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This Is What Happens, Janet, When You Take The Punchbowl Away
It appears the "Fed is ending QE because the economy is recovering" narrative is failing (as the world wakes up to the fact that The Fed is being forced to exit due to having broken the markets). In the September FOMC meeting, Yellen put the final nail in the QE coffin by confirming the money-printing would end in October. This is what has happened since then...
But, as we have noted numerous times before; the "taper" is all about economic cover for a forced move the Fed has to make:
1. Deficits are shrinking and the Fed has less and less room for its buying
2. Under the surface, various non-mainstream technicalities are breaking in the markets due to the size of the Fed's position (repo markets, bond specialness, and fail-to-delivers among them).
3. Sentiment is critical; if the public starts to believe (as Kyle Bass warned) that the central bank is monetizing the government's debt (which it clearly is), then the game accelerates away from them very quickly - and we suspect they fear we are close to that tipping point
4. The rest of the world is not happy. As Canada noted early in the year, and US monetary policy was discussed at the G-20
Simply put, they are cornered and need to Taper entirely; no matter how bad the macro data and we are sure 'trends' and longer-term horizons will come to their rescue in defending the prime dealers' clear agreement that it is time...
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BTW FUCKING NFLX NEVER HAPPENED TODAY?!!!! open 444 close 448 no mention or chart that it ever plunged 23% today!!!!!!!
wtf!!!????
After hours. And it looks more like -26%.
Only the insiders know what is going to happen.
Go ahead, toss the dice.
Regards,
Cooter
Oh and money printing is ending, but the money printed is out there in bank reserves...the best part is yet to come. We are only beginning act 2 of 3.
How do they continue to borrow and spend if they cannot print the money?
Behind the scenes there is an unlimited credit line for the TBTFs from the FED. That's as good as QE, but not on any official book and will privide whatever liquidity necessary, at least for the time being.
BTFC - buy the fucking crash, they will print and that is all they can do, ps short da dolla...
leader lead to the cliff.
long gold to hedge accordingly...
I think the plunge came in after hours trading.
And dear sir the yanky dolla got monkey hammered as well . Why?
If Putin is the bad ass every one says he is, he saw this coming.
There is no ifs, ands, or buts about the matter.
If he did, he is going to yank oil off the market. Not 10 million barrels a day, but enough to tell the west to fuck off and escalate the oil war.
This is an oil war, so be sure to get that point.
The strategy is as simple as plant your seed corn or eat it; a matter of perspective and planning.
Winter is up. Chips are down.
Who goes cold and hungry?
Regards,
Cooter
he has a combination of superior foresight and a real ability to steer global markets, but i don't think he has any intention of manipulating oil prices in a way that hurts russia. everything he's done to date has helped russia tremendously, both in monetary terms and in non-western political opinion. case in point: it's public knowledge that he had been accumulating USD/treasuries for quite some time (until quite recently), and at some point changed tactics and told his advisors to keep an eye on 40 usdrub. that was the level at which they would start taking profits, or as western media triumphantly declares, "defending the ruble". it's the western way of claiming "putin is losing and on his heels defending himself".
just as he implictly predicted, economic/financial storms have erupted as 40 was breached. in the process of his "defending" the ruble, he happens to be covering a massive short RUB short position (i.e. positive forex reserves are funded by shorting one's own currency) at all time lows and selling treasuries near all time highs. thetreasuries were accumulated over decades from about 10% - 2.5% yield at 20-30 usdrub, so he's got gains of ~50% in price appreciation plus whatever carry the treasuries have generated. that's a few hundred billion dollars in profit! his monetary actions have clearly been a huge win.
at the same time, global opinion of the USA is (sadly for us Americans) declining even faster than under bush. we aren't fooling anyone but ourselves and (some of) our allies with sanctions on russia being anything more than political retaliation for losing face in syria (remember the WMDs!). read the archives of any non-western/NATO news source if you're curious. meanwhile, domestic and international opinion (by non-western/NATO nations) of putin and russia is at all-time-highs... most critically including china and most of the emerging world, for that matter. so politically, other than his lost causes of the USA/NATO, he's not "losing" or "defending" anything either.
a couple notes... 1) back to his USD liquidation, he's operating on pace to finish the course of a year +/- depending on how price levels develop. i would guess that this rate/timing is based on a view on when the US might face its own sovereign confidence crisis. meanwhile, he's accumulating gold at a measured pace (roughly speaking, he is taking the PnL from his treasury/USD trade and putting it into gold). he's left russia with an increasingly large pile of gold, which he spent 0 net expenditure to acquire... absolutely brilliant! 2) i would imagine he felt safe publicly declaring 40 as the trigger because western media/populations don't listen to or believe what he says anyways, or perhaps he knew the western media (and ZH for that matter...) stories that suggest russia would be in trouble if their forex reserves decline are complete and utter nonsense. russia has little net foreign debt and a trade surplus even with oil at these prices. as a trump card, they also have a large amount of net foreign assets INSIDE russia (i.e. can be confiscated if sanctions deteriorate)... which conveniently, western sanctions have prevented from leaving!
putin (and/or his advisors) is an absolute genius AND he can manipulate markets. this is a potent combination, and he's using it to line his country's coffers. russians have their own gas to stay warm going into winter, as well as warming relations with the biggest real economy and manufacturer in the world. seems to me he has positioned himself and his country as well as possible, given recent history and the plausible outcomes going forward.
eat the seed corn, get my hands on plenty of 8 balls, some u-100's and a case of the best and head the fuck north.
it's all about ownership of you and me and everyone else CC, oil is just another tool to be used in a much larger scenario. it's about most of the population being controlled by the few and they want to keep it.
markets- check
ebola- check
terrorists- check
obummer care- check
isis- check
border break down- check
fukushima- check
everything is in place for the last hoorah, win or loose but there will be no draw.
It's buffering
Hey, at least the P/E for NOFlix will seem more "rational" in the morning.
Not unless it drops another 70%
I still rent at Blockbuster (in AK) for anyone that needs perspective.
Regards,
Cooter
Do you see what happens, Larry?!?!?
When you find a stranger in the Alps?
http://www.youtube.com/watch?v=IQUdJ6FdUQ0
I had to log in just to upvote you. awesome!
What does it matter...we're all gonna be dead from obola
Did she use code words to announce stealth QE today? The ramp up after she ran her mouth was insane. WTF happened?
Stealth QE will happen without a doubt. It will probably in the form of direct stock purchases, buying of treasuries being dumped by Russia and China and of course, soaking up bad debt. But you will never hear about it. Once the markets start to hit new highs in the coming weeks, reast assured stealth QE is on.
The insiders know ... fear will be spread wide ... best profits require lopsided boats ... so the sheep are herding.
Fleecing ... same as it always was.
Regards,
Cooter
Belgium is going to be one busy little country.
Horseshit. The Fed is walking the Market down to a more fundamentals based level. Bond buying will continue, there is no alternative unless the Fed has decided that it'll no longer dance around the sombero for the scum of power in DC.
Correction: They are the scum of power in DC.
Ok, maybe we can agree that it's a daisy chain?
How many zerohedgers actually know that Federal Reserve DOES NOT (I repeat ...it does not) create money like God, just by saying.
Fed created money always and at anytime only by.....................buying something.
Fed is allowed by congress to create excess reserves only by buying USTs and MBSs.
No USTs and MBS available, then no excess reserve creation.
How many zerohedgers know that Federal Reserve is a blackhole of dollars?
When Fed sells bonds and gets dollars, then dollars simply vanish into nothing.
That is called: EXTINGUISHING OF USD
I am certain that they pull them from Mr Yellens ass.
" .. by buying something"
or swapping something
http://en.wikipedia.org/wiki/Central_bank_liquidity_swap
which can transmit diseases
Not just USTs and MBSs, it also has the authority to buy gold or gold derivatives. No intermediary on the sly needed, even
The digital credits the fed creates is not money, it's currency. Silver and gold are money, FRNs are not, they're IOUs.
Yeees Mon!
EKM, buddy, the Fed NEVER sells the Treasuries they buy. No dollar extinguishment has ever happened because of the Fed.
Your first paragraph is correct. The second one only exists in the theoretical world since it's never happened, nor is it likely to happen any time in the forseeable future.
To be fair, if they held them to maturity, there would be dollar extinguishment, but even that would only happen if the Treasury didn't roll that debt into a new set of bonds. Which they will always do, by definition, any time the government is running ANY yearly deficit.
Of course they did sell bonds many times.
Fed sold bonds and extinguished dollars in the run up of 2008, thus pre-planning the 2008 financial wipeout
I am aware of no such bond sales by the Fed in 2008. The Fed held only nominal amounts of USTs until recent rounds of QE shot their balance sheet to the moon. They had effectively nothing to sell back then.
You and I and anybody else are not supposed to be aware of anything.
Hence the Fed has the doomsday book that was just revealed few days ago due to AIG court proceedings
Fed data you see on the internet is fake.
It's not what you know, it's what you can prove.
Auditing the Fed would be a necessary prerequisite for your thesis to be proven true.
So, don't hold your breath.
No, there is no such thing as 'proof'
Only courts operate on proof which a judge ends up judging whether it's real or not
Media operates on propaganda, not proof.
None of us operates on proof. Nobody does. None of us has access to what is actually happening.
If we did, we wouldn't be posting it on zerohedge or cnbc or cnn
We can only sift from propaganda provided to us
So, to recap, the insiders are going to make bank at the expense of everyone else.
ZH'ers who really dig at this know well about shadow banking, how fractional reserve really has no lending limit, etc.
This isn't the point.
The point is that those in control operate a system that is sufficiently complex so that most people don't really know what is really going on. This is coupled by the fact that any back room shit is totally out of the purview of the public.
NO ONE (EXCEPT INSIDERS) CAN SAY WHAT IS REALLY GOING ON RIGHT NOW.
Take me to the woodshed on that all-caps sentence. You can't.
The problem (for our insiders) is they are now doing battle with foreign adversaries who are not on board with the con. And these same foreign adversaries are a few drops closer to the apple tree than the entitled elite douche bags we got running the show.
Regards,
Cooter
P.S. EKM1, you post more value than most and your posts often make me think, which is why I still hang around. I don't have skin in this game and lack some element of sophistication. Clearly, you got skin in this game. Just coming from a different angle.
I got meat on the hoof
If you guys ever
Need a burger?
Paper burns...
digits erase
"Only courts operate on proof which a judge ends up judging whether it's real or not"
Have you ever acted yourself in court and seen, how technicalities go before "proof". It is, which evidence is allowed to be admissible regardless of its weight and how a judge, who decides over that, is as fallible as common man. Only natural sciences require experimental proof and elsewhere we are dealing with subjective appraisals not better than hearsay.
original poster is correct.
In SEP 2008, FED drained about 160B liquidity in one day, I think next day was a complete chaos. There was a tool that everyone was watching in 2008 to display balance of operations across different instrument types, but the name eludes me now.
"Your first paragraph is correct."
His first paragraph is not correct, as noted the Federal Reserve can only create IOU's aka US Dollars.
ONLY GOLD AND SILVER ARE MONEY!!!!!!!!!!!!!!!!!
How does the interest get paid, in zinc clad tokens stamped out by the mint? Or by more freshly printed money?
At what point does the FRB tell the USG that it has reached it's credit limit, and will no longer take IOU's as interest payments on the debt?
With the exception of 20 something assets4cash swap programs. Which is essentially we give dog vommit that's worth 70 cents, get 100 cents back, lent at 0.25. If that's not money printing I'm not sure we'll know what is.
That is wrong. Any new credit the FED grants to either big banks (or other CBs, eg. via swap agreements) IS money printing. Newly created digital dollars out of nothing. TA DAA.
Fed is allowed by congress to create excess reserves only by buying USTs and MBSs
it buys those MBS and UST from the banks that own the FED itself. But since our money is debt based ........
When Fed sells bonds and gets dollars, then dollars simply vanish into nothing.
If the FED sells the debt that it monetized in the first place (banks create money at the time of lending) then twice the money is in existance and the "DEBT BASED MONEY" scheme is exposed as inflation would ensue. Re-hypothefication only works between banks with gold not debt.
The FED is the banks and if the debt is sold the "money", lol, has to be retired.
98% of Americans have already forgotten that ChairSatan started this idiocy and will blame it on the fat clip haired lesbian who will go down in history as as having spoiled the best party ever. Wait until they get their monthly 401k and IRA statements for October.
No, it was not Bernanke.
It was congress that started QEs
"No, it was not Bernanke.
It was congress that started QEs"
NO it was the American voters that started all this sh.t!
They don't understand that it is not sustainable to spend more than your economy can produce.
"Give me more entitlements and more wars" is the "battle cry".
Greedy dumb fuc.s!
And the Federal Reserve is the enabler of this fraud where you "borrow" to cover your deficit.
But it was a version of CONgress that started the Fed in 1913, by the cover of disguise. We all know that TPTB use the public's ignorance against them quite effectively. It really is a shame that there's not more of a critical mass that cares to educate themselves about the truth of financial power.
The 401K crowd is in for, a full force ass rape by the big boys who are going to cash in the profits and leave the 401K's holding the bags of shit.
But but but money and oil and stocks got cheaper, isn't that good?
If I was the US Government, I'd borrow 900 Quadrillion dollars starting tomorrow. Clearly what we need is more debt for the Fed to buy.
That should get them through about next month. Enough to prime the pump and satisfy immediate liquidity needs.
After that we need to REALLY go big. None of this fiddle-farting around with small numbers. 50 Quintillion, maybe 60.
But after that, clearly no more. That would be crazy.
Money is not edible
But it is fungible. And that's what matters.
Fungibility depends on people accepting it for goods and services.
World is accepting less and less USD for goods and services, hence economic misery expanding
I'm not sure what color the sky is in your world, but to date the dollar's acceptance is not even in question. In fact, they are highly sought after right now. Hence the dollar's strength vs. other currencies. In fact, it's strength vs. almost any asset class you can name right now. 10 year USTs trading below 2% today, you may have noticed.
Don't confuse the long term inevitability of the Dollar's collapse with what is happening right now. You're going 1, 2... 6. We have to go through 3, 4 and 5 before we get to where you are.
There are two worlds:
Financial world
Real world
Financial world has great demand for dollars now, but the real woorld of goods and services does not
Dollar acceptance for goods and services is not only in question, but it has become worry number 1. Hence, Fed is draining dollar causing the current wipeout underway
Hold on. I'm going to go drop a tab of acid right now. Then I'll understand what you're talking about. Be right back.
He may be referring to
The other six billion people
Who don't belong to the
World of America.
Uhmmm, have you seen the price of oil in dollars lately?
Which is exactly what I predicted.
World abandoning dollars for goods and services, hence congress forced to tell the Fed to drain dollars
Oil is still $30 overpriced, still in hyperinflation at this moment
The fed is not draining dollars. There won't be any draining of FRNs until the fed offloads some so the shit off their balance sheet. The bottom line is there is a shortage of dollars right now and the world is clamor ins for them.
Let me put it in a different way
Fed is not providing dollars to few insolvent players who need it now, neither is anybody else in the system.
However, if DXY goes higher, assuming DXY is not tampered with electronically, it means that Fed is draining dollars one way or another
The Fed is providing funds to the insiders that maniuplate the markets up and down (the trendsetters of turning points) so they profit to the max. Everybody else...
"... there is a shortage of dollars right now ..."
It may be that there is an oversupply of oil from Saudi Arabia to put pressure on the Russians.
That may be why it takes less US Dollars to buy a barrel of oil.
It's not just st oil, it's commodities across the board. Sure the house of Saudi is putting pressure on somebody (hint it's not Russia look at the cost to produce shale oil), but there is still a huge shortage of dollars right now and entities (especially hedge funds) are starving for them.
EKM1: "World abandoning dollars for goods and services, hence congress forced to tell the Fed to drain dollars"
If this is the case, then they are draining the dollars faster than the demand is declining. This seems unknowable. Seems there's a good argument that financial types who only care about making a buck now are simply getting out of the way, selling assets and going to dollars now that the Fed is no longer printing. To boot, Europe is a mess, which may result in more dollar purchasing.
You may be right, but seems there's other reasons for the current currency volatility.
May I have this dance? (a quintillion is a dance, right? Like a fancy-dress dance like a masquerade ball, right?)
Rip the bandaid off, don't be gentle.
Were you a decent government like German, Swiss and recently even Swedish, you could get paid for borrowing money. You did not need tax revenue, if borrowed enough and this highlights, how insane the system has grown since starting zirps and other interventions.
"Deficits" may be shrinking. But, total debt added is not - up $1.076 trillion in FY14 vs a claimed deficit of $483 billion.
If, and I say if, markets are allowed to become a pricing mechanism again, and fundamentals begin to matter, then all the media lies about recovery and fake USG statistics about employment and incomes will fall away and the real state of the economy will be priced in. Think of that, The Real Economy Price Discovered. If the Fed allows this to return to a real market, than the shake out will ripe the fillings out of peoples teeth!
I find it hard to believe that Washington DC and the Fed can or will aloow price discovery to return. Sure the markets are broken by QE and money printing, but they have been broken to the UP side, to the !5 speculators advantage, The Shit Storm will rip trillions in speculator wealth out of the 1%'s hands. I doubt that this will be allowed.
They might just pull the plug.
I cant begin to guess why the FED is pulling the plug, but if they are, it's BECAUSE THEY HAVE TO.
Something is going sideways behind the scenes that's even worse than letting the effects of no QE occur.
Imagine that! Should we be surprised to learn that there's chaos of prehistoric levels going down, considering the FED's actions the last 5 yrs?
I tend to think that if the bailouts and TARP had not been instituted after the 2008 financial crisis, it would have resulted in not only a recession but also would have accelerated us into a social and political crisis on many fronts. This is by no means a defense of the bailouts; it's just my own take on the counterfactual. We've been kicking so many cans down the road, and they're all so interrelated, that we can't really solve any single problem without addressing them all, and we can't address them all within the context of business as usual.
2008 would have been too early to get the party started, as there are still too many people (notably the Baby Boomers, the wealthiest and most powerful generation the world has ever seen) completely committed to the status quo. With all due respect to Mr. Yeats, although the gyre is widening, the center is still holding. Market forces will reassert themselves only when the Boomers become too feeble to put their thumbs on the scale anymore. They will lose their grip when they literally can't hold on. It may take another 5 or 6 years to fully manifest. Until then we'll still be living in the holodeck economy they've created.
My view is more or less the same, no matter how much one might hate it, the first QE was a necessary liquidity injection to prevent the entire system from seizing up, there was just no liquidity in the system at all in the immediately aftermath of 2008. But the problem was the morphine injection that was QE turned the patient into a morphine junkie, and now the patient just can't say no.
and taken by how well the patient "seems" to have responded after the first QE, the FED decides more morphine was the answer, I wouldn't be surprised if some of them seriously believed they could reverse and fight off deflation and hence the economic contraction that otherwise would have occured.
As much as they try delaying the inevitable, you can't prevent nature from taking its course, all it does is adds 'morphine addication' to the list of problems.
and even when you can build a mirage around your country, we still live in a interconnected world, the economic tide of the rest of the world will still bring reality back, as we are seeing now.
and of course, generating inflation and preventing deflation is of vital importance for a private central bank that needs to make sure its shareholders continue to operate and get paid, and you can't have that with deflation.
Of course, you and wild theories are correct in your interpretations. But, for me, it begs the question were the events of 2008 a complete surprise for TPTB, or was it long expected? We know the Fed was aware of the recession which began in December 2007, though they hadn't told the public.
Was Bernanke put on the Board of Governors of the Fed in 2002 and made Chairman of President George W. Bush's Council of Economic Advisers in 2005 to have his steady hand at the tiller when the storm hit?
Why was Bernanke's first act as Chairman-in-training in 2005, the completely off the wall, out of the blue decision to stop publishing M3, to save the Fed money!!!!!!!!!!!!
So the bailouts and the TARP were the right thing to do after things imploded. No doubt buying 6 more years of the status quo was the right thing to do.
For me the question is how far in advance did TPTB know this was coming?
Bullshit headline, this is what happens after markets go up without a decent correction in years. We need to make up at least three corrections, a flash crash and a bear market before year end, I figure 1,200 should be a good point to target.
That is why they call it a "broken market". What should have happened was not allowed to happen. A real market would have a lot of catching up to do.
The way I understand it, the Fed has now taken on the role of preventing a recession from happening, even though they are cyclical and must happen to correct capital allocations. Yet the Fed wants to end recessions, as we know them.
We have a Newspeak term for what you describe.
UNRECESSION
Oldthink will not be tolerated.
The winds of disinflation sure are picking up, what with the unrecession and all. Good thing unemployment is 6.4%.
Ahem.
5.9%
If the public starts to believe the fed is monetizing the debt? Holy batfuck Robin! That's what the fed has been doing and the public doesn't have a clue nor do they care as long as that SNAP card is filled on the 1st of the month. The vast majority of the public are economic retards that don't know how to balance a checkbook.
50% of all government spending has been Monetized by the Fed for years now. 50%!
Who is worse? The enabler or enablee?
I distinctly remember George Will saying back in the 90's that we'd grow our way out of the deficit.
George? George!
Still waiting, dude........
95% of americans wouldn't understand a word you wrote, including "holy batfuck robin."
What debt ? And what is monetizing ?? Anyone ???
A sheeple
Da Nile
no seals swimming in that river....
Wells Fargo employee emails CEO asking for a $10K raise, CC'd to the entire company
http://6abc.com/business/man-emailed-his-ceo-asking-for-a-$10k-raise-ccd-entire-company/351566/
That may be the most polite FU I've read. Psychopaths-r-us branches of Banksters, Inc. don't like highly publicized criticism, executive suggestions and veiled threats outside of the control grid hierarchy of information. I don't see this ending well for this Tyrel
so..if fundamentals start to matter, will it make trading harder or easier?
The unwind process has further to go, since according to the Dow Theory, stocks are in a primary bear market since October 10th, as explained here:
http://www.dowtheoryinvestment.com/2014/10/dow-theory-update-for-october...
Primary bear markets, as spotted by the Dow Theory, tend to have long legs. While nobody knows the future, and it could be a failed signal (a ca. 30% probability), technically something ominous has happened.
this is what happens, Janet, when you **** a nation in the ***
wow
'Clipboard Man' with no protection too close to Dallas Ebola nurse before airlift? (VIDEO)
http://wtfrly.com/2014/10/15/clipboard-man-with-no-protection-too-close-...
Just don't, ever, sit in an Ebola patient's previous seat on any cushioned foam.
E-Z Ebola Transmission Vector
Warm moist foam (sponge) seat cushion or couch where Ebola virus survives for hours, on a bus, bus station, plane, airport, train, train station, cab, waiting room, hospital, doctor office, restaurant.
Coupled with patient sweating and various liquid emissions (blood, gas, bowel) into the cushion seat. Then next victim sitting in warm cushion in it and touching it and wiping it.
That specific seat is probably 'contagious' for 24 hours or more...the seat and virus kept warm and moist.
deleted
Greenspan left while the going was good.
Bernanke left while the going was good.
Hey, who's that old lady holding a bag?
The question then becomes: What are the "reserves" that the FED is read to dump into the markets, i.e. "the plunge protection team", that won't be linked to any bond issuance?
Perhaps that would be all the armed Fedcoat employees, perhaps those are the "reserves."
This is a classic case of when reality gets in the way of propaganda.
YellenTurtle retreats to her shell.
DAMMIT!
JANET!
No, no, bring back the punchbowl! I've made a vow to stay drunk until the ebola thing runs it's course. Dammit!
It's not often that a ZH columnist surprises me with his/her naivite, but come on sister. The fed doesn't need federal deficits to pursue QE. Why would they have to stop there? They've just used one crayola and there plenty more that make up the spectrum. Look at what the BOJ did. They started with JGBs, moved on to corporates and J-REITs, and eventually went all in and bought the NIKKEI.
you know i could interpret the stock market crash, the crude oil asset collapse as being positive economic factors, but the day JANET YELLEN thinks they're good for the economy, better hold on to your ass real tight
Ya, either that or bend over and kiss it goodbye.
Pension funds and Insurance companies' positions are now fish floating in a barrel of cheap West Texas Intermediate.
Hedgies and Squiddlies: Lock and Load!!
Ready!
Fire!!
Aim!
Not really.
There's a capital adequacy reporting going on for month of OCT. Banks started preparing end of SEP by liquidating assets to increase the ratio that woudl be reported. As night follows day.
Everything is being driven by oil, which is crashing because Saudi Arabia wants it to. Saudi Arabia wants it to in order to harm Russia (and Iran) economically. Saudi Arabia is taking such action either at the request of the U.S. government or at the request of ExxonMobil.
Only half correct: the Saudis are flooding the market with cheap oil because I asked them to do it, but I am not the USA govt or ExxonMobil :-)
SocialismIsCancer, a song from the Stones comes to mind after reading your comment. They sing "Can you guess my name?".
Sympathy for the Devil
In support of omi's comment - Karl denninger has proof the Fed pulled huge liquidity in Sept 2008. Over $100billion I believe. Since then the Fed no longer publishes that chart.
Since September 2014 this proves without doubt the excess central bank printing 'caused' inflation in Oil and many consumables.
Now the prices will adjust down, and possibly some bankruptcies, recession, depression, and shrinkage.
Humbling.
FIVE more POMO days to go - 16, 20, 21, 23, 27
The only ones buying this joke market are central banks and financial institutions aligned with CBs.
For the first time, CBs and FIs are the bagholders at these all time highs.
Good job yellen.
Sounds like the perfect circumstances for another bailout.
If the deficit really has shrunk that much, it might just be that the economy has recovered enough to withstand the end of QE without a total and complete economic collapse. Yes, we still have sluggish growth and poor job/business creation to deal with, but if the core economic activity has improved that much, it's possible that we can survive the recession we've been putting off for six years, limp through the remainder of the "you didn't build that" economic agenda, and then start to address some of the supply side impediments to job/business creation that are retarding economic growth, and finally start to see a better economic future.
Yes, markets go down in recessions, but a 20 to 30% correction, followed by a (more fundamentally) sustainable economic recovery generated bull market, can't be completely rejected as a potential outcome here.
That scenario certainly vannot be rejected as a potential outcome, agreed. But the premise that the economy has 'recovered enough to withstand the end of QE" is rubbish. Labor participation is the lowest since the 1970's. The underlying economy is WORSE now than it was before the crash. There has been zero recovery, only the ephemeral effects of money printing and artificial interest rate manipulation.
This doesnt mean that AT SOME POINT we will not recover, we will, but it will take many years imo.
This is the inevitable "crack up" phase of the false boom. I would not be surprised if the fed did indeed fire up the printing presses once again rather than let the whole monstrosity topple.
Look, I already told you a thousand times I never see things coming.
So, what makes you think I have the ability to look back and see what's happened?
Janet
Janet may pull away the punchbowl, but don't despair. She has a huge bong and hundreds of kilos to keep us satisfied. She will replace QE with another tonic.