was thrown into. It's only when he achieved the Presidency that he saw a pyramid he couldn't rise further in, and at that point in his political life he was driven by his own constitution into dusk and dormancy. I find LBJ's real résumé absolutely fascinating, and I'll probably write it up for me to link to all you ZH-ers or anyone-at-all at some future date. Haven't done that yet, though.

GHWB, on the other hand, was born into a class that could rise higher than LBJ would be allowed to rise in. Energy, intelligence, and finance. GHWB was a savvy player in this triad that was and is superior to the "military-industrial-etc complex".

I'm going to stop my rant here, for now, but I'm just waiting for someone to question what I have asserted. If no one does, you will hear me pipe in on some future post with more of my historical, financial, political assertions.

At the end of the day, I posted for this reason: I laugh like a madman when I hear "Bush appointed Bernanke". This is folly. Bush didn't do one damn thing that wasn't approved of by his puppet masters. Much like Obama.

Sun, 01/02/2011 - 13:16 | 842593 UninterestedObserver
UninterestedObserver's picture

Yeah it all started in 1982 with Greenspan - what a fucking moron. 

Sun, 01/02/2011 - 17:35 | 842988 Red Neck Repugnicant
Red Neck Repugnicant's picture

Please explain the unbelievable acceleration of US debt that began during the 80's which is evidenced in the chart that I provided. What happened in the 1980's that started this rapid deviation from the historical norm?


Sun, 01/02/2011 - 16:39 | 842899 combatsnoopy
combatsnoopy's picture

Wasn't it Clinton who put social security pensions in the US Treasury?  How else did he "balance the budget"?


Political pundits, easily owned. 

Sun, 01/02/2011 - 17:24 | 842969 Red Neck Repugnicant
Red Neck Repugnicant's picture

No.  Either you don't understand history, or you purposely distort it to protect your political convictions. 

It was Reagan.  

And if you don't understand that, then you obviously don't understand how Reagan "balanced HIS budget," and that probably also contributes to your partiality (I'm assuming) to the Republican party.  

Lastly, you obviously didn't read my post because I said that "every administration afterwards..." which would include Clinton, too. 

Ignorant easily owned. 

Sun, 01/02/2011 - 20:02 | 843138 Bicycle Repairman
Bicycle Repairman's picture


Sat, 01/01/2011 - 23:38 | 842180 Midwest Prepper
Midwest Prepper's picture

Snake Plissken... I thought he was dead....

Sun, 01/02/2011 - 13:48 | 842624 goldfish1
goldfish1's picture

Chicken in every pot is a fine idea and certainly as an advanced civilization (?) we should and could achieve that.

Instead, the gluttonous monstrosity sucking our life blood and the heritage of our progeny has been fed with our own naivete and willingness and now the beast must be annihilated.

Each one of us has the power to change our own world and reclaim and assert our individual power. I guess it's time to get started eliminating the gluttony in our own lifestyles.

Sun, 01/02/2011 - 13:54 | 842633 velobabe
velobabe's picture

money too tight, to mention 1985 simply red.

good reflection in todays world.

Mon, 01/03/2011 - 12:58 | 844417 4xaddict
4xaddict's picture

Probably a more appropriate misheard lyric version of that song with Mick Hucknell playing the role of "Banksta/JMafia/TheBernank/et al" and the bunny playing the middle classes

Sat, 01/01/2011 - 18:20 | 841841 Tense INDIAN
Tense INDIAN's picture

Indeed ...Dark days are coming.....lets have some fun...


heres the game...its not released yet though:

Sat, 01/01/2011 - 21:58 | 842093 Missing_Link
Missing_Link's picture

Nice viral advertising there  ...  not.

This game looks like ass.

Sat, 01/01/2011 - 18:31 | 841843 TruthInSunshine
TruthInSunshine's picture


...big problems in equity markets early in 2011, very possibly.

Bernanke has lost the real estate reflation game.

As residential, office and retail construction's blistering clip from 1997 through 2007 was masking the hollowing out of the manufacturing segment of the American Economy, and as manufacturing workers turned construction workers/skilled trades in the real estate industry now have no bubble-inflated sector to rotate into, Ben's last best hopes of finding the next, best refuge of the structurally unemployed/undermployed can't be found.

All Bernanke can hope for is that a situation won't arise that forces the Federal Reserve to open Maiden Lane's in spades, expand the Fed's balance sheet at an even more insane pace than was done under TARP/TALF to purchase deaden weight MBS, in a desperate attempt to save a collapsing bank and financial sector in 2011. That would necessarily require the Fed to either bail on its hopes of saving the banking system from a catastrophe, or to literally begin the inflationary push that will cause real (not speculative) political and social strife.

I can literally see Bernanke pondering all his options on trying to resuscitate real estate activity, realizing it's the only surrogate for manufacturing, and coming to the inescapable conclusion that neither sectors are coming back anytime soon.

What would Alan Greenspan do?

Oh, that's right: Greenspan would do what Bernanke has already done; lower interest rates to the point he has, with not much to show for it (arguably, he has adverse effects to show for it).

Bernanke's only remaining options are between a cold shit sandwich and a warm shit sandwich.

Bernanke faces a structural downturn not seen in U.S. history (or European history). This is the opposite environment in the U.S. after WWII.

Watch for a lack of demand for credit as a big, red flag in 2011.

Monetary policy is near useless, and arguably dangerous if applied aggressively, to try to battle anything other than a business cycle downturn, which this most certainly is not.


Sat, 01/01/2011 - 18:37 | 841858 hardcleareye
hardcleareye's picture


Sat, 01/01/2011 - 19:28 | 841920 barkingbill
barkingbill's picture

if we are on the titanic, then i guess bernanke is there in the steering room nervously sweating as part of the ship starts to slide into the water...


team America really has some great players up at bat for them. obama the traitor, bernanke the nervous nelly...sarah dipstick palin and the bamboozled tea party. we got the republican neanderthals chomping at the bit waiting for their chance to sink the ship further. 

a few bright stars here and there, but mostly its darkness.

Sat, 01/01/2011 - 19:44 | 841945 knukles
knukles's picture

Oh pshaw....

Let's not be too pessimistic.  There's a good amount of sun shining thorough the holes burnt in the ozone layer.

Sat, 01/01/2011 - 19:59 | 841963 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

While Summers is drinking sunny d and rum in the lifeboat!

Sat, 01/01/2011 - 19:59 | 841960 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

RE reflation was a dumb move.  Can't believe it was justifiable to anyone.  Bernanke done.

Sat, 01/01/2011 - 20:13 | 841979 Problem Is
Problem Is's picture

Bernanke is Just a Puppet Man...
Bernanke made that move to re-inflate RE to repair the balance sheets of his owners...

Jamie & Lloyd & the TBTFs...

Sat, 01/01/2011 - 20:27 | 841997 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I'm your banker/I'm your daddy

I'm that Tiger/In the alley

I'm your Doctor/When in need

Have some Tarp/Some QE

Bam knows me/I'm his friend

Your main boy/Thick and thin

I'm you Puppetman/I'm your puppetman

Ain't I clean/Bad machine

Super bald/Super mean

Dealin' bonds/For the man

Super bald/Here I stand

Super flippant/Here I be

Secret stash/PPT

I'm your Puppetman/I'm your Puppetman

Sat, 01/01/2011 - 20:55 | 842036 Dismal Scientist
Dismal Scientist's picture

+1 Curtis would approve, I'm sure

Sat, 01/01/2011 - 21:24 | 842066 TruthInSunshine
TruthInSunshine's picture

That is an epically great song, and Ben Bernanke & Alan Greenspan are the friendliest and most successful pushermen ever.

Sun, 01/02/2011 - 11:30 | 842488 juangrande
juangrande's picture

Just diggin' the scene witha gangster lean...

Sun, 01/02/2011 - 14:03 | 842649 velobabe
velobabe's picture

jimi john HST approved†

Sat, 01/01/2011 - 20:29 | 841999 unwashedmass
unwashedmass's picture

now they are just trying to suck retail in to take the insanely priced stock off their hands....

so the main question is, does the crash come in january -- if no one believes - or do they get to rape the public in march?

whatever. i'm not buying anything but gold or silver stocks...and using tight stops on those cause you know that those will get sold to meet margin on the other crap like the $200 NFLX stocks.....

thing that is really horrible is that so many of us know -- we zerohedge readers -- exactly the game that is being played....

hope everyone is alerting all friends and relatives to this next wall street heist....

Sat, 01/01/2011 - 23:04 | 842155 uno
uno's picture

You are absolutely correct about raping the public again.  Even CNBS was saying this week that a top will be when the public buys in.  That is the goal as usual, I expect the market to go up trying to bait the 401k money at the beginning of the year.

Sun, 01/02/2011 - 03:22 | 842349 Quixotic_Not
Quixotic_Not's picture

Anyone that isn't buying and holding PMs in this "environment" is either a moron or a insider connected primary dealer, i.e. a evil entity able to ride out the malstrom...


Next stop; Currency collapse and HELL on earth!

Got your chair for when the music stops?

Sat, 01/01/2011 - 21:07 | 842049 cxl9
cxl9's picture

Greenspan would do what Bernanke has already done; lower interest rates to the point he has, with not much to show for it

Greenspan was smart enough to kick the can down the road and then exit at the right time and leave his successor holding the bag. Poor Ben. I don't think he'll have that luxury.

Sun, 01/02/2011 - 14:15 | 842674 goldfish1
goldfish1's picture

Poor Ben.

What a beautiful illustration of "Pride goeth before the fall."

Sat, 01/01/2011 - 22:05 | 842095 hangemhigh
hangemhigh's picture

TO:  TruthInSunshine
on Sat, 01/01/2011 - 17:31


"Monetary policy is near useless, and arguably dangerous if applied aggressively, to try to battle anything other than a business cycle downturn, which this most certainly is not."


every US recovery since WWII has been lead by housing and autos.  now, both of those industries are toast.   you're right. this is no ordinary business cycle downturn, this is a vast wasteland of systemic destruction.  the money printing is a symptom of a larger malaise, not a remedy for what ails us.  

Sun, 01/02/2011 - 01:19 | 842268 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Its all about global imbalances.  The farm has been fully mortgaged.  Now we must start producing things because we will not have a choice.  I suspect that further competitive devaluations and trade wars will escalate next year.  As for further QE ... IMO, all it will do is hasten a bear market in debt.  The FED truly is pushing on a string.  Nobody wants to take on debt and buyers are concerned with the return of principle.  Personally, I expect 2011 to be the year of the haircut (at least for municipal and junk bonds).  As for stocks ... DOW 3200 anyone?

Sun, 01/02/2011 - 14:12 | 842671 goldfish1
goldfish1's picture


yes, the sooner we realize that we need to contribute meaningful service and work to our common cause, the sooner we get this thing back on track and take the power out of the hands of the slave masters.

Sun, 01/02/2011 - 01:20 | 842271 Aristarchan
Aristarchan's picture

The larger malaise in this country is that the vast majority of people had almost unshakable confidence in politicians and business leaders when they assured us that the country was on the right path. They always had the belief that they could not be lying to us...since they would also go down with the ship. Easy money, appreciating house prices, material wealth  and physically healthy existences led us to believe that out lives were indeed, charmed. Now, some of those people can see that a ship can sink and leave its leaders high-and-dry, nary a pant cuff wet. But, most still have that stubborn confidence that the chosen ones will stem the tide and pull us back from the brink. They think this while plummeting down a precipice. Too long we have made heroes of wealthy people, leaders, aggressive traders and all that ilk. Experience has shown that monkeys throwing darts are just as smart and just as successful. If everyone would look at these people as just folks who have failed upward - something most of us are capable of if we have the desire, then maybe....just maybe, things might begin to change.

Sat, 01/01/2011 - 22:09 | 842100 deadparrot
deadparrot's picture

The Fed is like a fire department. It is good at putting out fires and doing minor emergency work. The only problem is this financial crisis is not a fire. It is more like a flood. Yet the Fed keeps calling the flood a fire so they can keep pouring water on it.

Sun, 01/02/2011 - 01:20 | 842272 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Great analogy.

Sun, 01/02/2011 - 05:01 | 842380 bankonzhongguo
bankonzhongguo's picture

I used to laugh at the idea of the US concocting a war to bail out the system.

Now, given the magnitude of the debt (supposedly) owed, i just wonder how big of a war would be to be started in order to mobilize the USA and otherwise defeat unemployment, peak oil and our enemy in one fell swoop?

Iraq is not big enough.  AfPak is a vacum.  Iran?  Would TPTB nuke an American city and blame it on "Christian-hating Iran?" Russia?  China?  Planet 10?

We have seen enough high weirdness these last years. 

The next 2 will certainly be weirder.

Sun, 01/02/2011 - 07:27 | 842409 Snidley Whipsnae
Snidley Whipsnae's picture


Sun, 01/02/2011 - 12:17 | 842515 SWRichmond
SWRichmond's picture

Bernanke's only remaining options are between a cold shit sandwich and a warm shit sandwich.

...and he will choose the warm one.  This has always been a game of "last man standing" as we wait patiently for EU and China to implode.  We hold the "global reserve currency" card which we've been playing like trump for decades.  We're running out of trump and the hand's not over yet.  Can Ben keep printing until the hand ends?  Bet your ass he will try.

Sat, 01/01/2011 - 18:29 | 841845 Mariposa de Oro
Mariposa de Oro's picture

OT alert.  I came across this essay.  I'm not sure what to make of it.  I get the feeling the writer is just trying to sell his info.  Thoughts??  Thx

Sat, 01/01/2011 - 18:45 | 841871 JohnG
JohnG's picture

This seems about right to me (just skimmed it), and yes, most people are trying to sell something.

The way to beat this is to never, ever sell your gold or other PM's for that matter.  I'm heavily invested in PHYS and PSLV, and if/as/when events start (think food riots and general civil unrest...) I'll redeem for physical.

Never sell the PM's, spend them when the time comes.

Sat, 01/01/2011 - 19:57 | 841959 Blano
Blano's picture

Just curious....if you really want to be "heavily invested in silver, why not just buy the stuff that you can clink around in your hands??  And why do you assume that if riots/unrest/etc. start happening, that you'll be allowed to just redeem anytime you want??

Sat, 01/01/2011 - 21:44 | 842078 Oracle of Kypseli
Oracle of Kypseli's picture

One thing (among many) about this guy's claim on gold taxation is that when you have rapid inflation the gold upturn is not proportionate to the inflation but, exagerated as people are alert and thus: $100k in gold it will not appreciate 100% due to 50% loss of purchasing power but perhaps 400%. The guy with the gold will always be ahead. 

The formula of having 33% in PM's anf 67% cash is based on the theory that PM's will always overcompensate in inflation and your purchasing power will be 100% hedged.

Your $67 will be worth $33.50 on 50% devaluation and your $33 worth of gold will be at least $132 dollars or ($66 after devaluation) Thus: You end up with $99.50


This is not apparent at the moment as PM's are still being manipulated. A breakout can be very powerful. 

Sat, 01/01/2011 - 22:19 | 842111 Vendetta
Vendetta's picture

oops.  I have it backwards, 67% in PMs and 33% in cash.  My bad.

Sun, 01/02/2011 - 12:33 | 842217 Oracle of Kypseli
Oracle of Kypseli's picture

You're already way ahead.

I am in Lima Peru at the moment and will be shopping for silver and gold coins on Monday.

Will report late next week the ins and outs   

Sat, 01/01/2011 - 22:23 | 842116 StychoKiller
StychoKiller's picture

I really have to wonder about everyone's sanity -- they look at an FRN and see some value beyond the $85/ton value of paper -- guess the pretty inks  and "promises" clouds all their judgment(s)!

Sat, 01/01/2011 - 23:51 | 842193 New_Meat
New_Meat's picture

and narrow timeframe, like, oh, I have to get a dozen eggs and bread and gallon of milk-guess I'll use an Eagle.

Different purposes, different explanations.

- Ned

Sun, 01/02/2011 - 07:11 | 842407 XPolemic
XPolemic's picture

You do realize that greenbacks are printed on cotton right?


Sun, 01/02/2011 - 00:00 | 842197 Shameful
Shameful's picture

Would like some hard numbers on that if you can provide them. I have no doubt about holding value, but will people necessarily move to gold in particular over other assets? After all mot Americans have little net worth so if their not in now then not sure that the common man will rush in. When the storm hits canned beans and TP will also hold value :)

The tax thing is about right. Americans get hosed again, at least in EU it's not taxed...yet. On the positive side, in a hyper inflationary collapse it's a good bet the tax system would break down, it has historically anyway. I also doubt that the electronic payment system with credit cards would hold. If there is 10%+ inflation a month then that kills credit card companies.

Sun, 01/02/2011 - 00:33 | 842216 Oracle of Kypseli
Oracle of Kypseli's picture

Bear in mind that Americans may not have money, or may not want to get in now, but gold is a global commodity. The whole world buys gold and affects the price.

Central banks, institutions, rich and poor alike buy gold and silver. I read, perhaps here on a guest post, that the average institutional portfolio has less than 5% invested in PM's. That is nothing.

In another post, it was calculated that if everyone in the world bought one silver coin, that will break JPM. You can do the math.

I mere whiff of a dollar inflationary wave, will create a powerful uptrend.

Sun, 01/02/2011 - 01:11 | 842260 Shameful
Shameful's picture

Ah but as you point out it's the boom that will happen when inflation is realized by the mass of humanity. Now following that reasoning the inflation will be quick and brutal and the rising price of PMs and commodities would drive further loss of faith which would drive further price action in PMs and commodities. A virtuous cycle of fiat death, aided by the profligate printing of the CBS.

In this system how can you know that PMs would do better then food or energy commodities? Now I'm a big fan of the metals because I can hold them and move them. But if I was able to cheaply, easily store and transport commodities I would be looking harder at things like food and oil. I'm not even saying that it's not possible that wealth moves into tangible things, it very well probably will, but how much more then the corresponding change in the perceived value of fiat? Because we don't even know how much wealth there is because so much of it is based on fraudulent paper.

So you very well could be right, but I find it difficult to put numbers and defined expectations of future gain on it. In my mind what is quite probably is the metals holding value in a collapse value of the money supply. Like in Wiemar, the money supply expanded endlessly, but the value of that money supply fell off a cliff. So by having real things one saved purchasing power ,IE value, when all others lost, so kinda like a deflationary environment when looking at it via the hard asset instead of the paper currency.

Having said that if comes to be known that the paper and physical supply are in totally different worlds that could cause a massive rise in real prices. But that is more to do with fraud then inflation, though I suppose one can look at inflation as the reason the big boys would do the fraud.

Sun, 01/02/2011 - 12:54 | 842556 mick_richfield
mick_richfield's picture

In this system how can you know that PMs would do better then food or energy commodities?

PMs will do better in that environment than commodities for the same reason that they make better money than commodities.   Longevity, fungibility, divisibility.


Sun, 01/02/2011 - 01:31 | 842280 Lucius Corneliu...
Lucius Cornelius Sulla's picture

IMO, gold is in a bubble.  All it will take is interest rates rising a few hundred basis points to burst it (along with virtually all other asset classes).  2008-2009 redux.  I'll buy more at $650.

Sun, 01/02/2011 - 02:39 | 842331 Shameful
Shameful's picture

What will a few hundred basis points move do to the system? Seems like it would put a great strain on the system. If such a strain exsists won't more peopel look to metals if it looks like rates are rising outside of Zimbabwe Ben's controls?

Good luck, hope it does go down. I'm still accumulating, but won't stop on the hope that it will trade down when there is more stress on the system,

Sun, 01/02/2011 - 12:57 | 842559 mick_richfield
mick_richfield's picture

LC --

Ask the person who cuts your hair (trims your plume?) what they think about investing in PMs.

If they express enthusiasm and go on to describe at length their own recent purchases of gold and silver metal and mining shares -- then we are in a bubble.

They won't.


Fed delenda est.

Mon, 01/03/2011 - 00:37 | 843562 RockyRacoon
RockyRacoon's picture

You have reasons to suggest that gold is a bubble, but we're not there yet. Another point is that interest rates don't just affect the PMs.  There will be some mechanical gearing that will have unpredictable effects in the economy/society that will actually boost the "value" of the PMs.  There are never 1:1 ratios or reactions in these scenarios.  This is not the average business downturn.

Sun, 01/02/2011 - 07:38 | 842415 Snidley Whipsnae
Snidley Whipsnae's picture

"After all mot [most] Americans have little net worth so if their not in now then not sure that the common man will rush in."

You are making the common mistake of thinking too narrowly. Gold and other commodities are being driven not by average Americans but by purchases by central banks, SE Asians, oil producer state's soverign funds, the BRICs, smart monied individuals in Western countries, and others.

If the American public were left to their own devices the price of PMs would probably still be near $300 per oz.

This situation will change when Americans wake up to the fact of rapid inflation and the purchasing power of their dollars heads south quickly.

Right now they are watching NCAA Bowl Games and eating turkey sandwiches...and assuming that the gov has everything under control. Americans in general believe that America has entered another cyclical downturn...they do not know that America has a severe structual debt problem.

Sat, 01/01/2011 - 20:31 | 842003 Freddie
Freddie's picture

Does everyone think Sprott (PHYS and PSLV) are solid? Also if you are in the US - how would you redeem for physical?  Will Sprott do it for you into Canadian dollars?   What is safetest currency? Singapore dollars?

Sat, 01/01/2011 - 21:33 | 842075 psyclopz
psyclopz's picture

Hi, I would like to give my view for the Singapore dollar question. I live in Singapore FYI. I was checking out the central bank stats and noticeably the M1,M2 & M3 have also risen substantially in the previous stock market bull run. Perhaps this could be attributed by our govt's strategy of pro immigration. Our immigration inflow has stepped up quite a bit over the last few years. Hence, housing saw a boom and prices is still on the rise. Real estate has risen sharply for a while now. My estate has almost like 40% immigrants renting the place.

Vis-a-vis other currencies, ours have appreciated gradually over time. I'm grateful for that cause i shop online sometimes for clothes. Anyway, I'm a gold buyer as I think we do not have much gold in our foreign reserve basket. We have quite a heap of US treasuries. Not sure if that would impact us too much should anything happen.

Thanks and I am really thankful to have found this site. Learnt a lot from here. 

Sat, 01/01/2011 - 23:45 | 842188 Mariposa de Oro
Mariposa de Oro's picture


I'm an electronics technician with a background in telemetry (remote monitoring).  I'm in the RMI.  Should I loose my job (possible) I'll need somewhere to go other than back to Florida (no jobs).  Do you know if there would be any job prospects for someone in my field?  How hard is it to immigrate?  I've been working on NZ but am having trouble getting original documentation back THIRTY years (sheesh).  At this rate I'm going to end up a refugee....

Mon, 01/03/2011 - 01:13 | 843592 psyclopz
psyclopz's picture

Hi Mariposa,

I'm really sorry I do not know much about your professional field. 

As for immigration laws, you could check out:

The laws are always changing. But as of recent times, they have tightened the floodgates a bit. This could be attributed to the huge influx of immigrants in past 2 or 3 years. If you ask me, should you have applied 3 years back, the chances are pretty high, given on hindsight, the numbers are quite astounding. I can't help but say that the native population has been diluted significantly for better or for worse.

As for myself, I have yet to start undergrad school and I cant help but notice the rise in real estate prices and the competition for jobs creating downward wage pressure. Infrastructure is also quite bogged down due to the massive inflow and cars are getting more expensive. But as a whole, we did have 14% GDP grow which does not apply to every citizen. The benefactors are mainly those who have investments in real estate/construction etc and businesses. We the younger folks face a slow growth in incomes relative to housing price boom which could slow growth and justify more immigrant inflows in future.


Mon, 01/03/2011 - 01:14 | 843593 psyclopz
psyclopz's picture

Hi Mariposa,

I'm really sorry I do not know much about your professional field. 

As for immigration laws, you could check out:

The laws are always changing. But as of recent times, they have tightened the floodgates a bit. This could be attributed to the huge influx of immigrants in past 2 or 3 years. If you ask me, should you have applied 3 years back, the chances are pretty high, given on hindsight, the numbers are quite astounding. I can't help but say that the native population has been diluted significantly for better or for worse.

As for myself, I have yet to start undergrad school and I cant help but notice the rise in real estate prices and the competition for jobs creating downward wage pressure. Infrastructure is also quite bogged down due to the massive inflow and cars are getting more expensive. But as a whole, we did have 14% GDP grow which does not apply to every citizen. The benefactors are mainly those who have investments in real estate/construction etc and businesses. We the younger folks face a slow growth in incomes relative to housing price boom which could slow growth and justify more immigrant inflows in future.


Sun, 01/02/2011 - 00:04 | 842200 essence
essence's picture

Yes, Amerman is attempting to sell his services, however don't let that
detract from some good arguments on his part. They are valid.

The fact is it's the selling of PMs that is the Achilles heel to owning them. That is where the government will lie in wait for you. And it could very well get far worse in the future than it is now. Ignore this at your own peril.

And why would someone sell some of their PMs? Oh...maybe to get some
currency de jour to buy food and gas after they've lost their job.

The fact is Gold & Silver aren't the everyday currency. And when the USD implodes
then likely the PTB will introduce USD2, or SDR, or thereabouts ( and yes, they probably can get away with it...there just won't be any deficit spending/bond selling for a generation or untill memories fade).

Even if the new currency is PM based, I still suspect there will be
this 'got ya' whereas the gov screws you in converting held PMs into the new
PM backed currency.

I'm not attempting to put anyone off from shifting into PMs, nor am I attempting
(a la Daniel Amerman) to make something from the move into PMs....

What I wish to do is alert you all to one likely scenario as I see it.
These days the government always seems to find a way to screw you.

Thinking that PMs are a foolproof method to escape that is wishfull thinking.





Sun, 01/02/2011 - 07:49 | 842419 Snidley Whipsnae
Snidley Whipsnae's picture

"These days the government always seems to find a way to screw you."

Consider the results of the governments 'war on drugs', 'war on poverty', et al. All failures.

If the government attempts draconian legislation against PMs it will be a failure for several reasons.

The wealthy Americans have shifted some of their wealth to PMs and will not stand for confiscatory legislation.

Draconian laws vis PMs will create yet another huge black market for PM to currency exchange, much as the war on drugs.

When legal channels/markets are suppressed black markets take their place.

Smuggling is probably the second oldest profession. Viet Nam is relearning this lesson as we type.

Mon, 01/03/2011 - 21:30 | 845542 4xaddict
4xaddict's picture


Information is too widely available to the average punter these days for the gov to have a meaningful affect on people. When you can buy prepaid visa cards the world over that can in many respects be recharged anonymously there is little hope for the government short of closing the borders to all fund flows. You buy gold and hold it outside the US and you are laughing. Exchange it for cash and top up your rechargeable visa/MC atm card as needed. Very simple. The bankstas don't give a rats ass about government control, as long as they are clipping the ticket on your prepaid visa transactions your could be Osama himself for all they care. Sure sheeple will be f&^%ed, but they always are! Anyone with a light on between their ears will be fine provided of course they have something to convert into PMs at the moment. If not then I pray for you.....

Sat, 01/01/2011 - 18:47 | 841878 Montgomery Burns
Montgomery Burns's picture

When considering his scenario my initial thought is that if gold goes to 100k /oz i'm probably not law abiding enough to cash out my 100 oz all at once and claim and pay taxes on the increase. Thats just me though. I don't know what he's selling.

Sat, 01/01/2011 - 19:11 | 841908 Clampit
Clampit's picture

My guess is you won't be cashing out, but spending out. And I'll gladly pay capital gains on all the additional *ounces* that magically appear in my stash, otherwise I recognize no gain in my capital. Last I checked my Morgan dollars are worth exactly one dollar...

Sat, 01/01/2011 - 19:18 | 841915 Quixotic_Not
Quixotic_Not's picture


This is why all of my Ag is U$ Minted...

Sat, 01/01/2011 - 19:29 | 841921 squidward
squidward's picture

Exactly, its the governments own folly to keep minting eagles with a dollar value stamped on them.  The IRS can't even fight it.

Sat, 01/01/2011 - 21:42 | 842083 cxl9
cxl9's picture

You sure about that? I admire your spirit, but not your Googling skills.


Sun, 01/02/2011 - 00:55 | 842237 Clampit
Clampit's picture

If at first you don't succeed ... follow on from 2009.

Damn, now I'll have to melt all those Morgans into bullets.

Sun, 01/02/2011 - 01:37 | 842286 Clampit
Clampit's picture

So now I *have to* use bullion value? As in all the 2011 yellow dollar coins I receive (soon to be my whole salary) I *have to* report at about 8 cents? I'm on it boys. Job well done.

Sun, 01/02/2011 - 12:09 | 842511 unununium
unununium's picture

Damn good point.  I get paid in electrons.  What is the bullion value of those nowadays?

Sat, 01/01/2011 - 19:35 | 841929 Sudden Debt
Sudden Debt's picture

HA! If that would ever be the case, just buy yourself a igot mold, and small furnace and melt the coins into bars.

That surely wouldn't stop me from cashing in :)

Sat, 01/01/2011 - 19:38 | 841932 Mariposa de Oro
Mariposa de Oro's picture

Thanks, ya'll!  Happy New Year!

Sat, 01/01/2011 - 20:03 | 841971 Bendromeda Strain
Bendromeda Strain's picture

You don't sell - you put some up as collateral against a loan of clownbux if you need 'em. Invest accordingly and inflation will pay your note.

Sat, 01/01/2011 - 18:33 | 841852 buzzsaw99
buzzsaw99's picture

But what will happen when the Fed stops buying assets?


Funny stuff. What would happen **if** the fed were to stop putting a bid under everything?


Sat, 01/01/2011 - 22:06 | 842098 Troublehoff
Troublehoff's picture

I've just put a few old items on Ebay, and I set the 'Buy It Now' price quite high. I waiting on the US Federal Reserve to purchase these 'assets'. 

Sat, 01/01/2011 - 22:22 | 842114 Vendetta
Vendetta's picture

if you call the old items toxic, the fed will buy them

Sun, 01/02/2011 - 01:44 | 842294 buzzsaw99
buzzsaw99's picture

Change your name to Dimon or Blankfein.

Sat, 01/01/2011 - 18:36 | 841857 MobBarley
MobBarley's picture

"If the money to boost stock prices by almost $9 trillion from the March 2009 lows did not come from the traditional players, it had to have come from somewhere else.  We believe that place is the Fed."

 That's funny. I was following Bob Chapman's the international forecaster around then and it was fairly apparent that peculiar offshore banks located in the Cayman Island's where the big foreign investors in T-bills . This even as China was fleeing T bills. I'd say by around July 2009 the Fed had become the sole purchaser of T Bills by masquerading as different entities. Apparently the fed also really likes Stocks as an investment.

Paper is paper. Print money, spend money, who cares.

Paper money makes this all possible.



Sat, 01/01/2011 - 20:05 | 841968 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Gold makes this possible because the paper is credited on gold being the first loan of resource and proper asset of the paper issuance.

Mon, 01/03/2011 - 13:58 | 844558 TruthInSunshine
TruthInSunshine's picture

And cotton makes paper possible.

When are they  going to switch to a cheaper media than cotton for fiat?

Then again, actual paper and coin fiat only constitutes 3% of the supply, given digital dollars, so they're all good.

Sat, 01/01/2011 - 18:39 | 841861 max2205
max2205's picture

At least the fkers in 1929 had the balls to show their faces on the floor when they placed huge market orders to support the market and confidence. Ben is a pussy

Sat, 01/01/2011 - 22:25 | 842118 Vendetta
Vendetta's picture

they had the decency to jump out of windows to their deaths too.

Sun, 01/02/2011 - 01:46 | 842295 Things that go bump
Things that go bump's picture

What good sports.  

Sun, 01/02/2011 - 15:07 | 842725 goldfish1
goldfish1's picture

At least the fellow who was the head of the Freddie Mac mess was decent enough to be suicided. RIP. There are some good guys in the midst.

Sat, 01/01/2011 - 18:41 | 841867 hedgeless_horseman
hedgeless_horseman's picture

The continued cyclical decoupling of finance from reality only serves to make Biderman's predictions more plausible.

Sat, 01/01/2011 - 21:27 | 842011 TruthInSunshine
TruthInSunshine's picture

And the continued concetration of American GDP/GNP and political and economic power into the financial sector (something like 14% of U.S. GDP was in the financial/bank sector in 1968, while 41% was in manufacturing; not reversed) is sucking the life out of democracy and the purchasing power of any formerly wide and deep 'middle class.'

Phil Graham, Chris Dodd, Barack Obama, both George Bushes, Bill Clinton, Barney Frank and Tom DeLay must be so proud - they've managed to appear 'different' somehow to sheeple voters, while pounding the table with angry fists while speaking about social wedge issues, and yet completing the tasks they were told to do so splendidly.

What a fine, fine political system we have here in these United States.

Jefferson, Washington, Franklin, Jackson - all rolling in their graves.

Sat, 01/01/2011 - 22:25 | 842120 Vendetta
Vendetta's picture

+100.  Oh... you've noticed they speak about things that are irrelevant to the prosperity of the US too.

Sun, 01/02/2011 - 15:13 | 842729 goldfish1
goldfish1's picture

You underestimate the despicable acts of the henchmen: James Baker, Dick Chen*y, Donald Rumsfeld, Paul Wolfowitz and Michael Chertoff. Add Lindsey Graham and people like Ken Lay.

Sat, 01/01/2011 - 18:41 | 841868 French Frog
French Frog's picture

Rather than boosting stock/asset classes prices up to create a 'feelgood' factor, aren't they doing it so that they are able to slowly offload all their junk at a much better price to unsuspecting suckers; and only when this process is complete or near complete will the markets finally correct and resume their long term downtrend; it will be swift as doubtless they will all be placed on the shortside by then

Sat, 01/01/2011 - 20:42 | 842012 cranky-old-geezer
cranky-old-geezer's picture

It's all being done to transfer wealth from American people to Wall Street bankers.  End of story.

Stop focusing on individual trees.  Back off and see the forest.

Sat, 01/01/2011 - 21:11 | 842055 Oracle of Kypseli
Oracle of Kypseli's picture

All these bankers who are looting everything, must be putting their money somewhere safe. Where do you think they invest that money?

It would have to be gold and silver and it would have to be somewhere safe.

It would have to be real estate of some sort (when the bottom is in place)

It would have to be in diversified currencies and in safe banks.

It would have to be perhaps in farming stocks

It would have to be in commodity stocks.

Then, you have your recipe. If you have more ideas, please share.

The world may come to an end as we know it, and it may be rough for a few years, but people adapt and these few investments will always maintain wealth.



Sat, 01/01/2011 - 22:32 | 842129 cranky-old-geezer
cranky-old-geezer's picture

I would assume they're smart people socking away their accumulating wealth in things they know will retain value while they debase the currency to worthlessness. 

That's the forest view.  I don't have a clue about individual trees.

Sat, 01/01/2011 - 22:39 | 842134 gwar5
gwar5's picture

That's a sensible list. I think I got it covered.  

Sat, 01/01/2011 - 23:19 | 842168 chistletoe
chistletoe's picture

ancient chinese proverb, now nearly completely forgotton:


best place to store your surplus is in your neighbor's belly.

Sun, 01/02/2011 - 11:28 | 842487 Calmyourself
Calmyourself's picture

Not sure her husband would approve..

Sun, 01/02/2011 - 12:57 | 842558 AnAnonymous
AnAnonymous's picture

All these bankers who are looting everything, must be putting their money somewhere safe. Where do you think they invest that money?

It would have to be gold and silver and it would have to be somewhere safe.

It would have to be real estate of some sort (when the bottom is in place)

It would have to be in diversified currencies and in safe banks.

It would have to be perhaps in farming stocks

It would have to be in commodity stocks.

Then, you have your recipe. If you have more ideas, please share.

The world may come to an end as we know it, and it may be rough for a few years, but people adapt and these few investments will always maintain wealth.



That is not probably their approach. They are not obsessed in storing value. More interested in retaining their central position and the social organization that gives them their central position.

No matter what happens next, if they retain their central position, they will have access to the best society can offer.

This list is like commercials selling cars exhibiting a good looking family, tremendous life with friends, gorgeous houses... Conveying the idea that buying the car gives an access to the full package.

US citizens have grown specialists in aligning on interests that were not theirs fundamentally (why not?) and later posturing surprise when the completion of these interests are not compatible with their situation. Go figure.

Sat, 01/01/2011 - 18:41 | 841869 Boilermaker
Boilermaker's picture

Let's see here...Biderman's expert anaylis based on pure fact or Leo's "climb a wall of worry" hope, pray, and deny opinion.

Shit...I'm torn.

Sat, 01/01/2011 - 18:47 | 841879 TruthInSunshine
TruthInSunshine's picture

Leo's basing his thesis, based on what I can tell, on:

1) A fundamentally recovering economy; and

2) QE and other supportive Fed programs.

I hardly buy #1.

As for #2, it seems to me that even as POMO intraday bond purchases doubled in the last 30 days or so, from where they was pegged before, there was a far less stimulative, correlative effect on equities, than when it was half the intraday amount before.

If the economy is not fundamentally improving, then it's even more noteworthy that interventionist Federal Reserve policy is failing to do much of anything, except spike wholesale level and cost-push inflation.

Sat, 01/01/2011 - 18:53 | 841889 Boilermaker
Boilermaker's picture

Well, there is also the credibility factor.  I don't believe Biderman has a horse in the race whereas Leo (and his brethren) have ever incentive to distribute as many rose colored glasses as possible.

Biderman is a Corvette whereas Leo is a Chevette.  I don't need to see the race to know, in advance, who to bet on.

Sat, 01/01/2011 - 19:22 | 841917 Cursive
Cursive's picture


Lulz.  Leo is a Yugo with Fiat tires, not a Chevette.

Sat, 01/01/2011 - 20:17 | 841984 Problem Is
Problem Is's picture

LOL. Not even a Ukrainian peasant would drive that...

Sat, 01/01/2011 - 20:36 | 842008 merehuman
merehuman's picture

my garbage can has wheel too but i am missing that NEW car smell

Sat, 01/01/2011 - 20:48 | 842024 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

with Fiat tires

You can make tires out of currency?  I did not know that.  ;)

Sat, 01/01/2011 - 22:30 | 842124 StychoKiller
StychoKiller's picture

(sigh), Don't quit your day-job! :>D

Sat, 01/01/2011 - 22:30 | 842127 MsCreant
MsCreant's picture

They are tires by decree.

Sun, 01/02/2011 - 01:07 | 842255 Dr. Sandi
Dr. Sandi's picture

They are tires by decree.

Sounds like those useless teeny spares they put in most cars anymore. The manufacturer claims they'll work as a tire. Me, I'm not so sure.

Sun, 01/02/2011 - 00:58 | 842242 Cursive
Cursive's picture

Fiat Motors (Italy)

OK, OK, they don't make tires, but you get the point.

Sun, 01/02/2011 - 01:10 | 842257 Dr. Sandi
Dr. Sandi's picture

If you have to explain the joke, get a better audience.

Sun, 01/02/2011 - 12:14 | 842514 Bam_Man
Bam_Man's picture

Or get a better joke.

Sun, 01/02/2011 - 13:56 | 842638 mick_richfield
mick_richfield's picture

You can make tires out of currency?

Sure you can.  But the damn things keep hyperinflating.


Fed delenda est.

Mon, 01/03/2011 - 00:02 | 843520 Dr. Sandi
Dr. Sandi's picture


Sat, 01/01/2011 - 18:44 | 841874 Mark Noonan
Mark Noonan's picture

We must presume that Bernanke will continue to QE until at least November of 2012 - all of this, after all, is in the service of keeping the Ruling Class in power and so they won't want a huge stock market crash and/or Great Depression.  The big question is - will it work?  Can Ben really just keep printing money, forever, without people will real wealth at risk going, "are you kidding?".  I didn't think they'd be able to pull it off for this long - but now I can't say they won't be able to pull it off for another 22 months.

Sun, 01/02/2011 - 07:58 | 842420 Al Gorerhythm
Al Gorerhythm's picture

QE to infinity. It's all they have left.

The alternative is a proactive revaluing of gold. Perhaps those little Munchkins are doing exactly that now. That may stretch the game out a bit but the mere thought of that makes me shudder on how much havoc that will create. Will the entitlement groupthink accept such a crash in their living standards, compared to the new breed of feudal lords?

Screwed x 2 = Oh fuck.

Sun, 01/02/2011 - 14:08 | 842655 JR
JR's picture

Can Ben really just keep printing money, forever, without people will real wealth at risk going, "are you kidding?". 

I don’t think so.  It seems to me he’s pretending that 12% inflation is really 2% and when you get to 15% inflation, he’s going to have some explaining to do not only to the “representatives” of the people, but to his pals in the European and Asian financial capitals.  This is what’s going on; you can’t paper over the world. 

And chronicler Dave Barry, who knows economists better than anyone around, sums up the politicians’ answer to the Recession in his annual year-end review, beginning with the preface: “They also seem to have no idea what to do about this pesky recession...

“Congress tried every remedy it knows, ranging all the way from borrowing money from China and spending it on government programs, to borrowing more money from China and spending it on government programs.  But in the end, all this stimulus created few actual jobs, and most of those were in the field of tar-ball collecting,”

Commenting on the unemployment rate remaining high: “Every poll shows that the major concerns of the American people are Federal spending, the exploding deficit, and—above all—jobs, Jobs, jobs, jobs: this is what the public is worried about.  In a word, the big issue is: jobs.  So the Obama Administration, displaying the keen awareness that has become its trademark, decides to focus like a laser on: health care reform.  The centerpiece of this effort is a historic bill that will either a) guarantee everybody excellent free health care, or b) permit Federal bureaucrats to club old people to death.  Nobody knows which, because nobody has read the bill, which in printed form has the same mass as a UPS truck.”

Alas, we are leaderless. And the money power behind these dangling puppets wants it this way. The good news is that, finally, the political goofs – with their financial and political disasters -- are being found out as things fall apart and a political lynch mob, awake and watching, is a stirrin’.

Happy 2011! Mark.

Sat, 01/01/2011 - 18:46 | 841880 rxmitch
rxmitch's picture

silver 100 gold 1800 6

Sat, 01/01/2011 - 19:13 | 841910 Quixote2
Quixote2's picture

China is not rolling over their treasuries or buying new.  China is buying everything in sight in the world that is physical or produces earnings.  China will not be stuck with treasuries or Fed bonds when China decouples from the dollar and refuses to accept dollars in payment.  China does not buy ETFs that this analysis is based on.  China buys individual productive securities that they may take over in the future.  China is the big buyer in the market under hundreds or thousands of covers.

End of 2011, gold 1800, silver 45.

Sat, 01/01/2011 - 20:15 | 841982 TruthInSunshine
TruthInSunshine's picture

China is not rolling over their treasuries or buying new.


The timing of The Federal Reserve 'Bank' stepping up to the plate & becoming the largest and  buyer of last resort of US Treasuries seems awfully coincidental with China's massive scaling down of U.S. Treasury purchases (and China becoming a net seller), no?

It's odd how these things work out; almost as if they're coordinated by some larger, in-synch players....

Sat, 01/01/2011 - 20:25 | 841994 spiral_eyes
spiral_eyes's picture

great post, quixote.


china is the great reflator. at the end of their buying bonanza, america will be flush with dollars, after they have taken control of our productive assets. the metrics we stupid westerners use to measure the economy (e.g. gdp growth-- everything other than employment and industrial output) will look great (think: 2016) and the "permabears" like tyler durden, gerald celente, max keiser, etc will look to have egg on their face and the stupid fucking sheep will be listening again to cramer and buying the fucking dip. who cares about physical metals when you can make 50% in a year buying apple?


then china decouples, refuses to accept dollar-denominated payments, which slows the flow of manufactured goods to the united states (hey -- they always wanted to be an autarky, and now they have their own middle class to furnish) causing hyperinflation from all the inflation in the monetary base from QE as people scrabble to get their hands on the goods they need. this crash is gonna send america to the grinder, and will probably be ended either by a pentagon coup (sponsored by murdoch and koch industries, etc -- this would be a good thing as it would finally give america a corporatist public works program that restarts manufacturing), or as a chinese vassal.


after the crash? looks like america is going to have to learn to manufacture again after 30 years of borrowed prosperity -- i just hope that it will be under a pentagon coup, and not the chinese alternative.


(to the tune of yellow submarine):










(all together now)






Sat, 01/01/2011 - 20:52 | 842027 cranky-old-geezer
cranky-old-geezer's picture

Agree totally. Best forward analysis I've seen here in a while.

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