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Bubblespotting With Jim Bullard

Tyler Durden's picture


Today's "good Fed cop" award goes to St. Louis Fed president James Bullard who has some words of caution which neither he, nor anyone else at the FOMC, will pay attention to:

  • BULLARD SAYS ‘I’M THE BIGGEST INFLATION HAWK’, or better known as dove in hawk's clothing

And the punchline:


Yes: the bubble of Fed "assets"

As for his conclusion...


... forgive us if this seems like a small case of deja vu.

  • Bullard Says Fed Shouldn’t Rush to Ease as Economy Accelerates - December 2011
  • Fed’s Bullard says U.S. growth may accelerate to 3% in 2012NAPMPMI Index - April 2012
  • Bullard Says Economic Growth Will Probably Accelerate - February 2013

So, thanks, but we'll pass on any "acceleration"

Full Bullard slideshow (lots of pretty charts but no kittens):


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Fri, 11/01/2013 - 09:59 | Link to Comment Dr. Engali
Dr. Engali's picture

Yeah no shit there's a's called a federal reserve note you idiot.

Fri, 11/01/2013 - 10:03 | Link to Comment LawsofPhysics
Fri, 11/01/2013 - 10:09 | Link to Comment The Juggernaut
The Juggernaut's picture

Since there is a stock market bubble do any of you think that The Fed/Federal Gov't will set up account balance maximums to pop the stock market bubble?

Fri, 11/01/2013 - 10:17 | Link to Comment HoofHearted
HoofHearted's picture

OK, so I'm a bastard and a geek, someone who doesn't trust anyone...especially if they are from .gov

And Bullard told another whopper. I went to the BLS site. (I bet he didn't see that coming.) Sure, the LaborParticipation Rate fell in 2000 (.com bubble anyone), and it fell from 67% to 66% by 2003. Then it stayed stable until 2008. And for some damn reason that nobody at the Fed can seem to figure out, the drop has been almost linear since then, down to 63%. 

Ergo, that bastard Bullard told a half-truth, but he doesn't want to admit what has happened in the past five years. Why would a trusted government official be lying to us? I can't think of any good reason, though I can think of a ton of nefarious ones...

Fri, 11/01/2013 - 10:50 | Link to Comment aint no fortuna...
aint no fortunate son's picture

Somehow, one has difficulty reconciling "asset" on the Fed's balance sheet with Countrywide Credit Mar 2006 vintage Lee County (FL) residential MBS

Fri, 11/01/2013 - 11:01 | Link to Comment Stoploss
Stoploss's picture

Oh! OH! Just have the banks give back the excess liquidity. No?  LOLOL!!!!


It's called the FED, Bullard.  If you want to see the physical manifestation of said bubble, consult your nearest mirror.

Fri, 11/01/2013 - 09:59 | Link to Comment Martdin
Martdin's picture

There's always Next-YearTM!

Fri, 11/01/2013 - 10:35 | Link to Comment max2205
max2205's picture

Again...why are they on the payroll? 

Fri, 11/01/2013 - 10:03 | Link to Comment shanearthur
shanearthur's picture

Like inflation not counting gas and  food, the economy is going good - not counting the economy.

Fri, 11/01/2013 - 10:06 | Link to Comment Tsar Pointless
Tsar Pointless's picture

No kittens? Fuck you then. I'm not reading.

Fri, 11/01/2013 - 10:06 | Link to Comment fonzannoon
fonzannoon's picture

I'm hearing reports all over of people trying to buy stocks and the large brokeragre houses are failing to deliver on the buy orders. Facebook orders are being told anywhere from 3-5 weeks for delivery and DDD orders are just not being filled. If this keeps up there is going to be a flat out run on physical stock confirm tickets and the financial system may be seriously affected, especially the coke and hooker industry as they run out of supply as well.

Fri, 11/01/2013 - 10:09 | Link to Comment kralizec
kralizec's picture

If those hookers got nice bubbles all is well.

Fri, 11/01/2013 - 10:15 | Link to Comment NoDebt
NoDebt's picture

Wait.... what?


Fri, 11/01/2013 - 10:16 | Link to Comment gjp
gjp's picture

Epic, the bubble to end all bubbles.  Fueled by the dark power of the reserve currency.  Only Chinese (or Saudi?) Frodo can throw it in the Mountain of Doom, but Frodo is also seduced by the power of darkness ... the kleptocrat lifestyle looks pretty good to the foreign elites.  Will Frodo summon the resolve?  How long will it take?  Will the shire string Frodo up from their short lamp-posts?  Nymphs and hobbitweed for everyone!

Fri, 11/01/2013 - 10:29 | Link to Comment Dr. Engali
Dr. Engali's picture

Street name bitchez! BTW..Have you seen kito? I'm hungry.

Fri, 11/01/2013 - 10:11 | Link to Comment 101 years and c...
101 years and counting's picture

bubbles in: food stamp recipients, foreclosures, college grads living with mommy and daddy, cocaine and hooker prices in greater manhattan, etc....

Fri, 11/01/2013 - 10:16 | Link to Comment Billy Sol Estes
Billy Sol Estes's picture

Halloween chart?

Fri, 11/01/2013 - 10:23 | Link to Comment venturen
venturen's picture

maybe if the idiotic FED didn't pay banks to warehouse cash and get interest, maybe if they didn't allow the crooked banks to manipulate every "Fi"ng market and only allowed them to help businesses make thing it would be different. Instead they make more money trying to corner the market on every commodity or ramp the bond or stock market. Heck JP Morgan makes more money than just about every company....just prop trading people out of their money! 


Time end the FED, break up the crooked banks and simply the tax code that allows massive tax free CHEATING! Regular guy is a fish in barrel with these corrupt banks using an unlimited cash funnel at the FED to take their last dime!.  Oh an impeach Obama!

Fri, 11/01/2013 - 10:33 | Link to Comment Dr. Engali
Dr. Engali's picture

When you consider the fact that the fed is owned buy and works for the banks, from that standpoint they aren't so idiodic. The bankers are more than pleased with the fed's performance.

Fri, 11/01/2013 - 10:45 | Link to Comment ZDRuX
ZDRuX's picture

Biggest bubble: U.S. Government

Fri, 11/01/2013 - 11:17 | Link to Comment moneybots
moneybots's picture





I was watching the Nightly Business Report and some guest interviewee was claiming the stock market was not a bubble because some number was 150.  I had to change the channel.

Fri, 11/01/2013 - 12:23 | Link to Comment silverserfer
silverserfer's picture

the turd says" it stinks like shit in here..."

Fri, 11/01/2013 - 13:02 | Link to Comment SgtShaftoe
SgtShaftoe's picture

Thanks to the FED, Treasury and BIS, the gold and silver markets are probably the only two thing in which there aren't bubbles. In fact they're hugely undervalued. However, once they lose control, it will become the ultimate rush to safety.

Fri, 11/01/2013 - 15:39 | Link to Comment polo007
polo007's picture

The QE money "printed" by the Fed has no credit multiplier. It is designed to be captured by the Federal Reserve Bank of New York via interest on excess reserves, which is higher than fed funds rate for a reason.

If the QE money is not lent in the inter-bank fed-funds market, as excess reserves used to be lent before there was interest paid on such balances, it does not multiply in a factional reserve banking system.

Both monetary velocity and the credit multiplier have been intentionally lowered by the very mechanics of QE. They will not rebound on their own. Simply put, both the credit multiplier and the velocity of money are a function of QE. The more the Fed does QE, the more they go down. (For more details on the mechanics of QE, see this missive.)

QE is a game of interest rates, not the quantity of money. It is a bit surreal to watch the mechanics of the U.S. Treasury borrowing excessively in order to keep the economy afloat; the Fed dominating the Treasury auctions in order to keep long-term interest rates subdued, after which, the Fed pays 25 basis points for its QE excess-reserve funding, only to take in the remaining coupon interest from its giant fixed-income portfolio, aka the Fed's balance sheet, and remit it back to the U.S. Treasury in the form of an $88.4 billion profit for 2012.

QE is the largest carry trade in the history of finance, the success of which will be known after it is completely unwound, which will not happen for a few years after Chairman Bernanke leaves. I believe that with QE, Chairman Bernanke tried to get the U.S. economy to re-leverage, or at least stop if from de-leveraging. Regrettably, I have to report I do not believe he has succeeded on that front.

The total leverage in the U.S. economy has begun to fall again, coming in at 345.5% at last count. Total leverage in the economy is simply the sum of all credit market instruments in the U.S., total debt if you will, divided by GDP. The total leverage in the economy doubled in the past 30 years and peaked at the onset of the financial crisis, after which we began a process of de-leveraging, or falling total leverage. The U.S. economy registered rising leverage in Q3 and Q4 of 2012 but has again begun to de-leverage in 2013.

In the grand scheme of things, this renewed de-leveraging may seem like a blip on a long-term chart, but I believe it is what keeps Ben Bernanke up at night, for if it continues, it will likely prove that QE under his tenure was a failure.

Another way to think of this rising-leverage ratio is that it takes ever-increasing amounts of debt to produce the same unit of GDP, where the level of total debt in the economy goes to the stratosphere, while GDP is subdued. That rising differential between total debt and GDP has been a source of prosperity for much of the past 30 years, and QE is a maneuver to get it to move in the "right" direction.

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