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Fed's Lacker Slams Permabulls, Pours Cold Water On The US "Growth Story"

Tyler Durden's picture


Unlike the other Fed presidents who are all too happy to lie in order to instill some confidence in a centrally-planned economy and market, not realizing that by doing so they hurt their own credibility, non-voting member Jeffrey Lacker and president of the Richmond Fed has a different approach - telling the truth. Which is why we read his just released speech this morning with interest since once again, it contains far more truth and honesty than anything else the FOMC releases. Sure enough, it has enough fire and brimstone to put even fringe bloggers to shame.

First, just as we have been warning for the past two quarters, all US growth was on the back of inventory - a trend which everyone now realizes is unsustainable. So does Lacker:

Economists' hopes have been bolstered of late by a recent string of data releases indicating that 2013 ended on a positive note. Second-half growth in real GDP — our broadest measure of overall economic activity — was stronger than we've seen in quite some time. While that figure was boosted significantly by inventory accumulation that is unlikely to persist, there was some evidence of momentum that might carry forward.

That evidence, however, is on the back of a consumer who may or may not be back and spending freely once more. To Lacker, it is "may not":

... It's no surprise that credit is no longer available on the same terms. And it's no surprise that consumers have been paying off debt and building up savings in order to restore some sense of balance to their household finances. These developments appear to have contributed to a persistent cautiousness in household spending. Over the last three years, real consumer spending has increased at an annual rate of 2.1 percent. Although consumption grew rapidly at the end of last year, we have seen similar surges since the last recession, only to see spending return to a more moderate trend. Consumer spending trends are likely to depend on whether the dramatic events of the last few years are only a temporary disturbance to household sentiment or if they instead represent a more persistent shift in attitudes about borrowing and saving. At this point, I am inclined toward the latter view.

Next, Lacker slams the permabulls and their perpetual optimism that an improvement is just around the corner:

Many forecasters are citing the recent surge as support for projections of sustained growth at around 3 percent starting later this year. It's worth pointing out, however, that this has been true at virtually every point in this expansion. In other words, ever since the recovery began, most forecasters have been expecting the economy to pick up speed in the next couple of quarters with the easing of headwinds that have been temporarily restraining growth. My own forecasts (at least initially) followed this script as well.


Despite these perennial hopes, the actual results have been more modest. Real GDP grew by 2.0 percent in 2011, 2.0 percent in 2012 and 1.8 percent for the first half of 2013. This record of relatively steady but modestly paced expansion, despite forecasts of an imminent increase in growth, helps motivate the more cautious economic outlook that I will share with you today.

Hoping that this is finally the year in which that long overdue CapEx spending will finally take place (and which is being halted by none other than the Fed as we explained nearly two years ago)? Don't.

Businesses also appear to be quite reticent to hire and invest. A widely followed index of small business optimism fell sharply during the recession and has only partially recovered since then. Interestingly, when small business owners were asked in the latest survey about the single most important problem they face, 20 percent answered "government regulations and red tape." This observation accords with reports we've been hearing from many business contacts for several years now. They've seen a substantial increase in the pace of regulatory change and a substantial increase in uncertainty about the shape of new regulations. Both are said to discourage new hiring and investment commitments.

Then there is the government, whose absolute inability to craft any credible fiscal policy has hit record levels in the past years. Why? "Get to work Mr. Chairman" - after all why should politicians expose themselves to the risk of voter ire if the Fed can simply boost stocks higher and make it seem that all is well.

Adding to the uncertainty is the continuing cloud over our nation's fiscal policy. The most recent round of budget deliberations has certainly been a welcome relief from the recurrent legislative cliffhangers of the last several years. The lower odds of an imminent fiscal showdown may ease some business and consumer concerns, and that may aid growth. But overall government spending has been declining lately, and, given continuing fiscal pressures, that category is likely to make little, if any, contribution to GDP growth in coming years.

Next Lacker reminds the world of one more thing: even though the US budget deficit has improved in recent months, this is only a temporary phenomenon. Some time in 2015 the demographic tide will ebb and the amount of spending on welfare and benefit will explode.

From a longer-run perspective, it's worth noting that current law still implies an unsustainable path for federal expenditures and receipts. My fear is that the recent decline in the federal deficit will dampen the sense of urgency about fixing the longer-run budgetary imbalance. The sooner we resolve uncertainty about how the costs of those fixes will be allocated, the better off we will be, I believe. Dealing with the federal budget sooner rather than later would allow us to spread the cost out over time and reduce the ultimate burden. Moreover, it would remove a potentially important source of uncertainty hanging over investment and spending decisions.

Putting it all together, and Lacker gets 2014 GDP growth ofd 2%.

That leaves net exports, which for various reasons also are likely to contribute little to growth next year. Adding up all these categories of spending yields a forecast for GDP growth of just a little above 2 percent — not much different from what we've seen for the last three years.... The pickup in growth late last year is certainly a welcome development, and it may well be a harbinger of stronger growth ahead. But experience with similar growth spurts in the recent past suggests that it is too soon to make that call. My suspicion is that we will see growth subside this year to closer to 2 percent, about the rate we've seen since the Great Recession

Even that will prove optimistic.


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Tue, 02/04/2014 - 09:59 | 4399769 eclectic syncretist
eclectic syncretist's picture

It's like Motown in the 60's..... the hits just keep on coming!

Tue, 02/04/2014 - 10:02 | 4399781 XAU XAG
XAU XAG's picture

Hope his pension is safe!

Tue, 02/04/2014 - 10:05 | 4399793 Arius
Arius's picture

how these people make it to the FED is beyond me ... get rid of him!


if they dont believe in the US, they better leave the ship!

Tue, 02/04/2014 - 10:14 | 4399829 nightshiftsucks
nightshiftsucks's picture

Wow Airus, you're a fucking idiot.Only someone as fucking stupid as you would believe in the corrupt USA.We were once great now no more.

Tue, 02/04/2014 - 10:18 | 4399840 Keyser
Keyser's picture

He must not have gotten the memo that he is not supposed to be telling the truth. 

To those of you who still think the US is the greatest thing since sliced bread, good luck with that. 

Tue, 02/04/2014 - 10:22 | 4399851 Arius
Arius's picture


i believe the duty of the captain is not to point that there might be leaks on the ship ... but to go down with the ship if necessary!

Tue, 02/04/2014 - 10:41 | 4399887 Oh regional Indian
Oh regional Indian's picture

This Lacker is no slacker. But the system always has a Kucinich/RP type to be the limited hangout for the rest.

Statiing the stunningly obvious, raised to a fine art. Also false outrage.



Tue, 02/04/2014 - 11:59 | 4400264 Spastica Rex
Spastica Rex's picture

If only one guy says there's a problem, or asks questions, he's a crackpot and a good example for everyone to see.

Our whole world is a story.


Tue, 02/04/2014 - 12:08 | 4400289 john39
john39's picture

time for a new story teller.  this one is way beyond its use by date.

Tue, 02/04/2014 - 12:13 | 4400298 fonestar
fonestar's picture

Only 2% growth?  == Fed Doomer

Tue, 02/04/2014 - 11:17 | 4400065 bigkahuna
bigkahuna's picture

Duty of captain is to keep the ship afloat and save mariners lives when in an emergency. If you have to warn the mariners to turn the ship around to keep from going off the waterfall, thats what you do. You dont lie to them until you are over the fall, then tell them on the way down you had no idea.

Tue, 02/04/2014 - 20:49 | 4402190 MeelionDollerBogus
MeelionDollerBogus's picture

Nonsense, this fine vessel is UNSINKABLE!

Tue, 02/04/2014 - 10:24 | 4399859 Whoa Dammit
Whoa Dammit's picture

He's just setting the stage for more QE. This time a few facts got thrown into the storyline.

Tue, 02/04/2014 - 11:13 | 4400053 CH1
CH1's picture

He's just setting the stage for more QE.

Either that or for really pulling the plug... politicians be damned.

Tue, 02/04/2014 - 10:29 | 4399841 TeamDepends
TeamDepends's picture

Case in point, this was released to the world last week, but censored in the US:  Snowden said the Obama regime does not fear stateless whistleblowers such as himself, but rather an angry and armed populace who are beginning to demand the constitutional government they were promised. 

Tue, 02/04/2014 - 10:48 | 4399951 Drifter
Drifter's picture

"an angry and armed populace who are beginning to demand the constitutional government they were promised."

Demand?  What a joke. 

Sheep don't demand anything.   They just whine and fuss and make noise. 

Ditto for sheep with guns.

Tue, 02/04/2014 - 11:02 | 4400006 TeamDepends
TeamDepends's picture

A flock is made up of many individuals, no two alike.  NEVER underestimate the ability of the flock to stand behind the one, the ONE, who has balls and stands up.

Tue, 02/04/2014 - 12:39 | 4400401 onewayticket2
onewayticket2's picture

the sheep demand their EBT, obamaphone, SSA, AFDC, heat subsidies, obamacare subsidies, and so on....just TRY suggesting these get cut back.  Love, Mitt Romney

Tue, 02/04/2014 - 13:03 | 4400500 Richard Chesler
Richard Chesler's picture

well they sure know how to stand behind the ONE with no balls.


Tue, 02/04/2014 - 17:03 | 4401449 Drifter
Drifter's picture

Bullshit.  Your wives won't let you "go join some crazy militia thing". 

Not just sheep.  Pussy-whipped sheep.

Tue, 02/04/2014 - 20:46 | 4402186 MeelionDollerBogus
MeelionDollerBogus's picture

You mean OVER-estimate.
Usually it's a pack of lone-wolves that see mutual survival - never the sheep of the flock.
The flock is precisely a flock because they are precisely identical in the only ways that count.
yes, some sheep are fatter, some bleat louder, perhaps some other minor details. None change the behaviour nor make a flock-member not a sheep.
The sheep do NOT oppose anything as individuals, nor elect a leader to follow. Ever. They flat out move as a single herd unit.

Tue, 02/04/2014 - 13:22 | 4400583 lordylord
lordylord's picture

Ever try to convince a statist to picture a life without big gov?


"I've invented a marvelous machine that can propel a wagon and its passengers at tremendous speed all the way across the city! I call it an internal combustion engine."

"It looks heavy, can one horse pull it?"

"No, no, we don't need horses. My machine supplies all the power."

"If the horse is not pulling it, then is it pushing it?"

"No, my good man, you misunderstand me. No horses"

"We need horses, otherwise what will pull the wagons?"

"My machine does it. Look, here it is."

"I don't see anyplace to attach the harness."

"Without horses, we don't need a harness."

"But without a harness, how will the horse pull it?"

"Sir, please stop and consider. Everything we need is in this machine right here. It is not pulled by a horse"

"Oh, I get it, so it carries the horse too? It looks too small to fit a horse. "

"No, it does not carry the horse at all."

"So the horse walks alongside it?"

"No, it goes much faster than a horse can run."

"So the horse won't be able to keep up? If you do away with the horse, what do you replace it with? A cheetah, perhaps?"

"We don't need any animal. This engine does all the work."

"But if you don't replace the horse, then what will pull your wagon?"

"No animal pulls it."

"So your wagon just stays still? Hey! Look everybody, this man has lost his senses, he is trying to sell us wagons that don't move! Hahahah"

By Kyle Bennett

Tue, 02/04/2014 - 11:04 | 4400014 jughead
jughead's picture


Tue, 02/04/2014 - 11:08 | 4400032 Doowleb
Doowleb's picture

Lech Walesa

Tue, 02/04/2014 - 11:16 | 4400071 dtwn
dtwn's picture

Do you have a link?  Can't find anything.

Tue, 02/04/2014 - 13:51 | 4400661 wakablahh
wakablahh's picture

I'd prefer a link of the Fed's statement blocked in the USA..

Fri, 02/07/2014 - 04:35 | 4407062 MeelionDollerBogus
MeelionDollerBogus's picture

Who knows for how long but this SHOULD be mirrored everywhere.


Tue, 02/04/2014 - 10:28 | 4399875 Stuck on Zero
Stuck on Zero's picture

Speaking of inventory Mr. Lacker ...  the Fed has amassed an inventory of three to four trillion dollars worth of bonds and junk notes. 


Tue, 02/04/2014 - 10:59 | 4399992 Kaiser Sousa
Kaiser Sousa's picture

preseneted with out comment....

Tue, 02/04/2014 - 11:40 | 4400172 RaceToTheBottom
RaceToTheBottom's picture

Wait, they called that assets.  Balance sheet assets.  Where are the accountants to value those assets?

Tue, 02/04/2014 - 13:02 | 4400489 donsluck
donsluck's picture

It becomes inventory when they have to try to sell them! Ha ha ha ha,,,choke...gasp...hahaha!

Tue, 02/04/2014 - 20:45 | 4402181 MeelionDollerBogus
MeelionDollerBogus's picture

Accountants? Sir, you've been dreaming again.
We value balance sheets using unicorns & puppies.
Especially puppies riding in the Obamacopter.

Tue, 02/04/2014 - 10:26 | 4399876 Hooter Shaker
Hooter Shaker's picture

He knows the gig is about up and wants to keep his head.

Tue, 02/04/2014 - 12:06 | 4400283 Colonel Klink
Colonel Klink's picture

Hang him too for good measure!

Tue, 02/04/2014 - 10:43 | 4399904 Dr. Engali
Dr. Engali's picture

Ahhh to be young and naive. I used to think that way once. Then I watched in horror as our own country killed 3000 U.S citizens in two towers, and  promptly told us to go shopping. I watched people get behind the flag without asking questions as we used it as an excuse to bomb brown people around the globe. In 2008 I watched the intentional collapse of the financial system, and trillions of dollars get transferred from future generations to the oligarchs. I've watched in our face corruption from politicians and bankers alike. All this shit and what do we do? We keep arguing over the red and blue team as they both screw us while laughing all the way to the bank. Yes I used to believe in the U.S.... not any more.

Tue, 02/04/2014 - 11:00 | 4399995 Grande Tetons
Grande Tetons's picture

Bravo, Doc. 

Speaking/writing with courage is not easy. I could never have written something so poignant. 

Tue, 02/04/2014 - 19:16 | 4401925 Boozer
Boozer's picture

Always read Dr. E's comments!  ZH top 10 cat.  Sadly many other sharp guy's who

posted before this new policy have been booted.  Some fight club.

Tue, 02/04/2014 - 11:23 | 4400099 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Being young and naive in the 80's was a euphoric experience i'll never forget, now I am just existing, walking through life just to goto bed at night peacefully if possible. Pink Floyd's comfortably numb sums it up today's world precisely.

Tue, 02/04/2014 - 11:44 | 4400211 Hippocratic Oaf
Hippocratic Oaf's picture

(Use to be) easy credit and cheap drugs have numbed the populus. More debt=more drugs.

We may not be comfortable, but we are certainly numb.

Tue, 02/04/2014 - 13:19 | 4400569 green888
green888's picture

I am not young anymore so I no longer know everything

Tue, 02/04/2014 - 12:31 | 4400352 Son of Captain Nemo
Son of Captain Nemo's picture

Dr. E

By far one of your finest posts.

It says it all!

Tue, 02/04/2014 - 15:15 | 4401012 Stuck on Zero
Stuck on Zero's picture

Don't confuse the U.S. with corrupt politicians and crooked bankers.  It's like condemning Mother Teresa for the dog poo on the bottom of her sandals.


Tue, 02/04/2014 - 11:02 | 4400004 jughead
jughead's picture

as long as you're going to go down with it, I'm good with that.

Tue, 02/04/2014 - 13:26 | 4400594 1000924014093
1000924014093's picture

I think folks might be missing your sarcasm.

Tue, 02/04/2014 - 10:09 | 4399804 boogerbently
boogerbently's picture

Remove "regulations" and insert "obamacare", into his statements.

Tue, 02/04/2014 - 10:11 | 4399799 knukles
knukles's picture

Janet is gonna be pissing blood after this

Remember at her press conference with Obie and Ben when she was nominated, she outlined several tenants of what she'd like as the Grand Fromage?

One of them was that the FED would speak with one voice.
A direct slam at the Benji and the Howling Monkeys sowing confusion , mutiny from stern to bow

Pissing blood. And small pebbles. Goiter inflating and turning bright red.

All he'll to pay... Especially when they're past menopause.
Off to the basement, take away their executive bathroom keys

The guy must be a Conspiracy Theorist and Patriot who loves his country and the Constitution who reads Zerohedge
Femacamp his ass

Tue, 02/04/2014 - 10:58 | 4399976 slaughterer
slaughterer's picture

Evans will save the day today, echoing Rosengren's super-dovish ideas.  

Tue, 02/04/2014 - 11:06 | 4400009 booboo
booboo's picture

GDP is another worthless story pole on Planet Rainbow. Fer fucks sake, throw in a trillion a year of wet wood on the fire you get lots of smoke and pointy headed economist yell "raging fire"

Tue, 02/04/2014 - 12:27 | 4400342 Breezy47
Breezy47's picture

This guy is going to end up suicided over a 50 foot enbankment...or did he make these statements to save himself?

Tue, 02/04/2014 - 12:48 | 4400445 Offthebeach
Offthebeach's picture

This Lacker felllow seems to be, in a way, terroristic.

( Arm up a drone and get Napolitano's office, and, find out what time he picks his kids up. We don't want any "issues" down the road in ten-twenty years. Know what I mean? )

Tue, 02/04/2014 - 13:15 | 4400537 TaperProof
TaperProof's picture

<---- SHORT stox until TAPER stops or reverses

<---- Permabull don't care

Tue, 02/04/2014 - 13:46 | 4400652 Liquid Courage
Liquid Courage's picture




Set us free why don’t you Fed,
Get out our life why don’t you Fed ... Oooo ooo ooo oooo,
You really don’t love us,
You just keep us hanging’ on.

Tue, 02/04/2014 - 20:32 | 4402154 MeelionDollerBogus
MeelionDollerBogus's picture

wilde times! Now if only rates would rise like in that era.

Tue, 02/04/2014 - 10:00 | 4399771 LawsofPhysics
LawsofPhysics's picture

Will he be treated like all those "fringe bloggers"?  I won't hold my breath.

Tue, 02/04/2014 - 10:00 | 4399772 BandGap
BandGap's picture

They pulled the punch bowl, now they are cleaning it and putting it away.

Tue, 02/04/2014 - 10:23 | 4399854 ArkansasAngie
ArkansasAngie's picture

Nope.  "They" will never put the punch bowl away.  It's going to take it being broken by pitch forks.  Self control?  Nope.  Not going to happen.

Tue, 02/04/2014 - 20:32 | 4402150 MeelionDollerBogus
MeelionDollerBogus's picture

Dude, they're putting arsenic in it.

Tue, 02/04/2014 - 10:00 | 4399773 Oracle of Kypseli
Oracle of Kypseli's picture

It's a trap message. 

Tue, 02/04/2014 - 10:14 | 4399820 Grande Tetons
Grande Tetons's picture

PMs are down and the market is up. Things seem to be getting back to normal. 

Should be an interesting day. 

I wonder how many stops were hit yesterday in a variety of asset classes? A shitload, I suspect. 

Tue, 02/04/2014 - 10:25 | 4399861 ArkansasAngie
ArkansasAngie's picture

They've been trying to stop this since last week.  Will they be able to stop the rats from jumping to the sidelines?

I'm not BTFD

Tue, 02/04/2014 - 10:41 | 4399937 Keyser
Keyser's picture

They had to clear out the retail money before BTFD themselves. Same as it always was, 

Tue, 02/04/2014 - 11:22 | 4400097 A82EBA
A82EBA's picture

yep, sheep sheering profit taking

Tue, 02/04/2014 - 10:03 | 4399777 Stoploss
Stoploss's picture

It's over with. They are going to have a rough time with that.

Like hip hop, the "market" is dead.

Tue, 02/04/2014 - 10:01 | 4399778 max2205
max2205's picture

How fat is Lacker?

Tue, 02/04/2014 - 10:05 | 4399784 madcows
madcows's picture

Except for the fact that he's a fed banker, he's more credible than the rest.

Tue, 02/04/2014 - 10:03 | 4399785 FieldingMellish
FieldingMellish's picture

Bullish.... Apparently.

Tue, 02/04/2014 - 10:05 | 4399786 fonzannoon
fonzannoon's picture

If he was serious about all this he would jump over a 4 foot embankment and fall 50 feet to his death while jogging. Then his dead body would jump off the roof of the JPM building, twice.

Tue, 02/04/2014 - 10:04 | 4399791 BandGap
BandGap's picture

Gravity has been cruel of late to bankers.

Tue, 02/04/2014 - 11:42 | 4400186 RaceToTheBottom
RaceToTheBottom's picture

Not cruel enough.

Let it only be the beginning.

Tue, 02/04/2014 - 10:04 | 4399789 Temporalist
Temporalist's picture

Does he forecast higher or lower interest rates?  And what are they dependent on?  Does he even acknowledge currency wars?  Inflation?  Global social unrest?

Tue, 02/04/2014 - 10:06 | 4399792 Ban KKiller
Ban KKiller's picture

And they made this public? Admitting the people are buying less so they can pay off crushing debt? Makes too much sense.


Add in less food stamp money and even Malwart and McDonald's suffer. Perfect!

Tue, 02/04/2014 - 10:07 | 4399794 SheepDog-One
SheepDog-One's picture

Mr. Yellen? Please get to, you know....'work'?

LOL this is going to end so ugly.

Tue, 02/04/2014 - 10:07 | 4399796 Sufiy
Sufiy's picture

"Who's Got The Money?" - Bernanke's True Legacy "Helicopter Ben" - Elaine Diane Taylor

  Brilliant video and song - share it with your friends. You can guess: "Who's Got The Money".

Tue, 02/04/2014 - 10:06 | 4399800 SheepDog-One
SheepDog-One's picture

Consumer call to arms! Please resume 'spending freely!' :D

Tue, 02/04/2014 - 10:10 | 4399811 Pig Circus
Pig Circus's picture

The pickup in growth late last year is certainly a welcome development,

How much of that was because they changed the way we calculate GDP?

Tue, 02/04/2014 - 10:17 | 4399838 knukles
knukles's picture

Goddamnit, now you've gone and spoiled everything

Tue, 02/04/2014 - 10:33 | 4399900 SheepDog-One
SheepDog-One's picture

Yea...'We recently re-fudged how we calculate fake numbers to make ourselves feel better, so at least we got that goin for us, which is nice.' 


Tue, 02/04/2014 - 11:17 | 4400066 booboo
booboo's picture

Ahh, the old double triple fake fake out that falsely faked faking out the faders falling for the fake. Got it.
I say they need a mini crisis for mr. Yellen to save in order for the men's club to accept that she is up to the task of opening up the "print app" on her IPhone .
They are no doubt waiting for her signal to Buy buy buy.

Tue, 02/04/2014 - 10:11 | 4399813 cynicalskeptic
cynicalskeptic's picture

All those 'branch offices' of the Federal Reserve are just 'wiondow dressing' - they were set up only to pacicy those who worried about NY banks dominating the US economy.  The real power exist with FRBNY.  The big boys out of NY are the center of power - and they control the Fed as a whole.   And the big banks out of NY are controlled by the old centers of power'  The creation of the Federal Reserve was an exercise in camouflage and misdirection.

Those at the branch offices are allowed to speak their minds now and then but it really doesn't matter what they say. 

Tue, 02/04/2014 - 10:12 | 4399815 MilwaukeeMark
MilwaukeeMark's picture

Is this the first bit of hoarseness we are hearing in the "fat lady's" singing voice?

Tue, 02/04/2014 - 10:14 | 4399817 MR166
MR166's picture

His comments do not begin to show how serious our problem is.   Only 2% growth despite the fact that the FED is pumping Trillions into the world economies.  Without this artificial growth and wealth effect the GDP would be a big fat negative.

Tue, 02/04/2014 - 10:14 | 4399819 TuPhat
TuPhat's picture

He is better than Bernanke or Yellen, but that's not much to be proud of.

Tue, 02/04/2014 - 10:20 | 4399844 knukles
knukles's picture

He's better than Timmah, which is enough of a bounce for ones self esteem to last an entire lifetime

Tue, 02/04/2014 - 10:15 | 4399825 lunaticfringe
lunaticfringe's picture

I don't care for the fringe blogger ref, Tyler. You say that like it's a bad thing and know this....a shitload of folks think that ZH is a fringe blog.

Tue, 02/04/2014 - 10:21 | 4399849 knukles
knukles's picture

The pot calling the kettle black.

OK a lunatic fringe blogger

Tue, 02/04/2014 - 10:25 | 4399856 MR166
MR166's picture

"Fringe" is a huge compliment as far a I am concerned.  Call my opinions "Main Stream" and I will be really upset.

Tue, 02/04/2014 - 10:18 | 4399834 gwar5
gwar5's picture

So how come these stupid fuckers always wait until the crises is already on the doorstep before they ring the bell? Why can't they just see it coming like everybody else? We're being played.



Tue, 02/04/2014 - 10:21 | 4399848 Dr. Engali
Dr. Engali's picture

Bullish for moar printing.

Tue, 02/04/2014 - 10:26 | 4399868 XAU XAG
XAU XAG's picture

@Dr. Engali


Ah but what happend to "oliver twist" when he asked for MOAR! LOL

Tue, 02/04/2014 - 10:29 | 4399884 yogibear
yogibear's picture

The Fed is trapped.  It must print ever more. Until the US dollar free-falls.

Soon the Fed will reverse and go the other way. Inceasing QE from $65 billion/month to above $100 billion/month. It's easy to see their trapped in their own game.

Tue, 02/04/2014 - 10:21 | 4399850 BullyBearish
BullyBearish's picture

A very good movie on the failed FED that unfortunately doesn't go far enough:



Tue, 02/04/2014 - 11:42 | 4400184 A82EBA
A82EBA's picture


Tue, 02/04/2014 - 10:28 | 4399879 adr
adr's picture

Hey I'd sign up for a loan if they give me the same rate Blankfein and Dimon get.

Tue, 02/04/2014 - 10:26 | 4399863 Dasa Slooofoot
Dasa Slooofoot's picture

paraphrasing, "Nobody bought any homes because of Super Bowl Sunday" - Cramer  

Tue, 02/04/2014 - 10:25 | 4399869 adr
adr's picture

How much of the 2% growth in the economy is made up of the net export of energy products? Something that doesn't benefit the majority of Americans and even creates more of a drag on the economy by increasing base consumption cost.

I'd really like to know why the price of my gasoline is based on the contract of european oil that my gas isn't made from. That is kind of like a Jewelry store forcing me to pay the price of a higher grade diamond for the lower grade they sell. Just because the higher price exists somewhere else. But hey, that's Wall Street.

Also when real inflation is running at 10%, 2% growth is an 8% real decline. With incomes stagnant, all this growth is really just inflation causing quality of life to fall.

Tue, 02/04/2014 - 10:25 | 4399872 HRamos_3
HRamos_3's picture


Tue, 02/04/2014 - 10:30 | 4399878 highwaytoserfdom
highwaytoserfdom's picture


Tue, 02/04/2014 - 10:35 | 4399908 highwaytoserfdom
highwaytoserfdom's picture

Carson of Muddy Waters  research said Chinese is  bail is bigger than TARP  of course he only spoke of the 700b   not shadow markets.

Tue, 02/04/2014 - 10:36 | 4399914 ebworthen
ebworthen's picture

In the last couple of paragraphs I hear him suggesting higher taxes and confiscatory schemes along with reductions in SS, Medicare, Unemployment Compensation, and other social programs.

Tue, 02/04/2014 - 10:40 | 4399935 Sufiy
Sufiy's picture

This is why China is buying record amounts of Gold:

The Chinese Government’s Gold Policy, From The Horse’s Mouth

China implements Gold accumulation plan with the military precision and appropriate attention to the detail. We should not be fooled by the official numbers as China uses different tools to accumulate gold reserves. Jim Rickards has addressed this issue in his interviews before and now we have another confirmation of the State-level Gold policy implemented in China. Last year we have already witnessed the first results with China becoming the top Gold consumer in the world.

Tue, 02/04/2014 - 10:46 | 4399946 Sudden Debt
Sudden Debt's picture

somebody need to have a "accident"

Tue, 02/04/2014 - 10:48 | 4399956 superflex
superflex's picture


Tue, 02/04/2014 - 20:31 | 4402140 MeelionDollerBogus
MeelionDollerBogus's picture

Ya, like in the bathtub, all accidental-like.

Tue, 02/04/2014 - 11:01 | 4399991 KnightTakesKing
KnightTakesKing's picture

If you like your centrally planned economy, you can keep your centrally planned economy.

Tue, 02/04/2014 - 10:59 | 4399993 larry david
larry david's picture

Market is "well off da lowz" of yesterday because..... ????????





Its like the us market is the retard late for the short bus. Fuck off Yellen, fuck off Bernanke, fuck off Greenspan, fuck off Volcker. Fuck whoever was before him too. 

Tue, 02/04/2014 - 11:32 | 4400141 Winston Churchill
Winston Churchill's picture

I know its hard to remember such things, but real markets don't

go one way all the time.

I'm just waiting on 11 am.

The traditional margin call hour.

Tue, 02/04/2014 - 11:19 | 4400075 Muppet
Muppet's picture

Mr. Lacker's words show some competence, rarely heard these days.

Tue, 02/04/2014 - 11:22 | 4400101 geotrader
geotrader's picture

His conclusion  (just enough to keep the bosses off his ass??):


In conclusion, I'd like to return to the theme with which I began. The pickup in growth late last year is certainly a welcome development, and it may well be a harbinger of stronger growth ahead. But experience with similar growth spurts in the recent past suggests that it is too soon to make that call. My suspicion is that we will see growth subside this year to closer to 2 percent, about the rate we've seen since the Great Recession. Growth has been disappointing relative to our experience during the period of the Great Moderation, and growth may continue at a rate that is slower than in the past. But our economy is by no means stagnating; productivity is rising, incomes are growing and innovation isoccurring. Our institutions of higher learning are worldwide leaders in research and education, and they continue to attract exceptional students from abroad. Our markets remain flexible and resilient. The public policy problems we face may be difficult, but they are certainly not insoluble. Consequently, I believe, a broad perspective suggests a fundamentally optimistic view of our future.

Tue, 02/04/2014 - 11:31 | 4400137 MeBizarro
MeBizarro's picture

Yup.  Productivity is improving and translating into economic growth but since '00 have been hoovered up by the top 1/5 and since '08 almost in the top 5% because private US labor is almost entirely unorganized (around ~6% in '13 and the lowest since the early '20s).

As for public policy challenges, he is nuts.  The future is going to involve taking things away from Americans and that includes lessening the massive transfer payments to the elderly.  Amercians don't do sacrifice well at all and trying taking things away from the group in a democracy that votes in overwhelming outsized numbers especially in primaries. 

Tue, 02/04/2014 - 20:28 | 4402138 MeelionDollerBogus
MeelionDollerBogus's picture

Not to worry: a little propaganda will sew that right up.
How about TV ads with people eating alpo alongside their cute, adorable puppy?
"If you're not eating alpo, you're with the ter'rists!"

Tue, 02/04/2014 - 11:25 | 4400106 MeBizarro
MeBizarro's picture

How is what Lacker said that controversial or 'fringe?'  He said that most of the boost in the last 2 quarters was driven by periodic inventory rebuilding in a few sectors and likely won't happen while growth is likely to remain very tepid.   More a statement of fact and a fairly non-controversial prediction about GDP growth this year.  If anything, 2% looks a bit optimistic too right now. 

Tue, 02/04/2014 - 11:29 | 4400124 betterlockaway
betterlockaway's picture

The fed is buying and funding this recovery like crazy and all we can do is 2% gdp.  The fed is code red--taper qe etc., yet all we can do is mosey along? 

Tue, 02/04/2014 - 11:40 | 4400170 gatorengineer
gatorengineer's picture

Once europe closes, i be she comes down hard.....

Tue, 02/04/2014 - 12:02 | 4400272 Clowns on Acid
Clowns on Acid's picture

Lacker is a non voting member so his voice is tolerated by the tribesmen. Yellen will wait until the Stanislaus and Poorsky 500 is down another 10%, before coming to the rescue with MOAR. The Fed's role will expand under Yellen to go beyond "attaining full employment" to "making sure that the children are not hungry". 

The Fed will also "work closely" with the Obama admin to ensure that distribution of food stuffs to the "people" is fair and equitable. Yellen is smellin' like gevelte fish.  

Tue, 02/04/2014 - 12:11 | 4400297 thefirstabomb
thefirstabomb's picture
When the mainstream wakes up the fed's system will unravel.  I hope and pray we make it through that transition without too much pain (I doubt that, but here's to hoping) 

Tue, 02/04/2014 - 12:33 | 4400339 Beatles777
Beatles777's picture

Question: I want to withdraw all my $$$ from my 401(k), and I just asked my administrator how I might do this and his response was revealing and somewhat shocking to me...

He said, "...withdrawals are not an option while you're an employee unless a qualifying hardship exists."

So, I have to quit to withdraw my own $$$ or declare some type of "hardship?"

Based on my overall financial situation right now, I know I won't be able to declare (honestly) any "hardship," and I have worked here for 11yrs and don't plan to quit. My reason for withdrawal is obvious to ZH'ers as I would rather buy "Hard Assets" within my control. 

Has anyone else experienced this, is it my type of 401(k) which is technically called a "Profit Sharing Plan" which (by the way) only non-Sales employees actually take part in...? I've never recieved a "match" or a "profit share" - I've simply maxxed out each year for 11yrs my contributions to my 401(k) and did so when I was a zombie buying into the mainstream idea of earning interest on interest well into my late 50's early 60's. I am 38 and the way i see it - I am not invested in equities or the Bond Bubble and earning zero interest on the $$$ I have there in cash. The risk is a likely lose it to the Government as they tell me to patriotically hand over the goods... 

Any help would be appreciated...

Tue, 02/04/2014 - 12:58 | 4400483 Took Red Pill
Took Red Pill's picture

I understand your concerns but maybe you should just leave it where it is. Best not to have all your eggs in one basket.

Tue, 02/04/2014 - 13:20 | 4400563 Beatles777
Beatles777's picture

Yeah, I've considered this - I "guess" the only issue I have is I've begun to accumulate rental properties in specific locations in my area for between 100k - 200k and want to own these "free and clear" generating monthly cash-flow for living expenses and I want the money in the 401(k) to purchase another one... I am diversifying, but in a different way now... I am diversifying with "hard assets" (i.e. gold, silver, guns, ammo, rental properties, rare gems, off-grid "vacation home" with natural spring water & solar power, whiskey, wine, 30yr shelf live food stuff(s), some paper currency in my possession, etc...). Pray tell - what "diversification" does a 401(k) provide? As far as I can tell (and it's taken me nearly 6yrs discerning, studying, etc...) a number on a computer screen or a monthly/quarterly statement with a "number" on it might "feel" good but isn't it only as good as the piece of paper or computer monitor it's printed or pixelled on...? I am not "dug in" just "eyes wide open" so please talk me off the cliff....

Tue, 02/04/2014 - 13:41 | 4400642 the grateful un...
the grateful unemployed's picture

why don't you just buy some put insurance against a decline in the market, and your 401K. if the market drops in half, the money you make on the puts goes into your account not the 401K, which makes you more liquid. be prepared for a steep drop in the value of your rental homes. if you have daisy chained several the whole thing will unravel. you might have to cut your losses.

Tue, 02/04/2014 - 19:27 | 4401958 MeelionDollerBogus
MeelionDollerBogus's picture

Puts expire. UVXY & HVU do not. They also move -11x to the market so that's a cheap way with no time limit to hedge against market downturns.
ETF decay:
const C x 75 for 219 = hvu 1/11 x spy :

Tue, 02/04/2014 - 13:12 | 4400531 the grateful un...
the grateful unemployed's picture

as i understand it a lot of people live out of their 401K, unless the rules have changed. everyone has some hardship, i think your boss is making the speech he is required to make, and trying to keep you from spending your retirement on the roulette wheel in Vegas. (the casinos operators in Manhattan want to keep your money)

Tue, 02/04/2014 - 13:17 | 4400549 KnightTakesKing
KnightTakesKing's picture

Many of us white collar workers are in a similar situation. At this point there is little you can do.

Here's what I did. I reduced my 401(k) contributions to the minimum that maxes out my employer's contribution. The "extra" money that I would have put into the 401(k) I pay taxes on and it's part of my take home pay. I use that pot of money to purchase PMs and keep extra cash on hand (rather than in the banking system).

I'm hoping for the best for my 401(k) but hedging my bet (diversifying) with other insurance (PMs, guns, grub, etc).

Tue, 02/04/2014 - 13:35 | 4400572 I woke up
I woke up's picture

I looked into the same thing and got the same response.  Unless you leave or have a hardship you're not getting the money.  You can take a loan out against your 401k though.  My recommendation is to stop contributing and use that money that would normally go in your 401k to build up your metals.   If by some chance you can get a hardship or leave I think the tax implications are around 40% for early withdrawal.

edit: KnightTakesKing beat me to it

Tue, 02/04/2014 - 14:29 | 4400813 harposox
harposox's picture

I've also been stewing over how to best protect my 401k savings, so I decided to zero out my contributions and take out a 5-year 401k loan just a couple weeks ago. My plan allowed me to borrow up to 50%. The way I see it, a market crash is likely in the near future, and this at least shields half of my accrued savings from evaporating in case of calamity.

The downside is that regular sums are withdrawn from every paycheck, and if you lose your job, THE ENTIRE BALANCE MUST BE REPAID WITHIN 60 DAYS - so don't plow all of it into PMs unless you already have a pretty sizeable emergency fund. You also have to pay interest to yourself, but given current interest rates this is a pretty small percentage (4% or thereabouts), and it's being paid back into your own 401k (albiet in post-tax dollars). Overall the fees involved were pretty minor ($75 in my case). Obviously you lose a half of the growth potential within the 401k itself should the market resume its climb, but this isn't an investment strategy - it's an emergency, SHTF wealth preservation strategy.

If I'm right, I wait until the market craters and then pay off the loan in one lump sum near the market bottom - and if my timing's not terrible I've managed to protect roughly 20% of my overall balance that otherwise could have been vaporized. Then I can ride the market back up, rinse, repeat.

The other option, of course, is to quit your job - if you don't roll your 401lk over into an IRA you're looking at about a 40% haircut in taxes and penalties, IIRC. Obviously that's not advisable unless you can find a comparable gig (and certainly no financial advisor would ever rocommend this route), but I'm not convinced that it's a totally terrible idea. 60% is a lot better than zero, and there is a very real chance that retirement plans will get gobbled up by TPTB before you and I reach retimerment age. Good luck!

Tue, 02/04/2014 - 19:28 | 4401962 MeelionDollerBogus
MeelionDollerBogus's picture

That's why I won't get tricked. I saw that coming & I have ONLY cash, gold, silver, food, no retirement account to be controlled for me & held against me with penalties & restrictions.
If you can't spend it, it's not yours. If you can't hold it, you don't own it.

Tue, 02/04/2014 - 13:05 | 4400501 Took Red Pill
Took Red Pill's picture

"Dealing with the federal budget sooner rather than later would allow us to spread the cost out over time and reduce the ultimate burden."

How exactly are they going to do that?

Tue, 02/04/2014 - 13:07 | 4400509 Georgia_Boy
Georgia_Boy's picture

Lacker: And it's no surprise that consumers have been paying off debt and building up savings in order to restore some sense of balance to their household finances. Consumer spending trends are likely to depend on whether the dramatic events of the last few years are only a temporary disturbance to household sentiment or if they instead represent a more persistent shift in attitudes about borrowing and saving. At this point, I am inclined toward the latter view.

More wishful thinking. They aren't spending more because they don't have more money to spend ... that's it. It's the worst of both horns of that dilemma. Americans haven't learned to save again, and nor can they spend any more.

Tue, 02/04/2014 - 13:16 | 4400553 the grateful un...
the grateful unemployed's picture

as a non-voting member of the former US Republic, were I to have a larger voice than my one vote allows and I were to critisize my leaders, they would use that information to subjugate me further. all this message tells them is what they already know, there is no economic recovery, and another round of infinite QE will be needed to keep the balance sheets of Korporate Amerika from imploding like a cheaply built nuclear reactor. so you see even in the gulag, my dissent is still useful to them...

Tue, 02/04/2014 - 13:22 | 4400580 yogibear
yogibear's picture

Lacker is an idiot. All of his fellow banksters think otherwise. Nice try Lacky, it's not going to work.

Tue, 02/04/2014 - 15:37 | 4401073 DOGGONE
DOGGONE's picture

A picture is worth 1000 words -- the simple truth!
See the first three charts here.

Tue, 02/04/2014 - 16:12 | 4401256 ILikeBoats
ILikeBoats's picture

They get on both sides of the conversation and use their positions to "steer" the discourse to only safe, pre-approved views.  Do you see that?

Why DO we need the Federal Reserve?  Answer: we don't. Even the ancient Greeks understood that attaching interest to money was wrong - Aristotle himself wrote about the practice and said it was unnatural.  That supposedly educated Americans permit usury to be attached to our non-gold, non-silver "dollars" is madness.

Tue, 02/04/2014 - 19:08 | 4401910 MeelionDollerBogus
MeelionDollerBogus's picture

of course we need the Fed - sheep don't shear themselves.

Tue, 02/04/2014 - 19:06 | 4401904 MeelionDollerBogus
MeelionDollerBogus's picture

not too late to pick up some HVU. 100/share or so would put it at 10x its current price. As HVU & SPY move this should put SPY at 142.12 so S&P500 to around 1425 or 1430 I'd guess.

Nonsense newsletters speak of 10 baggers in mining - that's going to happen for 1% of 1% of the pennystock miners - this one's much more likely

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