David Stockman Fears "Panic" When The "Lunatic" Fed "Loses Control"

Tyler Durden's picture

"It's only a question of time before the central banks lose control," David Stockman warns a shocked CNBC anchor, "and a panic sets in when people realize that these values are massively overstated."

The outspoken author of The Great Deformation rages "the Fed is exporting its lunatic policies worldwide," as central banks around the world have followed the Fed's lead, "for either good reasons of defending their own currency and their trade and their exchange rate, or because they're replicating the Fed's erroneous policies."

If one cares to look, Stockman adds, "there are bubbles everywhere," citing Russell 2000 valuations of 75x LTM earnings as an example, "that makes no sense. It's up 43% in the last year, but earnings of the Russell 2000 companies have not increased at all." This is dangerous, he strongly cautions, "I haven't seen too many bubbles in history" that haven't ended violently.

"I'm not drinking the Kool-Aid..."

"Central banks all over the world have been massively expanding their balance sheets, and as a result of that there are bubbles in everything in the world, asset values are exaggerated everywhere." 


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King_of_simpletons's picture

Sheep is getting ready to plunge into the stock market in the new year. The thought is that Yellen Fed will be glorious for the stock market and I say why not !

Pladizow's picture

Not the type of Boo-Ya that CNBS appreciates!

Chris Jusset's picture

David Stockman says:

"There are bubbles everywhere!"

BRAVO!  100% correct!

Rainman's picture

O The humanity  ..... Happy Fukkin Thanksgiving !!!

Chris Jusset's picture

The Fed is intentionally blowing massive bubbles everywhere, with 5+ years of non-stop ZIRP, QE, debt monetization (thanks to massive deficit spending), and bailouts.

smlbizman's picture

have to capture those year end seps and ira contributions...wtf could possibly go wrong...30% returns forevere mutha fucka...thats black talk right dar..

EnslavethechildrenforBen's picture

The stock market has never ever gone down.
Gold has never ever gone up.

Anybody with any brains would be tapering out of stock in to metal about now

hedgeless_horseman's picture



This holiday, I give thanks that I am not a fascist CNBC presstitute.  My soul is worth more than what they are paid.

DaddyO's picture

Being a man of principle in this day and age is quite dangerous, don't you think?


Overfed's picture

I don't know about that, but I can say that it sure doesn't pay well.

wisehiney's picture

Dangerous and worth it.

DeadFred's picture

Your soul may be worth more but what is theirs worth? Maybe they're getting the appropriate compensation.

DaveyJones's picture

Good point Fred. You see, deflation and inflation ARE both occuring

fockewulf190's picture

"This holiday, I give thanks that I am not a fascist CNBC presstitute.  My soul is worth more than what they are paid."

Please say a prayer for Sarah Eisen, who sold her soul to the Post9 devil and will be joining the CNBS crew come Dec.12th.  

Everybodys All American's picture

Bloomberg is not a helluva lot different than CNBS. If you've ever listened to Tom Keene you know exactly what I mean. So I don't think she's going into this situation blind.

krispkritter's picture

A whole bunch of bubbles in search of a prick, blown by a whole bunch of pricks...

HardlyZero's picture

Stockman's comment "asset values are exaggerated everywhere"...its not necessary there are bubbles everywhere, or one big bubble.

There are lots of prickly things and any prick can do the trick, and start an avalanche or if 'one bubble' that binds them all.

Matrix Resolutions, coming in 2014 ?

TheReplacement's picture

Paging Doctor Jarrett.  Paging Doctor Jarrett.

I am Jobe's picture

nah they will be paying their fucking bills after Black Friday. 

Buy something for 1.99 and pay 20.699 in interest. Never underestimate the power of US Consumers

Clayton Bigsby's picture

I like Mandy Drury, but I sure wish the interviewers would shut the fuck up for a change and let their guests talk.

Four chan's picture

i read stockmans book in the early 90s and he was talking the same shit back then too, not that he is wrong.

hes just not tradable.

atomicwasted's picture

The Fed can keep stimulating longer than I can remain solvent.

Gringo Viejo's picture

@atomic: Keep stackin' brother. As the platoon sniper said to his buds about the tanks they were facing during the Battle of the Bulge.........."Unless they don't mind sleepin' in their own shit, they gotta climb outta that can sometime."

DaveyJones's picture

but they can't keep stimulating longer than they can

Kirk2NCC1701's picture

"hes just not tradable" totally nails it, and applies to all people who present a permanent-bull, permanent-doom position of the world.

You can't front-run it or trade on it.  Eventually this permanency in optimism or pessimism (especially the latter) is about as useful as the weather man who forecasts eternal sunshine or eternal cloud and rain.

What we really want from these "experts" is info we can act on.  In the next 12 months.  I don't need to pay for a "winter is coming" forecast, and I assume/hope you don't either.

These Bulls/Doom_Bears are reminiscent of a pairing of (Bouncy) Tigger vs. (Downer) Eeyore: https://www.youtube.com/watch?v=ZcrABhiXhQg

Tigger:  "Eeyore (Tyler), it's gonna be great1" https://www.youtube.com/watch?v=jXJ7Gtmw5rY


barroter's picture

Agree. The "We're all gonna DIE" crowd vs. the "Forever Puppies and Lollipops" types can get tiring.  What I want is rationality and that's not easy to find.

alangreedspank's picture

It's called technicals. That's what you trade on. Day trade on. Unless you are a long term investor a la Jim Rodgers.

scrappy's picture

Who knows but Armstrong says 2015.75 is major.


Volatility between the near future and then.

I like CHS's "stairstep" theory, slow frog boil with added steps to scare the people from doing anything then they offer calming "normalcy" bias, in a series of cycles, until the watershed event.

Could happen at any time if you see what I see.

But this seems to keep going so perhaps Armstong is on to something. His predictions continue from there but get foggy as to what we will decide to do as a society.

(Consensus in Crisis)




Obchelli's picture

He also said marjet would go straight down from aug-sep 2013 to aug 2014.

And although market initialy went down on debt ceiling and gove shut down bs. It retraced all and hitting all time highs on daily basis

BigJim's picture

 You can't front-run it or trade on it.  Eventually this permanency in optimism or pessimism (especially the latter) is about as useful as the weather man who forecasts eternal sunshine or eternal cloud and rain.

Damn right! We don't want someone to tell us what's fundamentally wrong with the economy so we can hopefully educate the sheep and elect people who will represent us and stop the ship foundering; no, we want people who can tell us how to win in the on-ship casino so we can be the richest guys on board as we all go down with the ship!

steelhead23's picture

What Mr. Stockman did not say, but likely knows, is that the FED is trapped by its own policy and has no motivation to stop serving its masters - the international banking cartel.  Were the FED to curtail its bond purchases, payments for excess reserves, and ZIRP a rapid, and possibly uncontrollable deflationary sell-off would occur.  The impact would be huge.  So, until Hell freezes over, Yellen and company will continue to pour on the coals.  While I believe asset prices will continue to rise until some event tips the hornet's nest, traders playing in these markets should remain aware that they are playing with hornets - and so is the Fed.

Nick Jihad's picture

You're right. All the Fed hopes for now, is not to be perceived as the trigger. So it's ZIRP-on and taper-off, until war in the Middle East, or some similar crisis, provides cover to change policy.

Breaker's picture

It has really trapped by the federal deficit combined with it's own policies. The fed would have a lot more playing room if the budget were balanced. That said, the fed has voluntarily become the enabler of Congress addiction. So both are to blame for the corner they have painted themselves into. As well as the people who elected them.

Long-John-Silver's picture

The panic will begin when (Physical) Gold spikes like Bitcoin despite paper gold dumps.

zaphod's picture

The panic in gold will be downwards. It will happen as more and more people who have held gold for years as the "end of the FED hedge" start to realize that the Bitcoin just might emerage as the winner this situation, and decide that they should allocate some portion of gold holding into BTC. Anyone paying attention to the Gold/BTC ratio for the past several years can see this.

BTW, I have been a holder of Gold and goldbug for many many years, but am started to see the above.

EnslavethechildrenforBen's picture

Goldbugs don't ever panic. The lower the price goes the more we buy everything in site...

Kirk2NCC1701's picture

Normal people buy, hold  and eventually sell their assets, when and as it is profitable to do so.

This does not apply to gold bugs:  No matter the economy, they ALWAYS have a good story for why you should buy gold.  To them... "It's always a good time to buy".  E.g. "Sure it's going up, but this means that you should buy before it goes higher".  Else, it's "Sure it's down, but this is a good time to buy it cheap".

Q: In what other industry and what other agents have we heard that before?  Real Estate!

Never forget that basics of nature, math and human nature, and never forget to determine how your "investment adviser" is making his/her living:  Off you and people like you. 

Plan, invest and gamble accordingly.

Spitzer's picture

BTC is a transaction currency. It doesn't have to have any value at all to work. Just like Jamaican dollars. So when the paper gold market buckles and the bond bubble bursts, your BTC will have as much value as Jamaican dollars.

Dealer's picture

The BTC protocol has value in my opinion.

Mudduckk's picture

Yep its a currency. But it also has value. Let alone it saves people transaction costs in terms of both time and money, it has crisis value.


When the whales hit the BTC ask in a fiat currency crisis ala Cyprus. It has value. Per Jim R, the world is flooded with a sea of liquidity. 12M BTC versus 12TUsd fiat units getting liquidated in a bail in. 


The Bitchcoin has value.

Papasmurf's picture

You are speculating, there is no evidence that bitcoin is durable through a crisis.

Mudduckk's picture

ns sherlock. Cyprus is an n of 1. i need a set of 6 to form a statistical basis. But I was never too good at stats.

I can however divide out zeros, the six lieing between 12M and 12T, BTC to USD and a Yellen on deck. thats six zeros. Thats a tail risk option cheaper than anything KBass can buy, and its just lying there for retail to just pickup. i thought it was worth the risk at double digits, n i liked it in the hundreds. some of the juice is traded out at 1000 to be sure, but I can trade the vol. Charts an easy read. its like the SnP on roids. Buy the dip. sell the new all time high. And repeat.

Thing about a low growth world drowning in a sea of liquidity. Another currency crisis is just around the corner. I could see it with Cyprus. And all the ECB denial about bail ins not becoming SOP for crisis, but the IMF confirms bail in on the table. Its all right here on ZH. And just yesterday a story about US Banks needing to charge for deposits. Yep Fiat is dying. The sea is drying up.

Tell you what. Wait until after the sixth isolated currency crisis, and then provide us your sage and scholarly advice, "Papasmurf has determined that currency crisis indeed correlates Bitcoin positive."

Thanks for saving us from our own stupidity.



mt paul's picture

when bit coin

strikes a gold or silver coin


i'll invest in bit coins..

HardlyZero's picture

Like all blowouts it will be good to see weak hands leave Gold. 

Gold is atomic with nothing in-between the atoms, no ether, no net.

Bitcoin is whimsy internet fluff.

How does BitCoin store Wealth, it all requires a modern internet market for pricing ?

Facts ?

Things that go bump's picture

I recall a few years back some Italian family tried to smuggle their gold hoard into Switzerland and got caught with all that lucre hidden in their car, and it was a lot. The Italian government confiscated it and was going to make them prove ownership. I bet all that gold is still in the hands of the Italian government. The owners have little chance ever prying it from those greedy, grasping increasingly desperate hands. Now, if they had quietly sold it, converting the money into bitcoin they could have crossed with no one the wiser, and converted that bitcoin back into gold on the other side of the border, where it would now be sitting safe in some bank deposit box in Switzerland. In this case, bitcoin would have been a better store of value than the now lost gold.

Bokkenrijder's picture

Completely agree with zaphod. Once the stock/bond/real estate bubbles burst, gold will be slammed down hard by naked short selling from the usual suspects. It will be a field day for them, a slam dunk and as the Germans call it: gefundenes Fressen!

It will be a great day to buy gold hand over fist!

Disagree with his BTC call though, although it might have some legs because it probably will be plugged by the central banks as some sort of new 'newconomy' (reserve) currency status, in order to draw attention away from the imploding fiat system.

harleyjohn45's picture

There is a difference in physical gold and paper gold. 

Stuck on Zero's picture

Hmmm.  Bitcoin vs. gold.  Somehow I can imagine a terrified government turning 200 PR people, 700 mathematicians, and 5000 network specialists loose on bitcoin to destroy it , which they would.  Gold is a bit tougher.


harleyjohn45's picture

If you hold physical gold, then I don't see how you can believe in bitcoin.