http://www.zerohedge.com/fullrss2.xml/component/option%2Ccom_docman/itemid%2C200023/gid%2C397/boombustblog/boombustblog/boombustblog/boombustblog/is-this-the-breaking-of-the-bear.html en The People On This Photo Have A Warning For The Market: There Is "A Build Up Of Excessive Risk" http://www.zerohedge.com/news/2014-09-21/people-photo-have-warning-market-there-build-excessive-risk <p>The people shown on the <a href="https://www.g20.org">photo below</a>, also known as "the people in charge"... </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/G20.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/G20_0.jpg" width="600" height="282" /></a></p> <p>... have a warning for the algos. </p> <p>First, a step back.</p> <p>Two months ago, none other than Janet Yellen <a href="http://www.zerohedge.com/news/2014-07-15/yellens-irrational-exuberance-moment-arrives-she-pops-momo-biotech-social-media-bubb">warned that a bubble is forming </a>in some equity sectors, namely biotechs and social media when the Fed said that "valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year." </p> <p>The warning was ignored, and as a result both biotechs and social/tech stocks have soared to fresh post dot com, if not record, highs.</p> <p>Then, a week ago, the central banks' central bank, BIS, warned again of unprecedented complacency when it said <a href="http://www.zerohedge.com/news/2014-09-14/low-volatility-everywhere-bis-sounds-alarm-alert-pervasive-complacency-masking-syste">there was "low volatility everywhere</a>", and once again reprised its warning from the summer of 2013, that there is a asset bubble, and that it is central banks policies themselves that are responsible for this. </p> <p>This warning too was ignored, although one wonders why: while there is no doubt that it is the central banks that are reflating the bubble to end all bubbles, it is not as if the BIS' Board of Directors, shown below, is unaware of the BIS' own warnings:</p> <p><a href="http://www.bis.org/about/board.htm"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/BIS%20BOD.jpg" width="260" height="427" /></a></p> <p>Then <a href="http://www.zerohedge.com/news/2014-09-18/imf-admits-qe-encourages-excessive-risk-taking-warns-sharp-downside-risks-are-rising">earlier last week</a>, the very organization that is in charge of globalization and perpetuating the status quo, the IMF said "<strong>that excessive risk taking may be building up, which could sharply reverse in the run-up to U.S. rate hikes or should geopolitical events trigger higher risk aversion.</strong>"</p> <p>Nobody even pretended to pay attention, even as the Financial Stability Board came out with a statement the very same day also warning that investors are becoming complacent about risks in financial markets. </p> <p>Finally on Friday, none other than the Fed itself in the fact of Dallas Fed president Dick Fisher, admitted that "<strong><a href="http://www.zerohedge.com/news/2014-09-19/feds-fisher-admits-fed-has-levitated-markets-warns-signs-excess">the Fed has levitated markets</a>."</strong></p> <p>The result? Stocks soared to records highs as Alibaba's IPO priced, soared over 30%, and briefly was more valuable than Walmart, before settling <em>at a much more reasonable 30x forward EBITDA multiple</em>.</p> <p>So with everyone ignoring any warning that there is froth, bubbles, or <a href="http://www.zerohedge.com/news/2014-09-20/greenspans-irrational-exuberance-warning-context">outright irrational exuberance </a>in the market, uttered by the very people who are in charge of <em>creating these bubbles in the first place, </em>we found it rather amusing that the 20 most developed nations in the world, which met yesterday in Cairns, Australia, decided to be the latest to <a href="https://www.g20.org/sites/default/files/g20_resources/library/September%202014%20communique%20-%20FINAL_0.pdf">issue yet another hollow warning</a>, which obviously will fall on deaf algorithmic ears, when a memo issued by the Group of 20 finance chiefs and central bankers "<strong>said low interest rates are contributing to a potential increase in financial market risk, as major policy makers rely on monetary stimulus to bolster growth.</strong>"</p> <p>“<strong>We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility</strong>,” the G-20 officials said in a communique released in Cairns, Australia. “We welcome the stronger economic conditions in some key economies, although growth in the global economy is uneven.”</p> <p>It is unclear just what that statement means: BTFATH, <em>but only on a downtick</em>?</p> <p>Putting this meeting in context, the G-20 met as the global economic recovery has <em>once again </em>faltered since a February G-20 meeting in Sydney when nobody apparently noticed the "harsh snowfall" that had just taken place in the US and was about to subtract $150 billion in potential US GDP growth, and of course as it is almost a given that Europe is about to enter a triple-dip recession. In Asia, Japan’s revival is being blunted by a sales tax increase and concerns are mounting that China’s 7.5%growth target for 2014 is becoming harder to attain.</p> <p>In other words, the G-20 is warning that the credit bubble that has kep the world afloat is about to explode, even as its impact on the global economy, by kicking the can on the day of inevitable reckoning, is the weakest since the Lehman failure. </p> <p>Bottom line: monetary policy, which has done nothing but push risky asset values to record, all time high levels, has failed to stimulate the global economy into the much needed "take off velocity" necessary for the virtuous cycle that is critical for central planning to be able to pull away from micromanaging capital markets around the globe. In fact, quite the opposite. And this time around, after 6 years of consecutive failures, even the G-20 itself is realizing the time to make hard decisions has come. </p> <p>What does this mean? <a href="http://www.bloomberg.com/news/2014-09-21/g-20-sees-potential-for-excessive-risk-in-markets-amid-low-rates.html">Bloomberg explains:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Policy makers in the U.S. and Canada are putting pressure on Europe to bolster demand. U.S. Treasury Secretary Jacob J. Lew has urged Europe to spur demand, while Canada’s Oliver has said some European countries should consider additional fiscal measures. </strong></p> <p>&nbsp;</p> <p>“It became clear that in the short-term, more work needs to be done to bolster cyclical measures,” Mexican Deputy Finance Minister Fernando Aportela said in an interview in Cairns.</p> <p>&nbsp;</p> <p>“There was a strong focus on the need to carefully communicate potential monetary policy changes,” Hockey said. “In this regard I want to particularly commend the chair of the Federal Reserve, Janet Yellen, for the careful and deliberate way she has undertaken this difficult task.”</p> <p>&nbsp;</p> <p>Lagarde stressed the importance of finding the right policy mix for each country. “The recommendations have to be tailored and targeted for each and every country,” she said. “Each and every one is different.” </p> </blockquote> <p>Translated, this means that while the world was able to avoid making any tough fiscal choices to boost growth, instead punting to central banks time and time again, the time when "Mr. Chairmanwoman will not get to work" has arrived. As such it is up to the various local governments to finally pick up the baton and instead of pushing regional equity markets to record highs rewarding on ly the super rich, it is time to encourage broad fiscal reform.</p> <p>And since the only thing more incompetent than a central banker are the bought and paid for corrupt corporate muppets also known as "politicians", the time to secure seat belts appears to have finally arrived. </p> <p>Finally, one wonders: just what needs to happen for <em>any of these warnings</em> to be finally <strong>not </strong>ignored by the market: should the alphabet soup of enabling "warners" listed above, the Fed, BIS, IMF, FSB, etc, have to start speaking in binary for the algos to understand the message?</p> <p><em>Source: Co<a href="https://www.g20.org/sites/default/files/g20_resources/library/September%202014%20communique%20-%20FINAL_0.pdf">mmunique Meeting of G20 Finance Ministers and Central Bank Governors</a></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="869" height="408" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/G20.jpg?1411316437" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-21/people-photo-have-warning-market-there-build-excessive-risk#comments Australia BTFATH Capital Markets Central Banks Dallas Fed Equity Markets ETC Federal Reserve Fisher Global Economy Irrational Exuberance Janet Yellen Lehman Monetary Policy None Recession recovery Volatility Sun, 21 Sep 2014 16:23:34 +0000 Tyler Durden 494639 at http://www.zerohedge.com 50 Years Of Washington’s Air Wars: Why They Always Fail http://www.zerohedge.com/news/2014-09-21/50-years-washington%E2%80%99s-air-wars-why-they-always-fail <p><em>Submitted by <a href="http://davidstockmanscontracorner.com/50-years-of-washingtons-air-wars-why-they-always-fail/">Ivan Eland of The Independent Institute via Contra Corner blog</a>,</em></p> <p>Although President Obama insists that no American military “boots on the ground” will be used to degrade and defeat the radical Islamist group Islamic State (IS) - which is well funded and has captured much heavy military equipment from the Syrian military and U.S. trained and equipped Iraqi army and Kurdish peshmerga militias - that <strong>will make his objective much harder to obtain.</strong></p> <p>My recent book, The Failure of Counterinsurgency: Why Hearts and Minds Are Seldom Won, which summarizes the<strong> lessons learned from many historical wars against irregular armies such as IS, concludes that is almost impossible to win against guerrillas by only attacking from the air.</strong></p> <p>Some damage can be done to armored vehicles, fixed targets such as supply depots, etc. if the guerrillas have any (IS does). Eventually, however, insurgents will blend back into the general population, and airstrikes will simply generate more fighters as a result of the outrage caused by the spike in civilian casualties.</p> <p><strong>So if boots on the ground are needed to effectively fight IS and Obama and the American people - as a result of the Afghanistan and Iraq debacles - vehemently veto that idea, what is to be done? Surprisingly, the best option is for the U.S. government to do nothing.</strong></p> <p>IS is a threat to Iraq, Syria, and neighboring countries, but not a direct threat to the United States. But John McCain, his equally belligerent sidekick Lindsey Graham, and other hawks will scream about how naïve is the belief that IS will not eventually get around to attacking the United States.</p> <p>Yet, unlike al-Qaeda, the group’s main purpose is not to attack the United States. Its primary objective is to do what it has already done - construct an Islamic State in the Sunni parts of Iraq and Syria, where it wins the support of many Sunnis as a result of oppressive Shi’ite governments.</p> <p>So it is not obvious that IS would focus its attacks on the United States in the future, if the United States discontinues airstrikes. Besides, many of the easy IS targets have been hit, at least in Iraq, and such attacks may quickly become counterproductive as civilian casualties mount.</p> <p><strong>In fighting an insurgency, the main objective should be - and which most traditional military organization have trouble getting their arms around — is to win the “hearts and minds” of the local population, not kill them. </strong>Mao Zedong, one of the most effective guerrilla fighters in world history, noted that winning the support of the population is key to winning this kind of irregular warfare because the population is the sea that the guerrillas swim in.</p> <p>Unlike regular warfare, in which both sides wear distinctive uniforms, guerrillas without uniforms attack and then just blend back into the local populace from which they receive sanctuary, supplies and fighters. Despite Mao’s later ruthlessness upon taking power, when fighting guerrilla-style to gain power, he cautioned his fighters to treat the people with respect and fairness.</p> <p><strong>When going into Afghanistan and Iraq, the U.S. military initially failed to learn the lessons of Vietnam War and made many of the same mistakes all over again. </strong>Instead of trying to win hearts and minds using a less violent counterinsurgency strategy, it once again wailed away with excessive firepower, thus killing or alienating too many civilians.</p> <p>However, that said, fighting guerrillas is difficult, because <span style="text-decoration: underline;"><strong>a foreign occupier never gets the benefit of the doubt when fighting locals - even brutal locals like the Afghan Taliban or IS</strong></span>. Also, foreign occupiers don’t know the culture as well as locals and therefore have much less intelligence about who supports the guerrillas and who doesn’t. Thus, for great powers, if they are using their own forces to fight guerrillas, they are much more likely to lose.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140921_ISIS.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140921_ISIS.jpg" width="600" height="425" /></a></p> <p><strong>Thus, boots on the ground in the fight against insurgents should be local ones anyway. </strong>That said, the Iraqi army and Kurdish pesh merga militias have not done too well so far against the battle-hardened and well-equipped IS. Fortunately, neighboring Shi’ite Iran, Turkey, Jordan, Saudi Arabia and the other conservative Gulf Sunni monarchies have an incentive to train and equip Shi’ite militias (Iran), the Iraqi army, or the Kurdish militias.</p> <p><strong>Therefore, regional countries should be able to handle a regional threat, leaving the United States to worry about any future training camps in IS-controlled territory that might be training terrorists to attack the United States. (As noted previously, if the United States takes a less prominent role in attacking IS, the motivation of IS to attack U.S. territory will be much reduced.)</strong></p> <p>Only if such terrorist training camps are discovered should the U.S. launch low-key, but congressionally approved, drone attacks to wipe them out; such fixed infrastructure can be targeted effectively by such limited airstrikes.</p> <p>If pressure builds for the United States to get more deeply involved in the fight against IS, perhaps Congress could approve private U.S. companies, staffed with ex-U.S. Special Forces, to conduct the training of Kurdish militias, the Iraqi army, or even Shi’ite militias using weapons provided by regional powers.</p> <p>Avoiding the use of U.S. military personnel for training locals might avoid the danger of later U.S. escalation - as occurred during the Vietnam War. <strong>If President Obama says it will take three years to subdue IS, try 10 or 12 or 20 years. If they succeeded at all (which most didn’t), many of the counterinsurgency episodes my book surveyed took that long.</strong></p> <p><span style="text-decoration: underline;"><strong>In sum, boots on the ground are needed to effectively fight IS. However, inserting U.S. military personnel for fighting or training locals likely would be counterproductive and would paint a big, red bulls-eye on the United States.</strong></span></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="564" height="531" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140920_target.jpg?1411312791" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-21/50-years-washington%E2%80%99s-air-wars-why-they-always-fail#comments Afghanistan ETC Fail fixed Iran Iraq John McCain President Obama Saudi Arabia Turkey Sun, 21 Sep 2014 15:28:42 +0000 Tyler Durden 494638 at http://www.zerohedge.com The Fed Then And Now – Remembering William McChesney Martin, Jr. http://www.zerohedge.com/news/2014-09-21/fed-then-and-now-%E2%80%93-remembering-william-mcchesney-martin-jr <p><em>Submitted by Erico Tavares of <a href="https://www.linkedin.com/pulse/article/20140920143852-1088431-the-fed-then-and-now-remembering-william-mcchesney-martin-jr">Linares &amp; Co.</a></em></p> <p><strong>The Fed Then and Now – Remembering William McChesney Martin, Jr.</strong></p> <p>These days, central banks have become so intertwined with the economy and capital markets that every word uttered by just about any senior Federal Reserve official is endlessly scrutinized to gauge what their next step might be.</p> <p>But it wasn’t always like this. There were times when the Fed actively defended the strict independence of monetary policy, as well as the role of free markets in creating prosperity and even preserving civil liberties. And those were the days of William McChesney Martin, Jr.</p> <p><strong>An Experienced Central Banker</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/McCheseny%20Martin.jpg" width="257" height="371" style="float: left; margin-right: 10px;" />Born in 1906, Martin was associated with the Fed from the very start. His father, a prominent banker from St. Louis, was part of the team that helped write the Federal Reserve Act and subsequently served as President of the Federal Reserve Bank of St. Louis from 1929 to 1941.</p> <p>After graduating from Yale with a B.A. degree in Latin and English, Martin started his professional career at the Fed of his native St. Louis. He then left to become the head of the statistics department at A. G. Edwards &amp; Sons, a local brokerage firm. He was promoted to partner just after two years, marking the beginning of a meteoric rise in the world of finance. He moved to New York to become the firm’s representative at the New York Stock Exchange, and eventually became the first paid President of the latter at the tender age of 31 – prompting the newspapers to label him the "boy wonder of Wall Street”.</p> <p>Wall Street in the 1930s of course was “no country for old men”. Throughout the decade, Martin had witnessed firsthand the wild gyrations of the stock market, and at one point worked for the SEC to reestablish investor confidence and prevent future crashes. He also pursued graduate studies in economics at Columbia University, but did not get a degree.</p> <p>In 1941, he was drafted into the US Army, supervising the disposal of raw materials on the Munitions Allocations Board and also liaising with Congress on lend-lease programs with the Soviet Union. Martin was discharged as Colonel at the end of the war, and soon after was nominated by President Harry Truman to lead the Export-Import Bank of the US. He then served as Assistant Secretary of the Treasury from 1949 to 1951.</p> <p>Therefore, by the time he was about to be appointed Chairman of the Board of Governors of the Federal Reserve in March 1951, Martin was already an extremely well-rounded finance professional, pursuant to his roles on Wall Street, the US Army, sponsoring the nation’s exports and finally the US Treasury. And he was ready to make his mark.</p> <p><strong>Preserving the Fed’s Independence</strong></p> <p>While at the Treasury, Martin was part of the team which negotiated the March 1951 Treasury-Fed Accord, which gave the Fed control over monetary policy and ended its obligation to monetize the government’s debt at a fixed rate.</p> <p>However, the Truman administration was keen to regain control of the Fed, and after the resignation of the then Chairman Thomas B. McCabe, they saw the perfect opportunity to step in. Once again Truman turned to Martin, a fellow Missourian Democrat, to be the next Chairman, hoping that he would play along with his plans. However, Martin fiercely resisted any attempts of government interference from the get-go. And he kept at it during the nineteen years he served at the Fed – the longest tenure of any Chairman.</p> <p>In a 1955 speech he said, “Congress entrusted to the Federal Reserve System responsibility for managing the money supply. This was an historic and revolutionary step. In framing the Federal Reserve Act great care was taken to safeguard this money management from improper interference by either private or political interests. That is why we talk about the overriding importance of maintaining our independence.”</p> <p>Martin had a job to do and he stuck with it. He stood up not only to the pressures from the politicians – the people who actually appointed him, but also from his former colleagues on Wall Street. At the bottom of one economic slump, he warned Congress that you can't “spend yourself prosperous”. He also remarked, “A perpetual deficit is the road to undermining any currency.” In 1965, he famously clashed with President Lyndon Johnson over the discount rate, raising it despite Johnson’s objections.</p> <p>And it was Martin who coined the now iconic phrase “take away the punchbowl just as the party gets going”, as a metaphor for the Fed’s role in reigning in the animal spirits at the appropriate time.</p> <p><strong>Economic and Political Views</strong></p> <p>While staunchly defending the Fed’s independence, Martin also had some strong economic and political views of his own, after working through some very pronounced business cycles and geopolitical events. Those were the heydays of the Cold War, with each side competing for supremacy and the hearts and minds of people all over the world.</p> <p>The following quotes exemplify his views, and appear to be as relevant today as they were back then:</p> <p>“That experience [<em>of substantial government intervention in the 1930s and 1940s</em>] led to growing concern over the effect of a straitjacket of controls on the economy's productive capacity, and the price that would be exacted in terms of individual liberty if the harness of wartime economic controls were carried over into the postwar years. Such a straitjacketing of the economy is wholly inconsistent with our political institutions and our private enterprise system. The history of despotic rule, of authoritarian rule, not merely in this century but throughout the ages is acutely repugnant to us. It has taken a frightful toll in human misery and degradation.</p> <p>“If businessmen, bankers, your contemporaries in the business and financial world, stay on the sidelines, concerned only with making profits, letting the Government bear all of the responsibility and the burden of guidance of the economy, we shall surely fail. I am as weary as you are of pious platitudes and after dinner preachments about leadership and financial statesmanship. But the fact is that the Government isn't something apart and remote from you. It is you – all of us.”</p> <p>However, despite his strong convictions he was not a purist, acknowledging that extraordinary times might require extraordinary measures. He once said “it is true that in a great emergency we have been willing to make a departure from our market structure, but our mood has been that of the man who has to leave home for the confines of a bomb shelter. When a war comes on, we are willing to put up with all sorts of economic controls and dictation of even small details of our economic life. When peace is restored we do not continue to ignore it. We cannot substitute the judgment of a few in authority for the free and independent judgments of the community as they are expressed in the market place. We cannot do so, that is, and retain our concept of freedom in a competitive, private enterprise economy.”</p> <p><strong>The Scorecard</strong></p> <p>Martin was not only the longest serving Chairman of the Fed; he was arguably the most effective post World War II.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/19af137.jpg"><img src="https://media.licdn.com/mpr/mpr/p/1/005/089/0df/19af137.jpg" width="602" height="242" class="center" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><em>Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Prof. Robert Shiller, Federal Reserve.</em></p> <p>Martin’s tenure, the economy and the stock market clocked some remarkable gains, with very little inflation and moderate credit growth. The favorable backdrop provided considerable positive momentum. The world economy was recovering from the devastation caused by the war, the baby boomers were starting to roll into the workforce, the international financial system was stable, commerce and trade were expanding, and technical progress was rampant.</p> <p>Philosophically speaking, it is inconsistent to preach the virtues of the free market while seeking praise for the results it delivers. But the fact remains that the US has never seen such low inflation rates during a period of prolonged economic expansion since Martin’s days at the Fed.</p> <p><strong>The Fed Then and Now</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/2f17060.jpg"><img src="https://media.licdn.com/mpr/mpr/p/1/005/089/0da/2f17060.jpg" width="602" height="391" class="center" /></a></p> <p>Comparing Martin’s views with those of his successors, it becomes clear that the Fed has progressively changed its views over the years on how it should conduct monetary policy and the role it should play in economic affairs.</p> <p>As Chairman, Martin was well known for his tight money policies and anti-inflation bias (see the relevant cover of Time Magazine above), while at the same time pushing for the Fed to have flexibility and discretion in its policymaking. He was able to retain the confidence of five different administrations, even when he had opposed them. His thinking was rooted around facts, emphasizing the importance of statistics over economic theory.</p> <p>In contrast, his successors particularly since Alan Greenspan all have brilliant academic credentials in economics, but very little hands-on experience in real world affairs (it is insightful to compare the biographies of the heads of the Fed over time and see how much the profile has changed). Accordingly, substantial emphasis is now placed on managing expectations, models and projections, which often have been at odds with some very significant economic outcomes in recent years.</p> <p>Consider the following. Martin fought against a proposed 2% inflation target, stating that “there is no validity whatsoever that any inflation, once accepted, can be confined to moderate proportions.” At a hearing, he summarized his views on how to steer policy in a free society: "We are dealing with waste and extravagance, incompetency and inefficiency, the only way we have in a free society is to take losses from time to time. This is the loss economy as well as the profit economy."</p> <p>Now the Fed seems to be diametrically opposed to these views. It is openly <a rel="nofollow" href="http://www.federalreserve.gov/faqs/economy_14400.htm" target="_blank">pursuing a 2% inflation target</a>; and its actions since the 2008 financial crisis have been specifically designed to prevent losses. After almost six years of massive liquidity injections and pitiful interest rates, we have never left the “bomb shelter”, to paraphrase Martin’s earlier quote.</p> <p>These losses of course are politically unacceptable today. The government’s debt has ballooned to over 100% of GDP, with no signs of abating over the foreseeable future. When Martin left the Fed in early 1970, financial industry profits as a percentage of total stood at 15%. Today it is double that amount, meaning that out of every dollar in profits generated by Corporate America nearly 30 cents comes from finance.</p> <p>Therefore, if the Fed were to take away the punchbowl, the economic and political consequences would be very severe today – in the US and abroad. As a result, the Fed can no longer be regarded as truly independent. Martin warned us of the consequences several decades ago: we will continue to deal with waste and extravagance, incompetency and inefficiency for many years to come, and an erosion of the liberties of society.</p> <p><strong><em>The Fed’s Legacy</em></strong></p> <p>After leaving the Fed, Martin served on the boards of several corporations and nonprofit organizations, including IBM, American Express and the National Geographic Society. Throughout his career he was praised for his competence and honesty. He passed away in 1998, at age 91.</p> <p>For someone with his pedigree and extensive financial experience, Martin was remarkably humble and also keenly aware of the uncertainties and limitations associated with setting the course for the nation’s monetary policy.</p> <p>Here’s what he told himself when he took office: ''My gracious, here I am, the new Chairman of the Fed, and I'm doing my best. I'm not the brightest fellow in the world but I'm working hard on this, and I haven't the faintest idea of how you figure the money supply. Yet everybody thinks I have it at my fingertips. They don't really know what the money supply is now, even today. I'm not trying to make fun of it but a lot of it is just almost superstition.”</p> <p>It appears that such superstition will now be the Fed’s legacy.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="935" height="608" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2f17060.jpg?1411309914" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-21/fed-then-and-now-%E2%80%93-remembering-william-mcchesney-martin-jr#comments Alan Greenspan American Express B+ Bureau of Labor Statistics Capital Markets Central Banks Corporate America Fail Federal Reserve Federal Reserve Bank fixed Monetary Policy Money Supply New York Stock Exchange Robert Shiller Time Magazine Sun, 21 Sep 2014 14:32:19 +0000 Tyler Durden 494637 at http://www.zerohedge.com Military Plant In East Ukraine Devastated By Massive Explosion; Kiev Accuses Russia Of Using Tactial Nuke http://www.zerohedge.com/news/2014-09-20/military-plant-east-ukraine-devastated-massive-explosion-kiev-blames-accuses-russia- <p>Last night&#39;s headlines crowed in bright red flashing text that Russia and Ukraine had (once again) agreed a cease-fire and terms over the borders between the two nations. Perhaps not surprisingly, mere hours later, <strong>Ukraine is claiming that Russia has broken the truce... with the use of a tactical nuclear weapon at Luhansk airport</strong>. This comes on the heels of claims by the pro-Russia separatists that Kiev forces destroyed a massive military plant in Donetsk. Russia&#39;s defense ministry flatly denies the &#39;nuclear strikes&#39; adding that <strong>&quot;no reasonable person will take them seriously.&quot;</strong> This truce-breaking action has once again raised calls among Ukrainians for the nation to get its nuclear status back; something Russia is clearly strongly against.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_ukrainenukes4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_ukrainenukes4.jpg" style="width: 599px; height: 535px;" /></a></p> <p>Earlier in the day, <strong>a massive military facility in pro-Russian separatist-held Donetsk was destroyed</strong>. <a href="http://rt.com/news/189280-donetsk-explosives-plant-blast/">As RT reports,</a> a neighborhood official told Ukrainian 112 television that a shell hit the plant.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;There was a direct hit at the No 47 industrial explosives shop, where some explosives were present. It detonated and caused another explosion. Luckily it didn&rsquo;t hit the main storage facility where we have some 2.5 tons of explosives,&rdquo; said Ivan Prikhod&rsquo;ko, deputy chair of the local community council.</p> <p>&nbsp;</p> <p><iframe frameborder="0" height="315" src="//www.youtube.com/embed/xSyNusxBaFo" width="560"></iframe></p> <p><iframe frameborder="0" height="315" src="//www.youtube.com/embed/xSyNusxBaFo" width="560"></iframe></p> <p>&nbsp;</p> <p>He added that while the incident caused considerable damage, nobody was hurt.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>There is no verified report about what kind of weapon hit the plant. But there are <strong>rumors of it being targeted by a Tochka-U tactical missile launched by Kiev&#39;s troops.</strong></p> <p>&nbsp;</p> <p><iframe frameborder="0" height="315" src="//www.youtube.com/embed/-QY4s1w4ons" width="560"></iframe></p> <p>&nbsp;</p> <p>&ldquo;According to our information, three Tochka-U missiles were fired and there you have it,&rdquo; a militia member who identified himself as codename &lsquo;Scorpio&rsquo; told RT.</p> </blockquote> <p><a href="http://en.itar-tass.com/russia/750516">Then, as ITAR-TASS reports,</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Ukrainian media earlier in the day quoted Geletei as telling one of the journalists that the Russian army had delivered two tactical nuclear strikes on the Lugansk airport from a self-propelled Tyulpan 2S4 mortar system, thus causing the Ukrainian troops to leave the area.</strong></p> <p>&nbsp;</p> <p>&ldquo;The strikes were so powerful that they demolished buildings completely from top to bottom,&rdquo; media reports quoted him as saying.</p> </blockquote> <p><a href="https://translate.google.de/translate?hl=de&amp;sl=ru&amp;tl=en&amp;u=http%3A%2F%2Finforesist.org%2Fpri-shturme-luganskogo-aeroporta-armiya-rf-ispolzovala-takticheskoe-yadernoe-oruzhie-geletej-dokument%2F">Adn as Inforesist notes,</a> this was <strong>confirmed by the Minister of Defense of Ukraine Valery Geletey during the return of the Ukrainian delegation from Poland</strong>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>It is reported on your page in the Facebook Roman Bocskai.</p> <p>&nbsp;</p> <p>In particular,<strong> the forces of the Russian Federation made two impact of self-propelled mortar 2S4 &quot;Tulip&quot; in Lugansk airport</strong>. It is for this reason that our military had left him. Blows were so powerful that &quot;completely destroyed the building from the fifth floor to the basement&quot; - described the minister.</p> </blockquote> <p>The devastation at Luhansk Airport...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_ukrainenukes1.jpg"><img height="399" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_ukrainenukes1_0.jpg" width="600" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_ukrainenukes2.jpg"><img height="383" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_ukrainenukes2_0.jpg" width="600" /></a></p> <p><em>h/t @L0ggol</em></p> <p>Which, <a href="http://en.itar-tass.com/russia/750516">as ITAR-TASS reports,</a> the Russian Defense Ministry flatly denied...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ukrainian media reports said that Defence Minister Geletei had made this statement upon return from talks in Poland.</p> <p>&nbsp;</p> <p>&ldquo;The leadership of <strong><u>Ukraine should consider sending Geletei through a basic military training course where rookies learn the main effects of a nuclear explosion and its consequences</u></strong>,&rdquo; the Russian Defence Ministry said in what meant to be a jock.</p> <p>&nbsp;</p> <p><strong>&ldquo;Speaking seriously, Geletei&rsquo;s regular attempts to justify the failures of the punitive operation in the south-east of Ukraine by alleged actions of Russian army units look like paranoia. But no reasonable person will take them seriously,&rdquo;</strong> the ministry said.</p> </blockquote> <p>*&nbsp; *&nbsp; *<br />What is somewhat comical is that <strong>these incidents comes just hours after Friday&rsquo;s signing of an extended ceasefire deal between Kiev and rebel forces, which hopes to put an end to hostilities in eastern Ukraine</strong>. The deal includes pulling back all heavy weapons from cities and frontlines.</p> <p><strong>The blast happened just as a Russian humanitarian aid convoy was unloading elsewhere in the city</strong>. Some 200 trucks carrying 2,000 tons of aid crossed the border earlier on Saturday.</p> <p>NATO chimed in...</p> <ul> <li><strong>*UKRAINE HAS CEASE-FIRE `IN NAME ONLY,&#39; TOP NATO GENERAL SAYS:AP</strong></li> </ul> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="583" height="439" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140920_ukrainenukes3.jpg?1411228770" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/military-plant-east-ukraine-devastated-massive-explosion-kiev-blames-accuses-russia-#comments headlines Poland Ukraine Sun, 21 Sep 2014 13:40:23 +0000 Tyler Durden 494620 at http://www.zerohedge.com The Big Picture For Gold And Silver http://www.zerohedge.com/news/2014-09-20/big-picture-gold-and-silver <p>With precious metals back at 4-year lows against a backdrop of gold migration from west to east, paper vs physical divergences, 'disappearing' Comex positions, dark pools in London, collateral grabs, and massive monetary policy extremist actions; we thought the following two presentations worth considering. Tocqueville's John Hathaway delves into the <strong>darker corners of today's gold markets</strong> while Mike Maloney reminds us of the <strong>big picture behind gold and silver as wealth insurance</strong>. The failure of a monetary system is never a smooth road - it is rocky and undulating, with twists and turns that don't appear on any map. But the destination is always without question, despite suppression efforts: <em><strong>Gold will inevitably respond to an expanding fiat currency supply. That simple</strong>.</em></p> <p>&nbsp;</p> <p><strong>Tocqueville's John Hathaway asks (and answers) "Do You Know Where <span style="text-decoration: underline;">YOUR</span> Gold Is"</strong> as he explains how counterparty and systemic risk will converge and the various dark and murky corners of the precious metals markets in which manipulation grows unchecked...</p> <p>&nbsp;</p> <p style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block;"> <a href="http://www.scribd.com/doc/240397428/John-Hathaway-Tocqueville-Keynote" title="View John Hathaway Tocqueville Keynote on Scribd" style="text-decoration: underline;">John Hathaway Tocqueville Keynote</a></p> <p><iframe src="//www.scribd.com/embeds/240397428/content?start_page=1&amp;view_mode=scroll&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>And <strong>Mike Maloney explains the big picture for gold and silver in the clip below</strong>...</p> <p><iframe src="//www.youtube.com/embed/y-IemeM-Ado" width="560" height="315" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>Simply put,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>We are living through unprecedented times, and if there is one lesson to keep in mind it is this: <strong>The failure of a monetary system is never a smooth road paved with gold.</strong> It is rocky and undulating, with twists and turns that don't appear on any map.</p> <p>&nbsp;</p> <p><strong>But the destination is always without question: Gold inevitably responds to an expanding fiat currency supply. That simple. </strong></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="542" height="346" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140920_gold3.jpg?1411248593" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/big-picture-gold-and-silver#comments Dark Pools dark pools Monetary Policy Precious Metals Sun, 21 Sep 2014 02:32:30 +0000 Tyler Durden 494636 at http://www.zerohedge.com Russia FinMin Calls For Shift Away From US Treasurys Into BRIC Bonds, Settlement In Non-Dollar Currencies http://www.zerohedge.com/news/2014-09-20/russia-finmin-calls-shift-away-us-treasurys-bric-bonds-settlement-non-dollar-currenc <p>It is no secret that Russia has had enough of the Petrodollar, and in light of ongoing western sanctions - which many view not so much as a reaction to events in Ukraine bur merely as an attempt to halt the Russian revolution against the Petrodollar status quo, crushing its economy before the momentum grows and more countries join Moscow - is constantly thinking of ways it can ditch the dollar as a medium of exchange as fast as possible. The problem is that when it comes to retaliating against the West, Russia - short of declaring an embargo on USD payments for its commodities - has little control over what currency its western trading partners will pay in. So instead it is focusing on its net exporting peers, aka the BRICS, with whom as previously reported, <a href="http://www.zerohedge.com/news/2014-07-14/anti-dollar-alliance-prepares-launch-brics-bank">Russia had launched a "bank" alternative to the IMF </a>when it comes to backstop and bailout funding, one that avoids reliance on the SDR, the USD, and on Western empathy. </p> <p>It is the same BRICs that, Russia's Prime Minister Dmitry Medvedev, told Rossiya TV in an interview earlier today, <strong>should conduct transactions in national currencies, bypassing cross-rates with the US Dollar</strong>, adding that "we can easily make mutual settlements directly," and the mechanism should be beneficial to both sides of transactions. </p> <p>And if it wasn't clear by now, Russia pivot away from the west and toward China is pretty much complete. <a href="http://en.ria.ru/world/20140920/193126956/Medvedev-Russia-to-Amplify-Mutually-Beneficial-Cooperation-With.html">Medvedev also said that </a>"our collaboration with China is of strategic importance. We have great, brilliant political contacts, we have excellent economic relations. [China] is our strategic partner, and we are interested in expanding the volume of cooperation. We are not afraid of collaborating because we are confident that this is equal, friendly and mutually beneficial collaboration in all areas." </p> <p>Meanwhile, regarding escalating Western tensions, the PM said that sanctions have created a bad situation for Russian banks on financial markets, all sources of liquidity are frozen. "We regard this as a senseless and ugly decision toward Russia, <strong>but we’ll manage without it</strong>." So does that mean that China will step in to provide the required FX reserves as Russia minimizes its USD exposure? Perhaps, but not entirely: Medvedev did add that "Asia, other markets “unlikely fully” to compensate for frozen European financing."</p> <p>The PM also said that Russia passed through similar squeeze in 2008-2009 and can manage with central bank resources, adding that Europe is still important market for Russia, if EU members "make no absurd decisions to squeeze us out of this market, we’ll stay there, it’s interesting for us."</p> <p>But while Medvedev was the good cop today, it was Russia's finance minister Anton Siluanov who was the designated "bad guy", and as the <a href="http://online.wsj.com/articles/russia-to-consider-diversifying-away-from-western-debt-securities-1411216108">WSJ reported</a>, <strong>Russia is considering diversifying its debt portfolio away from countries that have imposed sanctions on Moscow and into the papers of its BRICS partners.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Speaking on the sidelines of an annual investment forum in the Black Sea town of Sochi, Mr. Siluanov said the Finance Ministry wants to diversify its investment basket, and is looking for higher yields without too much risks. He said the ministry will consider buying papers issued by Brazil, India, China and South Africa, which along with Russia are known collectively as the Brics countries. </p> <p>&nbsp;</p> <p><strong>"[We would like to] walk away from investing in papers of the countries that impose sanctions against us,</strong>" Mr. Siluanov said, adding that the reshuffle would be carried out gradually. He didn't elaborate on when the first purchases of Brics debt may take place.</p> </blockquote> <p>The good news for the US, now that Russia appears set on either rapidly or slowly selling off its US Treasury exposure, is that Kremlin has possession of only $115 billion in US paper, which happens to be more than the $100 billion it reported in May when the first shock of a <a href="http://www.zerohedge.com/news/2014-05-15/russia-dumps-20-its-treasury-holdings-mystery-belgium-buyer-adds-another-whopping-40">Russian bond sell off hit the market</a>, and both of which happen to be amounts the Fed can easily monetize into its record big balance sheet (which, taper or no taper, <a href="http://www.federalreserve.gov/releases/h41/Current/">just grew by $28 billion in the past week alone</a>) in just over a month.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/Russia%20TSY%20Holdings.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/Russia%20TSY%20Holdings_0.jpg" width="501" height="391" /></a></p> <p>But at the end of the day it is not what Russia does, but what its other BRIC peers and US Treasury holders do. Because while Moscow may be in possession of just over $114.5 billion in US paper, China, Brazil and India share among them <a href="http://www.treasury.gov/ticdata/Publish/mfh.txt">some $1.6 trillion in US Treasurys</a>, better known as "leverage" in every sense of the word, or an amount that not even the Fed could monetize on short notice without sending a massive shockwave through the global capital markets. </p> <p>In other words, while the US pushes Russia hard, it may be careful not to push it too hard, and in the process start an avalanche that leads to a BRIC bond avalanche, which may well be one possible endgame as the world is forced to transition from the US Dollar as a reserve currency in the coming years.</p> <p>Never gonna happen? </p> <p>Considering that <strong>none other than Obama's own former chief economic advisor, Jared Bernstein, <a href="http://www.zerohedge.com/news/2014-09-08/obamas-former-chief-economist-calls-end-us-dollar-reserve-status">is advocating dropping the USD as the global reserve currency</a>, </strong>we would be careful with using the word "never" in this specific case...</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/Reserve%20Currency%20Status.png" width="499" height="422" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="553" height="369" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Siluanov.jpg?1411263521" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/russia-finmin-calls-shift-away-us-treasurys-bric-bonds-settlement-non-dollar-currenc#comments Bond Brazil BRICs Capital Markets China India None Reserve Currency Ukraine Sun, 21 Sep 2014 01:43:19 +0000 Tyler Durden 494635 at http://www.zerohedge.com Saturday Humor: iPhone 6 Plus vs Samsung Galaxy S5 http://www.zerohedge.com/news/2014-09-20/saturday-humor-iphone-6-plus-vs-samsung-galaxy-s5 <p>As untold millions unwrap their shiny new iPhone 6's this weekend, we thought the following would be useful for some context...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_itsawesome.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_itsawesome_0.jpg" width="600" height="983" /></a></p> <p>&nbsp;</p> <p><a href="http://www.theonion.com/articles/iphone-6-plus-vs-samsung-galaxy-s5,36969/"><em>Source: The Onion</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="649" height="586" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140920_itsawesome1.jpg?1411245837" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/saturday-humor-iphone-6-plus-vs-samsung-galaxy-s5#comments The Onion Sun, 21 Sep 2014 00:44:08 +0000 Tyler Durden 494634 at http://www.zerohedge.com The Decline Of America's Economic Model In 1 Simple Chart http://www.zerohedge.com/news/2014-09-20/decline-americas-economic-model-1-simple-chart <p><strong>&quot;You can&#39;t eat GDP, and you can&#39;t live in a rising stock market&quot;</strong> is the striking phrase from <a href="http://www.nytimes.com/2014/09/17/upshot/you-cant-feed-a-family-with-gdp.html?_r=0&amp;abt=0002&amp;abg=0">NY Times&#39; Neil Irwin</a> as he offers the most damning chart of the decline of America&#39;s Economic Model (and dream). As <a href="http://www.zerohedge.com/news/2014-05-21/keynesian-economy-one-chart">we have explained vociferously</a>, the most important thing to understand about today&rsquo;s economy is: <strong>Around 1999, growth in the United States economy stopped translating to growth in middle-class incomes</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140917_chart.jpg"><img height="497" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140917_chart.jpg" width="597" /></a></p> <p>&nbsp;</p> <p>The choice, by Greenspan and carried on by his followers, was to <strong>enable the financialization of the US economy for the benefit of the few, at the cost of the many</strong>. As Irwin concludes, <a href="http://www.zerohedge.com/news/2014-09-16/are-these-people-whose-confidence-conference-board-polls">and we explained previously</a>, Americans feel disappointed by the economy; the new data show that they have good reason.</p> <p><a href="http://www.nytimes.com/2014/09/17/upshot/you-cant-feed-a-family-with-gdp.html?_r=0&amp;abt=0002&amp;abg=0"><em>Source: NY Times</em></a></p> <p>*&nbsp; *&nbsp; *</p> <p>Perhaps, <a href="http://www.zerohedge.com/news/2014-07-14/santelli-goes-berserk-slams-fed-which-was-not-created-be-feel-good-institution">just perhaps, Rick Santelli was right after all</a>...</p> <p><strong>&quot;This is America! We don&#39;t follow consensus, we set it!&quot;</strong></p> <p><object data="http://plus.cnbc.com/rssvideosearch/action/player/id/3000182232/code/cnbcplayershare" height="380" id="cnbcplayer" type="application/x-shockwave-flash" width="400"><param name="data" value="http://plus.cnbc.com/rssvideosearch/action/player/id/3000182232/code/cnbcplayershare" /><param name="type" value="application/x-shockwave-flash" /><param name="allowfullscreen" value="true" /><param name="allowscriptaccess" value="always" /><param name="quality" value="best" /><param name="scale" value="noscale" /><param name="wmode" value="transparent" /><param name="bgcolor" value="#000000" /><param name="salign" value="lt" /><param name="src" value="http://plus.cnbc.com/rssvideosearch/action/player/id/3000182232/code/cnbcplayershare" /><param name="name" value="cnbcplayer" /></object></p> <p><span style="text-decoration: underline;"><strong>This is what Santelli is upset about... <a href="http://www.zerohedge.com/news/2013-07-11/rick-santelli-rages-who-bernanke-working">Who is the Fed working for? Main Street or Wall Street?</a></strong></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/07/20140713_santelli1.jpg"><img height="314" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/07/20140713_santelli1_0.jpg" width="600" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="597" height="497" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140917_chart.jpg?1411249936" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/decline-americas-economic-model-1-simple-chart#comments Main Street Rick Santelli Sun, 21 Sep 2014 00:17:08 +0000 Tyler Durden 494633 at http://www.zerohedge.com Summarizing Obama's ISIS Strategy Endgame (In 1 Cartoon) http://www.zerohedge.com/news/2014-09-20/summarizing-obamas-isis-strategy-endgame-1-cartoon <p>Presented with liitle comment aside to ask <em>"who could have seen 'that' coming?"</em></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_isis.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_isis.jpg" width="598" height="444" /></a></p> <p>&nbsp;</p> <p><a href="http://www.cagle.com/best-political-cartoons/2014/9/"><em>Source: Cagle</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="598" height="444" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140920_isis.jpg?1411249239" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/summarizing-obamas-isis-strategy-endgame-1-cartoon#comments Sat, 20 Sep 2014 23:28:13 +0000 Tyler Durden 494632 at http://www.zerohedge.com Greenspan's "Irrational Exuberance" Warning In Context http://www.zerohedge.com/news/2014-09-20/greenspans-irrational-exuberance-warning-context <p>As the marginal investing bot continues to invest his marginal leveraged dollar-on-the-sideline on an equity market that, as Janet Yellen has explained to the poor, will create a &quot;wealth effect&quot; to sustain everyone through rainy days and retirement, we thought <strong>some context worthwhile</strong>. On December 5th 1996, Alan Greenspan - upon the recognition that equity market capitalization has bubbled to over 100% of nominal GDP - opined that investors had succumbed to &quot;irrational exuberance.&quot; Since then, that <strong>&#39;exuberance&#39; has become increasingly <em>rational </em>as the Fed pulls all its monetary-base expanding, deficit-funding, asset-purchases to keep the American Dream alive for a select (and shrinking) few</strong>...</p> <p>&nbsp;</p> <p>Irational-er and Irrational-er...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional1.gif"><img height="451" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional1_0.gif" width="600" /></a></p> <p>&nbsp;</p> <p>But adjusted for the reality of a fiat world, things look a little different since the dot-com collapse inspired The Fed...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional2.gif"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional2_0.gif" style="width: 600px; height: 451px;" /></a></p> <p>&nbsp;</p> <p>As is clear - since the financial crisis, stocks have become completely dependent upon The Fed</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional3.gif"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional3_0.gif" style="width: 600px; height: 487px;" /></a></p> <p>&nbsp;</p> <p>As The Monetary stock and flow indicate...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional4.gif"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional4_0.gif" style="width: 600px; height: 487px;" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional5.gif"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional5_0.gif" style="width: 600px; height: 487px;" /></a></p> <p>&nbsp;</p> <p>And relative to debt... stocks have gone nowherefor 90 years...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional6.gif"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140920_Irrataional6_0.gif" style="width: 600px; height: 487px;" /></a></p> <p><a href="http://www.thechartstore.com/"><em>Charts: The Chart Store</em></a></p> <p>*&nbsp; *&nbsp; *</p> <p><em>&quot;Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past.<strong> But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade...</strong>&quot;</em></p> <p>&quot;How&quot; indeed, Alan, how indeed?</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="644" height="484" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140920_Irrataional1.gif?1411245611" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-20/greenspans-irrational-exuberance-warning-context#comments Alan Greenspan Irrational Exuberance Janet Yellen Japan Nominal GDP Reality Sat, 20 Sep 2014 22:33:42 +0000 Tyler Durden 494631 at http://www.zerohedge.com