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Bernanke Takes a "Leak"

Bruce Krasting's picture





 

 

How about Bernanke's communication policy? The most important development for monetary policy in the last four years comes from a planted story in the Wall Street Journal on a Friday night. While I'm not surprised, I'm still disgusted. Press leaks to favorite journalists are no way to run this show.

 

wsj5.10

 

The WSJ/Hilsenrath article confirms that the Fed is in the process of changing course on it's QE policy. America has reached "Peak QE", from now on it will be downhill for this policy. May will probably be the last month where $85B of securities are sucked out of the market.

The Fed's new plan is to taper off QE over the balance of the year. Unlike the endings of QE1 & 2 the sunset for QE3 will be a bit of a surprise for markets. The stated intention (according to Hilsenrath) is to change the amounts of POMO purchases on a month to month basis. Reading through the lines, I get the impression that Bernanke is going to lower the QE buys one month, but should the markets react negatively, he would increase the purchases the following month in an effort to "rebuild confidence".

I don't see this new policy working at all. It's the predictability of POMO that gives QE it's market clout. When the predictability is replaced with uncertainty, the markets will not like it. What I find particularly galling is that the Fed believes that it can micro manage US (and global) capital markets. The Fed thinks it can reduce QE one month, but if markets swoon as a result it will just turn around and ratchet up the buying the following month. By doing so, the Fed can manage the markets. I say, "Not a chance".

 

The market's reaction to the Fed's change in policy will be interesting to observe. I expect that there will be some weakness in equities next week. There should be some back-up in rates across the curve, and I think the dollar will move higher (especially the Yen). But I don't see a blowup in the markets. The "Bernanke Put" is still alive for the time being.

The timing of the change in policy is interesting. Bernanke is no dope, he knows what the bond market is facing over the next five months, he knows that the bond calendar is very favorable for a wind-down of QE.

In two weeks the debt limit will be reached. After that date there will be a big reduction of new Treasury debt issued. Under normal conditions, the Treasury would have about $200b of wiggle room on the debt limit before there is a crisis. But in the summer and fall of 2013 the Treasury will reap an additional $60b of revenue from (incredibly) Fannie and Freddie. Based on this, I think the debt limit will not be a problem until sometime in October. So the reality is that over the next six months or so, there will be a shortage of new issue Treasury paper. This fact gives Bernanke the opportunity to reduce QE without a a big sell off in the bond market.

Then there is ZIRP. This policy will continue for a long time yet. The fact that the near-end is pegged at zero means that the long-end can't get out of control. And finally, there is the inflation outlook - this looks to be tame for the next few months.

The ten-year may back-up to above 2% (currently 1.90%), but I don't see 2.5% coming at at anytime in the immediate future. Towards the end of the year, when the debt limit is increased (it will be) there will be a flood of new issue paper and QE will be a non factor. That's when the bond guys will be looking at supply and demand, and running for cover.

 

There is one element of this that gets a chuckle from me. Last week, two hedge fund guys, Stan Druckenmiller and Paul Singer made comments about the risks of QE and the distortions the policy creates. Paul Krugman jumped all over the hedge fund types who appose more QE in a series of blog posts. (Link and Link)

PK did his best to discredit Druckenmiller and Singer. PK said that those who appose Bernanke are just a bunch of stinkers who are short bonds and want to make money. PK's rant is pretty amusing, he even takes a shot at gold investors. The final line of one of the posts was interesting. PK was attempting to highlight the "greed factor" that he thought was the real reason behind money managers opposition to continuing QE. In his usual snarky way, PK attempted to convince his readers that Bernanke Bashers had to have evil intent, that or they were gay, or suffered child abuse. I thought this line was obnoxious:

 

So anyway, the phenomenon of Bernanke rage is interesting. It probably has something to do with sexual orientation or childhood trauma, right?

 

My message to Krugman:

The WSJ article today was planted by Bernanke, and approved by Yellen. Clearly, these two also see that QE is a policy that has high risk and marginal returns. The article confirms what Druckenmiller and Singer were saying. They were right - you were wrong. Do you have the integrity to admit that? Or are you going to suggest that Bernanke also has sexual orientation issues, or suffers from childhood abuse? If an elected official had used these words (even as a nasty joke) they would be called on the carpet. The words "Shit Heel" come to mind.

 

Smear

 

 


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Mon, 05/13/2013 - 13:23 | Link to Comment dcb
dcb's picture

once the bernanke has transferred all the bad mortgage debt to the fed/ taxpay, so the banks won't be too hut by a drop in asset prices, or if they reflect rue value. he will end QE

Mon, 05/13/2013 - 13:07 | Link to Comment dcb
dcb's picture

I do not understand how a rational person can not hate bernanke, unless they are in the financial industry, or the top 5% . then it's all greed which is of course rational. as usual I tried to post something on the web site, but there are so many holes in what PK rwrites I run into space limitations. it was strange considering the financial industry majority wants endless cheap money. It's also interesting to see how few followers actually understand economics or anyhting regarding wealth distribution. One comment pointed out that only 10% of wealth wasn't in the market so juicing it helped all. excdpt the bottm 80% of americans own just 7% of assets, so the juice could only be helping 15% or so, and regardless the with the top 1% holeding 50% it's a gift to the alredy rich. the krger followers don't seem to grasp this. weird.

 

I also loved how we hate bernanke for attempting to lower unemployment. I had to laugh. No i hate him for backing greenspan and the put, for ignoring warnings of the housing bubble, for telling lies on TV that it wouyld be contained while secret fed meetings were happening regarding what to do for the blow up, for paying goldman and others 100 cents on the dollar for AI, for the secret agreemtns with BofA against AIG claims (hurting the taxpayer) for the zero interst on my savings for yours, and for his insane wealth cransfer to the wealthy. why not just print and main the money to the bottm 80%. it would do a lot more for he economy. The PK lies are endless.

It's cealr the bernank is all about the banks/ bankers. any effect on the economy is secondary. the fed pays interst to the banks to store their money there. that tells you a lot.

krugman is so full of bs that he wants to help the common man.

the bernak is an epic fuck up on a massive scale, and a wall street goon, that makes the krug one to in my book if he backs him.

 

Wed, 05/29/2013 - 19:39 | Link to Comment StopIt.Now
StopIt.Now's picture

Rational people do hate him, because they know the truth and the entire central banker Ponzi.  But the general Public, all they know is that they are fed.  The Internet is the ONLY way I learned about economics, the Fed Reserve, historical info all all kinds, etc.

Sat, 05/11/2013 - 21:55 | Link to Comment Tinky
Tinky's picture

Dave in Denver sums it up well:

 

And Yet, Another Big Joke: Fed QE Tapering? Riiiiight The Fed is now serving up rainbows, unicorns and fairy tales.  And that mindless, moronic mouthpiece of Federal Reserve intentional deceit, Jon Hilsenrath,  is more than happy to put it all in print. Our system, especially as it operates in NYC and DC has become analogous to one big New City street shell game.  Keep your eye on the ball, NOT where they want you to think the ball is so that they can fleece you of your money.  

So the rumor of the Hilsenrath article about Fed QE "tapering," curiously released 20 minutes after the Comex close Thursday in order to enable the paper gold market manipulators dump a lot of paper in one of the most illiquid trading periods for paper gold in any given 24 hour period, finally hit the tape Friday afternoon.

The timing of a late day Friday release, after the stock and bond markets had closed for the weekend, is curious as well.  I'll let the readers decide why.

Having said that, I know for a fact that the Fed will not be "tapering" anytime soon.  I know a bank executive who recently met with Fed staff in DC.  To a man they admitted to this person that no one - as in "nobody" - at the Fed has any clue whatsoever how Bernanke and the Fed can possibly even begin to extract itself from QE, let alone start unloading it's massive $3 trillion portfolio of Treasuries, mortgages and insidiously toxic assets.

But why do we need inside word on that?  Play the tape forward.  Think about what happens if the Fed tries to stop, or even reduce, its rate of bond buying.  In the first 7 months of its fiscal year, the Government ran up  a deficit of $700 billion, or $100 billion per month. This includes a tax revenue windfall in December from asset selling ahead of the new tax laws that kicked in Jan 1 and it includes the big jump in tax revenues associated with the timing of tax deadline filings.  And the economy was not quite in decline, like it is now.

So with all the stars aligned, the Government was still running a $100 billion a month deficit, requiring about $80-$90 billion per month in new Treasury issuance.  The Fed was buying more than $45 billion - or more than half of this new issuance - because it is also rolling cash flow from interest into more purchases.  I'll leave it to your imaginations to decide what happens if the Fed pulls back on its Treasury purchases, but keep in mind that the economy is tanking and corporate taxable income and worker wages are in decline - all of which means lower tax revenues than planned.

How about mortgages?  See previous posts this week for my view on that.  But keep in mind that the housing market is starting to soften in most areas and the "organic," buy a home and live in it purchasers, are having to resort to using - more often than not now - subprime quality FHA financing.  That paper, my friends, is being bought by the Fed and is guaranteed by you and me.

One more point:  how quickly we all forget that just last week the FOMC issued a statement which implied that it stands ready to lower interest rates if necessary.  I guess that moron Hilsenrath doesn't get that particular information feed from his Fed source.   

Sure the Fed can start "tapering" QE, but it would also have to be willing to live with the consequences.  We know Bernanke isn't willing to live with the consequences of what he's done, which is why he's leaving in January.  And there isn't a politician alive - except may Ron Paul - who is willing to live with consequences of the Fed reducing QE.  Even more catastrophic, the Fed itself has no clue how it will unwind QE.  Keep your eye on that little red ball - not the criminal hands moving the shells around in a manner designed to rob you of your money.

 

Sun, 05/12/2013 - 11:14 | Link to Comment el Gallinazo
el Gallinazo's picture

Well Tinky, we have no argument over what the markets would do if the Fed "tapered" or cut their electronic printing orgy. (I refuse to use their meaningless, QE phrase.  As George Orwell and his Fabians pointed out, everyday language controls thought).  But where you and I part company, is that you appear to find it inconceivable that the Cartel would deliberately crash the economy.  Everyone on this site other than the trolls believes the crash now to be inevitable.  I maintain that the Cartel are not fools, the fact that this policy will "end badly" has been obvious to anyone with three synapses to rub together and was planned decades in advance, and that the Cartel wants the ensuing chaos to move into their end game of NWO tyranny.  And as with 9/11 and the three towers in the WTC, we can expect a controlled demolition at such a time as they choose.  These fuckers will not leave the timing to chance.  And the nanothermite, micro nukes, or Tesla scalar waves (depending on your favorite theory of how the buildings were dropped) will be a complete wipeout of the quadrillian dollar derivative markets.  Some argue that this will result in all major fiat currencies dropping to zero presumed value almost immediately.  Many at ZH would applaud this outcome, and I would also, if it weren't for the probable fact that the Cartel will use the ensuing desperation to replace them with an electronic global currency which can only be activated (from the prole side) by a microchip embedded in one's forearm :-(  (See the late Aaron Russo's discussions with Nicolas Rockefeller in America: Freedom to Fascism).  Maybe this is connected with the 2 billion DHS HP pistol rounds that cannot be used overseas according the the Geneva Accords on warfare - only full metal jackets allowed.  Only domestics are to be awarded the privilege of being targeted with them.

Sat, 05/11/2013 - 21:15 | Link to Comment matsoR
matsoR's picture

Bernanke is nothing more but a simple shitstain

Sat, 05/11/2013 - 21:06 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I gotta say

I'm sticking with the notion that QE cannot end. This is jawboning.

Sun, 05/12/2013 - 06:19 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

 

Bingo.  Test balloon to find out what the "coefficient of freefall" on the S&P is if the punchbowl was ever shut down.

S&P down 40 Monday, re-ramp by Friday with a WSJ mia culpa op-ed.

Sat, 05/11/2013 - 21:03 | Link to Comment kwatinhu
kwatinhu's picture

Just like our NWO Country club RINO's who sold us down the Global Free trade river for their corporate backers, the banksters are now doing the same thing parasites always do eventually, kill the host.

The "quick buck I got mine" white collar CEO criminals never factored in how anybody would buy their products when nobody had a job making a decent wage anymore. And since the first wave are all now safely floating in their golden parachutes all that's left is the leavings. The gravy bowl is empty and the one's left are fighting over the scraps. Now like a second bibical plague the banksters come to strip the bodies of the dead and dying of their clothes and jewelry.

Before the people finally ate enough sh#t for the French revolution to get going, a lot of hate  built up. Today's Sheeple? I guess the electric, internet and TV have to go dark before anything will get their attention.

I ain't optimistic! 

Sun, 05/12/2013 - 00:11 | Link to Comment Ropingdown
Ropingdown's picture

Clearly the nation fights its corporate profits wars the same way we end up fighting our hot wars: The urgent profit-growth share-value need is equivalent to the urgent political need to be seen using military force, either to appease voters or intimidate a foreign rival.

 

 The need to offshore manufacturing into cheap labor pools and cycle the profits to offshore low-tax jurisdictions was driven by one thing.  Corporations could not see any other way to maintain net margins and grow them.  There was no end game plan, just as there really isn't for most of our recent wars.  The enormous US federal debt was used to fund taxpayer-funded benefits for the poor and old, and to grow jobs (not enough) in the public sector to reduce panic and maintain consumption aggregate demand.  Health care jobs are essentially funded by the taxpayer, either directly via medicare etc, or via 'tax spending' through which all health care benefits are taxed to no one, not the employer, not the employee.

 

So we've been handed the bill for the costs of temporary voter fear-and-anger containment, but we can't keep the game going.  As you said, the executives and shareholders and their domesticated politicians are retired from the game now, have globally diversified wealth, and as the possibility of buying of the public rapidly declines, many rules will have to change.  Expect the creators of this bad ending to lay low, spend lots of time at their foreign residences, and work hard to assure the story as later told does not contain their names.

Sun, 05/12/2013 - 11:55 | Link to Comment WhiteNight123129
WhiteNight123129's picture

SHort Treasuries and be patient.

There is another shower of money across the Pacific, it is nice to sit under this shower of money in Japan....

When signs show it is stopping you move away...

Time to reduce net long exposure in US significantly.

Europe Periphery banks look interesting in case of Euro printing.

Gold is going down because of metals but will come back because arable land/human being  is set to shrink a lot because the net nominal increase in people is very large (yet the population growth is misleading).

In other words, with higher population growth it took 18 years in 1960 to get another half billion people, today it takes only 6-7 years yet the population growth is lower.

Too bad we do not lieve in the miracle of compounding, the physical is arithmetic and as Ricardo said, you have law of diminishing return otherwise you could grow the entire world food supply in a flower pot.

The other fact is massive urbanization in emerging world with is eating away arable land.

 

Sun, 05/12/2013 - 09:06 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

ropingd, good post, perhaps a bit naive..as to motive for offshore of manufacturing..look up NWO, banks benifit from, global corps benefit from, you might change what you see as just an economic motive.

Sat, 05/11/2013 - 20:27 | Link to Comment PubliusTacitus
PubliusTacitus's picture

Not sure if anyone has connected the dots here, or if it even matters, but the reason Krugman is going down the sexual orientation/character assassination path (other than its his usual m.o.) is that a few days ago, at a conference in CA Niall Ferguson answered a question citing Keynes’ well known homosexuality, tying it to his lack of reproduction and  lack of concern for the future and his policy recommendations.

 

For which he apologized -

 

http://www.nytimes.com/2013/05/07/business/economy/ferguson-of-harvard-apologizes-for-remarks-on-keynes.html?_r=0

 

Krugman remains an ignorant cocksucker and I would not be at all surprised to learn he is a sexual deviant.

Sat, 05/11/2013 - 19:04 | Link to Comment StopIt.Now
StopIt.Now's picture

The good thing is we have ZeroHedge and people like you who can get out the facts, maybe save a few people from utter poverty, IF they don't go completely communist and take all metal, guns, and start adding 'dissidents' their own 're-education' camps.

America, home of the capitalist communist, the new boss.  We certainly fulfilled the 200-year cycle for a nation to rise and fall.

Sat, 05/11/2013 - 19:01 | Link to Comment StopIt.Now
StopIt.Now's picture

Once you get to elitist level, and you are a hard-core liberal, you get the life-time free pass.

PK knows he's an arrogant fool, but that free pass allows him to live in la la land like the rest of the fools.

Sat, 05/11/2013 - 18:41 | Link to Comment Vuke
Vuke's picture

It's a good cop, bad cop routine.  The torch has been passed to Japan.  It will keep being passed around until the whole flotilla of currencies sinks deep enough to find bottom.

Sat, 05/11/2013 - 18:38 | Link to Comment chindit13
chindit13's picture

Bernanke actually has a few things working in his favor, a window of opportunity as it were, which might afford him the chance to wind down with minimal damage (at least short term).

The first is that the market remains starved for yield.  Doubt that?  Explain why junk grade corp and sovereign paper has a bid.  To a starving man, any meal looks tasty.  Investors who have been looking at 1.6% to 1.8% 10-year for 24 months will salivate at a chance for 2%.

The second thing going for him is that he will be the FIFO Qe'er (which has an odd ring to it).  If he slows just as much of the rest of the world is ramping up the printing presses, the dollar is going to go on a roll, which will entice foreign money into US debt.  Couple that "cleanest dirty shirt" with the fact that there are dollar borrowings all over the non-dollar world (that require dollars to repay the borrowings), the USD gets juiced further.  That won't help corporate profitability, but it might open a door for Bernanke to engage in a policy of part asset sales and part hold to maturity.  (Also, if corp profits fall, asset allocators might move from equities to debt.)

Longer term all the well-known, endlessly written-about factors come into play, but I can see a year or more of dollar bull market, steady rates and a partial Fed wind down of its balance sheet.

Nothing is in isolation in a global economy, and harsh reality often finds a way to get itself postponed.

Sun, 05/12/2013 - 06:27 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Interesting perspective...not sure I agree, but very good chain of logic.  If you are right, and Ben has the BOJ hemmed in with Abe's foot down on the printing press, then Japan is toast.  They will see inflation they cannot imagine.

But everything hinges on "foreign money [piling] into US debt" as you correctly point out.  That makes it an even bigger game of fiat Chicken; I think the ECB, BOE, and BOJ would call Ben's bluff and he will be forced to push CTRL-P within 90 days.  But that's me.

Good post.

Mon, 05/13/2013 - 08:49 | Link to Comment chindit13
chindit13's picture

I might be late replying, but here's some further "logic".

I operate from the assumption that the "fundamentals" are capital flows.  Everything else is just noise, which may, or may not affect capital flows.  That is why some people can pull their hair out because something "doesn't make sense."  They fail to understand that if some fact, figure or occurence doesn't capture the attention of the big pools of capital, it's just noise.

A good deal of the investment capital in the world is managed according to an asset allocation model and a benchmark.  Hedge funds, of course, operate outside of this structure.  Those with an asset allocation model must choose only approved assets.  They tend to have limits on market cap for equities, ratings of fixed income, and exposure limits, or bands, to certain asset classes.  A "maverick" fund manager of a pension fund is someone who goes 37% into equities vs. the benchmark of 40%.  No real cowboys there.

The benchmark is another key consideration, because performance is measured against it, not against an absolute plus or minus.  Yes, there are yield considerations, but in the end the manager is judged according to how well he performed against the benchmark.  That becomes a bit skewed, because in an up market where the benchmark rises, say, 20%, nobody gets too upset with the guy who returned 18%.  On the downside, however, the manager will champion himself if he "only" lost 15% when the benchmark lost 20%.

HF guys know all this, and thus try to figure where the benchmark herds are going to go before they go.

Because the US debt and equity markets are the world's largest and most liquid, they tend to garner a lot of attention.  If the dollar is on a roll, relative yield of fixed income becomes less important than the possible juicing effect from a rising dollar.  In other words, there is little difference between a 1.5% yield and a 2% yield when the dollar jumps 5%.  FMs love to catch that 5% FX move in a 2% i-rate world, and since FX tends to develop long term trends, they jump when it looks lie a run.

Thus, at the slightest hint that Bernanke might be slowing, coupled with the fact that Japan is ramping up and the EU is just getting started, the extra juice from a strengthening dollar would be enough to draw in capital to US markets...perhaps even enough to offset any possible Bernanke selling.

Also, the dollar became a carry currency of choice when everyone "knew" Bernanke would keep printing and the dollar was doomed.  That means there's a lot of borrowing out there in dollar terms.  As the dollar strengthens, it pains those with dollar liabilities, further exacerbating the rise when they throw in the towel.  This is the scenario I kind of expect over the next six months or year.  It will seem illogical if viewed in isolation, but in a globalized world nothing is in isolation.

I also think PM holders will be disappointed by the capital flows.  PMs are not an asset class allowed by most aggregated capital.  Most non-HF portfolio managers might have some affinity for gold, but they can't buy it with their fund.  Almost none has any affinity whatsoever for silver.  That is more an industrial metal and a retail metal.  I do know that many HFs and many HNW individuals jumped into PMs in the late 1990s, which is what initiated the PM bull market.  They bought both paper and physical.  Many began to liquidate in 2011 when the blow-offs happened, and continue to liquidate now.  I think the various gold promoters who have popped up over the last few years do their readers and customers a disservice by making false or unsubstantiated claims, or by creating a "logic" that just does not hold.  The idea that "if debt is this much or printing is this much PMs MUST rise" is flawed because most large pools of capital are not allowed to invest in PMs, and it is these large capital pools which drive markets.  The whole idea of a "paper" price and a "phyzz" price is also ludicrous, because it compares apples to oranges.  The paper price is for large scale, deliverable bars.  What everyone calls the "physical" price, at least on gold websites, is small lot coin prices which have embedded in them the LCS's operating costs.  Yes, coin shortages develop, but that doesn't mean there is a shortage of the underlying commodity itself.  As the HF guys and HNW types sell their 5000 oz silver bars and the stuff gets melted and minted into coins, the two prices will catch up and dealer premiums (or inventory cost recapture) will disappear.

I wrote in a PM thread that I visited a large PM trader outside of the US last week, and was quoted a razor thin spread on gold, similar to the bid-ask spread in the front month COMEX contract.  In point of fact, as one moves up in size, paper and physical become one.

When more funds open up their asset choice universe, that is when just a little flow from those aggregated pools will make PMs dance.

Sat, 05/11/2013 - 18:29 | Link to Comment Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Syllogisms come in handy often-so here goes.

Is QE4 ever aiding the real economy?.

If "no", then continuing it is either stupid or a deliberate policy to allow 'parties' to benefit from it

Is Bernanke stupid?

No

Then it is a deliberate policy to allow parties to benefit from it.

Conclusion: they will continue to print these worthless bits of paper that can be exchanged for hard/real assets until they own EVERYTHING. Then they will go to new money system backed by hard assets...simple really. I do not live in USSA (thankfully), but make no mistake, your Bennie bucks are making house prices where I live (Auckland NZ), OUTRAGEOUS. To the haves more: to the have nots, serfdom

Sat, 05/11/2013 - 23:28 | Link to Comment chindit13
chindit13's picture

I wouldn't put all the blame on Bernanke.  Monetary aggregates in China dwarf what Ben has done.  Remember that as China runs a trade surplus with the US, its CB issues yuan in exchange for exporter dollars.  In other words, they monetize the surplus.  That's juicing Chinese inflation (along with massive Chinese credit creation in both the visible and shadow banking systems), which is wafting toward much of Asia and Aust/NZ.  Indeed, Bernanke's printing (which has slowed if you look at rate of change of US aggregates) is probably now only a minor factor in NZ RE, with China, and then the BoJ running 1 and 2.  We tend to blame Bernanke because of "tradition".

Japan is the kicker.  Abenomics is already making things uncomfortable in China, SKorea and Thailand.  Singapore will feel it soon enough.  As China slows, Australia will have to face its own RE bubble.  The Aussie is down 3-4% in the last two weeks and is skirting USD parity.  I suspect we are going to see RE problems in China (Shanghai and the SAR), Singapore and Australia.  Pehaps NZ, too.  Good time to rent, bad time to own.

Sun, 05/12/2013 - 12:04 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Monetary aggregates only measure currency, nothing else. Currency can be issued against base money, or short term self liquidating credit (good bills) or crappy long term debt (financial assets). An unsound currency is a currency where there are too many of the third class backing currency issuance and where the policy marker is unwilling to declare bankruptcies.

China is is in the middle of real estate mess, but yes the miners of Australia are going to get laid off and that will make their multiple homes they own tough to service as far as interest payments are concerned.

 

Sat, 05/11/2013 - 17:49 | Link to Comment QQQBall
QQQBall's picture

How is the debt going to be paid back? How are the $212TTT in unfunded liabilities to be met? Talk of tapering? Hahahhaha! You are kidding, right? More misdirection.

Sat, 05/11/2013 - 16:30 | Link to Comment aicohn
aicohn's picture

"There is no housing bubble."

"There is no problem in mortgage lending."

"OK. There's a problem in subprime mortgage lending.  But prime mortgage lending is fine."

"OK.  There's a problem in mortgage lending but it will never affect the broad economy."

"Gold is NOT money."

"We're going to start tapering QE now."

Ben "Nostradumbass" Bernanke

Sat, 05/11/2013 - 17:58 | Link to Comment infiniti
infiniti's picture

His 2005 CNBC video is pure gold.

Sat, 05/11/2013 - 16:25 | Link to Comment aicohn
aicohn's picture

The most important part of the WSJ article was the statement about "disagreement concerning when to implement the policy."

So really what this amounts to  is more hot air in an attempt to smash gold/silver.

If the fed ever stops QE, they will have to restart it on an emergency basis within 30 days after the stock & bond markets collapse.

Sat, 05/11/2013 - 16:08 | Link to Comment thisandthat
thisandthat's picture

If Crookman likes BernanQE so much to go on a rampage against anyone who criticizes him, I'd question HIS sexual orientation...

Sat, 05/11/2013 - 15:56 | Link to Comment Awakened Sheeple
Awakened Sheeple's picture

Thanks for the analysis Bruce. The next 6 months or so will be very interesting.

Sat, 05/11/2013 - 15:09 | Link to Comment Captain Willard
Captain Willard's picture

The more interesting question, one which Bruce didn't address and one I wish he would address, is: Will Bernanke stay at the Fed beyond this coming January?

It seems impossible to me to interpret this Hilsenrath article without having a viewpoint on Bernanke's PERSONAL exit strategy, never mind the QE "exit strategy". Are we really expected to beleive that Ben will say to Janet: "Well Janet, just buy a few bonds, see how it goes, then buy or sell a few more, depending on the high-frequency economic data. Call me if you want to have lunch. I will be at the beach."?

This scenario beggars belief. He is going to have to come up with something else, or he is going to have to stay and serve his masters.

I cannot believe that Obama/Democrats will allow Bernanke to exit at the beginning of an election year. Yes, Yellen is one of them and she will take orders. But will the market have confidence in her? I doubt it.

I think the purpose of all of this leaking and misdirection is to build the case among Republicans to keep Bernanke in place as the lesser of two evils.

Sat, 05/11/2013 - 15:02 | Link to Comment ekm
ekm's picture

Mr Krasting

 

There is no such thing as FED POLICY.

Fed is a reactionary gov dept, since its creation.

Sat, 05/11/2013 - 16:41 | Link to Comment anonnn
anonnn's picture

Reactionary is apt , indeed.

Reactionary--automatic reaction to prevent any change that threatens their game. As in action-reaction. It is robotic . as in automaton.

Sat, 05/11/2013 - 14:41 | Link to Comment HoofHearted
HoofHearted's picture

I'm gay, abusive, abused, whatever you need to say about me. Doesn't bother me at all. My wife and five children might disagree on some of those adjectives, but it depends on if someone just broke a window when he was playing outside...again....or if it has been a good day.

I also think QE is a stupid idea. So I probably kick the dog.

Oh, I have gold and silver too. I must be a pervert, or a "lumberjack and I'm okay." Whatever.

When you don't have a real argument, you head for the ad homs. And this, ahem, esteemed professor, won the Nobel in economics. What a farce.

Sat, 05/11/2013 - 23:28 | Link to Comment August
August's picture

There is no "Nobel Prize" for economics, only the Sveriges Riksbank prize, in memory of Mr. Nobel.

This strikes me as beautifully appropriate though - the "Nobel" economics prize is a lie, masquerading as truth.

Sat, 05/11/2013 - 14:17 | Link to Comment ebworthen
ebworthen's picture

Talk of a FED exit is just talk.

Any taper will bring a crash, which will then bring more QE.

FED gravy is the only thing propping equities and real estate.

QE to 2016 to keep floating equities to DOW 20,000; and when they have all the retail, 401K, IRA, and Pension money back in equities and rotated out of Treasuries - only then will they cut QE and raise rates with no warning (except to banks and CONgress).

Sun, 05/12/2013 - 12:24 | Link to Comment sgorem
sgorem's picture

@ebworthern. Best Reply Award!....+1000....... "QE to 2016 to keep floating equities to DOW 20,000"AND THE ELECTION OF MORE FUCKING MORONS TO CARRY THE LIBERAL TORCH TO MORE "HOPElessness and CHANGElessness!

Sat, 05/11/2013 - 16:27 | Link to Comment aicohn
aicohn's picture

But they will TALK about ceasing QE to try & smash Gold/Silver further.

Can't have real money intruding on their paper schemes, now can we?

Sat, 05/11/2013 - 14:17 | Link to Comment DeadFred
DeadFred's picture

Don't bother waiting for Krugman to admit his mistake, he's a liberal. The only way I've seen liberals admit to error is by saying "we all had it wrong". When two people are equally at fault for a mistake they each shoulder 10% responsibility. This inability to admit to error is inherent to the mind set and world view of the liberal. "I've analyzed the problem and come up with this solution" is the way the liberal mind sees the world. That their reasoning may be off never occurs to them. "I've analyzed the problem and come up with this solution but I may be wrong" makes one a moderate while "I've analyzed the problem and come up with this solution but I need to be cautious since 'solutions' so often have unintended consequences" is the mindset of a conservative.

Our policies are being run by liberals so expect them to cling to those policies the bitter end. Ego preservation will make them put the country and world at risk rather than admit to error and ego preservation is one of the most powerful instints in human beings

Mon, 05/13/2013 - 13:17 | Link to Comment dcb
dcb's picture

why do you have to be so stupid. I am a "liberal" and can't stand pk.

bernake is a bush 9republican appointment and is a republican.

 

idiot.

Sat, 05/11/2013 - 14:13 | Link to Comment Chris88
Chris88's picture

If Bernanke hints at, winds down, or temporarily stops QE (they will never really stop printing, let's get realistic here) the 10/30 year yields will plunge, not rise.  With each new QE rates fell in anticipation and then rose when the program started.  When QE begins, equities rise and "risk on" idiocy becomes the norm.  If QE ends, since this is the only thing driving the stock market, stocks will get hit hard and people will run to TSY/GSE debt pushing yields down to even more ridiculously low levels.  

Sat, 05/11/2013 - 14:03 | Link to Comment Yen Cross
Yen Cross's picture

      We missed you Bruce. Don't be a stranger. ;-)

Sat, 05/11/2013 - 22:58 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Got sick, had a flood, got stuck with jury duty. Bad month - fuck it...

Sun, 05/12/2013 - 12:01 | Link to Comment Ying-Yang
Ying-Yang's picture

Heh... sorry. Sometimes it stacks up that way. Jury duty is a practice of stupidity in my county the way they run it.

Sat, 05/11/2013 - 13:47 | Link to Comment malek
malek's picture

 America has reached "Peak QE"

Dream on.
Just another CYA operation by the Bernank, so he can later deny responsibility with "but we tried!"

Sat, 05/11/2013 - 12:42 | Link to Comment Fuku Ben
Fuku Ben's picture

 

"While I'm not surprised, I'm still disgusted. Press leaks to favorite journalists are no way to run this show."

These are not leaks. You have either knowingly or unwittingly used the new meaning of the word put in place by the brainwashing MSM. They do this in part to redefine the truth and legitimize illegal activity.

A leak* is something unexpected that you can't control and want to plug. It is not highly controlled information that is knowingly and voluntarily released to third parties for publication. This could far more accurately be called a whole host of other things like criminal conspiracy, fraud, market manipulation, organized crime, but not a leak.

Your headline is the most accurate reflection of what is happening. We are collectively receiving a golden shower from the top of the pyramid courtesy of helicopter ben. It also contains no physical gold.

********Paragraph Censored********

*Leak example: A whistleblower leaks high controlled and damaging information outside of the hierarchy of the pyramid and is almost always threatened, punished or killed for the release of this information. (Too many examples to list)

 

Sat, 05/11/2013 - 11:22 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

"Bernanke is no dope"

All Keynesians are dopes.

Sat, 05/11/2013 - 11:21 | Link to Comment Charles Wilson
Charles Wilson's picture

BK-

This is Bernanke's Revenge.

Bernanke played the Monetarist Card at the Dinner for Milton Friedman years ago: "Dr. Friedman, you were right".

Friedman stated over and over that if the Fed had backed up trucks full of $$$ to the back doors of banks, the Bank Runs would have been avoided and the Depression would have played out differently.

Bernanke has held a Gazillion dollars in Fed Reserves over the past number of years for Bank Runs that never materialized.  A little leakage, perhaps, a few bribes to the Big 5 and Hyper-Inflation is held at bay.

Here's the gun to the heads of the Banksters: That game is over.

Now, you know and I know that the Banksters will be given another way to skim Mill...Bill...Trillions off the top.  The game, however, was always about Club Membership.  "We'll let those ham 'n eggers think they're gonna drink MY wine.  FOOLS!"

I still think that the Game was about getting China to Devalue the peg on the Dollar.  The inflation was exported to China and the End of the Story is that the Second Great Depression will be stretched into the Lost Decades.

All it cost us was Free Markets, our Freedom, a lost generation of Young Imbeciles (cannon fodder), and our futures.

Keep the next War off our shores, Hang the Bureaucrats and get the Nation back on a Constitutional Track.

That last sentence was a Joke, BTW.

See? Easy!!!

 

CW

Sat, 05/11/2013 - 11:12 | Link to Comment the grateful un...
the grateful unemployed's picture

i would like to see Hilsenrath and Taibbi on Meet The Press

Sat, 05/11/2013 - 11:06 | Link to Comment Ying-Yang
Ying-Yang's picture

To QE, or not to QE, that is the question:
Whether 'tis Nobler in the mind to suffer
The Slings and Arrows of outrageous Fortune,
Or to take Arms against a Sea of troubles,
And by opposing end them: to die, to sleep
No more; and by a sleep, to say we end
The Heart-ache, and the thousand Natural shocks
That Flesh is heir to? 'Tis a consummation
Devoutly to be wished. To die to sleep,
To sleep, perchance to Dream; Aye, there's the rub,
For in that sleep of death, what dreams may come,
When we have shuffled off this mortal coil,
Must give us pause. There's the respect
That makes Calamity of so long life:
For who would bear the Whips and Scorns of time,
The Oppressor's wrong, the proud man's Contumely,
The pangs of disprized Love, the Law’s delay,
The insolence of Office, and the Spurns
That patient merit of the unworthy takes,
When he himself might his Quietus make
With a bare Bodkin? Who would Fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death,
The undiscovered Country, from whose bourn
No Traveller returns, Puzzles the will,
And makes us rather bear those ills we have,
Than fly to others that we know not of.
Thus Conscience does make Cowards of us all,
And thus the Native hue of Resolution
Is sicklied o'er, with the pale cast of Thought,
And enterprises of great pith and moment,
With this regard their Currents turn awry,
And lose the name of Action. Soft you now,
The fairy Bernanke? Nymph, NOT in thy Orisons
Be all my sins remembered.

Sat, 05/11/2013 - 22:00 | Link to Comment Fuku Ben
Fuku Ben's picture

Hamlet & Creativity +1

 

Sat, 05/11/2013 - 11:01 | Link to Comment SillySalesmanQu...
SillySalesmanQuestion's picture

The words "Shit Heel" come to mind.

The words that come to my mind are "ass licking manure breath".

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