New Orleans

Has BP Made “Natural” Oil Seeps In the Gulf Larger?

While sounding just a tad preachy in his February newsletter, Bill Gross' latest summary piece on the economy, on the Fed's forray into infinite ZIRP, into maturity transformation, and the lack thereof, on the Fed's massive blunder in treating the liquidity trap, but most importantly on what the transition from a levering to delevering global economy means, is a must read. First: on the fatal flaw in the Fed's plan: "when rational or irrational fear persuades an investor to be more concerned about the return of her money than on her money then liquidity can be trapped in a mattress, a bank account or a five basis point Treasury bill. But that commonsensical observation is well known to Fed policymakers, economic historians and certainly citizens on Main Street." And secondly, here is why the party is over: "Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time." Yet most troubling is that even Gross, a long-time member of the status quo, now sees what has been obvious only to fringe blogs for years: "Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Still, zero-bound money may kill as opposed to create credit. Developed economies where these low yields reside may suffer accordingly. It may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper." Let that sink in for a second, and let it further sink in what happens when $1.3 trillion Pimco decides to open a gold fund. Physical preferably...

ConvergEx's annual analysis of Super Bowl economics shows that, when the time and place is right, prices can soar like a Hail Mary pass to clinch the playoffs.  Yes, the face value for tickets is unchanged in the last year - $800 to $1,200.  But the street price for a ticket to the big game will set you back at least $2,000, and the average ticket is running closer to $4,000.  The good news, sort of, is that there has been no inflation for the “Cheapest” seats since last year, when they were also two grand.  And that is despite a smaller stadium this time around (68,000 versus +80,000).  A signal about the stagnating confidence of the high end consumer?  Perhaps. Nic Colas goes to note that to get into Super Bowl #1 would have cost you all of $12.  That was in Los Angeles in 1967.  And the best seat in the house.  From there stated ticket prices went to $50 in 1984, $100 in 1988 and $500 in 2003.  Now, the prices printed on the ticket for the Indianapolis game this Sunday are between $800 and $1,200.  As the accompanying chart shows, this is an inflation rate of around 8,900% for the period, versus 687% for the Consumer Price Index. One thing we know – next year it won’t be a problem to set a new street price for the Super Bowl, regardless of whatever the economy may bring.  It is in New Orleans.

Stop a Wells Fargo Eviction at the Tehiva/Phillips’ Home 5305 Hana Hwy Monday Jan 2...

All this bickering and ongoing pissing contests are getting just a little confusing. So now Obama appeals, as Gibbs just announced, and appellate court overturns the overturned decision, only to capture even more of the rig workers' wrath? Drillers now all over the place, and for some reason BP is up, as if the firm will be doing fresh drilling in the GoM any time soon. And somehow this news is causing the EUR to spike, (luckily temporarily), just to demonstrate how every asset class now correlates with everything else and any reason, whatever reason, is good enough to cause a move in interconnected markets. Sigh. From the judge's language: "plaintiffs have established..likelihood.. showing..Administration acted arbitrarily and capriciously. Plaintiffs assert..they have suffered and will continue to suffer..irreparable harm..Court agrees." (via Platts)