"An alternate, more sophisticated approach to explaining why QE may not work to stimulate aggregate consumption is, perhaps, because the demographic mix of the U.S. (and most parts of the developed world) has shifted toward older people. Unlike 30 or 40 years ago, the enormous baby boomer generation, and even retirees, are much wealthier (including human capital) than in the past, and they are wealthier than current generations earlier in their life cycle. So the wealth effect does not lead to an increase in consumption and, potentially, has the opposite outcome."
- Robert Merton
Next week is all about the Fed, and the positioning or should I say De-Positioning will be taking place right up until the last minute of this all-important Fed Meeting.
This week's Economic Policy Institute's report, leverages the fashionable, French economist Piketty's statistics, in order to illustrate how well the "top 1%" are doing in each of the 50 states. The report is provokingly titled: "The Increasingly Unequal States of America". But the report creates distortions in the truth. An important matter affecting hundreds of millions should also include a straight acknowledgement of probability theory (involving large sample sizes). The most liberal people suggest that even thinking about this math is unnecessary. Perhaps any glorification of wrongs that need to be righted, justifies the means that it would take to get there. Over time this can conflate math ideas with one's ideological bias.
“... I am a hard working taxpayer who is getting pretty fed up with having my savings earning no interest and possibly being devalued (see Japan) and of not being able to find any sensible place to invest my hard earned due to central bank policies making it impossible to make any return anywhere without taking crazy risks.”
"When a social construct (gold as money) survives for 6,000 years I would expect curious people to inquire as to whether it is tied to some immutable underlying law... [instead], our court economists prefer to write this off as a 6,000 year old delusion. That says a lot about the sorry state of the economics discipline today.”
For any/all readers who retain the capacity for independent thought; it is universally acknowledged that the mainstream, Corporate media is little more than a propaganda megaphone. It broadcasts a single message, 24/7, with which the Old World Order brainwashes the masses in our Zombie societies.
It is understood that with the overwhelming financial resources at its disposal; the One Bank has been able to (literally) buy each-and-every mainstream media outlet across the Western world, with all of these media outlets controlled within a mere handful of its 147 corporate fronts. We understand that because of this media oligopoly that, conservatively speaking, 99% of what is spewed by the mainstream media is irredeemably tainted – and thus cannot be relied upon.
"My premise hasn’t really changed since I published my paper explaining why I had become more constructive towards risk assets this time last year. That is to say, the structural deficiency of global demand continues to radicalise the central banking community. I believe they are terrified: the system is so leveraged and vulnerable to potentially systemic price reversals that the monetary authorities find themselves beholden to long only investors and obliged to support asset prices. However, I clearly confused everyone with my choice of language. What I should have said is that investors are perhaps misconstruing rising equity prices as a traditional bull market spurred on by revenue and earnings growth, and becoming fearful of a reversal, when instead the persistent upwards drift in stock markets is more a reflection of the steady erosion of the soundness of the global monetary system and therefore the rise in stock prices is something that is likely to prevail for some time."
Three important factors which should support gold above $1,100/oz are Chinese demand, central bank demand including from Russia and of course the Swiss Gold Referendum. We remain bearish in the short term but very bullish for 2015 and in the coming years.
Kuroda has fired the shot that looks likely to trigger the next phase of the crazy monetary experiment we’ve all been living in for the last five years. Unfortunately, the next phase is where things start to get nasty. Just because equity markets cheered the latest sugar rush he guaranteed them should not make smart investors lower their guard — quite the opposite, in fact. Colonel Kuroda has gone up-country into the Heart of Darkness, and all we can do is await the Apocalypse now.
"It's important to remember that a little gold goes a long way. If you had 5-10% allocation in your portfolio from 2000 to 2010, you wouldn't have suffered a lost decade" ... “I believe that now is a good time to take advantage of negative short-term trading sentiment,” Wickwire of Fidelity Investments said.
This Austrian School interpretation of events fits the facts rather better than the monetarist account. The lesson for policymakers today is uncomfortable. For, on this view, if there is a parallel with the 1930s, the damage has already been done. It was done when the Fed allowed funds available for investment in capital markets to balloon, not this time through unsterilized gold inflows but through its QE experiment.
If the GOP takes the senate, the days of the Fed doing whatever it wants will have ended. This may well in fact be what pops the US stock market bubble. The GOP hasn't controlled the Senate at any point since the Crisis hit in 2008. If the GOP controls both the House and the Senate, the Fed will be in for SERIOUS problems.
Shortly before leaving the Fed this year, Ben Bernanke rather pompously declared that Quantitative Easing "works in practice, but it doesn’t work in theory." There is, of course, no counter-factual. But to suggest credibly that QE has worked, we first have to agree on a definition of what "work" means, and on what problem QE was meant to solve. We think the QE debate should be reframed: has QE done anything to reform an economic and monetary system urgently in need of restructuring? We think the answer, self-evidently, is “No”.
Sunni and Shia Muslims have lived peacefully together for centuries. In many countries it has become common for members of the two sects to intermarry and pray at the same mosques. They share faith in the Quran and the Prophet Mohammed's sayings and perform similar prayers, although they differ in rituals and interpretation of Islamic law. But... An ancient religious divide is helping fuel a resurgence of conflicts in the Middle East and Muslim countries. Islam's schism, simmering for fourteen centuries, doesn't explain all the political, economic, and geostrategic factors involved in these conflicts, but it has become one prism by which to understand the underlying tensions.
At the moment, the Ebola virus is ravaging three countries - Liberia, Guinea and Sierra Leone - where it is doubling every few weeks, but singular cases and clusters of them are cropping up in dense population centers across the world. Ebola's mortality rate can be as high as 70%, but seems closer to 50% for the current major outbreak. This is significantly worse than the Bubonic plague, which killed off a third of Europe's population. Previous Ebola outbreaks occurred in rural, isolated locales, where they quickly burned themselves out by infecting everyone within a certain radius, then running out of new victims. But the current outbreak has spread to large population centers with highly mobile populations, and the chances of such a spontaneous end to this outbreak seem to be pretty much nil. The scenario in which Ebola engulfs the globe is not yet guaranteed, but neither can it be dismissed as some sort of apocalyptic fantasy: the chances of it happening are by no means zero.
Russia Central Banks Scrambles To Halt Plunging Ruble, Spends Over $2 Billion In Last Three Days As Inflation SoarsSubmitted by Tyler Durden on 10/08/2014 09:07 -0400
After stoically ignoring the impact of its tumbling currency on the domestic economy (and as a reminder, Japan would kill for a currency collapse of this magnitude: just think of the "economic renaissance" that would result if only Abenomics was right about killing your currency leading to growth... which it isn't), the Kremlin is finally starting to feel the pinch leading to the biggest central bank intervention in FX markets since the start of the Ukraine campaign, buying Rubles for a third consecutive day at an amount of over $2 billion, with $1.75 billion purchased in the first two days of the current intervention attempt, and another $420 million in foreign currencies sold overnight according to Bank of Russia data.