We tried to bite our tongue; we ignored some of the sheer hypocrisy of Cleveland Fed's Sandra' oh Sandy' Pianalto (that QE2 was a definitive success in 2010 but now LSAPs require more analysis of costs and benefits); but when she started down the road of praising the US consumer for deleveraging we had enough. In the immortal words of John Travolta: "Sandy, can't you see, we're in misery" as while she notes consumers cutting back on credit card debt (due to forced bankruptcies we note), Consumer debt has only been higher on one month in history! Soaring auto loans and student debt should just be ignored? There is no deleveraging - Total US Consumer debt is 0.23% from its all-time high in mid-2008, and will with all likelihood break the record at the next data point. Meanwhile her speech, so full of careful-not-to-over-commits can be summed up by the world-cloud that shows the six words most prominent: 'Monetary Policy', 'Financial Conditions', and most importantly 'Credit Economy'. Here's the deal: Consumer Debt is Consumer Debt.
What do we call a power center that enables and enforces neofeudal exploitation and predation? We call it evil. The Federal Reserve is a force of evil that should be abolished at once. Its purpose - enabling and enforcing a neofeudal transfer of wealth from the productive many to the unproductive, parasitic few - is evil. Those within it are serving evil. Those who defend it are serving evil. Those who worship its power are serving evil. Those who mask its true nature are also serving evil. In a society and culture that has lost its moral compass, a culture of greed, self-serving lies and corrupt vested interests, the word "evil" has lost its power. It has been reduced to a cartoonish label, a cynic's smarmy joke.
It is one thing for various anti-Central Planning (and thus central bank) outlets to warn, over 3 years ago, that easy monetary policy is merely an enabling substance, and is addictive as any drug to a dysfunctional political establishment which is more than happy to avoid fiscal prudence if monetary policy is readily available to delay the inevitable day of reckoning when monetizing the debt will no longer work. It is a different matter entirely when the head of the world's only solvent central bank - the German Bundesbank, which happens to be the biggest guarantor of that other mega hedge funds the ECB, and which of all developed economies also happens to have had the closest recent encounter with hyperinflation (unlike all the "other" theoretical experts who enjoy talking extensively about matters they have zero experience with). In an interview with German Spiegel magazine, Buba head Jens Weidmann, once again has loudly warned what as recently as 2009 very few dared to even think: namely that rampant and gratuitous deficit plugging using central bank debt issuance, and thus explicitly monetizing the debt, "can be addictive as a drug." Obviously, like any drug overdose, the aftereffects are always fatal.
Ben talks, the WSJ blows smoke and storms grow.
Gold $1669.80 up 20 cents - Silver $30.61 up 16 cents Silver Charges Ahead, Gold Rebuffs Cartel RaidSubmitted by lemetropole on 08/24/2012 19:03 -0500
Silver is going to blow SKY HIGH!!
It is Friday, and the market is in danger of posting its first weekly loss in months. Which means it is time for everyone's favorite Fed mouthpiece, Jon Hilsenrath to hand over the podium to his true superior, Ben Bernanke, by posting the Chairsatan's response letter to Republican Darrel Issa in which he defends QE and leave in the following: "There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery." And just to make sure that as Hilsenrath is to the Fed, so Reuters is to the ECB, we get the following tried and now simply pathetic regurgitation of the Spiegel rumor from this Sunday (which was since denied at least two times for the simple reason that Germany will never agree to open-ended debt monetization until global stock markets are literally collapsing) via Reuters: "ECB considering setting yield band targets under new bond buying programme according to sources." Of course, neither Ben has said anything new, nor the ECB has said something that is on the margin either credible or actionable (recall that earlier today the ECB explicitly said its hands are tied until the Kardinals of Karlsruhe make their decision in 3 weeks), but the market doesn't care, and surges. Sadly for the programmed market ramp, the non-news was leaked too early, and should have been released at 3:30 pm at the earlier. Look for a full German denial shortly.
- So Draghi was bluffing after all: ECB Said To Await German ESM Ruling Before Settling Plan (Bloomberg)
- German finance ministry studying "Grexit" costs (Reuters) - it would be bigger news if it wasn't
- Money Funds Test Geithner, Bernanke Resolve as Schapiro Defeated (Bloomberg)
- Top Merkel MP says Greek deal can't be renegotiated (Reuters)
- China Eyes Ways to Broaden Yuan's Use (WSJ)
- Armstrong ends fight against doping charges, to lose titles (Reuters) - Dopestrong?
- Need more socialism: Public confidence in France's Hollande slips (Reuters)
- Seoul court rules Samsung didn't violate Apple design (Reuters)
- France, Germany Unify Approach to Greek Talks (WSJ)
- Stevens Sees Mining Boom Peaking, RBA Ready to Act (Bloomberg)
Up to his neck: the Governor of the Reserve Bank of Australia—the latest in a series
UPDATE: Added Romney's Bernanke-Busting Clip
With Romney's comments (that QE2 didn't work, that he doesn't back QE3, and that Bernanke should go) somewhat cornering the Fed-Head's decision-making, CNBC's Rick Santelli's comments this morning are even more prescient. The Chicago truth-sayer vociferously noted the increasingly politicized Federal Reserve actions, highlighting Schumer's recent 'demand' that Bernanke do his job. With Bullard this morning noting that muddle-through was not enough to justify the size of QE3 the market seems to be anticipating, it appears any actions by the Fed in the near-term can only be seen as political. The only way to justify any sizable NEW QE is then surely for the market to crash - and with Spain's no-bailout-soon, and Merkel back in the headlines, who knows what's possible. One thing is certain: under Romney the country will need a Fed Chairman. And if it is not Bernanke, despite Glenn Hubbard's promises yesterday, one very likely name will be Hubbard's close friend and co-author: Goldman's Bill Dudley, who now runs the NY Fed. One wonders which choice will be worse for the country (if not for gold longs) - the Chairsatan or Bill Dudley? Of course, look for Obama to retaliate and promise to para-drop dolla dolla billz if elected. Critically, the wizened ex-Gold trader Santelli notes the precious metal knows this and is acting as a barometer of anxiety in this stand-off.
The entire global financial "recovery" engineered by central banks and Central Planning is based on the absurd notion that if we spread unpayable debt over the entire body politic (be it a nation or regional entity such as the European Union) then that distribution will somehow make the debt payable and the phantom assets real. The debt remains unpayable and the assets (collateral) remain stubbornly phantom. As for adding more debt (selling Eurobonds, Treasury bonds, etc.), please note the diminishing return on additional debt: it is now negative.... Diminishing returns define the flailing financial system: the return on petrocapitalism is declining (how many barrels of oil or equivalent does it take to extract and process one barrel of shale-derived oil?), the return on more debt has turned negative, the yield on "saving" bankrupt States is marginal, and so on: spreading insolvency to the taxpayers does not magically create solvency, it only distributes insolvency to every nook and cranny of the economy.
All the debt remains painfully real; it is only the collateral that is illusory.
I am reminded that this is the 5-year anniversary of the emergency Fed Discount Rate cut in response to the collapse of Countrywide Financial (CFC) earlier that week.
Industrial unrest hobbling the South African platinum industry deepened yesterday, prompting fears of a broader mining crisis in one of the main platinum and gold producing countries. Platinum and gold prices continued to soar partly due to real concerns of supply disruptions after 44 people died during strikes at a pit owned by Lonmin. About a fifth of global platinum production capacity is idled in South Africa today as the nation holds a day of mourning for 44 miners and policemen killed in the deadliest police violence since apartheid ended (see Newswire). Massive discontent has spread to two other important platinum mines. Amplats, the world’s largest platinum producer that is 80% owned by Anglo American, disclosed it had received demands for pay rises at its Thembelani mine. Meanwhile, another miner, Royal Bafokeng, said about 500 people were protesting outside its Rasimone mine, and preventing others from going to work. It seems likely that the protests will spread from the platinum sector, to other sectors, including the gold mining sector.
- Australian minister says resources boom is over (Reuters)
- China dismisses reports of lost gold reserves (China Daily) - so China really did lose 80 tons of gold.
- Inconceivable: Former JPM CEO and Chairman William B Harrison Jr come out "In Defense Of Big Banks"
- Qantas Cancels 787 Order After Posting Annual Net Loss (Bloomberg)
- EU Official Says Crisis is Eroding Influence (WSJ)
- Greece Faces New Pressure on Cuts (WSJ)
- Philippines' black market is China's golden connection (Reuters)
- Hollande government responds to criticism (FT)
- LG Display Starts Touch Screens Output Before New IPhone (Bloomberg)
- Greek Crisis Evasion to Fore as Merkel Hosts Hollande in Berlin (Bloomberg)
- Stakes rise as US warned of double-dip (FT)
- Brazil’s Richest Woman Unmasked With $13 Billion Fortune (Bloomberg)
In tort law, an attractive nuisance is any potentially hazardous object or condition that is likely to attract the naive and unwary, i.e. children. A classic example is an abandoned swimming pool half-filled with fetid water. The stock market is demonstrably an "attractive nuisance" and should be closed immediately. It should never be reopened unless these conditions can be met: 1) All shares must be owned for at least four hours 2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants 3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law. If you insist on putting money at risk in the stock market, be aware that you are playing a rigged roulette wheel and thus you are a mark. You might win, or the entire game might collapse in a rotten heap of lies and corruption. Just remember that the market is ruled by parasites who need to keep their hosts (investors) alive so they can continue to feed off them (i.e. biotrophic parasites). If the hosts all leave the market, the parasites will have only themselves to feed on, and they will quickly expire.
Capital Markets Über Alles: What Mitt Romney's Economic Advisor, Goldman Sachs (And The NY Fed) Really ThinkSubmitted by Tyler Durden on 08/22/2012 10:09 -0500
When it comes to Glenn Hubbard, the man needs no introduction, at least to those who have watched the Charles Ferguson seminal movie 'Inside Job.' Indeed, the extensive connections of the Dean of the Columbia school of business to the financial industry is well known, a fact which served as the basis of Ferguson's question: just how corrupt is America's elite educational establishment, and just how much of a factor in the perpetuation of the status quo is Wall Street's puppet control over each generation of rising financial and economic thinkers. For those who are unaware, Hubbard also happens to be presidential candidate Mitt Romney's top economic advisor. The reason why Hubbard has suddenly made the headlines, is because of his overnight statement that contrary to what the potential future president has said, namely that Bernanke's days would be numbered under a Romney presidency, and that the Fed would be audited, Glenn has taken the other side of this argument, and told Reuters that Bernanke should "get every consideration" to stay beyond January 2014, when Ben's term expires. But why? Well, for the answer to this particular question, we have to go back to that long ago year 2004, when Glenn Hubbard together with current Fed president, and former chief Goldman chief economist Bill Dudley, authored a white paper bearing the Goldman sachs logo, titled "How Capital Markets Enhance Economic Performance and Facilitate Job Creation." In a word: for Mr. Hubbard (as well as for Mr. Dudley, Goldman Sachs, and thus, the New York Fed) it is all about the capital markets.