Federal Reserve

Bundesbank Blasts Draghi's QE, Fears "Monetary Policy Is Hostage To Politics"

"The concept of an independent central bank clearly focused on price stability is neither old-fashioned nor outdated," exclaimed Bundesbank head Jens Weidmann. As The WSJ reports, he criticized the European Central Bank’s decision to buy private-sector bonds and signaled his fierce opposition to purchasing government bonds, underscoring his reluctance to back additional stimulus measures to combat weakness in the eurozone economy. "There is a risk of monetary policy, especially in the euro area, being held hostage by politics," Mr. Weidmann said, tying fiscal policies together through ECB bond purchases “is a dangerous path,”

Will Gold Crash With The Dow... Or Soar?

In recent months, this prognostication has been gaining traction that a second, more severe crash - one that reflected the level of debt - is inevitable. There are two primary camps amongst economists with regard to the economic direction that a crash will generate: inflationists and deflationists. The argument goes back and forth, yet there seems to be the misconception that one must be either an inflationist or deflationist. This is not at all the case.

Inflation's Not The Only Way Easy Money Destroys Wealth

If by means of monetary pumping one could strengthen the economic growth then it would imply that - by means of monetary pumping - it is possible to create real wealth and generate an everlasting economic prosperity. This would also mean that world wide poverty should have been erased a long time ago. After all, most countries today have central banks that possess the skills to create money in large amounts. Yet world poverty remains intact. The artificial boosting of the demand by means of monetary pumping leads to the depletion of the pool of real wealth. It amounts to adding more individuals that take from the pool of real wealth without adding anything in return - an economic impoverishment.

"There Has Never Been A Crazier Moment In History"

Who can feel confident about the tending of things just now? The diminishing returns of the Information Age are about to bite our collective asses. The sum of all that digital magic is a nation completely incapable of telling itself the truth or acting honorably. Unemployment is down without employment being up. Candy Crush is making the world safe for democracy. We have the finest health care system in the world. ISIS is trying to compete with our homegrown videogame industry for supremacy in porno-violence (actually, I thought we already won that) but now we will obliterate all the bad guys in the world by remote control from the drone bunkers of Las Vegas, and that will show them. Thank goodness the long holiday season is almost upon us to juice the so-called economy ever-higher. There has never been a crazier moment in history.

Holy Trinity Caption Contest: Bernanke, Paulson, Geithner

If anyone's bucket list includes hearing, and seeing, the unholy trinity of Bernanke, Paulson and Geithner whose actions have pretty much doomed America, today is your lucky day, because as part of the lawsuit brought on by former AIG CEO Hank Greenberg, the three legendary statists will field questions from prominent, and very flamboyant, lawyer David Boies. As has been reported previously, Maurice “Hank” Greenberg is challenging the terms of the 2008 bailout for the company he built into a global financial-services powerhouse before being pushed out in 2005. He is not challenging the bailout which prevented AIG from liquidating as a result of selling billions of default protection on worthless companies, and which avoided the all out, and much needed, purge of trillions in bad debt and just as worthless equity.

Frontrunning: October 6

  • Ebola Patient Fights for Life as Contacts are Monitored (BBG)
  • GPIF Unlikely To Announce New Portfolio Until November: Delay Could Rattle Investors Hoping Fund Will Invest More in Stocks (WSJ)
  • High risk Ebola could reach France and UK by end-October, scientists calculate (Reuters)
  • Neves to Face Rousseff in Brazil in Surprise Comeback (BBG)
  • Hong Kong democracy protests fade, face test of stamina (Reuters); A Hong Kong Protest Run on Fumes and Instant Noodles (WSJ)
  • Putin Clans Said Gridlocked Over Arrest as Sanctions Bite (BBG)
  • Surging dollar may be triple whammy for U.S. earnings (Reuters)
  • Lloyds Said to Cut Thousands of Jobs as CEO Cuts Costs (BBG)

Futures Rise On Hewlett-Packard Split; Dollar Eases As Abe Warns "Will Take Measures On Weak Yen"

While the biggest micro news of the weekend is certainly the report that Hewlett-Packard has finally thrown in the towel on organic growth (all those thousands laid off over the past ten years can finally breathe easily - they were not fired in vain), and has proceeded to do what so many said was its only real option: splitting into two separate companies, a personal-computer and printer business, and corporate hardware and services operations (which will certainly lead to even more stock buybacks only not at one but two companies) which in turn has sent its stock and futures higher, perhaps the most notable development in the macro world is Japan's realization finally that the weaker Yen is crushing domestic businesses, which has resulted in the USDJPY sliding to lows last seen at Friday's jobs report print, and also generally leading to across the board wekness for the dollar, whose relentless surge in the past 3 months is strongly reminiscent of the euphoria following the Plaza Accord, only in the other direction (and making some wonder if the Plaza Hotel caterer are about to see a rerun of September 22, 1985 in the coming weeks).

Obama's Economic Recovery In Pictures

The last two days have seen President Obama will give speeches on the economy. This issue is critical going into the mid-term elections as virtually every poll shows this is a top concern of voters. The question of economic recovery is interesting in the context of where that recovery has occurred.  As we discussed recently in "For 90% Of Americans, There Has Been No Recovery," while the ongoing interventions by the Federal Reserve have inflated asset prices, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else. Unfortunately, the facts are going to make promoting an "economic success" story rather difficult. Let's review Obama's economic scorecard in terms of the things that truly matter to the average American...

3 Things Worth Thinking About

Amid the recent weakness in stocks and strength in the USDollar, we are constantly reassured by talking heads that major stock market declines only happen during recessions. While that may be technically correct, perhaps it is worth pondering: "Did a recession cause the correction, or did the correction cause the recession?"