Federal Reserve

Fed Up?

William Banzai ... for the win.

We can't have THAT, now can we?

Classic method of FUD - fear, uncertainty and doubt.

The Fed/Treasury is an evil axis defunding you and me: the debt is $14.5 trillion; this is our debt, not the government’s debt. The government does not generally earn money; we do. Therefore every criminal debt certificate (Treasury bond) the Treasury exchanges for cash is a debt on you and me--a promise to pay for which citizens are responsible to pay, IOUs in simple terms. If the government printed the money instead of the criminal Fed, there would be no debt. Uncle Sam borrows bucks and you become automatically indentured to pay back the bond and pay the vig! How is this not a criminal enterprise? If you go to a loan shark, at least you get to have the money in your hand and can spend it before you have to repay the loan and pay the vig!

There are many factors that clearly demonstrate why it would be disastrous for the Federal Reserve to repeat their vicious Quantitative Easing (QE) policy. If you want to know a significant reason why they cannot get away with another round of QE, here is an equation for you: (Quantitative Easing + Extreme Weather = Revolution + World War III)

Today, Sandra Pianalto, president of the most irrelevant Fed in the US, the Cleveland one, confirmed why when it comes to economic predictions, one may want to take anything uttered by the rocket scientists at the Fed with a pinch of salt... and why in general anytime an economist speaks it is best to run away. Specifically, in her prepared remarks to whoever it is that is dumb enough to listen, she just said that she expects the US economy to grow by 2% in 2011. Funny, because a simple google search reveals the following glaring headline from those long ago days of June 1, 2011...

The Founding Fathers' vision of prosperity has been destroyed - and we've gone from the "wealth of nations" to the "debt of nations" - at least in part because our political system has been subverted by non-Constitutional committees and entities.

The Fed has admitted that its banks are  private institutions.

Now, it's the "Super Congress" ...

We know two things: 1) the official policy of the Federal Reserve is to engineer and maintain inflation and 2) inflation is theft. As I have recounted here many times, in nominal terms, it looks like average wages (earned income) in the U.S. have been rising smartly for decades. But measured in purchasing power, i.e. adjusted for inflation, earned income has declined for most workers, especially in the past three years. Whenever a pundit scoffs at the idea that the dollar might lose 95% of its value, readers remind me it already has lost 95% of its value in the past century. The Federal Reserve robs savers every day of millions of dollars, which it then transfers to the "too big to fail" banks by paying interest on those banks' reserves. Savers earn .01% on their cash while banks are paid 2% interest. The difference is what is stolen from savers and funneled to the banks.

"What we ask is that you spread the Truth and take ACTION! WE ARE ANONYMOUS. WE DO NOT FORGIVE. WE DO NOT FORGET.EXPECT US."

The Fed has just taken one small step to acknowledging reality... and Zero Hedge's keyword of 2011: stagflation. The FOMC  released its revised 2011-2013 economic forecast, which saw GDP getting slashed, while hiking its inflation and unemployment projections. Specifically, 2011 GDP was lowered from 3.2% to 2.8% even as it raised its average unemployment forecast from 8.6% to 8.8%.

Update: according to sources, L-Pap has taken the smart way out and has decided to reject the offer to replace G-Pap #2.

According to Greek TV, and this is not confirmed by the Greek government yet, Lucas Papademos ("L-Pap", or "The Plant") will replace "Goldman employee of the year" Giorgios Papaconstantinou, (or G-Pap the Second as he is known on Zero Hedge) who is now the sacrificial lamb of the complete failure that is the PASOK government in Greece. A quick glance at L-Pap's resume explains why the European banking cartel is delighted with this nomination: "He followed an academic career at Columbia University, as well as
serving as Senior Economist at the Federal Reserve Bank of Boston in
1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to
Deputy Governor in 1993 and Governor in 1994. He was Vice President of the European Central Bank from 2002 to 2010." Take a wild guess whether The Plant will be on the side of his "constituency" or of the Criminal Banking syndicate in the upcoming plunder of Greece. And yes, this is quite bullish for the Ensolventzone Central Bank (and its currency) which was about to be saddled with tens of billions of defaulted debt pledged in its nether regions as cash collateral.

Presented without commentary:

• FED'S PARKINSON SAYS FED'S JOB IS TO COUNTER OVER-OPTIMISM' BY BANKS
• FED'S PARKINSON CITES `SHORTSIGHTEDNESS' BY BANKS PRE-CRISIS
• FED'S PARKINSON URGES HIGH-QUALITY CAPITAL ON SIFI SURCHARGE
• PARKINSON: FED TO PAY CAREFUL ATTENTION TO DIVIDENDS, BUYBACKS

Actually one word, or abbreviation, of commentary: WTF

Either we have just gotten yet another confirmation of just how worthless the Flow of Funds "household" plug category is, or there is something very, very wrong with conventional wisdom. According to a detailed breakdown of the Z.1 from Goldman Sachs the biggest seller of US Treasurys to the Fed in Q1, at an annualized rate of $1.1 trillion, were... US Households. We have to wonder how this news makes even remote sense when confronted with the ongoing dumping of stocks by retail investors. On the other hand, if indeed the Fed is correct then the entire paradigm of retail jumping into the safety of US paper may have to be reevaluated. And not only that, but if this activity has continued into Q2, it may present even greater risks for the Fed's unwind of QE2: should households persist in their Treasury dispositions with only dealers left to pick up the pieces, Gross' thesis may be proven right much faster than we expected, Fed Treasury puts notwithstanding.

Well, the problems in CMBX are finally hitting some of the mainstream media. We first pointed out the problems in CMBX last Thursday. HYG is down just over 1% since then. We highlighted the CMBX and ABX problems again on Tuesday. Since then HYG is only down a little bit, but as we suggested at the time, it has now underperformed stocks. It moved 1:1 with stocks on Wednesday and was only up marginally yesterday in spite of a decent size stock gain. I am not sure what it means that there were two Bloomberg articles today talking about CMBS market and how it has impacted the rest of the credit market. CNBC just mentioned CMBX. How long has it been since they mentioned CMBX? I suspect it has been awhile. This could be a sign that the problem has played out. It isn't new news to people focused on credit markets. My only hope as someone who is still a little bearish, is that if we do get another round of weakness, the CMBX boogey man will encourage some people who typically don't play in credit, to buy some CDS or even sell financial stocks, which would be good for the short.