Federal Reserve

The reckless herd has been in control for the last few years, but their recklessness is going to get them slaughtered. Corporate profits are plunging. Labor participation continues to fall. A global recession is in progress. The strong U.S. dollar is crushing exports and profits of international corporations. Real household income remains stagnant, while healthcare, rent, home prices, education, and a myriad of other daily living expenses relentlessly rises. The world is a powder keg, with tensions rising ever higher in the Middle East, Ukraine, Europe, and China. The lessons of history scream for caution at this moment in time, not recklessness. 2016 will be a year of reckoning for the reckless herd.

The sources of growth for US corporates have all dried up. Stocks have yet to adjust to this, but when they do it’s going to be an all out collapse.

It all started off relatively well: oil and US equity futures were buoyant on hopes Iran and Saudi Arabia would break out in a bloody conflict any minute boosting the net worth of shareholders of the military industrial complex, and then, out of nowhere, like a depressed China in a bull shop, the "mainland" crashed the party and it all well south very, very quickly...

Earlier in the session, after the surge in oil prices on fears of a spike in belligerence between Saudi Arabia and Iran, bulls were hopeful that after a poor close to 2015, at least the first trading day of 2016 would set a positive mood: after all, if there is one thing war is good for, it is to lift stock markets. And it did... for about 3 hours.  Then moments ago, Caixin Media and Markit Economics released the latest December PMI, which was, in a word, a total disaster, one which promptly sent US equity futures sliding, and the Shanghai Composite tumbling some 4%... and CSI-300 Limit down.

Though "another Lehman Brothers" isn't likely to happen with banks, it is very likely to happen with commodity firms and countries that depend directly or indirectly on commodity prices.

Another possible step would be to reduce short-term interest rates below zero if needed to provide additional accommodation... Could negative interest rates be a policy response that the Federal Reserve could choose to employ in a future crisis? ... these are transitional problems, but they might be sufficient to make a move to negative rates difficult to implement on short notice.

Prepare to be taxed.

As 2016 begins, there are clear signs of serious debt/default squalls on the horizon. We can already see the first white-capped waves.

The seventh anniversary of Zero Hedge is just around the corner, and so, for the seventh year in a row we continue our tradition of summarizing what our readers found to be the most relevant, exciting, and actionable news of the year, determined by the number of page views. We bring you the articles that you, dear reader, found to be the most interesting in the past 365 days.

Elections, elections, and more elections is the 'regime change' meme for 2016 but, as Bloomberg details, the key events of the year ahead vary from a California marijuana referendum to Brazil's Olympics, and from Davos to SCOTUS. No matter what, 2016 holds a lot of opportunity for volatility, and without The Fed's safety net, who knows what that means for markets...

Any serious reform has to start with the dissolution of the existing political parties and the Federal Reserve. Anything less is self-serving, pandering fantasy.

The Fed’s crystal ball is in serious need of a recalibration. Fed governors simply haven’t a flippin’ clue what to really expect from the economy. The gold market knows that. It knows that the U.S. economy is like an obese American who has taken up jogging to get into shape... only after the first lap around the track, it’s bent at the knees, huffing and puffing, and feeling like it’s gonna keel over.

It has come down to this: a year in which the US stock market (led by a handful of shares even as the vast majority of stocks has dropped) has gone nowhere, but took the longest and most volatile path to get there, is about to close either red or green for 2015 based on what happens in today's low-volume session following yesterday's unexpected last half hour of trading "air pocket" which brought the S&P back to unchanged for the year.

America is being destroyed by problems that are unaddressed. Unbridled greed, short-term in nature, will continue to drive America into the ground.

Wait, isn't direct funding of the Treasury against US policy: after all, hasn't Bernanke been on the record countless times repeating that the Fed does not monetize the US deficit? Not anymore...