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The Fed Is Losing, If Not Already Lost, Control
We witnessed a few things for the start of 2015 in the financial markets that were unlike any previous. The first three days of the new year produced the worst three-day stint in the markets – ever. A meaningless, insignificant, trivial, data point? Possibly. However, when it coincides with other noticeable factors taking place across the financial spectrum It behooves any thinking person to sit up and take notice. (Unless you’re the next scheduled appearing CNBC™ “Everything’s Awesome!” fund manager. Then it’s more like a Servpro™ tag line: Like it never even happened.)
The reason why this sell-off in conjunction with its timing raises eyebrows is its direct proximity to the release of the latest FOMC meeting and conference. Here was where markets were supposed to get their “guiding principles” for how to proceed into the new year.
What they seemed to get was nothing more than gobly goop. The all fearing word “patient” reared its supposed vampire slaying head, but instead of replacing the soothing phrase of “considerable time,” it was added too. This in-turn sent some very expensive headline reading HFT computers, along with some very expensive highly paid fund managers into a “Huh what?” state of confusion.
Was the language (as well as the delivery channel) intentionally meant to cause confusion? Possibly. For if one understands how those in the world of “policy wonk” think: Language and the parsing of it will/should only be interpreted in the way those that are writing and delivering it want it too – at any given moment of time.
So they bend and twist every possible meaning into a statement, rather than wring confusion out. This way when the desired action isn’t forthcoming one can always state, “Oh, well I didn’t intend that to mean this, I meant it to be read as that. See!”
This only works when nobody’s really paying attention. But when people are, and real consequences are on the line (as in billions if not trillions of dollars) confusion, double-speak, and the like sets into action a multitude of unintended consequences which the once “masters of communication” never envisioned.
Let’s put into perspective a few items that’s appeared on the screens for both those at the Federal Reserve as well as all those “Everything is awesome” camped fund managers that owe their 2014 bonuses too of late.
First we have the collapse of oil. Good thing for the consumer. Of course. Good for the economy as a whole? Sure, in some areas of business there will be considerable cost saving benefits. However, in other areas it is beginning to show signs of great stress. Primarily in the areas where the latest true growth of late took place: in the areas affiliated to anything relating to oil exploration of any type. Not only here in the U.S. but globally as well.
The real issue of concern for those at the Fed (which one has to assume they are more than aware of) are the stresses continuing to mount within the High Yield credit market. A market in which they are directly responsible for malfeasance with its proportionate risk-taking.
This is where the demand for yield trade was pushed by a Fed. that was relentless on keeping interest rates at the Zero bound. Now that market along with its inter-tangled web of cross, carry, swaps, you name it derivative trades is beginning to buckle. This is one of just a myriad of concerns that must be making all Fed. participants uncomfortable.
You know what is also a factor in driving down the price of oil separate from the underlying weakness that is truly within the global economy? A stronger Dollar. And guess what’s getting stronger by the week? That’s correct the U.S. Dollar. Why?
Well there are a host of reasons and most of them are nothing more than the equivalent of the old saying “It’s the cleanest shirt in the dirty laundry.” That said it should not be underestimated just how dirty the surrounding laundry can get. Especially if more wide-spread fears come into play. And rest assuredly it seems not a case of “if” fears occurs but we are much, much closer: to when.
Remember, the stated intention of the Federal Reserve’s intervention into the capital markets was to help foster a targeted 2% inflation rate. You know what throws all of that out the proverbial window? A rising dollar. The dollar has gained so much strength over the these last few months it is at levels not seen since the financial crisis began. So much for the omnipotence of a Fed. policy hitting it’s target with precision no? But wait…There’s more! (sorry, couldn’t help myself)
How about that latest employment data? Wasn’t it just the best?! The unemployment rate dropped down to (wait for it…) 5.6%. That’s one of the lowest rates again since the crisis began. A number far closer to (and possibly even sooner) of hitting the Fed’s number of “full employment.”
However, hidden within that report were a few other dirty little secrets. As the number of “Mission accomplished” for the Fed. notched closer, the number of long-term unemployed jumped to its highest in decades. As reported by ZeroHedge™ Record 92.9 Million Americans Not In Labor Force.
However shocking as that number is to any American, it’s probably not as shocking (or panic filling) as another number contained within that report to the very people fueling this economy with KoolAid®.
That number is the one that showed wage growth (e.g. average hourly earnings. a requisite data point in calculating inflation) printed not the expectations for an increase of 0.02%. But rather: a decrease of -0.02%!
All that money printing. All that balance sheet inflation (the only place where true inflation is currently) and the result to show on the final report of the year? A year when QE has now been shelved. It can’t even get a print of flat?! Never mind an increase.
And this data point is essential in helping make the argument that interventionist monetary policies resulted in the desired effect of an omnipotent Federal Reserve. What are we to hear at the next press conference: “Ooopsy?”
Once again we saw Fed. officials take to the airwaves in any way, shape, manner, or form to get a message out that whatever you thought was intended for the messaging from Chair Yellen’s last conference might be “misinterpreted.”
Instead of a non-voting member it must have been decided with both the release of the latest minutes in conjunction with the subsequent release of other government data points – it was time to get the word out and proclaim that a raise in rates would be a “catastrophe.” But this time it must be said by a voting member for true accountability.
Once again as the markets showed weakness and didn’t seem to get that resounding “seal of approval” in response to the release of the Fed.’s minutes, non other than a voting member of the committee speaking during a forum in Chicago was reported to proclaim “raising rates would be a catastrophe.” That statement at around 8pm EST sent a highly illiquid overnight futures market soaring. The result was a near 2% rally.
Now let me ask you a question dear reader: Why does one believe the word “catastrophe” was used? Hmmmmm? After all, the very articulated and polished minutes of what members expressed to one another as to set the current policy was just made public.
Where was the argument or verbiage contained within of a voting member stating that the raising of rates would be a “catastrophe?” I thought the verbiage of choice was now “patient.” Unless…
You know you’ve either lost, or in the process, of losing control of the markets ear. Where now one has to resort to playing the HFT headline reading algo sham as an extension of policy control and effect. Which moves us into very dangerous territory in my opinion.
The Federal Reserve is unwittingly placing on full display they have nothing more left in their monetary policy bag of tricks other than to play a very, very dangerous game via “off the reservation” styled comments from both non-voting as well as voting members. That, or the subsequent Hilsenrath release of what they really meant to say was this – not that.
In my opinion, this is an unveiled showing of possible outright panic developing behind the proverbial curtain. Why? Because it seems the Fed. is becoming increasingly aware not only that it’s on its own. But what might be worse is in their realization not only are they up a creek without a paddle, but their once reliable QE paddle will not help is the deluge from more turbulent waters which may be released at any given movement into this once insinuated “controllable” safe harbor. The possible oncoming storms are putting all that thinking once again to the test.
The Euro Zone is once again back on display. And what’s not on stage is what I would venture to guess was a presumed Fed.’s “Ace in the hole” Mario Draghi and his “what ever it takes” bazooka of monetary mayhem. Suddenly it seems no one wants to either hear or see a “Full Monty” by the ECB. At least how it was once first interpreted.
Currently not only has the situation in Greece deteriorated for its argument to stay within the Euro Zone (EZ). But now you are hearing more arguments from those within it of “We’ll be fine. Don’t let the door hit you…” Not something I would guess the Fed. imagined would take place just as it decided it would wind down QE.
And the reports of how Mr. Draghi is viewing the idea can not be reassuring to the Fed either I’ll speculate. Especially when it’s now rumored (or more apt to be real) that he wants out of the ECB and wants to return to Italy for a possible political run.
One of those seemingly to be voicing louder (and louder) that the Euro Zone could quite possibly use a shake up in one form or another – is Germany. And what Germany says means a whole lot more too what will, or wont happen in the EZ than what Mario might say currently. Especially if there is a hint (any hint) that he may decide to bolt.
Let’s not forget all the other ancillary data points that are far too numerous to list today. But just one that should be front and center when you’re asked if you want your very own fresh glass of “Everything’s Awesome KoolAid” is everything you’ve been told about China and all their continuing growth.
Remember, China is the repository of preordained data points. Preordained as in “it is what they say it will be. Regardless of factual evidence.” They’re now continually reporting a declining GDP rate. And they don’t care if the numbers are real. Yet, they are willing to print contraction? What does that tell you at first blush? So much for China saving the economy meme I guess.
That one fact stands on its own. Let alone the possibility of outright defaults occurring in sovereign debt in places like Russia, Venezuela, Greece, or a host of others. Yep, nothing to see here. Move along, thank you. Would you like more punch?
In retrospect I guess I do have to agree with the most relevant word put forth from a Federal Reserve official as of late. “Catastrophe” might be exactly what is on the horizon. However, not for the reasons first intended by that speaker, but for the policies they’ve allowed to go on for so long thinking they were the one’s controlling the beast.
The “catastrophe” will be what all of us will have to deal with in the aftermath once it’s realized this monster they’ve created won’t care nor listen to any words its creators speak once the cage door is found unlocked, or unhinged.
That will be where the word “catastrophe” will really find its true relevance as a descriptor.
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Dear 'The Fed' fuck off and die
Well that's what happens when you give a murdering criminal the keys to your house and car...
Seriously, did you think it would turn out any other way but terrible for you?
Forget what they say, it's what they do that matters. And what they have done over the last century is sheperd the dollar to a 98% loss of value.
One word: Seigniorage.
Sie Signore´...
King Dollar!
Sounds less like a war cry and moar like a fallacy everytime I read it.
Yo, King! How you gonna roll over your debt?
What have I been telling you mooks!!?
The FERAL Reserve is faced with its own extinction now and will do what it can to save its own ass!
Many idiots here don't get that fact and keep blabbing the Fed will just keep printing to inflate the economy.
THE FED CAN'T KEEP PRINTING WITHOUT DESTROYING THEM SELVES NOW!
DUH!
They cannot not print without destroying themselves either. They're damned if they do and damned if they don't. They will let King Dollar keep on going until an event happens that scares them more than some vague (in their minds, it is clear in mine) concept of future hyperinflation, then they'll probably print. What I expect in the future is not deflation or inflation, but volatility. Deflation, then inflation.
This article is just more pointless FED "Kremlinology". Sifting through FED statements is a waste of time. CBers have already made it clear that they do not, will not, tell the truth or any truth -- ever.
Oil 'bugs' insist the decrease in the price of oil is an indicater that the economy is in trouble. They are off by 180 degrees. It allows the game to continue longer -- except for oil 'bugs' that is.
You're toast.
I'll see that and raise you one.
Inflation because of deflation. When deflation hits full force they will really panic and hit the Ctrl-P. They have no other tools.
It is times like this that I find I kind of believe that the "folks" at the FedRes really aren't all that bad (today). It would seem more like they have been nothing but useful idiots for the real PTB. Maybe Yellen sees this too. Perhaps that explains the survival kits.
The Economy has performed its best since 2005.....this is the bullshit fed to the masses and its all down to the policies of the FED and the Government. When the system starts to collapse how are they going to explain to the masses that monetary inflation isnt the answer when the result has been so good over the years?
They will print for the benefit of the elite and the total destruction of the working class, no doubt in my mind, just a matter of time.
Got gold?
"Some of my best work is done during a crisis"
Satan
In order to create a crisis one must create a bubble, this way no one complains"
IMF White paper
"I was just following orders"
Most government lackey's
"Yeah I shot the mother fucker, he was a tyrant"
John Wilkes Booth
There are treatments available for Peyronie's, Au - but I do agree with your sentiments wholeheartedly...
Sorry, there is no, "Ooopsy". Only catastrophe and chaos.
That will be where the word “catastrophe” will really find its true relevance as a descriptor.
Indeed...
Maybe not:
Federal Reserve is able to contribute significantly to the expansion of crisis since the US government appears to be increasingly dependent on Fed's quantitative easing policies.
Just surfing oil prices and past artilces and read this from WSJ on October 29th-
Marianne Kah, chief economist of ConocoPhillips , said oil prices would need to fall to $50 a barrel “if you wanted to completely halt production” in U.S. shale basins. She said 80% of the American shale sector—in which ConocoPhillips is a major operator—is profitable at prices between $40 and $80 a barrel for benchmark West Texas Intermediate crude.
Oil been under 50 for how long now??
ANd fuck the fed
Good catch, blown...
I was wondering what happens to global demand for the US$/US treasury bonds now that oil is less than half its price (and some countries are now selling in non dollar currencies).
If demand for oil is maxed out and there is no growth due to peak debt saturation sales of oil and thus demand for the dollar drop, at least for the purpose of buying oil.
Does this mean that all the money that was off shore and being used for oil perches returns to the US?
Lastly how much of a problem would that be for the value of the Dollar/FRN?
I think that since you are wise enough to ask those questions that you are smart enough to already know the answers.
That's why they need the gold held by the Russian central bank.
No doubt it will end in catastrophe. As we all know the question is when. My bias is it won't be for a long long time. The global financial shell game they are playing has never been played before but the number of shells the many countries and currencies provide will prolong this game much longer than anyone is expecting.
Yet the system is so complex that it is very fragile. It can look like it is going to go humming along for years yet to come, then the wrong part breaks and shit just goes flying apart unexpectedly. It is so complex that nobody can predict exactly when the failure will be and nobody can predict what peice will go flying where. We live in a Rube Goldberg economy, and we are going to suffer a complexity collapse. These things happen slowly at first (it has been going on for a while now,) then all of a sudden. The slow part is when the support for the complexity gets eroded bit by bit, and the all of a sudden part is when the little support that remains suddenly gives way. Think of the Fed and the international financiers as champion Jenga players in this respect.
Not just when but how. There are innumerable ways for a complex system to break. Those ways lead to different ultimate outcomes. My own view, for whatever it is worth, is that the Euro System breaks at about the same time the USA goes into recession with a wave of corporate and private equity defaults, probably around 2018. This, and ongoing ISIS expansion, leads directly to world war.
Look over there at that catastrophe and pay attention to it, instead of looking over here at what I'm doing.
Works every time.
So what do I gather from this long-winded, rambling collection of sweeping generalities that everyone has already heard before in more concise and timely postings by people who can be bothered to present their arguments in a reasonably intelligible form of grammar that does not require constant effort to translate into English?
I gather that the author is a lazy, self-indulgent blogger who is convinced of his own magnificence and need not be bothered by the effort normally called for to present rational thought to a wide audience.
Complete buzzword salad or, more colloquially, boob bait for an audience of bubbas that he has no respect for on a lazy Sunday morning.
So what do I gather from this long-winded, rambling collection of sweeping generalities that everyone has already heard before in more concise and timely postings by people who can be bothered to present their arguments in a reasonably intelligible form of grammar that does not require constant effort to translate into English?
This is a run on sentence Capt. Grammar.
Of course it is.
And this one: "This is a run on sentence Capt. Grammar." requires a comma and a hyphen.
But this is just a moment of relaxation where I can toss off a quick comment rather than what I do for a living-- which is write professionally and get paid for it.
When I am writing professionally, I maintain proper standards. This guy is making a professional effort and should be held to professional standards.
We are in the mess we are in at least partially because people stopped being held to an acceptable standard.
Buit I understand your personal distate for me and my outlook. Even if it were perfectly formatted in the style of your choice, you would still find cause to dislike it. Now back to work I go. Today, it's AP.
While I have disagreed, with vigor, with you before, I think you are right here.
If people want to wake up the world they have to at least match the standards of the competing liars. This isn't Yahoo News. Hell, sometimes I feel like ZH might publish me with my garbage writing skills. This approach does not lend itself to credibility. Presentation matters.
Why didn't good old Charlie just say "Release the Kraken" instead?
and use a terror false flag to hide the facts untill we hit the catastrophe. watch this bad event till the final show hits. lmao
Yes tarabel, I agree. Mark St. Cyr could use a good editor.
I second that
One hundred and one years is a heck of a run.
Well, at least for the guys that got that law done.
Too bad we can't go back in time and pull their balls off.
losing control ? the exact opposite, they are in COMPLETE CONTROL !
central banks can go fuck off and die !
...
2001 - the Fed, USD, USA is going to collapse
2002 - the Fed, USD, USA is going to collapse
2003 - the Fed, USD, USA is going to collapse
2004 - the Fed, USD, USA is going to collapse
2005 - the Fed, USD, USA is going to collapse
2006 - the Fed, USD, USA is going to collapse
2007 - the Fed, USD, USA is going to collapse
2008 - the Fed, USD, USA is going to collapse
2009 - the Fed, USD, USA is going to collapse
2010 - the Fed, USD, USA is going to collapse
2011 - the Fed, USD, USA is going to collapse
2012 - the Fed, USD, USA is going to collapse
2013 - the Fed, USD, USA is going to collapse
2014 - the Fed, USD, USA is going to collapse
2015 - the Fed, USD, USA is going to collapse
...
So what else "new" you can "report"?
We've been in the process of collapse since around 2000. People just don't understand why it is taking so long.
It looks like a long time from our perspective - from the inside. To our grandkids, they'll read about it and it will seem quite sudden - from everyting going great in 2000 to - splat - just fifteen or twenty years later.
Yup. Today was OK, so the next day probably will be too. It's generally a safe assumption, and what people are used to. It's the one time that you are wrong that gets you. People will probably focus on one or two single events in the future too. Like the failure of Lehman and <insert future financial crisis> instead of viewing the whole process. Or, if we get WWIII, I would view that also as part of the process. We're on the way out, it would just be us thrashing around in our death throes. Of course, the survivors probably wouldn't view it that way, they would probably view WWIII as what ended the US, unless of course, it somehow didn't go nuclear, but the USD collapsed in the midst of the war.
"the Fed, USD, USA is going to collapse"
Zero Hedge was founded in January 2009 and filled much needed space as a contrarian view which is why its legitimacy has grown causing shithead trolls like yourself to begin to comment. Try Yahoo if you want feel good stories, otherwise, FUCK OFF. I have many sites I think suck, but I do not spend time there. Why do you spend time here? I would have to be paid to troll HuffPo and others.....
We're staring into the abyss, whereas most people are too scared and close their eyes.
I was talking to this dude when I turned and tripped over a hooker doing a line of blow. When I opened my eyes I had the sensation of falling surrounded by darkness. How'd you get here?
The burning building with no exits (the Euro) and the Yen will collapse long before the dollar does. And that leads directly to world war.
Go jump off a high rise, and keep telling us how you are, until the sudden stop.
Its a process, coming to a climax very soon.
It could have lasted longer, but the US has shot itself in the head, if it is behind
the oil price drop.The downward spiral is no longer stoppable in any case.
Tick tock.
Yeah, people don't get that it's a long drawn out process that has been and will be punctuated with very serious and large events. The employment population ratio peaked around 2000 or so. That means that more and more people have been having to accept a lower material quality of life, but there was still a lot of support to keep things going back then. Before that, it was more people taking more jobs and more debt to maintain lifestyles. Today, much of that support is gone, which is why it is so much more obvious to a lot of people. Some people simply do not want to believe it, so they won't, at least not until they're falling into the abyss rather than just standing in front of it with their eyes closed. If the dude wants to get schooled at looking intto the abyss, I'm sure that we here can help. If not, then he ought to fuck right off.
Hey freedumb, tese are your words:
I hope that one day freedom will rise and both people of Russia and people of USA will regain their sovereignty from oligarch regime.
Shouldn't you be cheering for the collapse of this "oligarch regime"?
Doesn't that really depend on exactly how many nukes are going to be involved?
Abracadabra Elamazoo
The FED's Box of Tricks
Has Fucked ME & YOU
Tell me moar, tell me MOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOAR
OOH AHA OOH AHA
Don'b blame it on the Bernank, don't blame it on the Yellen, don't blame it on the GreenSpam
BLAME IT ON THE WEATHER.
QE explained:
http://www.flickr.com/photos/expd/8268025737/
Sort of like Putin called the collapse of the USSR the greatest "catashrophe" of the last century, the central bankers will cause the "catastrope" of the current century?
No, but they'll sure as hell make it a lot worse than it needs to be.
yes and through crisis they will get what they want !!!
There can't be anything to worry about because the president of Washington D.C. is now offering free immigration with two year college opportunity complete with Dream Act. The US has more money than at anytime in the past and nobody has to work.
gobly goop? seriously?
The Federal Reserve is unwittingly placing on full display they have nothing more left in their monetary policy bag of tricks other than to play a very, very dangerous game via “off the reservation” styled comments from both non-voting as well as voting members...
NOTHING LEFT? HAHAHAHAHAHAHAHAHA!!!
WRONG WRONG WRONG WRONG WRONG!
THEY HAVE NOT EVEN BEGUN TO FIGHT BITCHEZ
THEY WILL OWN IT ALL SOMEDAY. ALL OF IT.
As Barry and Congress hand out moar unfunded 'free' stuff, the debt soars and will become unsustainable and lead to quasi-bankruptcy and serious inflation. Those who are fortunate enough to have educated themselves and have read "When Money Dies" understand this and prepare.
I've never read "When Money Dies," but I know that to not be prepared when it finally happens is going to be akin to sticking your junk into a whirling mass of jagged metal.
Cloward Piven plan working as intended...
Control lost
integrity tossed
1913 was a hell of a year!
Adhere to the Constitution!
Article VI.
"The Senators and Representatives before mentioned and the Members of the several State Legislatures and all Executive and Judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Consitiution, but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States."
Your oath is to our Constitution, not to the right wing of your Party, John.!
The NAZI's are in charge. A Revolutionary Response is required. No voting booth can fix this now. Our government has been corrupted from top to bottom in All 3 branches.
Our government is going to do itself in. Just hope that that occurs before the ICBMs and SLBMs are launched. Just wait until all of those government workers wake up one morning and realize that, one way or another, the value in their pensions has evaporated. I doubt that many of them will be chanting "USA! USA! USA!"
f16; The Nazi's, whatever their obvious shrtcomings, , ran a better economy that our CB's are doing now.
The FED hasn't lost control and they aren't failing. 80 men now control more wealth than half the worlds population. This is good progress towards the ZWO.
It is the people they rule over who are failing, as they are supposed to.
The FED lost complete control of the financial World on March 10th
2008 @ 11:00am Bear Stearns time New York. There is no 'if' about the fact that the FED has demonstrated their loss of control since that date
so I don't get why theorists are proclaiming that the FED may have lost complete control in 2015 when we all know that they lost it all back when they failed to understand what was happening to the markets
when Bear Stearns was downed via naked shorts, put options, herd contagion, and overleveraged mismanagement on the part of the SEC, and that mindless retard sandwitch eater Christopher Cox? The membership of Z/H houses a myriad of thinkers that know in their own assessment that the FED died completely when Henry Paulson and Tim Geithner failed to put Humpty Dumpty back together again
and all the theorists in the World are still debating if the FED is finishing up today or tomarrow. I don't get why there has not been widespread agreement that the FED was finished seven years ago? Could someone please explain to me why we are debating the 'if' part of this equation when everyone knows that the real numbers
support my thesis and not the prospect that the FED is still viable?
In brief, why have we not achieved consensus throughout the entire World that the United States of America is completely bankrupt by the numbers it is faced with? This is an honest question I have of Z/H and I am not attempting to be antagonistic in my approach to this question put to, Z/H.
The Fed can never lose as long as people play.
The only way the Fed loses, if people do not show up at the casino.
And people are not showing up. This is not about control. This is about world simply walking out of the game
The FED and ECB are toast. You can manipulate and print all you want but never ever can you control credit risk that arises from a non functioning economy. Sure that can take years. Read history, there have been 3 central banks before in the US that blew up.
From FED website:
"Full verbatim transcripts of the FOMC meetings are made available with a five-year lag".
http://www.federalreserve.gov/faqs/about_12798.htm
Oh how I would love to have the transcript of the last meeting and compare it with the official minutes...
Hey Wikileaks people, wouldn't that be a job for you??
BTW, has anybody read and analyzed the 2008 transcripts?
For example this one: http://www.federalreserve.gov/monetarypolicy/files/FOMC20081216meeting.pdf
Interesting stuff...
Oh and I would hope the 2009 transcripts would come online soon...
Yep! There be dragons!
And just like Fukushima, after the disaster that they created has been fully unleashed on man and beast alike, they'll lie, cheat and steal their way back into the hearts and minds of the masses. If not voluntarily then through threats and force if necessary. They've got a plan and they'll love it if it ever comes together
Much of the problem is the western sanctions on Russia which is speeding up the inevitable fiscal calamity of the EU. If Russia decides not to make payments to several large EU banks it will be all over but the crying. LOL. Then what will the great western democracy's do?
... Federal Reverse ...