QE Inventor: It’s EASY to Create a Full-Blown Recovery, But Central Banks Chose to Make Banksters Rich Instead ...Submitted by George Washington on 03/05/2015 17:14 -0400
QE Is a Sham
Once upon a time businesses borrowed long term money - if they borrowed at all - in order to fund plant, equipment and other long-lived productive assets. Today American businesses are borrowing like never before - to fund financial engineering maneuvers such as stock buybacks, M&A and LBOs, not the acquisition of productive assets that can actually fuel future output and productivity.
Let’s see. The Eccles Building has grown its balance sheet by 9X since the turn of the century, but real net investment in the business sector has plunged by 33%!
The establishment has done everything in its power to hide the most foundational of economic realities, namely the reality of dying demand. Why? Because the longer they can hide true demand, the more time they have to steal what little independent wealth remains within the system while positioning the populace for the next great con. For now we will only say that the program of manipulation we have seen since 2008 is clearly changing. The fact of catastrophic demand loss is becoming apparent. Such a loss only ever precedes a wider fiscal event.
We have “early signs of new demand slowing” while “construction pricing is busting budgets beyond feasibility” in a market where “speculation abounds” in land pricing. When framed against a very unfavorable foreign exchange dynamic for the market’s most important buyers, the situation really couldn’t get much more precarious.
Following the approval of the government, Kazakhstan's Central Bank has announced it plans to de-dollarize its economy by the end of 2016. The goal is to avoid the macroeconomic instability that the USD creates and to give priority to Tenge in trade agreements (banning price designations in foreign exchange). Coming just 2 weeks after the ratification of the $100 billion BRICS bank, and Russia's creation of a SWIFT-alternative, one wonders - as one by one foreign nations agree non-dollar trade and swap agreements - who is becoming 'isolated' now?
History Made: For The First Time Ever, US Consumers Spent More On Food In Restaurants Than In Grocery StoresSubmitted by Tyler Durden on 03/04/2015 18:07 -0400
For the first time ever, the spending patterns of US consumers are so skewed, that Americans, or at least a small fraction of them, spent more on restaurants and bars, than what Americans, the much larger fraction, spent on grocery stores to prepare food for themselves.
What people and central bankers do not understand, is that you can't devalue your way to prosperity. Absolutely nothing has changed since the last crisis. The same too big too fail banks have only gotten much bigger. The same people that were in charge leading into the crisis and during it, are the same people who are in charge of fixing it. New regulations were established to try and regulate the industry, but they will be proven to be ineffective. Why? Because the Volcker Rule and Dodd-Frank have had all the important elements removed, thanks to the massive lobbying power of the TBTF banks and the Fed.
- RBS to cut up to 14,000 jobs in investment banking unit (FT)
- Doctors, patients scramble ahead of high court Obamacare decision (Reuters)
- Rajan Cuts India Rates After Modi Agrees to Inflation Target (BBG)
- Russia’s Putin Makes First Public Comments on Killing of Boris Nemtsov (WSJ)
- House breaks impasse, passes security funding without provisions (Reuters)
- How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge (BBG)
- Jeff Immelt’s Overhaul of GE Impeded by Falling Oil Prices (WSJ)
- Sahara India Defaults on Luxury Hotel Loans From Bank of China (BBG)
A century of government meddling has turned the issue of water rights on its head, and further centralized control of waterways in local, state, and federal governments. Just as the residents of Los Angeles fought over water with local farmers, the residents of Las Vegas will soon find themselves fighting with surrounding states over what’s left of Lake Mead. None of the power players seem to care that the current population settlements of the southwestern United States cannot last. One day the water will run out. The sooner this reality is confronted, the better.
Going into 2015 the economic outlook held by the U.S. investment establishment could not have been much more positive, and more unified. Pundits saw all the variables aligning to create the best of all investment worlds, a virtual "no-brainer" of optimism. High degrees of certainty can be dangerous. Herd mentality can cause investors to chase returns en masse and pile into positions that may already be overvalued. But herds can be spooked, most often by unexpected developments which can catch the herd wrong-footed and spark major movements when the masses scatter at the same time. When that occurs, those who resisted the herd may find themselves rewarded. We believe that we are approaching such a point.
- “Bail-in is now the rule” - EU Finance Minister Noonan - Austrian bondholders today … international depositors tomorrow ... We urge readers to diversify deposit holdings and acquire allocated gold to protect their wealth during the next phase of the banking crisis.
Ukraine's infamous pink Porsche-driving central bank governor, Valeriya Gontareva, raised the nation's refinancing rate from 19.5% to a stunning 30% (effective Wednesday) in order to "stabilize the situation in the money and lending markets," and imposed some 'capital controls' on exporters holding foreign cash. For now, the hink to the highest rate since 2000 is having a positive effect as UAH has rallied 2-3 handles back to one-month highs against the USD - having lost over 60% of its value in the last year (though we note these are the 'official' rates and may not represent actual UAH transactions in the real world). "The central bank is trying to send a strong signal that it is in charge," noted on analyst as the country desperately waits for its $17.5bn bailout from US taxpayers The IMF.
- 3 days after Zero Hedge, here's Bloomberg: Company Cash Bathes Stocks as Monthly Buybacks Set Record (BBG)
- Israel's Netanyahu to address Congress in speech that has strained ties with Obama (Reuters), Risks Diplomatic, Political Pain If Speech Falls Flat (BBG)
- Before Key Speech, Netanyahu Hails U.S. Ties (WSJ)
- $1.92 bilion FX rigging charge: Barclays Posts Loss as Foreign-Exchange Provisions Rise (WSJ)
- Barclays Awards Jenkins First Bonus as CEO, Cuts Pay Pool (BBG)
- Exxon’s Russia Exposure Surges as Long View Outweighs Sanctions (BBG)
- Obama says Iran must halt key nuclear work for at least a decade (Reuters)
- Yellen Turning from Friend to Foe for Dollar Bulls (BBG)
The 2008 worldwide financial crisis was produced due to excessively easy monetary policy, which caused the largest debt driven mal-investment in housing, automobiles, and Chinese produced crap in world history. The consequences of this debt bacchanalia should have been the orderly liquidation of the Wall Street entities that created the crisis, the writing off of trillions in bad debt, corporate and personal bankruptcies of businesses and people who borrowed recklessly, a sharp steep economic decline to cleanse the excesses, and politicians who immediately began the process of reducing budgets and addressing long term unfunded unpayable liability promises. Instead, the psychotic oligarchs did not want to lose any of their power, wealth or control over the proletariat. They have done the exact opposite of what needed to be done.