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The Chart That Terrifies The Fed
For many months, the Fed had openly ignored what the market was signaling about future inflation expectations, either through 5Y,5Y forwards or breakevens, instead opting to rely on such trivial and unreliable indicators as inflation surveys and beige book narratives. However, with the collapse in 10 Year yields back under 2% that has now changed. Here is what yesterday's FOMC minutes had to say on this topic:
A couple of participants remarked on the apparent disparity between market-based measures of expected future U.S. short-term interest rates and projections for short-term rates based on surveys or based on the median of federal funds rate projections in the SEP. One participant noted that very low term premiums in market-based measures might explain at least some portion of this gap. Another possibility was that market-based measures might be assigning considerable weight to less favorable outcomes for the U.S. economy in which the federal funds rate would remain low for quite some time or fall back to very low levels in the future...
In other words, the Fed is suddenly at odds with what not only the market, but the Fed's favorite market-driven indicator of future inflation expectations is saying.
Does this lead the Fed to believe that it may be wrong? That remains to be seen but here is a take from BofA in its daily chart of the day:
[Recently] we argued that the drop in inflation breakevens adds another downside risk to inflation. Thus far, Fed officials have dismissed the dramatic drop. They note that surveys don’t show the same drop, and they argue that the drop may be technical. We are less sanguine. Looking at the current market, let’s take the extreme assumption that the inflation risk premia has dropped to zero — that is, investors are so certain about inflation that there is no insurance value in breakeven contracts. If the liquidity premium hasn’t changed, then current breakevens are consistent with 1.8% expected PCE inflation. In other words, either the market believes that even five years from now, the Fed will not achieve its target or the liquidity premia has jumped to 30bp.
And the chart in question, which while the Fed will never admit it, is terrifying the FOMC members as they have never heard a louder cry from the market that the Fed is "wrong, wrong, wrong" with inflation breakevens not only the lowest ince 7 years, but the lowest since the entire financial system was crashing!
Which may explain that other big surprise statement in yesterday's minutes, one which we also conveniently pointed out, when we revealed that finally the Fed was admitting frontrunning of central banks is a key aspect of what moves markets:
In their discussion of financial market developments, participants observed that movements in asset prices over the intermeeting period appeared to have been importantly influenced by concerns about prospects for foreign economic growth and by associated expectations of monetary policy actions in Europe and Japan.
Why would the Fed make this admission? Simple: in its hubris and refusal to admit it may be wrong (as the market is implying), the Fed has had no choice but to state, tongue-in-cheek, that it is the market that is wrong and is no longer a fully efficient, discounting mechanism, and instead relies on frontrunning of monetary policy by other central banks, i.e., the BOJ current and ECB's imminent monetization of bonds, but also the Fed's ZIRP policy by implication. Of course, this is something we observed back in 2009 when the 200%+ "bull market" in stocks began, a bull market that has been entirely driven by frontrunning of global central banks liquidity injections which now amounts fo $11 trillion and rising at well over $1 trillion per year.
This also means that as Hilsenrath hinted earlier today, the Fed will be far less concerned about jarring the market from its frontrunning stupor in order to ramp forward inflation expectations, expectations which as BofA states ' suggest "the Fed will not achieve its target", i.e., the Fed will fail. Which to the Fed is equivalent to loss of credibility, and akin to suicide.
So will the Fed risk a few hundred points of S&P downside to regain credibility, and to avoid the embarrassing schism between what the market is signalling and what it is trying to achieve? Absolutely: just keep your eyes on the chart that "terrifies the Fed the most" - should the blue line above take out the Lehman lows, all bets are off.
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we have inflation of food prices where I live, meat is off the charts
Food is very expensive, especially good beef. the only beef we ever buy now is the ground up kind. And who the hell knows what that is.
Also, we just bought a whole chicken the other day. the damn thing cost $16. We got a couple meals out of it, but it's to the point where i'm thinking about turning the property into a gentleman's farm... get some chickens for eggs and a couple pigs for food.
FU FED/Gov. your printing and incompetence are destroying this country.
The Fed has obfuscated the truth and manipulated the markets for so long, these statistics mean absolutely nothing... We're on our own folks, prepare accordingly...
The fact that the fed won't let indexes drop even 3% shows that there is still a bogie man under the bed
Indeed,
It is bizarre that the markets are not allowed to fall even a few percent without public officials leaping forward to intervene.
WTF are they hiding?
They aren't hiding anything but they are lying about everything. This is merely a sign that they need to change how they calculate things so we can all go back to riding unicorns to the big rock candy mountain.
The Doors discuss this very topic in this little number:
https://www.youtube.com/watch?v=4naoVjdFxCA
Excellent. Thanks for that.
True, and many of us have been preparing for several years.
"thinking about turning the property into a gentleman's farm"
Probably the best thing you can do. I am currently working towards that myself. Chickens, rabbits, goats (maybe), and growing as much food as I can that will grow in my local area/climate.
Rural area in Hawaii; pigs and turkeys, and doves, are numerous pests; the damn ocean is full of fish; going to be hard to get hungry here. Beef prices have gone crazy this year. My ex-wife who lives ten miles down the road keeps trying to give me Avocados and Oranges; the trees are dropping on her property. Meanwhile, I'm on a diet. Costs me about 3$/day to eat and drink coffee.
nice.
hopefully close to surfing spots. Wanna trade homes?
NoVa
I used to body surf; but I'm 72 now. Once I was up on a storm swell and looking down at the patio and swimming pool of "Magic Sands Apartments"; at magic sands, Hawaii. That was an interesting ride. Where I live now is far from the ocean; and I go for walks; if I'm having a good day.
I live near Dulles airport and so tired of this area's multi-culturalism - this place is the fricking United Nations or worse. plan to leave in 2-3 years if we can make it that long. will move to a surf city area as I've surfed all my life.
NoVa
Otherwise known as "Tragic Sands" at the local ER.
Never again.
The 50th state has long been my idea of a great place to take cover if one were not wanting to leave the US Corp. entirely - which is on our radar. As you say, abundant food on land and in sea and there is plenty of fresh water, no heating or air conditioning neccesity, no warm winter clothing needed, and except for the islands being threatened by wind driven GMO from Maui, a rich, fertile, unpolluted environment. Being a haole might not be too good in future though when things are tough and the natives are restless...
Don't worry about what being a Howl-eee might get ya. Worry that it's only an island, and that means they can SWAT team you right into the sea if it comes to that.
molokai?
..... Wash the sheets on the spare bed, I might have to move in for a while.
I looked at whole chickens the other day and about shit. 10-20 bucks depending on size.
Chicken used to be for the poor folks.
pods
My wife pointed out the cooked chicken at Food Lion was cheaper than the raw stuff...things that make you go hmmmmm.
Same thing at Harris Teeter. Cooked ones are like 8 bucks I think (or they were). Or you can buy a raw one yourself and roast it for double. WTF?
pods
Food Stamps! A local store had a sign up that said it would cook chickens, for free, for EBT customers. This is because Uncle Sugar doesn't allow EBT to be spent on prepared food. So, prepared foods and restaurants are cheaper. Just another market screwed up by gov.
Here's something else to make you go hmmmm. Day after Christmas, I was in a 99cent store parking lot. Out comes this nice looking, well dressed middle age white woman pushing a shopping cart chock full of Christmas wrapping paper and goodies that I assume she got at half price. Not too unusual, but wait. She pushes the cart to her brand new big silver 4-door Mercedes and unloades it all in the trunk and then drives off. Let that sink in awhile.
Now its pork, pods. My mother in law told me this. Shes right! Pork chops, saurkraut, and applesauce tonight. Its whats for dinner!
"A chicken in every pot..."
Look at the bright side. If industrial Ag weren't subsidized so heavily, your chicken and beef would be much more expensive.
Look at the bright side. If industrial Ag weren't subsidized so heavily, your chicken and beef would be much more expensive.
Then I guess it is more expensive when I factor in those subsidy's and their impact on my taxes.....
Not necessarily true. As regulatory compliance drives smaller operations out of business, leaving inefficient bureaucracies disguised as businesses to produce. Reductions in competition brought on by the fascist police state rarely results in lower prices than would otherwise be reflected in a voluntary society.
There is also the expense of taxation. Subisizing inefficient system gaming coporations (some to grow corn, and some to not grow corn), through inefficient government bureaucracies ain't cheap.
Reduction in competition, believe it or not, is brought about by free market capitalism, which leads to monopolies, which can charge whatever they want for labor, products and services unless the government steps in, which leads to inefficiencies and poor quality and higher prices, which........you get my drift? Things get complicated.
"When you're feeling in the dumps,
don't be silly chumps,
just purse your lips and whistle, that's the thing
and..."
We bought 5 acres of irrigated farmland and never looked back. We raise chickens, goats, and yak, and buy a cow from the neighbors every year. We have a large "kitchen garden" and we are hoping to set up aquaponics this year so we can add fish to the menu. We aren't off grid sustainable at this point by any means, but any little bit you do along these lines saves you money down the road. We all know what is coming. Get ready for it.
I got Chicken last March as chicks for about 3.50 each, 3 Buff Orphintons and 3 Black Autralorps each lay about 4 eggs every 5 days. They will eat about anything, I feed them organic layer pellets mostly but they get some of our spoiled veggies and fruit. Those two breeds are cold hardy they survived 6 degrees last night with no added heat in their coop. Feed cost about 30 bucks a month. So that's about 12 dozen eggs for 30 bucks or $2.50 a doz for extra large organic fresh eggs. Takes about 30 - 45 minutes of work a week to maintain them. Their Laying does slow down (about 1/2)in December due to decline in day light but will return in late February. Their food intake also decreases in the winter.
@Froze25, I have five Rhode Island Reds. Great layers. Four to five eggs per day, no slow down yet. Last night their water was frozen and it was three feet away from the heat lamp. They didn't freeze. They line up in a row on the perch pole next to the heat lamp and keep each other warm. Feels great to have fresh eggs for the family. My eggs compared to the organics at the store — mine are thicker and brighter, and taste better too. Plan on getting more in March. To anybody thinking about doing it, just do it. It's easy after the initial build of the coop.
@Weiss, sounds like I could have written this. Aqua is on my list too (and a goat). Foraging for wild edibles is also cool to add to the mix. You probably have lots of edibles on your land you may not know about. I've made dandelion honey, dandelion root coffee grounds, autumn olive fruit rolls, etc. Fun hobby to learn.
I am getting ready. Trying to make as much money now and use as much credit now and have as good a time now as I possibly can. I don't want to live in a world of xenophobic preppers.
yep, and there was a sale on 100% Natural Angus Ground Round 1lb for 5.99 at the local chain grocery. I asked for it during the sale and was told it was out. Then I got a rain check for 6 lbs. Over the course of 1 month they kept telling me they don't carry it, never heard of it and will call me when they get it. Of course I never got that call until I continually complained to them. Finally they got it in and I picked it up.
I misread that as Natural Anus Ground Round at first.
Was gonna say, HEY THAT'S WHAT I BUY!
pods
Is that on the menu at Black Anus restaurants?
http://www.blackangus.com/location/
yep, just got back from the store again, on sale, 100% grass fed and open pasture ground beef, 7.99/lb.
I only buy hamburger "at the counter" either 1/4 or 1/2 at a time. The 4 oz steaks are good option too.
Until there is a cheap, predictable, reliable energ source in place, in place of petroleum, volatility will continue. And so will the depression.
Angus beef down 5$ a kilo here since that oil drop. Hopefully the trend continues.
A kilo and a pound ain't the same thing.
Losing control is what terrifies them.
When markets lose faith in the Fed it's when free markets return.
Precisely. But the first step is the market's observation that the Fed may be failing (as this chart does) and then the Fed's confirmation that it has observed what the market is saying. The Fed is now a victim of its own success for all the wrong reasons.
I dunno, Tyler. We've been watching the BOJ fail for 20+ years now, I haven't seen the return of free markets there yet.
https://www.youtube.com/watch?v=XvuM3DjvYf0
Here is your return of free markets. The market will be thin and there will be no leverage.
The FED isn't terrified of anything. They can either talk the market up, print the market up, give money to the banks to prop the market up or just simply buy directly (at a discount) equity futures to prop the market up. Mom and pop are gone - the etrade babies are taking a nap. This is the NYFED, BOJ, FED, Citadel, etc.. DOW up 210 as I type - on what? Data? haha. Nope, on FedSpeak alone. The only thing that brings this down is a fucking full-fledge old fashioned war but that isn't coming either. This war is going to be fought with 1's and 0's.
I understand your comment. But the FED has never been down this road before - certainly not with its huge balance sheet, and not with all the other CBs printing like crazy. And they still only barely have control of equities. They aren't controlling bonds, and the real economy, and those will kill their efforts at omnipotence. I think the doublespeak coming out of the FED in the last two days is indicative of confusion if not fear itself. Yes, they can keep this going a while longer, but I think they're losing control.
The only limit to the Fed's balance sheet is fear of spooking what's left of the herd. Somehow, I've got to wonder if Jose Marques will be the next participant to smooth out the ongoing insanity.
http://www.zerohedge.com/news/2015-01-07/did-worlds-biggest-hedge-fund-j...
Just as planned. Destroy the present, and usher in Mencken's hobgoblins causing us to clamor for the new order with a new currency to provide SECURITY, the only fake crap the parasites have to peddle.
They aren't as inept as believed, as with the EU, some of their cats are difficult to impossible to herd up and corral. Greece comes to mind, threatening to split the EU. Apparently, the BOJ herds at the slightest hint to do so. I suppose a drowning man will grab onto a floating turd. They are going down for the umpteenth time. Not to worry, Keynes will save them.
It's the militarization of the police that bodes ill. The Fed's balance sheet is growing and growing, they are buying up everything. But how do they hold on to it when the people turn?
Look back to Germany just before WWII. Want a good job? Become a soldier for the government at any level (soldier, police, inspector...) and just do whatever they tell you.
Don't think it won't happen here. It will, and it's getting closer every day. What will you be willing to do for your family?
Yep, first make the majority dependent on Govt. Then militarize the police so the FSA can be controlled when inevitable rationing has to take place because of the failure of govt. planning. Next, establish capital controls (hello MyRA) to confiscate whatever assets are still held by citizens as the "patriotic" duty of the citizens. It will be sold as necessary to prevent a bigger calamity, just like Paulsen's bazooka, just like Greece, just like Cyprus. The final step will be world war to reduce the chaff, and leave only enough serfs to tend TPTB. The New Feudal World Order is what is being implemented.
It will happen all at once. It's the only way. Confidence has to be lost simultaneously, then the return to free markets would be instantaneous.
"I haven't seen the return of free markets there yet." The focus is put on each individual market in whack a mole style. Inevitably, all the mole heads will pop up at the same time, and that's when you know the final act has played.
Until then, the CB's can keep this shit up until everybody blows their brains out or the CB's fail together. That's a fine line right there...
Strength in numbers: One drunk cannot stand by himself, but may be helped by another.
Thus he may stand up for a while longer, than on his own. then they both fall. But in concert. And then (after the Reset) they get up in concert.
Trust me. You don't want cut-throat, greedy beyond belief, free markets. The Rockafellers and Morgans and Fords will come out of the woodwork and prices you wouldn't like. Pick your poison: Big business or big government.
Come on Tyler, isn't it obvious by now that people don't see what they don't want to see? There is far too much vested interest in not seeing, all those 401Ks don't want to look, the fantasy is much nicer thanks. People are just going to quietly note that its all a fantasy and keep on acting like it makes no difference.
Let's just call it an adaptation for survival, and stop kidding ourselves.
we have never had free markets and never will until the fed is DEAD
Here's to hoping.
Enter a new global currency ponzi.
When the FED is dead big business will rule and markets will not be free.
Have they ever really been in control?
Experimentation is fine and good, but when you wander off into uncharted territory, and willing to play with the destiny of all wages and prices, then you are a less a pioneer and more of a doctor Frankenstein.
"So will the Fed risk a few hundred points of S&P downside to regain credibility, and to avoid the embarrassing schism between what the market is signalling and what it is trying to achieve"?
"Credibility"?
I am certain that that word no longer means what it once did, many,many years ago!
yeah. that last paragraph refers to their credibility that they will do what they said (raise rates). they don't have any credibility in that regard. the other credibility hinted at in the article is that they will hit their inflation target. they don't have that credibility either. so no credibility, boo hoo.
In honest circles, Credibility is like virginity, you can only lose it once. How can one give a banker pimp institution like the Fed any credibility?
they cant hide the issues for ever , you can only mask them for a certain period
There is nothing hidden at this point. They come in at night and price "The Market" wherever they want it, instruct the media on how to tell "the story" as to why it went UP.
But can they mask them for long enough to make it moot in comparison to the next issue they create? That's really all that matters in their world.
Can Kicking 101.
+100
How long? How long?
It's all rigged from here on out. We're way past the "markets" being able to discern anything, let alone the ability to exhibit faith in anything other than Lord Blankfein, Jamie Dimon, and the third member of the Triune Godhead, Janet Yellen. Praying for that Asteroid strike to end it all and mankind finally getting the "reset" it needs.
rigged from inception
..even the asteriod
Deep and true.
"appeared to have been importantly influenced"..... Influenced / Manipulated / Rigged / Blatant Fraud / Price fixing / Financial warfare.
don't worry about credibilty, haven't you seen this?
they've already got the next excuse set up, and this one is actually real, there really is global weakness.
No credibilty will be lost when interest rates are "put off" again due to global macro.
off topic:
Texas Report on Impact of Eagle Ford Fracking: http://cryptome.org/2015/01/eagle-ford-task-force-report.pdfOff-Shore Drilling Rigs Eyeball(see the pictures: http://cryptome.org/2015-info/off-shore-rigs/off-shore-rigs.htm
The FED can't be terrified because it is not an idividual. They are employees that are laughing all the way to the bank.
Hold up, Corporations are people , my friend!
Mitt Romney- Corporations Are People!
https://www.youtube.com/watch?v=E2h8ujX6T0A
10 things the media won’t be talking about after the Paris terror attack
Do NOT click on the above link!
First you have to define "wrong" and "market".
Don't tell Krugman that the low interest rates are just the result of people front running fed purchases. The man has been using the low interest rates as evidence that no one is scared about inflation and therefor we should have an undetermined amount more of government deficit spending.
A few hundred S&P points to the downside and the fed will be fearing for their lives after pushing everybody and their grandmother into risk assets. If they let it fall there won't be any stopping the cascade this time. I don't care how much they print.
They will never risk personal attacks. QEn will remain....
At a certain point the FED tells the FED it can’t pay the notes so the FED repossesses the notes from the FED and now the FED owns all the properties free and clear.
At least the debt jubilee nonsense finally ended.
"I'll take Neo Feudalism for $200 Alex".
Wednesday the spy touched the 4 week ma.....freak out time!
To be terrified means you can feel emotion. The souless don't and like Robert Johnson any Reserve employee made a deal.
The FED has been talking about raising rates at some point in the future for years - and that may be their wish assuming that the economy actually picks up. But they are pushing zero bounds, and the real economy is in depression. I don't think they will ever be able to raise rates without some major reset like a war or revolution - and I am not saying that has to happen in the USA. Globally, we have too much manufacturing capacity, but it isn't so easy to make a war now that many have mass destructive weapons.
By pushing rates to zero, the FED has totally F*Up the pricing of productive assets since you can buy a productive asset with near zero cost debt. That drives the price of the asset up to the point that the only discount is how long in the future, you think those cash flows continue.
The market is telling the FED that they don't buy the talk of pushing up rates. Anytime the market takes a tiny hit, some FED talks about how rates aren't going up anytime soon. Rates are probably going down further. If I were a gambler, I would be long treasuries, but I have been turned off from the market for well over a decade once asset pricing exceeded what I though of as value, and investing turned to gambling.
And I should add that by keeping rates artificially low, the FED has created huge distortions and malinvestments. A normal rate of capital return is not 10 years at 2%. Interest rates, money/credit growth and future promises should be approximately the same as real economic growth. One you promise more than real growth can deliver, you create a ponzi, unsustainable system that ultimately can't keep its promises. People invested in the system have great power and incentive to keep it going, and it can keep going for far longer than most here would think. But ultimately, many of the future promises will not be kept.
Planet Earth has over-supplies of labor and non-producers.
Rates are exactly where they should be.
They can say and do what ever they like ! The big LIE that everyone will support and patch up to the bitter end ( and then some )
and people think its crazy that N Koreans follow the Pig Boy and his crazy fanatics .... yet the same fraud is here with the FED BANKS in every country
WHAT would you do without the FED BANKS ... thats right, you couldn't even find your own pecker without the NANNY BANK !
So suck it, DEBT SLAVES !!! Just SUCK IT
LOL - I like it...
Every Dow stock green
Since every shale company on the planet is starting to dry heave QE needs to start and for real. Toss in student and car loan defaults, Greece,(the mighty juggernaut of an economy) and Japan and the FED will crush the Dollar. 125 billion a month until election time in the US. Then add in another year or so just to get Hillary or Jeb through the tough patch. After all what's another 3 or 4 trillion really going to mean at this point.
must be time to smash Gold back under $1175?
$1130 Gold by February 28th.
$1000 Gold by May 31st.
(Damn I like sales...)
I am Long Term Bullish on Gold. But we are suffering an Energy Price Meltdown also.
THe only chart that should terrify the fed is one showing the hockeysticking of gun ownership in the US.
This is a 'personal put' on both government collapse and extreme tyranny. I'm not sure why one would be scared by this data. Crime stats suggest a more heavily armed citizenry equates to a lower rate of violent crime.
They won't be terrified until they see the guillotines outsde their office. Go long on gold, guns, and guillotines.
.......and pitch fork purchases from the inner cities.
The FED, "The current food inflation is TRANSITORY...it will get much worse"
How does
"This also means that as Hilsenrath hinted earlier today, the Fed will be far less concerned about jarring the market from its frontrunning stupor in order to ramp forward inflation expectations, expectations which as BofA states ' suggest "the Fed will not achieve its target", i.e., the Fed will fail. Which to the Fed is equivalent to loss of credibility, and akin to suicide.
letting the markets drop increase inflation expectations?
Look, 10y yields have been in real dollar terms a losing proposition for several years - few seemed to notice or care.
The Fed is staffed by people who work for the banks that own the Fed, and more particularly, the people who own the banks who own the fed - Rothschild, Lazar, Warburg, etc. etc.
The key to this black magic is nothing more than the prive issuance of the public currency as a loan at interest [plus frac reserve checkbook money creation, plus compound interest].
End the Fed.
WHAT THE FUCK DID THEY THINK WOULD HAPPEN WHEN YOU PAY ZERO INTEREST!
THe Federal Reserve is toast in the long run. They are scrambling for credibility just as this asserts.
http://www.globaldeflationnews.com/the-creature-from-jekyll-island-the-e...
A few people here have commented that perhaps they got that cold fusion thing working.
(E-CAT).Lets see: there has to be worldwide bloodshed on a mega scale because (1)a small group of bankers wish to maintain an unsustainable ponzi (2),a selloff of T-bills,and (3) a potential free energy source that is proven to be effective and clean.
With the obvious currency war against Putin going on,I think we have months,perhaps less before the whole thing implodes.It will be some time before people ever trust paper money again....
Oh, you mean that mark to model thingy that required the mandatory evacuation of all Accountants to Alpha Centauri so as to not destabilise it? ... that 'market'?
Can't Gov-Co figure out a way to make the oil price negative? That would put cash directly in the hands of motorists.
Inflation, like discovering a pickpocket has taken your wallet, is the effect of the banksters' earlier theft.
The banksters need to repay us.
Guillotine the Fed!
"...or the liquidity premia has jumped to 30bp."
I'll take the "or", Bob.
The implication of the chart is the Fed cares about generalized price deflation. That may be their public stance, but it is categorically untrue. They care solely about financial asset price deflation (specifically bond prices). Falling bond prices imply rising yields it's true, but their real concern/fear is the damage falling bond prices do to bank balance sheets as well as their own.
The wheels will start coming off that wagon starting in fall.
Am I missing something?
I don't get where the Tylers are with this article. Perhaps the author could clarify.
I think that the FED might interpret the above information as meaning that they may need to SIGNIFICANTLY increase QE. That is, they are "right" in accomidating, but simply not accomidating enough.
The chart indicates that everytime they blast with QE they get inflation expectation results that they desire.
The information tells me that they will need to boost QE to a Trillion a quarter. S&P goes to 4000 and everything is "fixed" for a few months.
I am concerned that either I am missing something or the Author is crediting the Fed with too much common sense. Let's face it. The FED has one tool and it looks like they are getting ready to ramp up again with the Subprime Auto and Home. Perhaps they will purchase those worthless loans with new program all the while goosing the headline DOW.
The DOW and the currency relative to Ruble is very important politically and all the USA political elite have to point to their success.
As for rate increases, how does that happen in the next couple of decades without the FED "purchasing" ALL debt?
I don't believe decision-makers at the FED or USG (or any gov, for that matter) give a rat's ass about anything but themselves. All they care about is (1) being respected, and (2) having prestige.
But they aren't respected and have no prestige. Instead, they are (1) feared, and (2) pretentious.
One has to be competent to be respected. That means a track record of quantifiable success. These people don't have that--instead they have resumes that reflect connections and caste-climbing; a willingness to draw blood in order to fulfill their personal ambitions. So they are not respected, but feared.
From the perspective of a pragmatic sociopath, it's a distinction without a difference. The practical value of being feared is actually better than being respected. For one, they are elevated by a predatory system to the level of the respected, and two, they are not restrained by principles accommodated by the respected.
The fact they are feared makes them pretentious, which, as sociopaths, they misinterpret as prestige. Again, the difference has no value for a sociopath.
Their whole world view is sociopathic theater, legitimized with decades of narcissitic sophistry.