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Why The Fed Can't, And Won't, Let The Stock Market Crash

Tyler Durden's picture




 

When it comes to the stock market, while the biggest, and according to many only, beneficiary of the Fed's ZIRP/QE policies of the past 6 years has been the wealthiest 1%, the reality is that said top crust of US society no longer needs the S&P to continue its relentless, manipulated and centrally-planned levitation.

Between a third Hamptons residence, a 5th Ferrari, and a 7th French villa, not to mention a few tons of gold, the super wealthy have long since booked their paper profits, and transferred their "wealth" out of the intangible and into actual, physical assets.

Therefore it is not the 1% that would suffer the most should the S&P have a post-Lehman like 50%+ wipe out, which also means that the Federal Reserve's only mandate of pushing asset prices to ever higher levels while pretending it does so to boost employment and keep inflation at 2% is no longer for the benefit of the uber-wealthy.

So why can't, or rather won't, the Fed let the bubble market collapse once again? Simple - as the following chart shows, the illusion of wealth is now most critical when preserving the myth of the welfare state: some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys. This compares to less than 10% for Japan which also explains why for Abe, the only lifeline left is pushing pension funds out of their existing asset allocation sweet spot and forcing them to buy stocks. Whether this gambit will work is unknown.

What, however, is known is that in a country like Germany between 2005 and 2012 the Pension funds asset rotation out of stocks and into bonds has been truly unprecedented, with stocks plummeting from 30%+ of total exposure to less than 5%!  It also explains why Germany was, is and always will be leery of allowing the ECB to pursue asset bubble-inflating policies which would barely benefit pension funds on the equity side, while any rising inflation would crush the mark-to-market value of bond holdings.

But back to the US: while the 1%'s paper fungible, market-driven wealth has been long converted into other hard asset formats, it is the paper gains for the future retirees that are on the chopping block should the S&P 500 "get it." As such, it is the fate of future retirement funds, and in fact, the very core of the US welfare state that is at stake should there be a massive market crash. In which case what happened in Ferguson will be a polite stroll in the park compared to the chaos that would ensue should another generation of Americans wake up with half or more of their paper wealth wiped out overnight.

None of which touches on the most important question: will the Fed be able to avoid a market crash?

The answer of course is no. But while we have explained countless times why central-planning always fails in the end, we will give the podium to Fred Hickey, aka the High-Tech Strategist, who gives a very poetic summary of what the Fed's endgame will look like:

The Fed hasn't made the world a better place with its interventions. It has created moral hazard, encouraged the formation of asset bubbles that eventually pop (leaving economic messes), widened the wealth inequality gap to record levels, discouraged savings and investment, severely penalized retirees on fixed incomes, encouraged spending, funded massive government deficit spending by monetizing the debts, lengthened the recession and likely reduced the number of jobs that would have been created if the economy had been allowed to take its normal course. Eventually the Fed's policy interventions will also have created debilitating, widespread consumer inflation, the "cruelest tax" against the poor and middle classes.

And the final nail in the failed Keynesian school of economic thought's coffin, will come when a hundred million current and future retirees wake up one day, realize that the welfare state dream is over, and suddenly realize they have nothing left to lose.

It is only then that the 1% will be truly in peril, as one after another revolution in the history of the world has shown all too clearly.

 

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Sat, 08/16/2014 - 21:44 | 5103598 Bossman1967
Bossman1967's picture

If your stupid enough to own stocks now then you deserve what you get! It is time to let the truth come out let things go back to reality so those of us who know the truth can start to invest again. Id rather have an honest 1percent or zero that watch , country burn

Sat, 08/16/2014 - 21:46 | 5103602 InjectTheVenom
InjectTheVenom's picture

END. THE. FED.

Sat, 08/16/2014 - 22:11 | 5103656 TeethVillage88s
TeethVillage88s's picture

Kudlow is on the Radio AMUSING workers with Liberal Economic again.

Propaganda.

Not Epic Fail. But coordinated Racketeering and Collusion.

Sat, 08/16/2014 - 23:24 | 5103864 nidaar
nidaar's picture

"some 50% of all US pension fund assets are invested in stocks "

This is indeed the reason they will let it crash under its own weight. Since when they care about interests of other than the .05 ?

Sat, 08/16/2014 - 23:37 | 5103895 Oldwood
Oldwood's picture

I have always suspected that wall street's goal was to ramp the market, sell to retail and then dump. What I'm wondering is if retirement funds are retail, because if they are, the market is burnt toast. Government will only bail if there is no political cost, but after TARP and all the rest, they might have trouble doing it in the scale required this time.

Sun, 08/17/2014 - 01:51 | 5104228 markmotive
markmotive's picture

Peter Schiff would agree.

The Fed knows this bubble is too big to pop.

http://www.planbeconomics.com/2013/12/peter-schiff-the-fed-knows-this-bu...

Sun, 08/17/2014 - 03:11 | 5104335 All Risk No Reward
All Risk No Reward's picture

Wrong paradigm, wrong conclusion.

The bust is equally important to the bubble.

The bust is where the Banksters mop up all the assets of their mark debtors - including government.

They.

Will.

Bust.

The.

Economy.

On purpose.

Read Sun Tzu Art of War...  The best warriors is never identified as such.

Sun, 08/17/2014 - 03:16 | 5104344 Elvis the Pelvis
Elvis the Pelvis's picture

The FED's power is limited.  Bad news.  17,000 Dow was the peak.  This bubble is about to pop no matter what Yellen does.  Bitchez.

Sun, 08/17/2014 - 03:42 | 5104374 California Nigh...
California Nightmares's picture

I'm thinking that many of the ruling elites feel that the pensioners don't even deserve their pensions, many of which were secured through union organizing.  

 

Sun, 08/17/2014 - 09:39 | 5104709 Anusocracy
Anusocracy's picture

If the Fed ceased to exist, what exactly would the Treasury not do, or not be able to do, that is being done by the Fed now?

After the US economy crashes and gets decapitated punching through the windshield, the government will double down, with or without the Fed, on its ruinous policies.

It has to, for Empire.

Sun, 08/17/2014 - 15:54 | 5105832 All Risk No Reward
All Risk No Reward's picture

The Empire IS NOT America - never was.

The Empire WAS NOT British - never was.

The Empire is Supranational Debt Money Cartel that controls their vassal governments through their ability to finance their vassal governments.

If you want colorful imagery, think about it this way...

"There I saw a woman sitting on a scarlet beast that was covered with blasphemous names and had seven heads and ten horns. The woman was dressed in purple and scarlet, and was glittering with gold, precious stones and pearls. She held a golden cup in her hand, filled with abominable things and the filth of her adulteries. The name written on her forehead was a mystery:

babylon the great

the mother of prostitutes

and of the abominations of the earth.

I saw that the woman was drunk with the blood of God’s holy people, the blood of those who bore testimony to Jesus."
~Revelation 17:3-6

The "woman" pictured with immense wealth (and non threatening) could depict an the supranational Debt Money Monopoly Cartel.

The "beast" could be the government system.

The woman is depicted as riding the beast because the woman actually controls the beast system.

As most people are aware, if you don' receive the "mark" of the beast on your hand (work on behalf of the beast system) or on your head (programmed to think like the beast system) then you will not be able to make a good living because the Debt Money Monopoly Cartel "woman" riding the beast won't direct their debt money in the direction of people who oppose their system.

If you want to know how this works, watch "Genius on Hold" - available on Netflix.

Genius on Hold Trailer
https://www.youtube.com/watch?v=w-Cx7EXRp8o

This man wouldn't accept the JP Morgan Interest financed mark on his "forehead" or his "hand" and he could not "buy or sell."

This is simply a premonition of what is beiing orchestrated...  as the outstanding debt soaks up actual cash and dries it up, only the most aggress woman riding beast system sycophants will have jobs that pay debt money...  everyone one won't be able to "buy or sell."

I'm not here to say whether that this figurative depiction is special revelation or blind luck, but it fits together reasonably well.

Sun, 08/17/2014 - 20:54 | 5106667 Enslavethechild...
EnslavethechildrenforBen's picture

WHAT GOES UP NEVER COMES DOWN

Sun, 08/17/2014 - 23:43 | 5107244 All Risk No Reward
All Risk No Reward's picture

Wrong. 

1. Create massive debt bubble through massive fraud...  protected from government interference because, well, they finance the government and its officials and they don't finance people to mess with their agenda.

2. Once the Main Street Ponzi pops (already done - Main Street has beent toast since 2008 never to come back), use government force, fraud and coercion to provide monetary wealth to Debt Money Monopoly Cartel interests while offloading the debt of those interests to the general public via the Federal Reserve intermediary.  In addition, simply loan trillions into existence from the ether, give the proceeds to The Cartel and leave the inextinguishable debts to the Muppetry.

3. Once #1 and #2 have run their course (doesn't it feel close...  any moment?), create a correlated pretext in order to blame the eventual collapse so that the Muppetry doesn't blame the root cause - the fraudulent Debt Money Ponzi system.  Putin has been set up as the fall guy for Europe.  "Sanctions" (based on declarations of guilt WITH NO SUBSTANTIAL EVIDENCE!) are already being blamed for Europe's economic troubles.  They may not limit the fall guy to Putin - we'll just have to watch and see what else these criminal orchestrate.

4. Seize the planet Earth's physical assets from debtors - AND GOVERNMENT MAKES SURE WE ARE ALL DEBTORS.  The private mega corproations will make claims ON ALL OUR ASSETS.  Now you know the reason they are setting up a police state and beta testing it.  If you don't go along with this criminal Debt Money Tyranny System in your mind and with the work of your hand, THERE WILL BE NO MONEY FOR YOU TO BUY OR SELL.

It is so elementary.  Hyperinflating to ruin trillions in looted money and trillions in debt paper to bail out people forced into fraudulent debt MAKES NO SENSE.

That's why they pay "magnetic personalities" to trumpet such nonsense...

The Muppetry simply repeats what they hear and feels smart if it sounds "oppositional."

"The best way to control the opposition is to lead it."
~Vladimir Lenin

"The super best way to control the opposition is to finance it."
~All Risk No Reward

Anyone waiting on the bankster to bail out their debt when the banksters can seize their physical assets by bankrupting the economy is naive "to the max."

The people running the world are doing so because they are simply much, much, much more intelligent than even the above average citizen.

From Sun Tzu, Art of War...

"Pretend inferiority and encourage his arrogance."

"Hold out baits to entice the enemy. Feign disorder, and crush him."

Sun, 08/17/2014 - 10:18 | 5104779 ejmoosa
ejmoosa's picture

Funny that I feel that most of the government employees do not deserve their exorbinant pensions either.  And I am not part of the ruling elite.

Sun, 08/17/2014 - 11:04 | 5104878 BuddyEffed
BuddyEffed's picture

Ramping the stock market has always been a goal, to hide the weakness in the social structures, and let the 1% cash out even more into real assets while on the surface things seemed normal.  Think back to Bush and his attempt to put the Social Security funds into the stock market.  If that had been successful, it would have hidden the 2008 weakness for another 6 months or a year or so, allowing stock options and such to keep growing and business as usual to be the perceived norm. 

Sun, 08/17/2014 - 07:46 | 5104566 free_lunch
Sun, 08/17/2014 - 10:53 | 5104853 Oldwood
Oldwood's picture

What is it that people refuse to understand of the principle that a crisis is too good to waste? If we look at what we are experiencing, all of it is the result of some response to a ...crisis. A market collapse is just another opportunity and it is being delayed for one reason, increased advantage...and we all damn well know it. ..even those who are making a living or have their savings invested in this market and secretly (or not) hopes it will continue on indefinitely. This is but a grand scale pump and dump, with the wall street folks  lined up to pick up the pieces, with government help and endorsement of course, even if they are blamed. Remember the trash talking banks received after the collapse, yet they "recovered" faster than anyone, and with government direction. Dominoes placed for the best effect.

Sun, 08/17/2014 - 21:20 | 5106726 Buck Johnson
Buck Johnson's picture

He's correct, the bubble is to big to pop.  So what the fed aka the people in power are doing is plundering as much as they can and getting it out either overseas or in some asset so when they have to pop it or it pops because of something they don't see (black swan event).  Their assets will somewhat be safe but the country will be on fire.  Can you imagine if the markets crash 50% or more this time, it won't come back for decades because this time it will take the dollar with it.  And here's another thing to think about, What happens when Social Security checks and other checks either are cut or bounce?  We are going to have a ver very bad depression and it possibly will change what the US as a country will be.  Essentially breaking up the country.

Sat, 08/16/2014 - 23:39 | 5103905 Greenskeeper_Carl
Greenskeeper_Carl's picture

Yep, Goldman, JPM, and others 'in the know' have found their bag holders, and it is the average persons pension fund, who likely have no idea. If you are expecting any kind of pension in this country, you are probably a big holder of many of the most overvalued stocks in the US, rather you know it or not.

Sun, 08/17/2014 - 06:57 | 5104503 what's that smell
what's that smell's picture

the fed IS the stock market, the buyer of last resort, the source of phantom bids below the market and asks above it, co-located and cocked-and-loaded with buy programs to wag the e-mini's tail.

bear market? somewhere there's a zoo with unicorns and fairies and honest men and bear markets....

but in this universe, there's an organization that can print money out of thin air.

Sun, 08/17/2014 - 10:24 | 5104803 skidsmango1
skidsmango1's picture

...sounds familiar to '07.  The market can't go down...and then it does.

Sat, 08/16/2014 - 23:42 | 5103912 Squid-puppets a...
Squid-puppets a-go-go's picture

ok so lets assume the Fed refuses to let the stockmarket crash. But what if the those who receive the QE through their merchant banks decide from their lifeboats that the collapse is necessary , that they need the flames to clear burn the economy before their phoenix projects can take root for the next generations of the oligarchy

The Fed, in the end, is but one tentacle of the illuminati

Sat, 08/16/2014 - 23:46 | 5103922 JR
JR's picture

some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys. This compares to less than 10% for Japan…

These pensions are trading in the stock market and holding on, yes, but it’s a trap. 

In the 1940s, if my recollection of history is accurate, pension funds could invest no more than 6% in the stock market; it was considered gambling and, therefore, of too high risk for such funds. It could be said that the Fed deliberately has put the future of ordinary Americans at high risk, even savers, and one has to ask, Why? Former Secretary of the Treasury and Goldman Sachs/Citigroup mogul, Robert Rubin, also prodded President Clinton to cut a deal with Newt Gingrich to partially privatize Social Security funds and put them at them at the same high risk as IRA funds by allowing SS retirement contributions to be invested in private assets, such as stocks. Luckily, the Monica Lewinsky scandal put that on the back burner or this flight of millions of new amateur investors into the market would be like shooting ducks for the Wall Street snipers.

In addition, pensions now are the primary investors in private equity funds in terms of capital invested.

Bronwyn Bailey, Ph.D., wrote in an April 8, 2013 paper:

“Private equity funds have existed since the 1940s, and the industry mainly raised capital from individual investors until 1979 when the U.S. Department of Labor clarified the “prudent man rule”.6 

"This clarification allowed corporate pension funds to invest in a variety of investment products beyond bonds and stocks of very large companies. Public pensions, such as the Oregon Investment Council, followed this guidance and began investing in private equity funds in the early 1980s.

"Since the 1980s, pensions’ investment in private equity funds has grown. According to Preqin, a provider of data on the private equity industry, pension funds have been the largest contributor of capital in private equity investments during 2001-2011. Figure 1 shows that pension funds make up 43%of capital invested, of which public pension funds comprise almost 30%. In addition, endowments and foundations contributed 19% of capital invested in private equity.”

6 As part of the Employee Retirement Income Security Act (ERISA), the prudent man rule dictated federal standards for investing by pension funds. The original passage stipulated that pension funds were prohibited from holding certain risky investments, including investments in privately held companies. The 1979 clarification allowed for a measurement of risk at the aggregate portfolio level, rather than by individual investments. --Source: 44 Fe. Reg. 37,222 (June 26, 1979. 

http://www.pegcc.org/wordpress/wp-content/uploads/Long-Term-Commitments-The-Interdependence-of-Pension-Security-and-Private-Equity.pdf

Sun, 08/17/2014 - 00:18 | 5104015 Ayr Rand
Ayr Rand's picture

If the Fed fails to cause wage inflation greater than CPI, which is the only thing that can stabilize the financial system, then they (and the Dems and Reps) will look upon the 1970s with great fondness. A complete change of management will be the absolute best case for them as the misery index will exceed by far what was seen in the 1970s. QE, while a great boon to those of us in a position to take advantage of it, was completely useless in combatting the actual problems-- like painting over rust. 

Sun, 08/17/2014 - 07:11 | 5104514 RafterManFMJ
RafterManFMJ's picture

Luckily your government has adopted policies that lead to wage inflation, such as.

1. Reducing the number of jobs available through massive outsourcing and regulatory over reach.
2. Encouraging women via both propaganda and policy to enter the workforce.
3. Continuing and expanding work visa programs.
4. Allowing the importation of tens of millions of new, unskilled and uneducated immigrants.
5. Byzantine corporate tax laws where your effective tax rate is directly proportional to corporate size and number of lobbyists.
6. Raising the minimum wage, which provides organic job growth.
7. Foisting 0blam0 care on business, which will no doubt increase hiring.

Your government is truly doing the best it can for it's people. I hope this post has made that clear.

Sun, 08/17/2014 - 23:29 | 5105857 All Risk No Reward
All Risk No Reward's picture

Do you think the FED would keep its trap shut about offshoring millions of jobs to slave labor camps in authoritarian countries around the world if they were trying to induce wage inflation?

People, simply use your eyes and view THAT WHICH ACTUALLY EXISTS without letting bias get in the way.

Sun, 08/17/2014 - 04:12 | 5104397 Eyjafjallajökull
Eyjafjallajökull's picture

Combine the 50% decrease in retirement funds' numeric value with the loss of reserve currency status, resulting in at least half of the dollar's purchasing power disappearing and you may see, why for the BRICS it's just a waiting game.

In this lite it's somewhat awkward to read Stratford's Friedman's underlining of Russia's economic demise every single time he mentions the country - like a self-reassurance mantra of an ostrich.

Sun, 08/17/2014 - 10:29 | 5104789 rbg81
rbg81's picture

So, only 0.5% of the working population has pensions?  Or 401Ks (which are invested in stocks too)?  I don't think so Tim.  Stock ownership is very widespread.

Basically, the politicians will shit-their-pants if people are allowed to feel the "sharp pain" of a crash or a depression--even it it is short-lived and ultimately cleansing & healthy. Instead, they doom everyone to a dull throbbing pain that gets progressively worse over time.

The biggest sign that the West has become Socialist is that we won't let the Markets function naturally--so we don't let big companies or people (social safety net) fail.  

The real question is:  is this sustainable?  In the past, my answer would have been no.  However, technology and automation are gradually making the production of goods & some services without labor a reality.  So, increasingly, there will be people who literally cannot be employed in the traditional sense, but will need to be fed, housed, clothed and entertained.  Thus the Powers-that-Be have concluded Socialism is the way to go to make this happen with minimal unrest.

Sun, 08/17/2014 - 11:20 | 5104916 Anusocracy
Anusocracy's picture

Except that the Powers-that-Be started on the socialist path at least a hundred years ago.

Sun, 08/17/2014 - 02:11 | 5104256 giovanni_f
giovanni_f's picture

the sheer existence of the likes of koodloff means there are deep, deep problems. He's a symptom.

Sat, 08/16/2014 - 22:15 | 5103661 mjcOH1
mjcOH1's picture

"So why can't, or rather won't, the Fed let the bubble market collapse once again? Simple - as the following chart shows, the illusion of wealth is now most critical when preserving the myth of the welfare state: some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys."

You look at those statistics as a reason why the fed won't let it crash.
I look at them as a reason why the Fed will force a crash.

There be FRNs in them thar hills, and they're not all yet herded into treasuries.

Sat, 08/16/2014 - 22:58 | 5103799 elephant
elephant's picture

During the first years of this 5+ year bull market, ZH kept warning us and giving us reasons to show us the market was on the verge of collapse.  Now they are telling us it can't happen.  Hmmm...

Sun, 08/17/2014 - 00:26 | 5104035 Ayr Rand
Ayr Rand's picture

Not really. They are simply explaining that the Fed is obliged to keep the S&P 500 increasing for as long as possible, something that has been obvious to many of us for some time (though ZH is providing only one of several compelling reasons). There is a point at which the markets will crash, and the more the Fed props them up the more completely they will crash, at least in terms relative to GDP. The Fed needs to stabilize the system, which requires a massive reduction in debt load relative to median wages. The Fed has been encouraging (or at least allowing) the opposite by reducing interest rates. 

Sun, 08/17/2014 - 04:47 | 5104414 debtor of last ...
debtor of last resort's picture

S&P is just another round of bread and circusses. Until the lions escape from their cages.

That is what ZH is telling you.

Sat, 08/16/2014 - 23:22 | 5103860 SDShack
SDShack's picture

There is a reason why MyRA was conceived. The only questions to be answered are how and when will MyRA be forced on the masses? How... is most likely answered the same way TARP was strong-armed into passing in 2008. So really, the only queston left to answer is "when?"

Sun, 08/17/2014 - 01:20 | 5104158 joe6px
joe6px's picture

Is it so hard to believe that MyRA will replace SocSec?  Let SocSec crash, with the rest of the economy, then out of the ashes comes a new and improved ponzi.  An overhaul of an outdated financial farce.  Put your money in #US!  Surely this .gov won't pass up the chance to latch onto your earnings with something that is sooo good for you!  There are those who may be able to navigate this farce for what it is, for the rest of us...  the crash is coming, how YOU crash is up to you.

Sat, 08/16/2014 - 23:53 | 5103937 BOPOH
BOPOH's picture

End fractional reserve banking system.

Sun, 08/17/2014 - 07:30 | 5104542 free_lunch
Sun, 08/17/2014 - 07:13 | 5104515 barre-de-rire
barre-de-rire's picture

except saying it, what 's ur move to do it actually...? hm ?

 

ho..i see...

Sun, 08/17/2014 - 08:01 | 5104583 yogibear
yogibear's picture

Go better than that. The people in the US need to throw Bernanke in jail for lying when he stated that he would not monetize debt. All should be tried for treason for benefiting a few at the expense of many. These PhDs should be tried as criminals.

Sat, 08/16/2014 - 21:52 | 5103625 Carpenter1
Carpenter1's picture

Every day I walk along a beautiful seawall near my home. It's filled with retired, pension receiving folk who haven't a care in the world. Part of me admires them, wishes I was them, another part hates them for being lucky enough to be born in the generation they were, and the last 3rd of me laughs heartily at them because when the SHTF, they won't know what hit 'em.

 

 

Sat, 08/16/2014 - 22:18 | 5103675 economics9698
economics9698's picture

Don't let them know you stack, shhhhhh.

Sat, 08/16/2014 - 23:45 | 5103919 Squid-puppets a...
Squid-puppets a-go-go's picture

let anyone and everyone know you stack, and that they should do the same. Its good for your soul, and the added demand will hasten the day when the tower of Babel crumbles

Sun, 08/17/2014 - 03:54 | 5104383 EBT excepted
EBT excepted's picture

they look at me like I have two heads...

 

"they said you was hung"...

..."and they was right"

Sat, 08/16/2014 - 22:50 | 5103774 Shad_ow
Shad_ow's picture

You are right but it isn't just retired people who do not know what is going to hit us.  Young familes are headed by men and women who go to their jobs gladly everyday of the week.  On the weekends they play and laugh.  Try talking the future of our country with them and all you get is anger that you dare to disturb their pretty lives. 

 

Sat, 08/16/2014 - 23:41 | 5103908 Oldwood
Oldwood's picture

Truth is kryptonite to Delusionists.

Sun, 08/17/2014 - 08:00 | 5104584 Eyeroller
Eyeroller's picture

Truth is hated by Delusionists.

Try making any point raised on ZH on the lamestream sites and you'll get excoriated.

Sun, 08/17/2014 - 01:23 | 5104171 Canoe Driver
Canoe Driver's picture

You are right, Shad_ow, that they don't want to hear it, but they go, generally speaking, quite miserably to their jobs every day, and on the weekends they stress about money they don't have, charge too much to their credit cards, and otherwise engage in hot-tempered family dysfunction. There is indeed a lot of misery out there.

Sun, 08/17/2014 - 11:36 | 5104971 DOGGONE
DOGGONE's picture

Look at my bio.

Sun, 08/17/2014 - 00:01 | 5103965 Lanka
Lanka's picture

Generally speaking its preferable to be young, rather than old.

Sun, 08/17/2014 - 04:31 | 5104407 dark_matter
dark_matter's picture

"Why is it that we rejoice at a birth and grieve at a funeral? It is because we are not the person involved."

Mark Twain

Sun, 08/17/2014 - 07:18 | 5104524 RafterManFMJ
RafterManFMJ's picture

— 'Always go to other people's funerals, otherwise they won't come to yours.' - Yogi Berra

Sun, 08/17/2014 - 10:13 | 5104773 Bastiat
Bastiat's picture

Mark Twain would have loved Yogi.

Sun, 08/17/2014 - 03:55 | 5104384 EBT excepted
EBT excepted's picture

we stole some folks' money...

Sun, 08/17/2014 - 07:15 | 5104519 barre-de-rire
barre-de-rire's picture

the 4th part of yourself won't see neither from where others gonna fall on your back.

 

the guy feeling safe crouched behind the tree always forget there is a forest surrounding him...

 

thing about it. you will thx me in another life.

Sat, 08/16/2014 - 22:37 | 5103717 Ass. Manager
Ass. Manager's picture

The BOJ is buying all the large cap stocks. They need the market to keep going up so Japan can solve its little budget problem.

Print fake money, then buy US large cap stocks. Why do you think small caps have been hammered? No buyers. 

Sat, 08/16/2014 - 23:45 | 5103920 Oldwood
Oldwood's picture

Simultaneous financial failure promote a single world currency reset. Allows devaluation/revaluation of everything and once their are no competing currencies they can print like mad. No fx, no capital flight, no gold or silver as prices will be set.

Sat, 08/16/2014 - 23:55 | 5103941 tempo
tempo's picture

2015 spx 2500. Prices will increase as FED will move QE type programs to fit the Treasury financing requirements. Now withholding taxes are higher than expected and Treasury funding needs are below plan so the FED can taper. The problem is 2016 and beyond. That means SPX may reach 2500 in 2015 before peaking.

Sun, 08/17/2014 - 02:12 | 5104260 theonewhowaskazu
theonewhowaskazu's picture

Hello I was wondering if somebody could tell me what that "other" section is. The grey one in the chart. Its pretty sizable, seems like there might be a trade in there.

Sat, 08/16/2014 - 21:45 | 5103599 TeamDepends
TeamDepends's picture

Because thing'z goin' so well.

Sat, 08/16/2014 - 21:45 | 5103600 Jack Burton
Jack Burton's picture

The wealthy have cashed out of paper assets and into tangible ones. They have booked their profits, from the Fed generated bull market run. Now, left holding the bubble bag are pension funds of America's workers. Now why did I expect the average guy saving for a retirement to be the ones the elite rich sold out to to book those profits. Entirely as planned and "The Suckers Are?"

Sat, 08/16/2014 - 22:08 | 5103650 Atomizer
Atomizer's picture

 

 

 

Knock, knock 

Who's there? 

MyRA

Sat, 08/16/2014 - 22:17 | 5103671 Eyeroller
Eyeroller's picture

MyRA who?

Sat, 08/16/2014 - 22:38 | 5103719 Atomizer
Atomizer's picture

MyRA confiscate your assets to transform the United States of America. 

Forward comrades. Understand? 

Sun, 08/17/2014 - 07:21 | 5104527 RafterManFMJ
RafterManFMJ's picture

That joke ain't funny

Sun, 08/17/2014 - 22:16 | 5106907 IRC162
IRC162's picture

MyReal dream is to become a cosmetologist; but in the meantime,  I signed up for this IRS job cuz they was hiring.   Can you please fill out this form related to your personal assets and their locations,  and attach it to your 2016 1040? Any items left off the list are subject to reporting penalty. 

Sat, 08/16/2014 - 22:16 | 5103667 TeethVillage88s
TeethVillage88s's picture

Jack; I have not found the data you describe but some say certain data like GDP is worthless.

The Gist is as You Say.

Repost:

Solutions? There has to many ideas about restructuring the current debt, reducing executives compensation, and doing it without hurting avg households:

A) Maybe change corporate money into a lower valued dollar like the Pacific Dobo Dollar (PDD) which doesn't exist yet... you could call it anything. Several problems exist with this Pensions, NGOs, and Institutions need to be protected some what unless it is an account owned by bankers. 2nd problem is you need bankers to implement any exchange of US Dollar denominated debt or account. 3rd problem is Wealthy, Big Corporations, and Bankers will scream to high heaven. 4th Problem is US Lobbying

B) Reducing the Size of US Corporations & TBTF Banks justifies lowering the compensation of executives. Anti-Trust Act and subsequent legislation and establishment of FCC was created for this. But FCC no longer has authority over Banks. And we have Lobbying in the USA.

C) Austerity is already happening as the velocity of money has slowed down, we have had capital flight from US Industries, there is little Investment in the way that would lead to millions of jobs with decent compensation... EBT/SNAP prevents photos of hungry people similar to the Depression, so Social Programs are holding the US together, ... So how could we plan new institutions to provide money & Credit immediately after a massive Default? Educational Loans Direct from the US Treasury, Federal Government Credit direct from US Treasury,... Create State Public banks like North Dakota in each State, Create mechanisms to incentivize more Public Banking with Stricter Accounting, Financial Ratings organizations, and Standardized Financial Instruments to limit Fraud and increase transparency.

D) Mass Default would look like International Agreement & Treaties on this. After all China, EU & USA are in trouble. And the Derivatives are sitting every where in many countries. Maybe the first phase would be to bring home Derivatives to countries from which they were sold.

E) Depression by what definition? EU & USA & UK and many 3rd World Countries have the basics in place now. We don't want to let things get worst, but I think we all want solutions to a Debt Jubilee, a Flawed US Dollar, Flawed ECB, Flawed Peoples Bank of China... And maybe solutions to War as an alternative to contracts for Resources, Solutions for Electricity or Energy, Solutions for Current Corporate System in which Corporations have the power of Countries and Corporatocracy looks like an Aggressive Empire that allows gaming the system by wealthy player and allows Usury and abuse of Consumers.

Sat, 08/16/2014 - 22:22 | 5103684 TeethVillage88s
TeethVillage88s's picture

Here is something Else:

Consider that all is planned in advance, that the Wealthy have an advantage in all Government Relationships and can offer jobs to all government Employees:

QuietCorday;

I think you are Identifying "Trans-National Government or Trans-National Government Officials & Diplomats"

Trends:

A) Presidents that Lie about war & Suppress Individual Rights & Constitutions... and otherwise abandon Geneva Conventions that made us GREAT and Stated that as a People we abhorred Aggressive War
B) Personally now I am Questioning if US Federal Government had a Coup in 1947 or before this... in favor of acting like an Empire
C) Reasons for House of Lords, House of Commons, or US Congress to Lie has always been clear, It is the Influence of Money, Power, Status, Legacy
D) Royal Families were never fully Denounced, Haciendas were never Reformed with Land Reforms... and Today we live with Government Service Families who are rich & believe they are Royalty... while we create a new threat... the Tech Dynasties or the Newly Rich who join Government Personalities knowingly or unknowingly to advance Fascist Agendas

But I don't stop there.

Knowledge is power, and all European Families seem to know this and work to keep education from commoners. Petroleum, Bitumen, and Gas products have lead to a new age starting in like 19th Century. But what if this is based on Sumerian Technology that was known to Germans, Jews, the Vatican, the French, the Dutch, and the British Empire?

We see Royal Families in Europe that have done well... same as the above but add the Luxemburg, Lichtenstein, Belgium, and Switzerland. Norway & Sweden discovered oil later I guess.

Knowledge creates classes. The french & English explored Egypt & ancient Iraq and discovered the knowledge of the Sumerians in use for Alcohol in medicine and the value of bitumens.

A) German Drive for ancient knowledge and a pipe line from Iraq considered major in WWII
B) UK Colonized Middle East and confiscated all ancient artifacts
C) Africa was old mining resource that attracted Germany, France, British Empire, and Dutch.
D) "Naphta" is the most commonly used word for petroleum product and is linguistically derived from Sumeria
E) Sumeria is situated on Iraq
F) Sumeria was an agricultural, animal husbandry & metallurgy based society that also had the most words for Petro, Oil, Gas, Alcohol, and Bitumen

- Trans-National Government Officials could give a crap about your economic well being...
- you are just labor, military fodder, or a source of energy
- Profits & Wealth mean more to these Sociopaths.
- US & UK States of Serfdom & Indentured Servitude.

Sat, 08/16/2014 - 22:48 | 5103761 Atomizer
Atomizer's picture

Shhhhh, stop educating the muppets. 

Good job. Most of what you said will fall on deaf ears. Keep plugging away. That's all we can do. 

Sun, 08/17/2014 - 11:04 | 5104877 Villageidiot777
Villageidiot777's picture

Swedish oil?

Sat, 08/16/2014 - 21:47 | 5103604 Carpenter1
Carpenter1's picture

US economy and stock markets are now under the protection of national defense.

 

No joke.

Sat, 08/16/2014 - 22:18 | 5103676 ekm1
ekm1's picture

Yes

Sat, 08/16/2014 - 23:06 | 5103812 Atomizer
Atomizer's picture

Sad isn't it? Yet we're told it's a free market. The panic is losing the petrodollar status. Someone is a mole, leave it at that. Our taxpayer funded Langley, VA fucknobs couldn't find there way out of paper bag after given a matchbook and box cutter utility knife. 

Stop fucking asking for money and do your goddamn job. If you cannot do this, you're fired for being a lazy fuck off.

Got It? 

Sun, 08/17/2014 - 09:33 | 5104700 mvsjcl
mvsjcl's picture

Those spy agencies don't work for "the country."

Sat, 08/16/2014 - 21:46 | 5103605 Eireann go Brach
Eireann go Brach's picture

I want a Gold EBT card which will buy unlimited fired chicken!

Sat, 08/16/2014 - 21:47 | 5103607 Seize Mars
Seize Mars's picture

Well I disagree if the idea here is a political one, i.e. they just can't let the pensioners get hosed and hang on to the welfare state dream.

I don't see it that way. They (the actual bankers) don't care about anything other than the complete ruin of the US and all of its people. So yeah, I think they're just fine with the induction of collapse. The politicians' pathetic "careers" will be hung out to dry right along side mom-and-pop.

Sat, 08/16/2014 - 22:42 | 5103730 toady
toady's picture

Yeah, the premise that the fed or banksters won't let it crash because of what it would do to pension funds is flawed. The fed and banksters only care about one thing, themselves.

Sat, 08/16/2014 - 21:47 | 5103609 babylon15
babylon15's picture

In all honesty those other countries are screwed more than the United States.  Every country is at a 350%+ total credit market debt to GDP ratio.  Would you rather have bonds or stocks in a country with a 350% total credit market debt to GDP ratio?  It is obvious that the bonds cannot be repaid.  So by having only 50% of their money in bonds, US pension funds are positioned better than almost any other country.

Sat, 08/16/2014 - 22:15 | 5103662 Winston Churchill
Winston Churchill's picture

You think the US will not default ?

There are no clean shirts in the laundry, except maybe Putins.

If Uncle Scam had to do its accounts the same way other countries did, what do you

that debt % would be ?

Please send me your dealers tel. number asap.

Sat, 08/16/2014 - 23:10 | 5103822 NYPoke
NYPoke's picture

No, the U.S. won't default.  The 2nd Central Bank managed to push through the 14th Amendment, to hold the tax payer's feet to the fire for hundreds of years to come.

 

Coming decades are going to be brutal, or so it appears.  Maybe it is is different this time, but I doubt that the difference is in a good way.

Sat, 08/16/2014 - 23:56 | 5103944 Oldwood
Oldwood's picture

But this is all too messy. Too much arguing and debate between countries. The big squeeze is being put on Russia's economy to force them along so they can do a single currency. Do you think it a coincidence that virtually every country is broke and printing at the same time? Other than bankers, everyone is looking at these numbers and knows their days are numbered, so a single currency solves a lot of problems...for them. Coordinated economic collapse. Nothing else makes sense to me. They want power, the unaccountable kind and that will not come about as long as other countries can interfere. A one world bank and currency puts everything under one roof and yes, you will still be able to invest in government bonds through global banks that will set interest rates for the rest of history.

Sun, 08/17/2014 - 06:39 | 5104491 oudinot
oudinot's picture

Canada does not have that problem, nor does Norway, others as well.

Sat, 08/16/2014 - 21:48 | 5103610 blindman
blindman's picture

Bob Marley - Burnin and Lootin
https://www.youtube.com/watch?v=M99nzyiS830

Sat, 08/16/2014 - 21:55 | 5103630 NYPoke
NYPoke's picture

Soros disagrees.  They have let it crash for centuries.  They won't stop now.

Sat, 08/16/2014 - 21:56 | 5103634 pachanguero
pachanguero's picture

Big bubble here in Real estate in Thailand, most of Asia except less in Vietnam.....  when it blows watch out!

Sat, 08/16/2014 - 22:19 | 5103677 conork
conork's picture

Really?I've been getting emails on property in Thailand for years and the price hasn't gone up, eg, a 1 bed is approx 40k euro

Sat, 08/16/2014 - 21:59 | 5103639 q99x2
q99x2's picture

Let's get real here. The thieves that have been using Keynesian this and Keynesian that only do it because it allows them to steal everybody elses money. They need to be arrested, locked up and their stolen wealth re-distributed.

Sun, 08/17/2014 - 07:33 | 5104547 RafterManFMJ
RafterManFMJ's picture

I really don't get this 'lock 'em up' mentality. I don't. Blood sucking treasonous parasites get to live and continue to suck resources?

Maybe they get pardoned, escape? Perhaps the still breed with conjugal visits, and spread their evil through writing or interviews?

No - the prison they get is the prison of the grave; the gibbet, then their bodies consumed by wild dogs.

Sat, 08/16/2014 - 22:10 | 5103654 BullyBearish
BullyBearish's picture

No really, it's different this time...the market can only go up and up and up.  BTFATH to INFINITY and BEYOND!!!!!!!!!!!!!!!!!!

Sat, 08/16/2014 - 23:28 | 5103872 SDShack
SDShack's picture

Tulips, tulips for everyone! With just the right tulip, I can retire!

Sat, 08/16/2014 - 22:17 | 5103666 moneybots
moneybots's picture

"Why The Fed Can't, And Won't, Let The Stock Market Crash"

 

The FED can't prevent the stock market from crashing.  100% of bubbles burst and deflate.  Math beats the FED.

Sat, 08/16/2014 - 22:55 | 5103789 Dadburnitpa
Dadburnitpa's picture

Completely agree.  Only fools believe that they can control complex systems.

Sat, 08/16/2014 - 22:17 | 5103668 blindman
blindman's picture

the lootin' and burnin' has gone
global and systemic. who will stop
the rain?

Sat, 08/16/2014 - 22:20 | 5103678 Eyeroller
Eyeroller's picture

I'm 'confrused':

Is the Fed powerful enough to prevent a crash?

OR

Is the Fed powerless to prevent a crash?

Title suggests the former, but reality suggests the latter.

Sat, 08/16/2014 - 22:40 | 5103723 DOGGONE
DOGGONE's picture

Eyeroller,
I share your confusion. Most likely I figure is NO nominal crash, but rather a real crash by CPI rising (perhaps not so fast that it gets called a crash?). In case you think the people cannot be so easily fooled ..., see here:
http://patrick.net/forum/?p=1230886

Sat, 08/16/2014 - 22:22 | 5103685 DOGGONE
DOGGONE's picture

Good to be in TIPS, when reading that!
I remember some guy's phrasing years ago: Inflate or die!

Here's my contribution:
The Public Be Suckered
http://patrick.net/forum/?p=1230886

Sat, 08/16/2014 - 22:26 | 5103692 IronShield
IronShield's picture

Think of the Fed as New Orleans with Katrina bearing down on it; doesn't stand a chance in hell. The Fed is dead. No amount of stimulus will bring that patient back.

Sat, 08/16/2014 - 23:47 | 5103924 Squid-puppets a...
Squid-puppets a-go-go's picture

Japan.

Recovery may not be possible, but that fukker can stay in a coma until the next generation retires

Sun, 08/17/2014 - 07:31 | 5104545 Eyeroller
Eyeroller's picture

If Japan were to crash tomorrow, Yellen would learn a very important lesson.

NOT that Keynesian economics is devastating.

Oh no.  The lessen she would learn is that since Japan's Ponzi lasted 15 years, then she can keep the US Ponzi going for another 8.

Sat, 08/16/2014 - 22:40 | 5103724 loveyajimbo
loveyajimbo's picture

Ron Paul... the finest President in the history of the USA...  waaa??/what?  Shit, I just woke up... realized the blacks, commies, heebs and lemmings went along with the Rothschild criminals and elected a Ferguson-type Jigga-puppet to facilitate the final looting of America... ah well... maybe I can steal me some rims.

Sun, 08/17/2014 - 07:41 | 5104558 RafterManFMJ
RafterManFMJ's picture

Dear Whitey;

Please continue to strive, invest and work 60 hour weeks. Also, you are needed to fill the shock troop ranks for the Bankster's wars of Empire.

Kill as many Browns and Yellows as possible; and don't worry that they will soon out number you at home due to demographics and illegal immigration.

Get married and enjoy the fair and balanced divorce system.

Work. Reproduce. Serve.

Signed,

Your Friendly Neighborhood Tribe Member

Sat, 08/16/2014 - 22:40 | 5103725 blindman
blindman's picture

Creedence Clearwater Revival: Who'll Stop The Rain
https://www.youtube.com/watch?v=lIPan-rEQJA

Sat, 08/16/2014 - 22:49 | 5103770 Quaderratic Probing
Quaderratic Probing's picture

Germany moved most pension money into bonds at record low interest rates?

Stupid is as stupid does

Sun, 08/17/2014 - 08:57 | 5104655 css1971
css1971's picture

Exactly how is that stupid? The wealthy get out at the top leaving the bag holders.

Sun, 08/17/2014 - 20:15 | 5106584 Quaderratic Probing
Quaderratic Probing's picture

They get out at the top by selling to whom?
Are you going to start buying bonds as the rates increase?

At record low rates the face will fall so fast no German could getout.

Sat, 08/16/2014 - 22:54 | 5103787 blindman
blindman's picture

Tom Waits - The World Keeps Turning
https://www.youtube.com/watch?v=P4CzLh-pLAE

Sat, 08/16/2014 - 22:57 | 5103795 Yen Cross
Yen Cross's picture

  Hook, line $ sinker?

   Long talcum Powdur

Sat, 08/16/2014 - 23:00 | 5103802 Yen Cross
Yen Cross's picture

 You Cranial rejects?

Sat, 08/16/2014 - 23:00 | 5103805 3rd Pig
3rd Pig's picture

 

some 50% of all US pension fund assets are invested in stocks

Like it or not when the market crashes that’s our money they have taken.

They printed new bucks into creation to purchase real assets – now they own the assets, they just disappear the money again leaving us with the bill – genius

The one problem left is what to do with the billions of people you just stole from, because they are pissed... Well, set the 4 horse men on them – whatever it takes MAKE THEM UNABLE TO TAKE REVENGE.

Fuck, most people will be too busy beating their neighbour to death for the last Oreo biscuit in the packet.

 

Sun, 08/17/2014 - 07:34 | 5104549 Eyeroller
Eyeroller's picture

And its ONLY when pension/401K's are affected that the people will give a damn.

Just like no one cared too much about Obamacare until they got the sticker shock of higher premiums.

Sat, 08/16/2014 - 23:08 | 5103818 mijev
mijev's picture

The fed is probably more worried that it would take down the Insurance industry and mutual funds.

Sat, 08/16/2014 - 23:11 | 5103825 lynnybee
lynnybee's picture

oh, i'm sooo glad i'm not in that darn stock market anymore...but, then, i've basically nothing left after my so-called "advisor" said i needed to get in the NASDAQ!   nothing like losing what took a lifetime to save to wake me up !  ... so, that's how this game works, suck in everyone, pull the plug, short it on the way down & take it all for themselves.   no one is stealing (swindling) anything from me ever again.  had i simply saved in gold over the course of my long life i'd have been just fine.   sometimes i look in the mirror & wonder just how dumb i was; wait til the rest of the people wake up!  

Sun, 08/17/2014 - 07:46 | 5104564 RafterManFMJ
RafterManFMJ's picture

Most people will only wake up as their bowels loosen as they tumble down the side of the mass grave, after being shot in the back of the head.

Sat, 08/16/2014 - 23:13 | 5103831 Dingleberry
Dingleberry's picture

Shit is coming to a head.

Paper cannot be rolled over for zero interest.

That means roller coaster riding stocks, perhaps some commodites, RE.

When does it get too hard to control?

Talk about a Greenspan put.

Sat, 08/16/2014 - 23:18 | 5103837 AdvancingTime
AdvancingTime's picture

At some point the return on loaning money is simply not worth the risk!  It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward.  When this happens we are at the end game.

 Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.

The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.

http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit...

Sun, 08/17/2014 - 01:00 | 5104112 bid the soldier...
bid the soldiers shoot's picture

"At some point the return on loaning money is simply not worth the risk!" 

Welcome to the "undiscovered investment from whose bourn no principal returns.

I have a $250,000 CD yielding 3.0% that matures in 3 weeks.  The bank will renew it at 0.55%.  I can live without the $7500 interest for a year and see where rates go.  Or I can buy a $100,000 annuity which pays 8.1% but my children pay for it.

We're in terra incognita, and we've been there since 2008 or before.

Sun, 08/17/2014 - 07:35 | 5104551 Eyeroller
Eyeroller's picture

The mattress option seems the best for now.

Sun, 08/17/2014 - 14:15 | 5105546 bid the soldier...
bid the soldiers shoot's picture

Ah, the mattress option.

Your head sleeps easier but you wake up with a bad back.

Sun, 08/17/2014 - 02:17 | 5103838 Radical Marijuana
Radical Marijuana's picture

"some 50% of all US pension fund assets are invested in stocks"

The overall effect of that has created a social situation I refer to as the Ouroboros of Incorporated Robbery. Collectively, institutions created by governments now own the vast majority of shares of publicly traded corporations. There were spirals of governments chartering corporations, while governments created institutions that eventually became the primary owners those corporations. The revolving doors of the careers of people who move between corporations into government, and then back into corporations, are nothing compared to the degree that institutions given the power of governments have gradually bought up control over the supposedly private sector corporations.

For all practical purposes, the collective government now owns the economy, while the people who control governments and control corporations have blended together, into a herd of professional money managers, who mostly have no clue about anything outside of what their herd is doing. There are NO good labels for what exists inside of the realities of the Ouroboros of Incorporated Robbery. None of the previous labels that are pretending to discuss political economy apply to the situations that exist after governments become the biggest form of organized crime, controlled by the best organized gangs of criminals, while the collective powers of government mandated institutions now own the vast majority of the economy.

Here are some links to more information, to try to wrap one's head around the ways that the so-called "private sector" is now almost totally owned by what could be called "collective government."

http://www.cafr1.com/

Some of the people who have been presenting that information are Walter Burien, Clint Richardson and Jerry Day. Unfortunately their videos are not well-made, entertaining videos, however, the concepts revealed are important!

http://www.youtube.com/watch?v=bn3hUcmNDdA

Ending Taxation - The Only Game in Town - 2011

http://www.youtube.com/watch?v=QkfMuvVuETQ

The Corporation Nation Master (2010)

http://www.youtube.com/watch?v=fhkWueEjewM

Corporation Nation 2

Another, shorter, talking head video about the CAFR:

http://www.youtube.com/watch?v=T2aif0Wk9E0

Introduction to the CAFR

Understanding the American and global economy now takes thoroughly ecological concepts, however, almost nobody wants to engage in that kind of understanding of the realities of those SYSTEMS!

Instead, the public discussions of the political economy is almost totally dominated by bizarre bullshit, which is so out-dated and obsolete as to be relatively ridiculous. But nevertheless, since almost everyone still thinks in those ways, and there is almost no publicly understood language to discuss what now actually exists, we are stuck inside of the runaway absurdities of the emerging situations:

FOR ALL PRACTICAL PURPOSES,

 THE COLLECTIVE GOVERNMENT

 NOW OWNS THE STOCK MARKET.

Sun, 08/17/2014 - 08:12 | 5104590 SmallerGovNow2
SmallerGovNow2's picture

Wow, have not heard of this CAFR concept. Interesting, thanks for the links....

Sun, 08/17/2014 - 12:01 | 5105041 Bastiat
Bastiat's picture

I listened to about half of that last CAFR piece and was stunned at the level of deception or ignorance.  A couple of examples:  he mentioned pension funds as a pot of hidden money implying it is somehow available to budget for other than pension expenses- short of bankruptcy it is NOT;  he mentions rainy day funds as of they were some great evil when they are simply prudent financial management-state and local government can't simply print money when disasters or disruptions hit; he demands that CAFRs be subject to outside audit-I have never heard of a state or city government that did not have audited financials.

 

Generally he speaks about the CAFR as its very existence were some great secret uncovered but the only thing he uncovers is his own petulant ignorance.  The annual financial report is legally mandated and publicly available.  These days it is usually available online.  You may have to learn some accounting basics to understand it.  But that's just how life is if you want to understand something rather than stomp your feet like a 12 year old.

 

The real problems in local government come from the ignorance of the public that allowed politicians to make  unrealistic retirement promises.  No, the costs don't show up in the budget which just looks at the coming year but they do show up on the annual report, the evil CAFR.  The pension liability is offset by some of those evil pots of money that are being "hoarded.".

The unfunded liability is where the future problem is-it needs more revenue, either from higher investment returns or higher tax revenue. Higher tax revenue means higher rates, growth in taxable business activity or growth in real estate valuations.

Calculating the unfunded liability is done by outside third party actuaries-assumptions have to be made about mortality rates and investment returns, as with any other corporation.  As market returns fluctuate, those investment returns rates are adjusted, often on some sort of moving average basis.

 

If you want to critique government finances it is helpful to know something.  Otherwise you come off like a monkey shreiking at the insides of a clock-you only impress other monkies.

 

 

 

 

Sat, 08/16/2014 - 23:33 | 5103886 ramacers
ramacers's picture

ready the blade w/intrepitude.

Sat, 08/16/2014 - 23:43 | 5103913 Pairadimes
Pairadimes's picture

Crashes have a habit of catching a great many people with their trousers around their ankles. Just because people are invested in a way that does not protect them on the downside does not mean it won't happen. In fact, it is a strong indicator that it could happen. Besides, the pumping the Fed has done assures us that the inevitable disaster, when it comes, will be in proportion to the manipulation, or in other words, really bad.

And if you think TPTB care about middle class pensions, then maybe you forgot what happened to the GM bondholders.

Sat, 08/16/2014 - 23:54 | 5103939 damicol
damicol's picture

The one thing never mentioned, that are too scared to speak of, is the real end.

The fucking motherfucker of all bubbles.

The absolute inevitable end, is hyperinflation. when the piece of useless asswipe in you pockets starts growing an extra zero every year then every month then every day.

That id always the end game as more and more refuse to to take the shitty shilling, and ask for real goods or assets instead.

Fuck, Pay me in cases of beans, I don't need the goddam green shit.

Cash in your 401 and buy enough canned food to live on through your retirement,

Te day will come when you realize the Walmart shelves are getting bare. It is coming, you just don't see it yet,  and when people do notice that is when panic sets in and like a herd of wildebeest everyone will all run to the nearest store at once.

Want to start a real scare.

Try this, Find a local mart, break in and empty every shelf hiding all the stock before they open in the morning.

Watch the panic, especially when you stand outside the store telling everyone that all the stores in town are the same.

But thats coming, and when it does, game  over.

 

 

 

 

 

Sun, 08/17/2014 - 00:35 | 5104059 Lanka
Lanka's picture

TPTB are attempting to maintain the current system and continue looting/stealing and enriching themselves.  It may continue for a few more years.

Essentially all fiat is in a race to the bottom.  Inflation will be concentrated in hard assets ( productive land, secure housing, viable producer companies, gold, etc. )  and life-giving essentials (food, water, energy, medicine, etc.) and be partially due to the depreciation of worthless fiat, via unlimited printing.

In the eighties, I experienced two hyper-inflation periods (Argentina and Venezuela); we experienced rationing, shortages, and prices were raised daily; in the local currency the stock market soared.  That was tame compared with what can be expected now; one will be encouraged to report to the nearest FEMA camp, where you are safe from the roaming hoards and have a cot and three cold MREs daily.

Sun, 08/17/2014 - 07:51 | 5104572 SoDamnMad
SoDamnMad's picture

Sorry Lanka

An MRE is a 2,000 calorie meal so you get ONE a day unless you work in the mine shovling coal to keep the rest of the FEMA camp warm.  #24 is my favorite so hands off.

Sun, 08/17/2014 - 00:35 | 5104065 q99x2
q99x2's picture

Look. These enemies of mankind printed money to steal all the US gold in the 30s and today they are printing money to steal all the corporations.

Arrest them. Somebody call the police.

Sun, 08/17/2014 - 00:57 | 5104104 edifice
edifice's picture

Send in the Missour-ah Highway Patrol!

Sun, 08/17/2014 - 00:37 | 5104072 digitalindustry
digitalindustry's picture

"It is only then that the 1% will be truly in peril, as one after another revolution in the history of the world has shown all too clearly."

 

bhaa they'll be in Europe by that time , or the dark side of the moon (of course)

Sun, 08/17/2014 - 07:41 | 5104556 Eyeroller
Eyeroller's picture

Europe is the dark side of the moon...

Sun, 08/17/2014 - 00:45 | 5104083 bluskyes
bluskyes's picture

People are going to get a harsh lession in the difference between price, and value.

Sun, 08/17/2014 - 08:24 | 5104610 CHX
CHX's picture

<<< harsh lesion

<<< harsh lesson

 

+1 could be either ;-)

Sun, 08/17/2014 - 03:48 | 5104377 AGoldhamster
AGoldhamster's picture

Boy the crowd here is bearish. Boy that is bullish.

ekm: 3xLehman or dead oligarchs in the streats.

I say SnP minimum towards 22xx into yearend and neither 3xLehman, nor some other disaster hurting stocks.

ZH continuing to blow the bearish and insane valuations horn (btw that chart is already 1,5 years old - and we all know a lot has changed in the meantime regarding rates and stocks and manias) - that way supporting indices as shorts always will be wrong and will have to buy back.

While nevertheless ZH is still the best site on this planet. Just that the financial world is NOT interested anymore in valuations or in the truth or in the amount of inequality out there - but just on how to make money the next millisecond, day, week and month.
And thanks to current admin and Fed there's only one profitable place left - and that is stocks. For many many major reasons often enough outlined here already.

And still the sheeple continue to lament about valuations and how insane the markets are.
While market right now has only one serious call: and that is long stocks and that for the rest of the year. As there is no (other) market anymore.
Except the currency market - where the true fight is ongoing.

SnP > 22xx here we come.
And much higher after some more short lived washouts.
With most of them in the week before the week of OE. Coincidence of course.
But who cares as long as we have ZH and ekm thinking for ourselfs. Complaining loudly what are also our concerns. Keeping the masses attracted.
While the market moves along - and keeps us trapped.

Boy is that bullish.

Sun, 08/17/2014 - 04:00 | 5104390 Jano
Jano's picture

Yes, from their perspective, they cannot. But they will be forced to.

Sun, 08/17/2014 - 05:38 | 5104439 CHX
CHX's picture

Things are bubbly already, so boiling point can't be too far. The wolrd has beckome one heck of giant steam cooker. 

Sun, 08/17/2014 - 07:43 | 5104561 Eyeroller
Eyeroller's picture

Japan has been in a Keynesian bubble for 15 years.

Sun, 08/17/2014 - 08:16 | 5104597 CHX
CHX's picture

True, but Japan has been local, now the world has gone Japanese.

Sun, 08/17/2014 - 08:42 | 5104633 Eyeroller
Eyeroller's picture

Cue that oldie but goodie, 'Turning Japanese'

https://www.youtube.com/watch?v=gEmJ-VWPDM4

(How many of you know that the title is actually a secret reference to masturbation -- i.e. the face you make)

Sun, 08/17/2014 - 08:59 | 5104451 BeetleBailey
BeetleBailey's picture

"Between a third Hamptons residence, a 5th Ferrari, and a 7th French villa, not to mention a few tons of gold, the super wealthy have long since booked their paper profits, and transferred their "wealth" out of the intangible and into actual, physical assets.

Exactly correct. I preach this to my clients damn near daily. My advisement for PM's and other tangible assets (paper money "transfers") hinges on this very factual point.

Sun, 08/17/2014 - 06:10 | 5104464 buzzsaw99
buzzsaw99's picture

so gates, buffett, waltons, et al, sold all their stock to the epnsion funds? please. this article is long on assumption, short on facts.

Sun, 08/17/2014 - 06:36 | 5104487 Raoul_Luke
Raoul_Luke's picture

Indeed!  A good indication of this is the record federal tax take this year, which the happy talkers tell us is the result of a recovering economy (and justification for their claims of the affordability of the welfare state), when, in fact, it is merely a sign of the 1% taking their massive stock profits as they sell the inflated assets to Joe and Jane Sixpack who are reaching for yield in the Fed induced ZIRP stagnating economy.

We'd be fine if our policy makers would use this time of fake prosperity to restructure the welfare state, roll back the regulatory morass, and develop our energy resources to fuel a rebirth of high tech manufacturing in America - and provide real, bread winner type jobs (and rising real incomes) for the masses.  But that would require real work and difficult decisions so we know that will never happen.  So it's "forward" to the economic collapse that the Keynesians have baked in to our economic cake.  Hopefully there will be enough pieces left after the crash to start building a new, more productive and competitive economy, but it won't happen until we banish the Keynesians (and their Pied Piper Krugman) to the scrap head of failed ideologies, where they belong.

Sun, 08/17/2014 - 06:47 | 5104498 RealityCheque
RealityCheque's picture

It's their bubble, but the responsibility of popping the fucker is no longer in their hands.

In fact its in nobody's hands. It's only a matter of (short) time. 

Sun, 08/17/2014 - 07:02 | 5104507 rsnoble
rsnoble's picture

Save the children! We need the guns!!

I just came to the conclusion that the likes of politicians and Fed members are the children being referred to.

Also I wonder what distractions they have cooked up?  A couple nukes could easily explain the crash.  In their minds anyway.  A lot of people have awokened to this rancid horseshit.

Sun, 08/17/2014 - 07:44 | 5104563 Eyeroller
Eyeroller's picture

I too believe Janet prays every night for a Black Swan.

NO WAY will the Fed admit to  a $4 trillion failed experiment.

They need a Black Swan to blame for a crash.

Sun, 08/17/2014 - 08:00 | 5104582 RiverRoad
RiverRoad's picture

You are SO right about that!!!

Sun, 08/17/2014 - 09:13 | 5104680 falak pema
falak pema's picture

Self fulfilling prophecy; it is repetitive in History and always occurs when you least expect it as an unforseen consequence of irrational exuberance; false certitude; spawned by Top Man's Hubris. 

The first lesson as related in the mythological origins of West, aka the House of Atreus. Agememnon drinks the chalice to its dregs under the vengeful knife of flaunted wife! 

That guy Homer sang the greatest novels of western civilization--all in words--never written ! 

All we do is repeat the sins of the Oligarchs of that age. 

We can run the Marathon in 2 hours, but that's about it!

Sun, 08/17/2014 - 07:06 | 5104509 rsnoble
rsnoble's picture

I have to admit I will  have zero bad feelings for most of the public union workers.  You know.......the ones that just keep rolling along business as normal sending out all those fkn tax bills to keep that fabulous retirement and benefits program funded.  Thanks to the lies from the top there are no breaks for the rest of us.  Why would they make concessions if we are in a recovery?

This is the one group of assholes that refuse to join the recovery and have the power(for now) to do so because if you don't want to pay then they'll just sell your ass down the road to the next tax slave.

Good fucking riddance assholes.

Sun, 08/17/2014 - 07:25 | 5104534 barre-de-rire
barre-de-rire's picture

just read 1984, bypass the 2/3 of the book, start when winston read the book given by o'brien...

 

for 50 pages, you realize that for a book written in 1950... there are kind of stuff that just make you not comfortable AT ALL when you drop the book on the table after reading.

 

a sort of taste in the mouth that you kinda had in a more much entertening way by watching matrix.

 

you realize that destiny is not  a 360° path, it is just a 30cm width straight line.

 

no one here will change how the system is. never. ever. period.

 

the illusion of what you think you can do, prepper, PM, whatever... it is well definined in the book, produce, but not distribute, no stuff that can growth globaly the world.

you buy weapons, it not help growth, it just gives money to top tier.

you have been manipulated up to way you still actually believe in your constitution.

 

this is so deep under the skin you don't even realize over your skeptism & sarcs how things will not move AT ALL because they cannot by conception.

 

pm... lol, a single computer control silver, & same system for gold will be implemented for gold as well within a year, only way to bypass russia & brics attemps to free the value by their own system.

 

usa is locking system. nothing can be done.

Sun, 08/17/2014 - 07:50 | 5104574 Keltner Channel Surf
Keltner Channel Surf's picture

Ed says the problem with Yellen

may be just a matter of spellin’

How many i’s 

in “monetize”?

“She knows, but she’s not tellin’”

Sun, 08/17/2014 - 08:11 | 5104589 yogibear
yogibear's picture

The Federal Reserve is just a tool for Wall Street.  The idea to get the muppets excited and invest in stocks, become bag holders and then open the trap door when enough pile in.

This huge money transfer scheme has worked for ages. Why stop now?

 

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