So how do you grow household wealth by $18 trillion in the face of these dismal real world trends? In a word, with a printing press. But what happened today is that Draghi showed he is out of tricks and Yellen confessed she is out of excuses. Yes, this sucker is going down. And this time all the misguided economics professors turned central bankers in the world will be powerless to reverse the plunge.
Citi Turns Bearish On Stocks On "Richer And Richer" Markets, Sees 65% Recession Probability; Janet Yellen DisagreesSubmitted by Tyler Durden on 12/03/2015 14:19 -0500
"Given the surge back towards the all-time highs in the S&P 500, we think that the best might be over for US equities and that indices might range trade more in 2016. We have downgraded US equities to neutral. This takes our overall equity weighting down to neutral, in many respects an extension of what we’ve been doing for most of this year as richer and richer asset markets, against a global background of economic risks, have made us more cautious."
Americans today are blissfully distracted by their iGadgets, plotting out their holiday shopping strategies, leasing new cars, eating out, and buying advance tickets to the new Star Wars movie. They don’t see the wicked winter squalls ahead which will try their souls. We are experiencing the lull before the storms, but the storms are surely coming. The potential for catastrophe is high and burying our heads in the sand is not a strategy.
A simmering rage is bubbling below the surface as 20% of American households rely on food stamps to survive, the percentage of Americans in the labor force stands at a four decade low, real household income remains stagnant at 1988 levels, corporate profits have reached record levels while corporations continue to fire Americans – shipping their jobs overseas, and the six mega-corporations representing the mainstream media cover up the truth, mislead the public with propaganda, while celebrating the .1% as saviors of our economy. There is nothing more volatile to societal stability than millions of unemployed men, growing angry and resentful towards the ruling class for their lot in life.
A Furious Ralph Nader Calls Out The Fed As "Tribune To Plutocratic, Crony Capitalism"; Janet Yellen RespondsSubmitted by Tyler Durden on 11/23/2015 17:05 -0500
In his letter, reproduced below, Nader bashes the "tediously over-dramatic indecision as to when interest rates will be raised"; demands that the Fed not "lecture us about the Fed not being “political.” When you are the captives of the financial industry, led by the too-big-to-fail banks, you are generically “political" and - in short - wants to know when the Fed will put the interests of Main Street over those of "plutocratic, crony capitalism for which the Federal Reserve has long been a leading Tribune."
2015 ends with the market cap of Amazon & Google exceeding that of every single Chinese company in the MSCI China index… the US stock market a mere 107 trading days away from becoming the 2nd longest bull market of all-time, with equity leadership driven by “growth” (longest duration of outperformance ever) & “quality” (at all-time relative high)… and $6trn of negatively-yielding government bonds, $17trn of bonds yielding <1%, and the Fed expected to raise the Fed funds rates for the 1st time since 2006.
There is a widespread global campaign to eradicate physical cash. And we’ve now got a connected insider confirming it.
The Fed was out in force yesterday peddling some pretty heavy-duty malarkey about the up-coming rate liftoff at the December meeting..."If we begin to raise interest rates, that’s a good thing." That’s not a bad thing." Goldman is putting out the final mullet call for this Bubble Cycle because it knows that this bull is dying; that insiders still have massive amounts of stock winnings to unload; and that the clock is fast running out. The expiring clock is evident in the S&P 500’s one-year round trip to nowhere. Despite the fact that the Fed has ponied-up a stick save at every single meeting this year, the market’s 27 separate efforts to rally have all failed for the simple reason that the jig is up.
"The equilibrium, for now, is QE infinity – but political risk could be the breaking point"...
Sure, the stock market had a great October with the Dow Jones Industrial Average jumping by 8.5%, but the disconnect between Wall Street and Main Street is too stark to ignore, and the Federal Reserve is about to pop the easy-money financial bubble.
While there are many that continue to dismiss individual "economic data points" in order to promote a "bullish bias" for the equity markets, it is more important to accumulate the "weight of evidence." The rising inventory levels, weak consumption, and plunging imports all suggest that the domestic consumer is much weaker than currently believed. The last time this combination of data points collided was just prior to the start of the last recession. But then again, this is where "economic theory" collides with "Main Street realities." Place your bets carefully.
The institutional academic system is broken. We need less systemic, traditional education that only provides knowledge of low utility and more alternative education that provides the right high-utility knowledge to thrive during today's global currency wars.
It's simple - in theory - a central planning body, who knows what is best for the rest of society, lowers interest rates (to reduce the cost of capital, encourage entrepreneurial actvities, and stimuluate the economy - and therefore jobs - for the average joes and josephines of the world). But a funny thing happens when the world is saturated in debt, leveraged to the max, and liquidified by lenders of last resort... the textbook breaks!
Greenspan’s phony disinflation success led to the Fed’s embrace of fully mobilized and massively intrusive monetary policy in the guise of the Great Moderation and the wealth effects theory of financial asset levitation. In due course, Greenspan’s self-aggrandizing but purely experimental forays of massive central bank intrusion in the financial markets were supplanted by the hard-core Keynesian model of Bernanke and Yellen. Alas, they operated under the grand illusion that a domestic wage and price spiral would tell them when the domestic GDP bathtub was filled to the full employment brim, and therefore when to lift their foot from the monetary accelerator. It never happened, and they never did. The era of Lite Touch monetary policy was by now ancient history.
The world of Bubble Finance economies created by the Fed and other central banks is fundamentally different than that prevailing under the “Lite Touch” monetary policies which preceded the Greenspan era. The problem today is that the PhDs running the Fed have an economic model which is a relic of the Lite Touch era. It is not only utterly irrelevant in today’s casino driven system, but is actually tantamount to a blindfold. It causes them to look at a dashboard full of lagging indicators like jobs and GDP components, while ignoring the explosive leading indicators starring them in the face on CNBC. The clueless inhabitants of the Eccles Building do not recognize that they have created a world in which Wall Street supersedes main street.