Time Magazine

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Hoisington On The End Of The Fed's (Mythical) "Wealth Effect"





As we noted earlier, The Federal Open Market Committee (FOMC) has continuously been overly optimistic regarding its expectations for economic growth in the United States. A major reason for the FOMC’s overly optimistic forecast for economic growth and its incorrect view of the effectiveness of quantitative easing is the reliance on the so-called 'wealth effect'. However, "There may not be a wealth effect at all. If there is a wealth effect, it is very difficult to pin down..." Since the FOMC began quantitative easing in 2009, its balance sheet has increased more than $3 trillion. This increase may have boosted wealth, but the U.S. economy received no meaningful benefit. Furthermore, the FOMC has no idea what the ultimate outcome of such an increase will be or what a return to a ‘normal’ balance sheet might entail. Given all of this, we do not see any evidence for economic growth as robust at the FOMC predicts. Without a wealth effect, the stock market is not the “key player” in the economy, and no “virtuous circle” runs through the stock market.

 


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Obamacare Claims Its Latest Victim: Kathleen Sebelius Resigns As US Health Secretary





Obamacare has been such a smashing success that the US Health Secretary Kathleen Sebelius just couldn't wait until days after its "successful" rol out to get the hell out of dodge. "Kathleen Sebelius, the health and human services secretary, is resigning, ending a stormy five-year tenure marred by the disastrous rollout of President Obama’s signature legislative achievement, the Affordable Care Act.  Mr. Obama accepted Ms. Sebelius’s resignation this week, and on Friday morning he will nominate Sylvia Mathews Burwell, the director of the Office of Management and Budget, to replace her, officials said. The departure comes as the Obama administration tries to move beyond its early stumbles in carrying out the law, persuade a still-skeptical public of its lasting benefits, and help Democratic incumbents, who face blistering attack ads after supporting the legislation, survive the midterm elections this fall."

 


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Guest Post: Russia Is Dominated By Global Banks, Too





As the Ukrainian crisis festers and other dangers in the Pacific and the Mideast grow, an odd consensus among alternative analysts is taking hold — namely the belief that President Vladimir Putin and Russia represent some kind of opposition to globalization and the rule of corporate financiers. Perhaps moments in Putin’s rhetoric have seduced elements of the Liberty Movement into assuming that Russia is a “victim” in the grand schemes of Western oligarchy and that Russia is truly the "white knight", the underdog willing to stand up against the New World Order. We're sorry to say that nothing could be further from the truth. Russia is just as much a tool of the global elite today as it was after the Bolshevik Revolution, and Vladimir Putin is just as much a socialist puppet as Barack Obama.

 


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Sam Zell: Tom Perkins Was Right, Top 1% "Pummeled" For Political Convenience





"Markets were over-priced coming into 2014," warns Sam Zell (noting that he does not believe in the Fed's wealth effect perspective on market-growth helping buying and selling decisions in the real economy), but while he sees a benign outlook for residential real estate, among his biggest concerns are "half-assed" Obamacare's "deleterious effect on the USA" and its "need to be radically changed." Supportive of Carl Icahn and his 'capitalist activism', Zell adds rather frankly that he believes Tom Perkins was correct about the "the 1%... for political convenience," and reminds Bloomberg TV's Betty Liu that "the politics of envy, the politics of class warfare are what has separated America from many parts of the rest of the world," until now.

 


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You Can Buy A House For One Dollar Or Less In Economically Depressed Cities All Over America





Would you like to buy a house for one dollar? If someone came up to you on the street and asked you that question, you would probably respond by saying that it sounds too good to be true. But this is actually happening in economically-depressed cities all over America. Of course there are a number of reasons why you might want to think twice before buying any of these homes...

 


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"Two Roads Diverged" - Wall Street's Doubts Summarized As "The Liquidity Tide Recedes"





"I happen to think that 2014 is a VERY different year than 2013 from a variety of viewpoints.  First, there appears to be a dispersion of opinion about markets, valuations, policy frameworks and more.  This is a healthy departure from YEARS of artificialityArtificiality in valuations, artificiality in market and policy mechanics and essentially artificiality in EVERY financial, and real, relationship on the planet based on central bank(s) balance sheet expansion and other measures intended to be a stop-gap resolution to  tightening financial conditions, adverse expectations of economic activity, and the great rollover" - Russ Certo, Brean Capital

 


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Jobs Day Market Summary





Risks surrounding the looming release of the latest jobs report by the BLS later on in the session failed to weigh on sentiment and heading into the North American open, stocks in Europe are seen higher across the board. The SMI index in Switzerland outperformed its peers since the get-go, with Swatch Group trading up over 3% after the company said that it expects good results for 2013 at operating profit and net income level. At the same time, in spite of stocks trading in the green, Bunds remained better bid, with peripheral bond yield spreads wider as market participants booked profits following the aggressive tightening observed earlier in the week amid solid Spanish bond auctions, as well as syndications by Ireland and Portugal. Fake Chinese trade data failed to boost Chinese stocks, which dropped anoter 0.7% and is just 13 points above 2000 as Shanghai remains one of the world's worst performing markets since the financial crisis. The yoyoing Nikkei was largely unchanged. All eyes today will be fixed on the headline streamer at 8:30 when the latest nonfarm payrolls report is released.

 


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Is Bitcoin Bringing The "Dark Web" Into The Light?





Despite the best efforts of the search engines, the majority of the Internet is unsearchable with estimates of this “Unlit” Web as high as 90%. As ConvergEx's Nick Colas notes, some of this content (no one knows how much) is dark for a reason - hosting every form of criminal behavior known to man - but the rest from the increasing interest in anonymous Internet use in light of widely publicized government surveillance. Among the least well understood emerging themes in technology, Colas points out, is the “Dark Web”, adding that Oscar Wilde famously opined that “All human beings have three lives: public, private and secret.”  The existing structure of the Internet handles the first two very well.  The Dark Web is, apparently, for the third. The first innovation to move from “Dark” to “Lit” Web is bitcoin, but it certainly won’t be the last.

 


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Why Is An Epidemic Of Thievery Sweeping America?





Desperate people do desperate things, and it appears that Americans are rapidly becoming a lot more desperate.  An epidemic of thievery is sweeping across America, and authorities are not quite sure what to make of it. So why is all of this happening?  Well, as we have written about previously, crime is on the rise in the United States, and poverty is absolutely exploding.  In fact, according to the latest numbers from the U.S. Census Bureau, 49.2 percent of all Americans are receiving benefits from at least one government program each month.  Over the past five years, we have seen an unprecedented rise in the number of people that cannot take care of themselves without help from the government.  Millions upon millions of Americans that have been forced into poverty are becoming increasingly angry, frustrated and desperate.  And what we are watching right now is only just the beginning - all of this is going to get a whole lot worse.

 


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30 Mindblowing Statistics About Americans Under The Age Of 30





Why are young people in America so frustrated these days? 

You are about to find out...

The system is failing, and young people are going to become even angrier and even more frustrated.

 

 


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Guest Post: Don't Cry For Me, Ben Bernanke





Financial volatility since Federal Reserve Chairman Ben Bernanke’s announcement in May that the Fed would “taper” its monthly purchases of long-term assets has raised a global cry: “Please, Mr. Bernanke, consider conditions in our (non-US) economies when you determine when to end your quantitative-easing policy.” That is not going to happen. The Fed will decide on monetary policy for the United States based primarily on US conditions. Economic policymakers elsewhere should understand this and get ready.  All of this is just hard reality. The best way to prepare is to limit the use of credit in boom times, prevent individuals and companies from borrowing too much, and set high capital requirements for all banks and other financial institutions. The Fed surprised markets last week by deciding to maintain its quantitative-easing policy. But that underscores a larger point for non-US economies: You never know when the Fed will tighten. Get ready.

 


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Guest Post: Has America Been Set Up As History's Ultimate Bumbling Villain?





The high priests of academic and “official” history love a good villain for two reasonsFirst, because good official villains make the struggles and accomplishments of good official heroes even more awe-inspiring.  And, second, because nothing teaches (or propagandizes) the masses more thoroughly than the social or political lessons inherent in the documented rise and fall of the world's most despicable inhabitants.  We get shivers of fear and excitement when we discuss the evils and the follies of ancient monsters like Nero, Attila the Hun, Caligula, etc, or more modern monsters, like Mussolini, Stalin Hitler, Goebbels, Mao, Pol Pot, Idi Amin, and so on.  We take solace in the idea that “we are nothing like them”, and our nation has “moved beyond” such animalistic behavior.

 


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