Recession

Santelli & Schiff: "A Messy Exit Is A Given... Ending QE Will Plunge US Into Severe Recession"

"Markets are slowly coming to grips with reality is not going to be as easy as everybody thought," Peter Schiff tells CNBC's Rick Santelli, noting the pick up in volatility across asset classes recently. What The Fed clearly does not understand, Schiff blasts, is that "you cannot end quantitative easing without plunging the US into a severe recession." Because of the Fed's extreme monetary policy and the mal-investment that flows from it, Schiff says, "The US economy is more screwed up now than it's ever been in history." Most prophetically, we suspect, Santelli agrees that "a messy exit is a given," and Schiff believes they know that and that is why QE4 is coming simply "because it hasn't worked and they can't admit it's been a dismal failure."

Living The Grecovery Dream: Two Jobless Parents, Two Kids, One Cat All Living In A Car

Squeezed between steering wheel, handbrake, door and dashboard, Katerina reads in her history book, takes notes for school. Next to her, on the driver’s seat, cat Eddy stares right in the camera lens. It may look like a cute snapshot on a sunny day, if it wasn’t for a sad detail: a withering spring stuck in a roll of toilet paper.  A distinctive memory of a former normal life that turned into a grim reality for a family of four.

 

"The Economic Outlook Keeps Getting Better And Better" Says Fed President Who Last Week Unveiled QE4

"I’ll be honest: These speeches get more and more enjoyable as time goes by because the economic outlook keeps getting better and better. Instead of gloom and doom with a scattering of hopeful notes, things are now pretty upbeat, with only a couple of standard economist’s caveats thrown in....  So the message is that things are getting better. We’re on track to end our asset purchases and we’re preparing for the time the economy can sustain an end to accommodation. We’ll want to see improvements in unemployment, wages, and inflation, and we’ll be driven by the data. But all in all, it’s good news—with just a few of those requisite caveats thrown in."

How Far Will the Stock Market Rebound Go?

In the past few years the stock market has always recovered from corrections to make new highs, and we cannot be sure if the party is indeed over. However, both from a fundamental and technical perspective, the probability that it is over seems quite high. Should market internals and trend uniformity to the upside improve again, this assessment would obviously have to be revised. However, there are surely more than enough warning signs extant now and every financial asset bubble must end at some point.

Why Abenomics Failed: There Was A "Blind Spot From The Outset", Goldman Apologizes

Ever since Abenomics was announced in late 2012, we have explained very clearly that the whole "shock and awe" approach to stimulating the economy by sending inflation into borderline "hyper" mode was doomed to failure. Very serious sellsiders, economists and pundits disagreed and commended Abe on his second attempt at fixing the country by doing more of what has not only failed to work for 30 years, but made the problem worse and worse. Well, nearly two years later, or roughly the usual delay before the rest of the world catches up to this website's "conspiratorial" ramblings, the leader of the very serious economist crew, none other than Goldman Sachs, formally admits that Abenomics was a failure. So what happened with Abenomics, and why did Goldman, initially a fervent supporter and huge fan - and beneficiary because those trillions in fungible BOJ liquidity injections made their way first and foremost into Goldman year end bonuses  - change its tune so dramatically? Here is the answer from Goldman Sachs.

The Farce That Is Economics: Richard Feynman On The Social Sciences

“Because of the success of science, there is a kind of a pseudo-science. Social science is an example of a science which is not a science. They follow the forms. You gather data, you do so and so and so forth, but they don’t get any laws, they haven’t found out anything. They haven’t got anywhere – yet. Maybe someday they will, but it’s not very well developed. But what happens is, at an even more mundane level, we get experts on everything that sound like they are sort of scientific, expert. They are not scientists. They sit at a typewriter and they make up something like ‘a food grown with a fertilizer that’s organic is better for you than food grown with a fertilizer that is inorganic’. Maybe true, may not be true. But it hasn’t been demonstrated one way or the other. But they’ll sit there on the typewriter and make up all this stuff as if it’s science and then become experts on foods, organic foods and so on. There’s all kinds of myths and pseudo-science all over the place."

The IMF And Austrian Theory

Nobody in the economic intelligentsia is implying that the IMF is staffed by paranoid cranks. They continue to ignore and belittle the Austrian school. This pompous and undeserved behavior will go on until it’s too late. In the process, the ivory tower disciples of Keynes will only further prove their intellectual bankruptcy. The average person never trusted them to begin with. And things certainly won’t change now.

5 Things To Ponder: "Buy" or "Run"

This past week investors took a blow from a sharp selloff in the financial markets. Now that the correction has occurred, at least to some degree, the question that must be answered is simply: “Is it over?” That is the basis of this weekend’s reading list which is a compilation of reads that debate this point. The bulls remain wildly bullish, believing that this is simply a “dip” in the ongoing “bull market.” The more pessimistic crowd sees the opposite.

Define Irony: Janet Yellen Talks Inequality, Has Some Advice - Start A Business, Get Rich Parents

With no mention of the current turmoil in markets - or suggestion of QE99 - Janet Yellen's speech this morning on "Inequality and Opportunity" in America explains how the poor can get rich. After admitting that widening inequality resumed in the recovery (and "greatly concerns" her), as the stock market rebounded (driven by Fed's free money) and cost-conscious share buying-back companies defer wage growth as the healing of the labor market has been slow; she turns her attention to how the poor can beat the vicious cycle. Rather stunningly, she notes the 4 sources of income opportunity in America: The first two are widely recognized as important sources of opportunity: resources available for children and affordable higher education (so more student debt and servitude). The second two may come as more of a surprise: business ownership and inheritances. As she concludes, "this is how individuals and their families can improve their economic circumstances."

The Pompous Prognostications Of "Permanently High Plateau" Prophets

The talking heads will be rolled out on CNBC to assure the masses that all is well. The economy is strong. Corporate profits are awesome. The stock market will go higher. Op-eds will be written by Wall Street CEOs telling you it’s the best time to invest. Federal Reserve presidents will give speeches saying there are clear skies ahead. Obama will hold a press conference to tell you how many jobs he’s added and how low the budget deficit has gone. We couldn’t possibly be entering phase two of our Greater Depression after a temporary lull provided by the $8 trillion pumped into the veins of Wall Street by the Fed and Obama. Could we?

Did The Saudis Just Get A Tap On The Shoulder?

The US-Saudi "secret" plan that was supposed to crush Putin quickly turned sour when as we reported several days ago, one after another America's own shale plays, which recently entered a very sharp bear market, started appearing on various death watches (case in point today's MHR Second Lien refi which repriced from L+500 to L+750 in minutes). As a result, one wonders: did Obama realize that Russian "costs" which as everyone knows by now include a Eurpoean triple-dip recession, could also very soon include an insolvent US shale industry, and thus may be just a little too much, and, one further wonders, if he is the one who just tapped Saudi Arabia on the shoulder?