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The Race For The Door

Tyler Durden's picture




 

Submitted by Lance Roberts of Street Talk Live blog,

Clues To Watch For The End Of QE "Infinity"

 

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Mon, 05/13/2013 - 20:14 | 3558644 q99x2
q99x2's picture

The FEDs gonna shit in its hat and pull it over its ears.

They are crooks, traitors, criminals and need to be locked up. The only thing you can be sure about the FED is that they are going to steal your money.

Mon, 05/13/2013 - 20:21 | 3558664 AlaricBalth
AlaricBalth's picture

Front-running the Fed works both ways.
http://www.zerohedge.com/article/how-front-run-fed-best-em

Mon, 05/13/2013 - 22:29 | 3559054 Beam Me Up Scotty
Beam Me Up Scotty's picture

The Fed will be shitting in everyone elses hat but it won't be shitting in it's own hat that's for sure. Whether it comes in a hat or through a fan, it will be on us and not them.

Mon, 05/13/2013 - 20:22 | 3558667 flacon
flacon's picture

There was a nano-flash-crash on SPY today. Did anybody else see it at 12:51 PM?

Mon, 05/13/2013 - 21:10 | 3558802 CheapBastard
CheapBastard's picture

Bullish for houses prices when POMO ends, right?

 

Ouch!

Mon, 05/13/2013 - 21:44 | 3558916 SheepDog-One
SheepDog-One's picture

What's this? Now Tylers believe that the Fed will 'talk down' the markets before they draw down their monetization actions? Thats fucking ridiculous....like thinking the kidnappers actually like you. I'll guarantee you I'm not betting on this theory, at all...they'll scalp the shit out of you that's what's going to happen!

Mon, 05/13/2013 - 21:47 | 3558931 fonzannoon
fonzannoon's picture

Sheep this is from Lance. He is a market guy. He can't concieve there not being one.

Mon, 05/13/2013 - 20:19 | 3558660 fonzannoon
fonzannoon's picture

I knew  this day was coming. The end of QE. Wow it's finally here. I am getting all misty eyed.

QE1...not enough

QE2...need Moar

Operation twist...just a coffee break

QE3....who could have guessed it?

QE4....stock market crack

But that's it. That's where it ends. Shirley they won't do QE5.

Mon, 05/13/2013 - 20:24 | 3558671 cosmictrainwreck
cosmictrainwreck's picture

see how many ya get, Fonz: don't evah call me Shirley again

Mon, 05/13/2013 - 20:27 | 3558683 HelluvaEngineer
HelluvaEngineer's picture

Don't call me Shirley.

Tue, 05/14/2013 - 11:46 | 3560720 Winston Smith 2009
Winston Smith 2009's picture

Airplane and Zero Hour Mashup

http://www.youtube.com/watch?v=dO90hdkeKrs&hd=1

From the video's description on YouTube:

"Airplane!" is the greatest comedy film ever made, and was conceived after the writers caught the movie "Zero Hour!" on late night television.

"Airplane!"'s producers bought the rights to the 1957 film and used the same screenplay to create the basis for the spoof.

Airplane contains references to disaster films in general, with specific jokes aimed at the Airport series of films and Saturday Night Fever.

But the film pokes fun at Zero Hour the most, by using the same scripted lines, using a Basketball player to be the co-pilot, and even adding an exclamation mark to the title.

Basically, Airplane IS Zero Hour, and this video shows you some of the similarities. If you like this video, please consider buying either or both movies - they are available on Amazon for hardly any money at all, and both are great to watch. If you know Airplane well, Zero Hour is almost as funny. When they say the fog's getting thicker, you can't help buy say "And Leon's getting laaaaaarger!!!"

Mon, 05/13/2013 - 21:38 | 3558891 JackT
JackT's picture

Flash crashes will be like popping popcorn in a pan over and open flame. (For the kiddos - we use to have to pop popcorn in a pan over an open flame, 4Realz we did)

Mon, 05/13/2013 - 20:23 | 3558669 Seasmoke
Seasmoke's picture

Sorry but the exit doors are locked up tighter than a nightclub in Rhode Island.

Mon, 05/13/2013 - 21:26 | 3558823 andrewp111
andrewp111's picture

But how high will the DOW go before the grand pyrotechnic finale? That is the ten trillion $ question that  us greedy investors want to know. I'll bet on at least 36000.

 

You can always exit early. But don't try to get out even one millisecond late.

Mon, 05/13/2013 - 20:24 | 3558673 blindman
blindman's picture

hft. the computers have a clock like door. or a door like
clock.
.
the door . what is clock speed?
.
"Clock speed is a measure of how quickly a computer completes basic computations and operations. It is measured as a frequency in hertz (Hz), and most commonly refers to the speed of the computer's Central Processing Unit (CPU). While computer developers and users can refer to this term regarding CPU performance, this has fallen out of favor as CPUs have become more complex. The easiest ways to boost clock speed in a computer include upgrading components and "overclocking" a piece of hardware.

What Clock Speeds Measure

There is a small quartz crystal inside of a CPU that vibrates at a particular oscillation or frequency. This frequency sets the "speed" of processes in the computer and is usually very high; they are typically measured in megahertz (MHz) and gigahertz (GHz). A megahertz is one-million cycles per second, while a gigahertz is one-billion cycles per second. So a computer with a clock speed of 800MHz is running 800,000,000 cycles per second, while a 2.4GHz computer is running 2,400,000,000 cycles per second.

These cycles set the speed for all processes within a computer. This ensures that all components and memory are working together at a rate that remains harmonious. Different components and processes can also run as a fraction of the primary CPU speed, which allows each element of a computer to work on its own and still function with the primary frequency of the CPU.
"
.
http://www.wisegeek.org/what-is-clock-speed.htm
.
"..at a rate that remains harmonious".
good luck finding the door.
"..this was no boating accident". r.d. (jaws)

Mon, 05/13/2013 - 20:26 | 3558680 Stuck on Zero
Stuck on Zero's picture

Real inflation is about 10%.  The government debt is $17T.  We are thus inflating away $1.7T.  The U.S. can thus spend $1.7T more than it takes in indefinitely.  Where's the problem?

 

Mon, 05/13/2013 - 20:55 | 3558766 WhackoWarner
WhackoWarner's picture

You do not do the grocery shopping obviously.

In many cases the inflation rate on the basic of FOOD is 33% and hidden in repackaging and downsizing of portions.

Gradual upswing on prices combined with a down-sizing of pack sizes...

Go figure that.

Mon, 05/13/2013 - 21:01 | 3558781 Catflappo
Catflappo's picture

Yeah, but iPad 3 has more features than iPad 2 so thats a huge deflationary force affecting everyone in the land

Mon, 05/13/2013 - 20:30 | 3558692 A Lunatic
A Lunatic's picture

Buy some chickens, a few five gallon value packs of rice, a rototiller,  a .357 mag, six months wages in PM's, a case of Jack Daniels, and a lawn chair and enjoy what's left of the American Dream........

Mon, 05/13/2013 - 21:45 | 3558919 SheepDog-One
SheepDog-One's picture

Yea pretty much.

Mon, 05/13/2013 - 22:14 | 3559021 prains
prains's picture

no porn?

Mon, 05/13/2013 - 23:36 | 3559178 RafterManFMJ
RafterManFMJ's picture

I'd love to have lunatic for a neighbor. He sounds fun.

Tue, 05/14/2013 - 06:34 | 3559542 Papasmurf
Papasmurf's picture

I thought those things were the American dream.  Except swap out the chickens and rice for hot dogs and burgers.

Mon, 05/13/2013 - 20:35 | 3558704 whisperin
whisperin's picture

I' like to nominate for #1; the monthly POMO release that shows any reduction in largesse.

Mon, 05/13/2013 - 20:41 | 3558708 Julian
Julian's picture

When the correction occurs it will be an instantaneous crash, the markets will halt and remain closed - the notion that you can watch VIX and still have time to get out is laughable.

Mon, 05/13/2013 - 21:34 | 3558876 miker
miker's picture

I think your comment is spot on.  Like you, I believe they will close the markets and freeze everyone out hoping they can figure out what to do which they won't be able.

Mon, 05/13/2013 - 23:38 | 3559182 RafterManFMJ
RafterManFMJ's picture

I just put in an order for 1000 shares of MSFT at nine cents, so I'm ready.

Tue, 05/14/2013 - 10:14 | 3560274 rosiescenario
rosiescenario's picture

The HFT's are going to be running just a tad faster than VIX.

 

I visualize the HFT's as moving so quickly they create a cavitation bubble (vacuum) which then implodes.For an interesting view of this phenomina, Google pistol shrimp.

Mon, 05/13/2013 - 20:39 | 3558713 yogibear
yogibear's picture

Hey Hilsenrath, FU! We know your full of BS. 

It's best to ignore Hilsenrath. The Fed cannot quit QE. In fact the Fed may even increase QE/month.

Hilsenrath, we know Bubble Bernanke, Evans, Dudley and Yellen are about the only ones buying US debt, so they cannot stop.

So you can exhaust all the hot air you want. Your irrelevant now. 

Mon, 05/13/2013 - 20:59 | 3558777 kito
kito's picture

well, ive wasted 2 years plus of my life here................ learning all about how printing is bad, and fiscal responsibility is good, and how this will all end badly.....stocking up on canned goods and toiletries and bullets and band aids......and .....then....he hints about pulling qe.....and nothing happens...all of those supposed algos that run the markets do nothing.....night sets in......with daylight following......im not sure whether to laugh or cry.........im going back to cnbc............

Mon, 05/13/2013 - 21:11 | 3558804 fonzannoon
fonzannoon's picture

2 years plus and you let Lance take you down?

Mon, 05/13/2013 - 21:16 | 3558820 kito
kito's picture

hahah....im getting depressed......really................i cant sleep anymore.............its getting bad.............

Mon, 05/13/2013 - 21:23 | 3558842 fonzannoon
fonzannoon's picture

I have not slept in 2 weeks. I have been glued to this place. I walk my dog a bit less, so I can get back here and check in. I'm not depressed. Just convinced something is about to break. Everyone I speak to feels the same way. I have a good group of close friends. We get lunch a few days a week. It becomes a bitchfest. Everyone logging complaints about how things are. Everyone knows a reset will be god awful and yet everyone is almost looking forward to it. Just so that you get that vindication in knowing you were not nuts.

It used to be the market could stay irrational longer than you can stay solvent. Now it's the market can stay irrational longer than you can stay sane.

I need a break from this place so bad, but yet this place has become the only semblance of reality that I know. Fucked up man....

Mon, 05/13/2013 - 21:37 | 3558886 blindman
blindman's picture

it is very serious. the world can remain evil and
disgusting longer than you can stay alive. a person
does need to have the discipline to walk away, prioritize
their time and energy in a sustainable way or ...
get sick and die from internalizing the global "muck"
and debris that is brought to you at the speed of light
from every perspective on the planet. the mind of man
or any sentient being was not designed to integrate this
many perspectives this fast. it is unsustainable and for your
own survival you have to learn your limits before the
violation of them destroys you.
peace.
exercise and quiet meditation everyday for some time is
something to seriously contemplate.

Mon, 05/13/2013 - 21:47 | 3558936 kito
kito's picture

thanks for the wise words blindman......you are sooo right............

Mon, 05/13/2013 - 22:16 | 3559027 prains
prains's picture

trooth!

 

listen

Tue, 05/14/2013 - 17:17 | 3562242 blindman
blindman's picture

John Trudell , I'm crazy ?
http://www.youtube.com/watch?v=ctUecTdPEO0
.
"they mine the energy of the human." j.t.

Mon, 05/13/2013 - 21:38 | 3558892 miker
miker's picture

Hey man, get your life back.  What will happen will happen.  This thing will go on for a lot longer than any of us think.  Maybe that's a good thing; not sure.  Whatever happens, trust that there are more good people in this country than bad.  We still have a political system that can recover with citizen anger but more importantly citizen action.  Get some sleep.

Mon, 05/13/2013 - 21:44 | 3558915 fonzannoon
fonzannoon's picture

Miker thanks, for whatever reason, I never got sleep. My whole life I have fought with it. I am all good. I still keep the seperation and more importantly my sense of humor. What makes me very nervous is to see the people around me come unglued. Short tempers...short fuses. They know something is wrong.

Kito you are local. Say the word and I buy you a beer. It would be my pleasure.

Mon, 05/13/2013 - 21:50 | 3558948 kito
kito's picture

we may have to douse our uneasiness in some suds.........will keep that invitation open......francis would be so pleased............

Mon, 05/13/2013 - 21:39 | 3558894 kito
kito's picture

weve gone mad...........nothing will break until 2015....count on it.......im sure of it...............

Tue, 05/14/2013 - 05:29 | 3559499 BringOnTheAsteroid
BringOnTheAsteroid's picture

That is seriously bad news for the glaziers of the world and therefore Dr Krugman.

Mon, 05/13/2013 - 23:40 | 3559187 RafterManFMJ
RafterManFMJ's picture

With new Google Glass you can walk the dog, check Zerohedge, and look like like a colossal asshole all at the same time.

Tue, 05/14/2013 - 03:29 | 3559418 Meremortal
Meremortal's picture

You will really be in bad shape in another month.

Mon, 05/13/2013 - 21:14 | 3558814 kchrisc
kchrisc's picture

"I cannot teach him. The boy has no patience" Yoda

          hujel

Mon, 05/13/2013 - 21:32 | 3558865 Aurora Ex Machina
Aurora Ex Machina's picture

ZH, and all of the internet in general, is a huge mirror, an echo chamber, a Chinese room with 90% non-signal where you feed it your own emotions, desires and dreams to complete the information feedback and it spits back what you require.

 

That's its dark secret, and why it works so well.

 

 

If you have learnt nothing, then.....................................................................................................................The fault lies within.

Mon, 05/13/2013 - 21:34 | 3558873 fonzannoon
fonzannoon's picture

It's an addiction. You know a new article will be out in 20 minutes....and this one wiill be the one that snaps the cord.

Mon, 05/13/2013 - 21:47 | 3558897 Aurora Ex Machina
Aurora Ex Machina's picture

Oh, sweety.

Yes, that's ZH's hook, it's not how the internet works though. That's why I've linked to TED talks on information bubbles, and in my more Chthonic moments linked you to dark places, to break said bubbles (to the algos, just having a link in your space is enough to chip the walls).

 

Effigies

Indulgences

Anarchist

Violence

Chthonic

Intimidation

Vampyric

Pantheon

Succubus

Hostage

Transference

Identity

Mauer

Interface

Flitting

Isolation

Revenge

Osmosis

Crusade

Tyrant

Domination

Indifference

Miasma

Pressgang

Displaced

Flight

Resettlement

Funereal

Glide

Trace

Balkan

Burial

Reverse

Manipulate

Origin

Text

Traitor

Urban

Comeuppance

Tragic

Nerve

Mystification

 

David Bowie ~ hi there Mr Star Man. Don't see any others doing the Scientific Journalism though, nor the multi-layered link mimetic referencing. And to think I chose the rankest pound out there, was it by chance? Or was it because it was the only place that would tolerate it in these odd times?

Mon, 05/13/2013 - 22:01 | 3558979 MythicalFish
MythicalFish's picture

Chtonic Comeuppance. Just as Marc Faber said.

Mon, 05/13/2013 - 22:12 | 3559019 Aurora Ex Machina
Aurora Ex Machina's picture

Oh, there's a club all right.

Mon, 05/13/2013 - 22:12 | 3559017 TheFourthStooge-ing
TheFourthStooge-ing's picture

Splunge

Mon, 05/13/2013 - 22:38 | 3559071 Aurora Ex Machina
Aurora Ex Machina's picture

That's Bowie Splunge to you.

 

 

Worth it.

Mon, 05/13/2013 - 21:41 | 3558906 miker
miker's picture

You don't get it.  It's all staged.  The article and the markets not tanking.  That is what they want the perception to be; that the stock market it not hinged to QE.  Also, talk of ending QE sets up more downward pressure on PMs; expect more selling. 

Mon, 05/13/2013 - 21:45 | 3558917 fonzannoon
fonzannoon's picture

I think I get it...that's why I said it...

Sweety?

Mon, 05/13/2013 - 21:52 | 3558950 Aurora Ex Machina
Aurora Ex Machina's picture

Yeah, you're gonna want to look that one up.

And Francis even gets to latch onto the hidden meaning: A fruit that is a crossbreed between a grapefruit and a pomelo, originating in Israel.

 

(No, I just meant option #1)

Mon, 05/13/2013 - 21:56 | 3558965 fonzannoon
fonzannoon's picture

the people on this site are awesome.

Mon, 05/13/2013 - 22:13 | 3559020 TheFourthStooge-ing
TheFourthStooge-ing's picture

...and a grapefruit is a cross of an orange and a pomelo.

Mon, 05/13/2013 - 22:17 | 3559029 Aurora Ex Machina
Aurora Ex Machina's picture

I KNEW THE JEWS WERE DOING SOMETHING UNNATURAL.

BREEDING A FRUIT WITH A FRUIT THAT'S ACTUALLY THE SAME FRUIT.

 

 

INCEST!

Mon, 05/13/2013 - 21:07 | 3558795 kchrisc
kchrisc's picture

Isn't "winding down" going to be alot like getting a camel through the eye of a needle?!

I am going to so enjoy watching this.            hujel

Mon, 05/13/2013 - 21:27 | 3558857 Aurora Ex Machina
Aurora Ex Machina's picture

When this ends you won't need graphs.

Or, everyone could end up in a Soviet type dystopia where we're all waiting on the end of the post-Capitalist dream watching Dancing with the Stars while the lucky few blow their minds on the dream of eternal youth while the waves of climate catastrophe roll in. That's not much fun though.

This or That?

 

 

I find the lack of original thought disturbing.

Mon, 05/13/2013 - 21:46 | 3558922 bubblemania
bubblemania's picture

My UBS Money Manager is assuring me no more than a 5% correction. Now I'm going to sleep. btw - I went shopping this weekend, spent $250 at BJ's for toilet paper and other family necessities and $75 to fll-up my volvo. Fuck You Bernanke!

Mon, 05/13/2013 - 21:48 | 3558939 Aurora Ex Machina
Aurora Ex Machina's picture

Seriously: get a bidet.

Mon, 05/13/2013 - 21:53 | 3558956 kito
kito's picture

what if the water supply gets cut off??

Mon, 05/13/2013 - 21:57 | 3558964 Aurora Ex Machina
Aurora Ex Machina's picture

Rainwater collection?

 

If his water supply gets cut off in a high density urban setting, a shitty bum is the least of his worries. Ask all the homeless people you see around about it. The switch to providing purely scalding hot water in public conveniences was a direct attack on them btw, not to mention the loss of public water fountains (championed in Victorian times, and don't give me the health angle, it's easy to coat them with a silver-nano coating these days).

Mon, 05/13/2013 - 21:58 | 3558975 bubblemania
bubblemania's picture

Sounds refreshing!

Mon, 05/13/2013 - 22:04 | 3558983 Aurora Ex Machina
Aurora Ex Machina's picture

Let's just say... your first time is a shocker, especially if you aim wrong!

 

(But it's actually cleaner, more sanitary (use soap, obviously) and better for you. No more raspy ass. Talk to any sophisticated Indonesian or Malaysian - they find the use of paper barbaric, for good reason).

Mon, 05/13/2013 - 22:05 | 3558990 bubblemania
bubblemania's picture

I'll keep an ice pack nearby just in case. 

Mon, 05/13/2013 - 22:08 | 3559004 Aurora Ex Machina
Aurora Ex Machina's picture

If you have a partner, it's probably worth recording it just for them.

 

Comedy Gold, they'll love you forever.

Mon, 05/13/2013 - 22:07 | 3559003 bubblemania
bubblemania's picture

I rid myself of the nasty raspy ass after I had kids and started using their baby wipes.

Mon, 05/13/2013 - 22:15 | 3559013 Aurora Ex Machina
Aurora Ex Machina's picture

Very bad for your bum. Don't ask why I know this, but the use of baby wipes is mostly an American thing, and not good for nappy rash or your own bottom. CF over-use of anti-bacterials and the spread of MSRA and allergies through over-sanitized environments. People thrive on dirt, that's why Dogs as pets are so great for your health. Kids should be rolling in dirt, unless you live in Miami or >Most other post-industrialized countries< where the heavy metal pollution and so on makes it unwise.

Water, water, everywhere, and not a drop to drink.

 

ZH - serious financial news, and the microbiology of your anus. Covering ALL angles!

Mon, 05/13/2013 - 21:47 | 3558933 SheepDog-One
SheepDog-One's picture

'3 strikes and you're out' apparently even applies to the Maniacal Monetizers.

Mon, 05/13/2013 - 21:47 | 3558938 miker
miker's picture

Bernanke will not end QE before he leaves.  They will talk alot about it but not end it.  That is so they can brainwash the public into believing that stocks are not tied to QE.  Also so they can continue to smack down PM's. 

Look the ecomony is weaking.  Layoffs are incrasing from The Sequestration and tax increases.  And that's only about 50B this year.  The deficit is down some this year but I fully expect it will still be over a Trillion by end of September.  Trust me though.  They will do everything in their power to have it come in below 1 Trillion for the psychological effect. 

The economy will never recover until we rebalance our society.  We have way too high a cost structure in most areas for the wealth (or lack thereof) that we can now generate as a society.  Until we figure that out and start knocking down all those puffed up industries/crony businesses and crony entitlements, we will continue to subsidize these unproductive parts of our economy.

Mon, 05/13/2013 - 22:14 | 3559024 NihilistZero
NihilistZero's picture

Well said.  The deflationary spiral is here.  Perhaps not as much nominally, but definitely in real dollars.  The FED has no power to stop this.

LIQUIDITY.  TRAP.

Mon, 05/13/2013 - 22:18 | 3559030 fonzannoon
fonzannoon's picture

Is a liquidity trap good for a 10 point selloff in the S&P?

Mon, 05/13/2013 - 21:56 | 3558961 MythicalFish
MythicalFish's picture

Both CBOE tail hedge index and VIX short & roll kicking the ball out of the park at the moment. Nasdaq circa Feb 2000 style. Surely very healthy and sustainable.

Mon, 05/13/2013 - 21:56 | 3558967 orangegeek
orangegeek's picture

The US Dollar rises (spot daily below) as the US indexes climb sharply too.  Something will give.

 

http://bullandbearmash.com/chart/dollar-continues-climb-euro-pound-conti...

 

What supports the US Dollar?  A weak Euro, Yen, Pound and CDN (commodity economy - CRB is sliding).

 

What supports the indexes?  Flat / missed revenue on rising EPS (massive share buy backs).

 

Is it the USD or US Indexes that will rise?  Hmmmmm.

Mon, 05/13/2013 - 22:05 | 3558995 YHC-FTSE
YHC-FTSE's picture

Doubtful that the Fed will stop QEx. One thing consistent about these people is the big disconnect between talk and action. If mere rumours bring down the markets more than expected during the traditional "Go away in May" wind down this summer, why that will be just the excuse for more QE in the autumn. 

I was reading a Reuters article (by Sarah Lynch) on the fact that HFT traders have increased donations to lawmakers by 635% during the 2008-2012 election cycle. Algos are here to stay and they love to flash crash, so that vulnerability in the markets to extreme price corrections and volatility in the markets will likely be amplified when the "perceptions" or sniff of fear start its death spiral. 

My take on the whole Hilsenrath tapering leak is that just because a shit tapers thin does not mean it isn't still connected to the infinite supply of shit that may dilate to a big fat arse tearing log later on. All indicators point towards a systemic crash if the flow ever stops, and the fact that QE3 was a different animal to QE1&2 showed to me that investors started buying the rainbows and unicorns stories from the Fed about the recovery - what's not to like when you can ride the index without fear of loss? Couple that complacency with kamikaze Japan making them run to the "safety" of the USD, and suddenly the complete debt laden mess that is the US economy seems normal. If Bernanke starts to believe his own delusions and really does cut off QE, expect the event we've all been waiting for - a complete collapse. But I believe it will carry on crapping QE for some time to come while promising/threatening to taper off every now and then to manipulate the markets.

And also, Congress recently overturned last year's much publicized law that made it illegal for government employees to profit from insider knowledge, so I expect them to lie their faces off to get rich from the volatility in the markets. 

Mon, 05/13/2013 - 23:00 | 3559108 Spaceman Spiff
Spaceman Spiff's picture

Shouldn't any chart about QE3 include the 8ish (?) months of telegraphing of open ended manipulation by the fed and the Hilsenrath minion?   Only people who did not frontrun QE3 are the hopelessly prudent or the clueless.   I fall into one of these categories.   

Tue, 05/14/2013 - 00:01 | 3559164 Coldfire
Coldfire's picture

Because tapering off of heroin in the face of an unlimited supply is a viable strategy.

Tue, 05/14/2013 - 01:12 | 3559312 polo007
polo007's picture

http://www.safehaven.com/article/29800/bubbles-inflating-faster-than-gdp

Global central banks have clearly demonstrated the ability to re-inflate stock and real estate bubbles. Global stock markets are roaring ahead of their economies and real estate prices are quickly rebounding from their recent collapse. However, rock-bottom interest rates and massive money printing have yet to show an aptitude for creating sustainable GDP growth.

There has been a lot of talk about a rebound in the equity and real estate markets helped along by the Fed's free money. That much is for sure the truth; but the evidence of a viable and sustainable recovery built on free-market forces just isn't there.

For example, the percentage of consumers who own their own home continued to fall during the first quarter of 2013, dropping to a national level that hasn't been seen since the fall of 1995. The Census Bureau reported that the nation's homeownership rate slipped to 65% in Q1 2013, a decline from 65.4% posted in the last quarter of 2012. The rate of home ownership now stands at a 17-year low!

But if the housing market was gaining ground on stable footing then why is it that first-time home buyers and owner occupiers aren't participating. Instead, it has been hedge funds and speculators that are sopping up all the foreclosures. One has to wonder if these "investors" will hold onto their rental properties if the economy tanks once again and home prices take another steep drop.

In addition, the labor market isn't rebounding as the Fed had hoped and projected it would. Last month's NFP report showed that despite $85 billion per month of QE, 9k goods-producing jobs were lost. And even though you here the MSM talk about resurgence in the manufacturing sector, there were zero manufacturing jobs created in April. What's even worse is that aggregate hours worked fell by 0.4% in April over March. Therefore, despite the fact that the Labor Department says that 165k net new jobs were created, the actual total number of labor hours worked was in decline.

There is a reason why the Fed and other central banks have been unable to achieve a healthy and viable economy even after five years of trying to manufacture one from a printing press. The truth is an economy that is soaked in debt just doesn't grow because it is always marked by at least one, if not all three, of the following growth-killing conditions; high interest rates, rampant inflation and onerous tax rates.

Any country with outstanding debt that is equal to or greater than its GDP is forced into sucking an exorbitant amount of capital out of the private sector due to burdensome rollovers and interest payments on that debt. In addition, rising tax rates act as a disincentive to increase productivity and whatever money that is taken from the private sector is always redeployed in an inefficient, GDP-destroying manner. Rising interest costs also discourage borrowing and lead to capital shortages. And finally, inflation destroys the purchasing power of the middle class by eroding the value of the currency and leaving consumers with an inability to make discretionary purchases.

But central bankers don't acknowledge this truth and are instead seeking to increase their efforts in pursuit of ever-increasing money supply growth. Of course we are all familiar with the counterfeiting undertakings of the Fed and BOJ. Now Australia's central bank is joining the crowd of inflation lovers and cut its key interest rate by 25 basis points on Tuesday, to a record low of 2.75%.

Tue, 05/14/2013 - 03:51 | 3559435 dunce
dunce's picture

The market may break from a political shock. The press may turn on obama and the scandals may increase in number and exposure. If that happens the democrats may lose control of the senate. As things stand obama can not be impeached because no democrat would vote to impeach no matter how deserved. Some things that have been done are criminal and could be prosecuted without the DOJ. Once people start to face jail time they will bargain testimony for lenience or immunity and the dam will break. The market might lose all direction with our govt. in turmoil. The way things are going the last few weeks, i do not see obama sailing through to 2016 unscathed. A return to law and order with republican control will be a rough ride for everyone. Obama has lost control of all overseas events and things there are escalating while we have no leader that commands respect abroad.

Tue, 05/14/2013 - 09:24 | 3560018 bubblemania
bubblemania's picture

There is no difference between Dem and Repubs', they're the same party. 

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