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"The Fed Has Been Horribly Wrong" Deutsche Bank Admits, Dares To Ask If Yellen Is Planning A Housing Market Crash

Tyler Durden's picture




 

The reason why Zero Hedge has been steadfast over the past 6 years in its accusation that the Fed is making a mockery of, and destroying not only the very fabric of capital markets (something which Citigroup now openly admits almost every week) but the US economy itself (as Goldman most recently hinted last week when it lowered its long-term "potential GDP" growth of the US by 0.5% to 1.75%), is simple: all along we knew we have been right, and all the career economists, Wall Street weathermen-cum-strategists, and "straight to CNBC" book-talking pundits were wrong. Not to mention the Fed.

Indeed, the onus was not on us to prove how the Fed is wrong, but on the Fed - those smartest career academics in the room - to show it can grow the economy even as it has pushed global capital markets into a state of epic, bubble frenzy, with new all time highs a daily event across the globe, while the living standard of an ever increasing part of the world's middle-class deteriorates with every passing year. We merely point out the truth that the propaganda media was too compromised, too ashamed or to clueless to comprehend.

And now, 7 years after the start of the Fed's grand - and doomed - experiment, the flood of other "serious people", not finally admitting the "tinfoil, fringe blogs" were right all along, and the Fed was wrong, has finally been unleashed.

Here is Deutsche Bank admitting that not only the Fed is lying to the American people:

Truth be told, we think the Fed is obliged to talk up the economy because if they were brutally honest, the economy what vestiges of optimism remain in the domestic sectors could quickly evaporate.

But has been "horribly wrong" all along:

At issue is whether or not the Fed in particular but the market in general has properly understood the nature of the economic problem. The more we dig into this, the more we are afraid that they do not. So aside from a data revision tsunami, we would suggest that the Fed has the outlook not just horribly wrong, but completely misunderstood.

 

... the idea that the economy is “ready” for a removal of accommodation and that there is any sense in it from the perspective of rising inflation expectations and a stronger real growth outlook is nonsense

And the kicker: it is no longer some "tinfoil, fringe blog", but the bank with over €50 trillion in derivatives on its balance sheet itself which dares to hint that in order to make a housing-led recovery possible, the Fed itself is willing to crash the housing market!

... if the single objective was to reduce inflation, regardless of where it came from, then crashing the housing market is certainly one way of going about it.... The dilemma for the Fed is of course that it is precisely the decision not to crash the housing market by doing extraordinary stimulus in the first place that has led to the current outcome of weak ex housing demand and strong housing inflation. The decision is akin to embracing financial repression as an alternative to the uncertainty of asset price deflation and a debt default cycle. If we could reset house prices 30 percent lower and fast forward a few years, the economy would probably be meaningfully more dynamic but it is those few years that might be hairy and no one let alone the Fed would likely stomach the risks.

Here is the full note from Deutsche Bank which we expect every other primary dealer to copycat in the coming weeks and months now that the truth among the "very serious people" is finally out.

* * *

At issue is whether or not the Fed in particular but the market in general has properly understood the nature of the economic problem. The more we dig into this, the more we are afraid that they do not. So aside from a data revision tsunami, we would suggest that the Fed has the outlook not just horribly wrong, but completely misunderstood. And here’s why.

For many years we have focused on the poor supply side dynamics of US growth and more recently have recognized it as much a global phenomenon when it comes to productivity. And as we know supply always equals demand so invariably there is some “disappointment” in demand side metrics. What we haven’t dwelt on much is whether demand creates supply or, as in Say’s world, does supply create demand. It is very easy to see through the latter’s linkages. Companies have to meet a given demand say but choose to use cheap labor rather than invest for productivity. Productivity may be weaker for longer. Perhaps there is a lack of innovation so a lesser requirement to invest. Perhaps there’s greater depreciation so investment spend may be less impressive on a net basis. Since it takes a while for wages to pick up (need to be nearer full employment), demand doesn’t really strengthen much. Global issues may depress pricing, so this is an additional constraint for the investment outlook. But over time the hope is that under an accommodative monetary policy, full employment is reached, wages rise and companies are encouraged to substitute capital for labor thus boosting productivity and there is a virtuous cycle of rising demand, strengthening expected returns on investment so encouraging still stronger growth. It is not clear that pricing power returns but the profit cycle is supported nevertheless through higher productivity. Now it could be debated that this is just as much about demand driving supply in the sense of the investment cycle. At least though in the context of weak underlying demographics, initially sluggish associated demand plus the lack of innovation explaining weak investment and productivity, it can also be a supply led story.

However there is also a whole different demand side angle to this that is less to do with the wage-productivity nexus but more to do structural weak consumer demand and the hangover from the housing crisis. This of course will tie out to weaker productivity and therefore weaker wages as well. It starts with the recognition that since the crisis or at least a few years after the initial rebound, consumer demand is decidedly weaker than it was pre crisis. As we highlighted last weak using log real retail sales we can observe a distinct weakening in the post crisis trend, especially in the past couple of years that’s worth almost up to 1 percent. Taking a broader look at consumption, the weakness however is even more protracted in housing services and especially in owner occupied housing. The latter is particularly important because it is the germ of demand for other consumption. Owners typically will furnish their home, buy more “stuff”, maintain the property through other services more aggressively etc. than say tenants. The “multiplier” effects of home ownership are almost certainly stronger than for tenant homes, controlling for age etc. It is therefore concerning that while household formation may be rising, homeownerships rates are still falling.

What is then striking of course is that if housing consumption is unusually weak, why are housing components of inflation so strong? As the charts show it is quite striking that overall housing inflation in the PCE is almost 3 percent year over year (2.7 percent for owner occupied component) but for owner occupied housing consumption it is the most chronically divergent weaker than all other major consumption categories. Tenant home consumption is in line with trend despite also having a very strong deflator. Effectively we can think of housing as being in “stagflation”.

Of course the obvious conclusion is that it is precisely because owner occupied housing is expensive in absolute terms that there is limited consumption in absolute terms that drives rental consumption relatively higher with also higher rents. The imputed rental for owner occupied housing comes from an adjusted rental series for tenancies so the results are consistent i.e. expensive rents and owner occupied, trend consumption for tenant housing consumption and below trend for owner occupied. In turn this then spills over into below trend for consumption ex housing. Note that weak consumption ex housing then also implies weak inflation in those sectors.

The actual numbers are impressive. Owner occupied consumption in the PCE is almost half the trend since 2010 compared with the whole sample period 1990-2015q1. Annualized it is growing around 0.8 percent compared with over 2.5 percent for the whole period. It represents around 11 percent of total consumption, so alone shaves 0.1 to 0.15 percent off the trend realized real GDP growth. For the rest of consumption, including the other components of housing the trend is better but still disappointing since 2010. It drops from around 3 percent to 2.4 percent so in GDP terms effectively shaving 0.4 to 0.5 percent from trend GDP. Note that for tenant housing the trend is stronger, as we would expect but quite volatile. Currently running around 2.6 percent versus the whole sample trend of only 1.8 percent. However, interestingly recently the rental  trend seems to be a little weaker, suggesting high rents themselves are exerting a downward pressure on housing consumption.

There are other interesting observations to note. For example, goods PCE alone isn’t too far off trend but is a little lower, around 3.2 percent versus 3.6 percent for the whole sample, while healthcare consumption is bang on an unchanged trend.

The next charts show the housing and inflation ex housing deflators. Core CPI ex shelter is pretty much still at post crisis lows, less than 1 percent year over year. Consistent with the PCE analysis above, the PCE ex housing the deflator is zero. The deflator ex housing, ex energy is less than 1.2 percent year, but falling. The housing deflators, in line CPI housing and OER are close to 3 percent year over year.

This brings us to the crux of the analysis. If the inflation “problem” or risk is in housing but the weakness in demand also stems from housing, what on earth is the Fed, or anyone for that matter, thinking in terms of the logic for removing accommodation? The inflation problem is not being created by excess demand for housing i.e. a housing boom because that would show up in terms of excess demand for consumption ex housing. Instead it is the quirky result of owner occupied housing being too “expensive” relative to rental housing which pushes up overall housing inflation via rents.

Of course if the single objective was to reduce inflation, regardless of where it came from, then crashing the housing market is certainly one way of going about it; but it would only work if it forced homeowners to sell their homes and become renters, assuming house prices did actually fall in the process. Simply keeping house prices elevated and having new supply come onto the market even if it all goes into the rental sector won’t necessarily help if house prices are  lofty since rents may stay robust. This is effectively what has been going on anyway.

The dilemma for the Fed is of course that it is precisely the decision not to crash the housing market by doing extraordinary stimulus in the first place that has led to the current outcome of weak ex housing demand and strong housing inflation. The decision is akin to embracing financial repression as an alternative to the uncertainty of asset price deflation and a debt default cycle. If we could reset house prices 30 percent lower and fast forward a few years, the economy would probably be meaningfully more dynamic but it is those few years that might be hairy and no one let alone the Fed would likely stomach the risks.

The alternative is to accept elevated house prices as a byproduct of the stimulus and look to the supply side of housing to address high rents. If we consider housing completions as our supply of housing variable, it is clear that the only thing that really correlates with new supply is the change in the debt income ratio of the household sector. Balance sheet expansion is good for housing supply. Importantly, affordability doesn’t just have no relationship with, but if anything, is inversely correlated with supply. Housing affordability does not solicit new supply.

Higher house prices do solicit some new supply, although there is a very large gap now in that supply has been very slow to respond to higher prices. The real issue is that housing supply is linked to household balance sheet expansion- proxied by the change in the debt income ratio. Since this has been growing slowly, so has supply been slow to come back on tap.  Households are still feeling balance sheet constrained.

So that leaves two policy choices. One is to wait much longer for supply to catch up with elevated house prices but “hope” that prices don’t become further elevated. (We can give a nod to the financial stability camp; there is a case for no more QE and maybe at some point the odd rate hike). The second would be to wait longer for further improvements in the debt  income ratio i.e. the propensity for households to resume some re-leveraging. Now of course that can come from stronger incomes but there seems to be a little of a catch- 22 embedded in that. The other, is to give some regulatory relief to  encourage more mortgage lending, even rolling back on the 80 percent LTV formula for example. However that is about as likely as getting a GDP forecast correct.

Either way, the idea that the economy is “ready” for a removal of accommodation and that there is any sense in it from the perspective of rising inflation expectations and a stronger real growth outlook is nonsense. There is some logic in giving up on expecting normalization to previous growth trends as a prelude to any rate rise (Yellen’s 2.5 percent threshold). This is reflected in what was then but not now a stronger supply side economy and a matching demand side, consistent with a greater share of consumption in owner occupied housing. But then rates are naturally very constrained in the normalization process and type 2 errors abound if the objectives of any lift off are not clearly understood. Note that Yellen’s 2.5 percent seems low in that all you need on a year over year basis is 2.5 percent quarterly growth for 2015h2 based on the Atlanta Fed’s current tracking for q2 GDP. However if the above analysis is right, this may still be too high. Moreover, note that for the past five years 2 ½ percent has been somewhat elusive anyway with the average through to 2015q2 being 2.2 percent and only above 2 ½ percent 9 out of 22 quarters, albeit 4 of them in the last 8 quarters. But please let’s not call this transitory! (Truth be told, we think the Fed is obliged to talk up the economy because if they were brutally honest, the economy what vestiges of optimism remain in the domestic sectors could quickly evaporate).

Meanwhile in the medium term it is possible that if there is an exogenous positive productivity shock, consumption ex housing trend can bump higher, perhaps even bumping owner occupied consumption higher too via the improved debt income dynamic. Though, our indicators suggest that too is still not on the horizon.

In general the Fed is necessarily bound to do very little, if anything. And if they insist on tying policy blindly to ill defined expectations on say inflation or full employment, the danger of a gross policy error builds. In the extreme imagine that core CPI was 2 ½ percent but it was all in housing inflation at 4 percent with full employment would they really think it a good idea to remove all “accommodation” with rates at 2 -3 percent. The scary thing is some people would say yes. The scarier thing would be the resulting economic crisis.

 


 

Deutsche Bank continues, but this is the punchline. And all of this, of course, is or at least should be well known to Zero Hedge readers. As for the key message here is, it is simple: it is not just the "fringe blogs" who are telling the truth anymore, it is now the turn of the "very serious people", and as everyone knows, once one dares to call the emperor naked, soon everyone else does. Which, incidentally, would be the final disaster for the Fed, which for the past several years has had just two things: a printer and "credibility"... if only among the "very serious people."

Now, the latter is about to evaporate. Which means all the Fed will soon have is a printer, which it will have no choice but to operate on turbo until such time as the residents of the Marriner Eccles building are driven out by angry, if armed, citizens.

 


 

And perhaps just to confirm once again we were right all along, in yet another amusing incident involving a Federal Reserve economist, yesterday none other than St. Louis Fed's David Andolfatto, in an oddly defensive moment, had this to tweet yesterday:

David, of course, is the same St. Louis Fed career economist who in November accused Zero Hedge of being "dickheads", something for which he promptly apologized thereafter.

Our response to the St. Louis Fed economist is simple:

The problem for Andoflatto, and his equally clueless peers across the US central planning bureau also known as the Fed, is that what has been obvious to us from day one, is finally spreading among the very people whom the Fed decided to bail out while crushing the middle class it was supposed to protect.

As for Andolfatto's latest tweet faux pas, he promptly deleted it. Because that's how the Fed rolls.

 

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Sun, 05/31/2015 - 16:12 | 6149856 CarpetShag
CarpetShag's picture

Abit onus, obit anus.

Sun, 05/31/2015 - 16:28 | 6149894 doctor10
doctor10's picture

gotta have jobs to have a "housing led recovery"

takes a while for capital investment to spool up and generate yields.

just sayin'

Sun, 05/31/2015 - 16:33 | 6149913 kaiserhoff
kaiserhoff's picture

Housing will be godawful.

Bonds will be worse.

Sun, 05/31/2015 - 17:11 | 6150020 max2205
max2205's picture

That would finally kill off the 95% ers 

Sun, 05/31/2015 - 17:24 | 6150063 espirit
espirit's picture

Fringe blogs and "very inFLUential people" telling the truth?

I can believe in ZH and make my own decisions, thank you very much. 

Sun, 05/31/2015 - 17:56 | 6150142 NoDebt
NoDebt's picture

I find it apropos that David Andofatto's barb would so completely miss the mark.  Not just petty and childish, but totally lacking in understanding of the foe he is attacking.

He's made ZH's point perfectly about the Fed not even understanding the nature of the problems they face.

 

Sun, 05/31/2015 - 18:27 | 6150204 espirit
espirit's picture

So go housing valuations, so go local tax valuations.

They should be afraid, very afraid.

No moar 7.5 - 8.00% retirement builds for public employees.

Sun, 05/31/2015 - 18:49 | 6150253 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Not really. Tax valuation down 50%?  Millage rate up 100%.  Voila, revenue problem solved, though collecting might  become more difficult.

Sun, 05/31/2015 - 21:09 | 6150534 Greyhat
Greyhat's picture

Of cause, they will always find a way to suck out your blood. :)

It's easy to understand: After Bush they gave you Obama, a nicely painted liberal sheep and now they slaughter it publicly so that you vote for the "hawk" they want to see in office. Moar woar, moar ammu, moare fireworks... Long CNN! 

Thats the "american manifest destiny dream", they pay, you dye. So if you behave like brave mercenaries everything will be all right, thats your role in their grand game.

7 countries, 5 years was not workable, but now you may continue after some recreation.

Sun, 05/31/2015 - 22:23 | 6150707 forexskin
forexskin's picture

and nowhere does DB refer to the huge overhang of housing inventory being held off the market on large bank balance sheets, listed as foreclosed assets valued fully to model. what could possibly go wrong with a self serving analysis that prescribes moar QE or the fed's (and the banks) dick will fall off.

these assholes are going down, and this is not so much truth as the first whispers of a rising blamestorming creshendo.

Sun, 05/31/2015 - 23:42 | 6150854 Sages wife
Sages wife's picture

ZH cred is growing exponentially. It might shine even more without the "I told you so". When you're good, everyone knows it.

Mon, 06/01/2015 - 02:24 | 6151063 Keyser
Keyser's picture

The "finger wagging" precursor to collapse is well under way... Soon there will be press conferences filled with fire, brimstone and spittle blaming someone else for the necessaity to ban cash, nationalize your state pension fund, implement currency controls, raise taxes and finally to go to war... 

Mon, 06/01/2015 - 02:32 | 6151072 Gobbler
Gobbler's picture

The FED is caught in a box.  Raise interest rates, and the house of cards collapses.  Deflationary depression.  Keep interest rates at zero and settle for an endless deflationary recession.  Pick your poison.

Mon, 06/01/2015 - 08:23 | 6151334 kaiserhoff
kaiserhoff's picture

Yes, and with a lot less man hating and America bashing,

  we might even keep a few grown ups around here.

Sun, 05/31/2015 - 18:53 | 6150260 philipat
philipat's picture

Agreed ND, as is the Fed's "Response" to the "Problem" which is a further "Double seasonal adjustment". They are very clearly demonstrating themselves to be clueless. I would contend that seasonal adjustments (ALL seasonal adjustments) are totally unnecessary if one simply uses Q1 2015/Q1 2014  (And so on for Q2, Q3 and Q4)) data together a Moving Annual Total (MAT). The whole point of a Moving Annual Total is that it recognises and automatically adjusts for seasonality.

Incidentally, using the above approach, the Fed would have looked better in Q1 2015 because GDP "Only" shrank by 0.7% compared to 2.1% in Q1, 2014!!

Sun, 05/31/2015 - 19:40 | 6150374 Handful of Dust
Handful of Dust's picture

One of our former houses is still up over 385% since 2002. My Dad built it and knows for a fact it ain't worth 1/3 of that even when you consider its location. It's interesting because between 1985 and 2002 it went sideways in price or maybe even dropped a bit.

 

The Great Correction will be very painful for 95% of us i suspect. I have no doubt Bankers and Wall Street and DC will walk away [again] unscathed.

Mon, 06/01/2015 - 02:53 | 6151105 Gobbler
Gobbler's picture

I have wonderful news.  There be a leprechaun up in the tree.  Peace.

Sun, 05/31/2015 - 17:25 | 6150069 mvsjcl
mvsjcl's picture

"...Fed has the outlook not just horribly wrong, but completely misunderstood."

 

More of that "Fed is completely clueless" bunk. That's what they want us to think.

 

Sun, 05/31/2015 - 20:28 | 6150472 DeadFred
DeadFred's picture

This data has been accumulating for years, why is this article being published now? What game is being played now that wasn't allowed last year? Analysis like this could have been done years ago and I don't believe some guy just had an 'Ah Ha!" moment.

Mon, 06/01/2015 - 07:57 | 6151303 blindfaith
blindfaith's picture

 

 

YES AND OF ALL THE ROTTEN BANKS, THIS ONE TAKES THE CAKE.  A foreign bank ( German) walks up to the Fed window and borrows FREE  money and you can't, lends it to blackrock and other hedge funds to buy the house you just lost so you can rent it from them.  Then bundle the rents up and sell them to your retirement fund.

Brilliant.

Mon, 06/01/2015 - 04:59 | 6151182 bunnyswanson
bunnyswanson's picture

"Question our judgment, not our motives" (VP Biden during commencement speech at The Thief Factory (Yale).

Sun, 05/31/2015 - 17:26 | 6150075 BoredRoom
BoredRoom's picture

I'm praying for a crash, but before depositer confiscations. I've got a contract on my current home for top $, and my eye on numerous farms in SE WV. No traffic lights? No fast food? More black angus than people? $240 annual property tax on 100K? Low Obama son quotient???

 

 

it's a no brainer....

Sun, 05/31/2015 - 18:49 | 6150263 tenpanhandle
tenpanhandle's picture

Oboma's economy has taken care of me so I don't have to worry about depositer confiscations.

Sun, 05/31/2015 - 17:19 | 6150043 winchester
winchester's picture

dude, you post links of 2006 & 2012...

wtf is wrong with you...

Sun, 05/31/2015 - 16:46 | 6149950 TeamDepends
TeamDepends's picture

Stawks will go crashing
This Yellen's a curse!

Sun, 05/31/2015 - 17:16 | 6150037 kaiserhoff
kaiserhoff's picture

I'm a poet,

  and didn't know it.

Sun, 05/31/2015 - 19:55 | 6150385 bigkahuna
bigkahuna's picture

If the fed ever smells their own poop then the market is going to go down very quickly - but the fed is a 1 trick pony and their trick is the market and that is it! They chose their path - what a bunch of evil lucifarians or plain fucking idiots, either way not good.

They are going to keep holding out as long as possible, which has thus far been an impressive duration. I dont think anyone knew they could hold on this long.

Sun, 05/31/2015 - 21:47 | 6150643 conscious being
conscious being's picture

The longer they hold out, the greater the sytemic damage they do. No one realized they intended to kill the goose laying their fiat eggs.

Sun, 05/31/2015 - 16:56 | 6149975 Squid-puppets a...
Squid-puppets a-go-go's picture

first Citi, now Deutsch.

That's 2 drops of Ice-9 dangling over the ocean surface

Sun, 05/31/2015 - 23:00 | 6150800 Hobo Sapien
Hobo Sapien's picture

+100 If I remember, there was a huge "FWOOM!" sound, a strange stillness, then immensely powerful storms. Going to have to dig that out and read it again, thank you.

If anyone is unsure of the reference, let me help there:

http://www.amazon.com/Cats-Cradle-Novel-Kurt-Vonnegut/dp/038533348X/ref=...

;-)

Sun, 05/31/2015 - 17:13 | 6150027 Perimetr
Perimetr's picture

Don't worry, they will seasonally adjust everything a few more times.

BUY!!

Sun, 05/31/2015 - 17:28 | 6150083 BoredRoom
BoredRoom's picture

plus, as I surmise, there will be a lot more short squeeze sheeple shearing of the 'savvy' investor before it goes bust

Sun, 05/31/2015 - 17:58 | 6150147 ebworthen
ebworthen's picture

Yes, it's bubble #3 since 2001, and Deutschbank and all the other EU and U.S. TBTF banks will be bailed out, AGAIN.

People say it won't happen again, they wouldn't dare, but they are committed to the course - and who will stop them?

Look what the banksters and elites got away with in 2008, and continue to get away with.

They will push this all the way; capital controls, getting rid of cash, and martial law.

Sun, 05/31/2015 - 22:17 | 6150698 eyetaliano
eyetaliano's picture

David Andoflatto's tweet infers that Global Warming actually exists which is a double whammy on his intellect.  Not only is he a economic moron but he also delves into the realm of pseudoscience as well.  G_D help us all.

Sun, 05/31/2015 - 18:18 | 6150186 flash338
flash338's picture

Stack silver. Wait for a silver spike. Buy land.

Mon, 06/01/2015 - 05:16 | 6151194 Beowulf55
Beowulf55's picture

Stack silver. Wait for a silver spike. Buy land. And let the government tax you till they get the land........great idea.....

 

Untl they stop taxing your property you will never own it and will always be a serf of the state.....

Sun, 05/31/2015 - 22:07 | 6150678 Lets Buy The Dip
Lets Buy The Dip's picture

what about the SHANGHAI market holy hell ==> CHART IS HERE

That is up over 100%, a bubble or not, people have made a killing there. 

Housing could be just being pumped up on xmas fairy dust?

Sun, 05/31/2015 - 16:36 | 6149926 LawsofPhysics
LawsofPhysics's picture

LOL!!!  right, now remind us, what is the average wage again?  remember, when food and housing gets more expensive, so does the SNAP program...

 

just sayin'

Sun, 05/31/2015 - 16:49 | 6149959 j0nx
j0nx's picture

Crash the housing market?? Certainly not where I live. Been waiting 2 years in a shitty rental for it and still prices keep rising...

Sun, 05/31/2015 - 20:19 | 6150445 surf0766
surf0766's picture

IN a $250-300 K neighborhood in SE PA. Not much happpening. House across the street empty for almost 3 years now. Others were finally rented and never sold. Local market never recovered. Number of empty houses is the same as in 2009.  Township is monitoring because of thefts of copper etc..

Mon, 06/01/2015 - 05:40 | 6151208 OldPhart
OldPhart's picture

You that are making $50k per year prepare to make $30K per year.  You making 100k per year prepare to make $1,000k per year. Thus it is written, thus shall it be.

Sun, 05/31/2015 - 16:33 | 6149914 Stoploss
Stoploss's picture

.     .

  0

Sun, 05/31/2015 - 16:39 | 6149928 falak pema
falak pema's picture

man can do what he wills but he cannot will what he wills.

That's the difference between obscurantism and reality.

The FEd is like the Popes, it takes its allegorical tales literally, concealing its legendary origins, instead of admitting it is a fable and as such should be treated as a moral allegory.

QE is an allegorical tale which will one day disappear like a puff of hot air. And the world of power all swears it is real ! 

Sun, 05/31/2015 - 17:39 | 6150118 joseJimenez
joseJimenez's picture

Where exactly does the bear shit in??

Mon, 06/01/2015 - 06:00 | 6151210 OldPhart
OldPhart's picture

My neighbors outhouse,  That Bear has got to go, (well we all have too), but he has to go extinctually.  It sucks to fight a bear to take a shit, when just meeting a bear will give you the shits.  (trust me on this)

Meet a wild bear on a face to face encounter and you WILL shit yourself into a literal disgusting mess that the bear is even disgusted and leaves you alone.  (Used the same tactic against the wife and it works!)  Haven't run into a grizzly (other than the wife), so can't vouch for results..  [Really, meet a bear face to face, from five feet away...You WILL shit yourself, it's kinda like having the sound of the WHSST of bullets going by your ears except there's this really big, pissed off, montrosity directly in front of you that has a fondness for fresh meat and has three cubs behind her]  As I said, you WILL shit yourself,

Best tactic is to retreat and make yourself as small as possible and offer nothing that seems theatening.  Hmm, that seem's a plausible tactic for what war criminal government?

Sun, 05/31/2015 - 21:42 | 6150629 ZH Snob
ZH Snob's picture

happy days!  Douchea Bank has validated my opinion.

Mon, 06/01/2015 - 09:05 | 6151416 marathonman
marathonman's picture

Ponzi schemes always unravel eventually.  Forty years is a long time to keep a Ponzi scheme afloat. 

Sun, 05/31/2015 - 21:47 | 6150646 Cynicles
Cynicles's picture

Only if the old lady is Lady Freedom.

Sun, 05/31/2015 - 22:10 | 6150686 eyetaliano
eyetaliano's picture

David Andoflatto's tweet infers that Global Warming actually exists which is a double whammy on his intellect.  Not only is he a economic moron but he also delves into the realm of pseudoscience as well.  G_D help us all.

Sun, 05/31/2015 - 22:10 | 6150687 eyetaliano
eyetaliano's picture

David Andoflatto's tweet infers that Global Warming actually exists which is a double whammy on his intellect.  Not only is he a economic moron but he also delves into the realm of pseudoscience as well.  G_D help us all.

Sun, 05/31/2015 - 22:17 | 6150697 eyetaliano
eyetaliano's picture

David Andoflatto's tweet infers that Global Warming actually exists which is a double whammy on his intellect.  Not only is he a economic moron but he also delves into the realm of pseudoscience as well.  G_D help us all.

Mon, 06/01/2015 - 06:03 | 6151222 OldPhart
OldPhart's picture

Since you've inflicted David Andoflatto's tweet on us no less than three fuckiing times, who the fuck is Dave Andoflatto?

Sun, 05/31/2015 - 16:13 | 6149857 keremetski
keremetski's picture

As Ben she is in line for mortgage? Daaah.

Sun, 05/31/2015 - 16:14 | 6149862 Oh regional Indian
Oh regional Indian's picture

So interesting. It is ALLEGED, hey you leagel eagles, note, ALLEGED...

Well, it's been alleged that the folks at Deutsche bank have been party to deep banking shenannigans snce back in the day with Prescott B. They have since remained thick with bond scandals and gold scandals and a plethora of misdeeds under Bush I and the long time DB president whose name evades me at this moment.

They should be complaining about the FED, their brother in arms...

Truth...

https://www.youtube.com/watch?v=lk1TSBW_368

Sun, 05/31/2015 - 16:17 | 6149870 Consuelo
Consuelo's picture

This article by Zerohedge represents what some of us in the community refer to in ring parlance as: A 'Tap Out'. In this particular case, by the naysayers...

Bravo Zerohedge ++++++

 

 

Sun, 05/31/2015 - 16:30 | 6149897 Bay of Pigs
Bay of Pigs's picture

And David Andolfatto? Oh yeah, I remember him, that clueless fuckan Canuck working for the FED.

http://research.stlouisfed.org/econ/andolfatto/

Sun, 05/31/2015 - 16:35 | 6149922 LawsofPhysics
LawsofPhysics's picture

Yes, the truth of the matter is that with 7+ billion people on this rock, there is plenty of "economic activity".  The death of fiat and faith is another thing altogether. 

Sun, 05/31/2015 - 18:03 | 6150154 F0ster
F0ster's picture

Zerohedge has always delivered 'real' journalism. The corrupt sycophants that colleges like Columbia Univerisy spit out should hold their heads in shame and cash their next mainstream media paychecks. Zerohedge is to news and economics as Gold is to money, truth for the intelligentsia. Today I'll wear my ZH t shirt and tomorrow buy a gold eagle and think about this post. Onwards and upwards!

Sun, 05/31/2015 - 18:57 | 6150287 tenpanhandle
tenpanhandle's picture

Your ejaculate has spattered my computer screen.

Sun, 05/31/2015 - 22:26 | 6150715 NotApplicable
NotApplicable's picture

Feels kinda strange upvoting both of your posts...

Mon, 06/01/2015 - 06:05 | 6151223 OldPhart
OldPhart's picture

*Wiping screen to see what you posted.*

Sun, 05/31/2015 - 21:52 | 6150653 Cynicles
Cynicles's picture

Gold Eagle. WTG

Shit, I can't afford an inopperable AMC Eagle found in the sleeziest of junk yards. 

Sun, 05/31/2015 - 22:55 | 6150785 bilbert
bilbert's picture

Gotcha covered - I've got a buddy that can put you in an AMC Pacer for less than a Gold Eagle - and if you can fog a mirror, he'll even give you generous terms...........

Sun, 05/31/2015 - 16:17 | 6149871 Peter Pan
Peter Pan's picture

"If we could reset house prices 30 percent lower and fast forward a few years.."

If there was 30% equity in the system I would say give it a go but ......

Sun, 05/31/2015 - 22:40 | 6150749 NihilistZero
NihilistZero's picture

It's gonna happen anyway.  I've been saying for a while that Housing Bubble 2.0 was engineered to help the banks clear as much of their Bubble 1.0 inventory as possible.  I think that was pretty much accomplished by early last year. Since then it's just knife catchers and flippers rushing to be bag holders.

As the article says the best way to juice the economy is to burst the Bubble.  get back to 2011 prices or slightly below and you immediately make all the other inflation easier on consumers because they're fixed housing costs have dropped dramatically.  And as the article says when you actually get people in houses they can afford the "Ownership Effect" can be an economic engine.

Mon, 06/01/2015 - 06:09 | 6151224 OldPhart
OldPhart's picture

On the verge of accepting 3.857 interest on loan balance of $36k for refi of $100k for mortgage at 7.5%, due to wife demand. (Yeah, I know)

What is the best way to mitigate this?

Mon, 06/01/2015 - 07:41 | 6151286 duo
duo's picture

how many thousands in fees for a $36K refi?  Wouldn't it be better to put it on a credit card or home equity loan?

Tue, 06/02/2015 - 03:56 | 6154592 OldPhart
OldPhart's picture

3K

Sun, 05/31/2015 - 16:18 | 6149875 Sudden Debt
Sudden Debt's picture

The Fed’s sollution to zerohedge is to block it on their own computers.

Head in sand defence!

Sun, 05/31/2015 - 18:12 | 6150172 Shad_ow
Shad_ow's picture

zerohedge and every other thinking human who sees the truth.

Sun, 05/31/2015 - 18:16 | 6150184 knukles
knukles's picture

I believe that at one point Goldman and JP Morgan had likewise blocked it on corporate systems.
I can see it now, Lloyd in the executive stall with his BlackBerry screaming and the other senior staff thinking he's shitting gold bars.

Sun, 05/31/2015 - 21:54 | 6150654 Paveway IV
Paveway IV's picture

ZH should redirect any connections originating from the Fed, Goldman, JPM, the White House, etc. 

Replace with a link to a completely black page and some cynical, sarcastic message in tiny 5 point type - something simple and direct, like 'Fuck You'. 

All they have to do is use some proxy to get to ZH instead - it wouldn't really 'block' them. It would send them a clear message, though.

Sun, 05/31/2015 - 16:19 | 6149876 falak pema
falak pema's picture

Deutsche Bank is like that VP of FIFA indicted for corruption : Jack Warner from Trinidad--that other Holywoodian Mogul from footballista land.

Warner now shouts : The US is kicking the Fifa beehive 'cos it lost out; as did the Brits.

Deutsche Bank is saying essentially the same thing : Pot calling kettle black! The FED is the grand-daddy of Ponzi, the Madoff of WS's shenanigans, past and present.

Well, there aren't many life boats on the financial Titanic.

And its getting hot on planet earth; a sign of purgatory or whatever bubble bursting is likened to in metaphysical Uber land! 

Calling Dante Alighieri !

Sun, 05/31/2015 - 16:19 | 6149878 Batman11
Batman11's picture

Imagine Ben Bernanke taking over from Alan Greenspan in 2006.

He asks 25 of the FED’s top economists to produce 1000 page reports on the current situation.

He reads all 25,000 pages and concludes everything is fine.

The problem.

Alan Greenspan recruited Ben Bernanke and all the economists within the FED so, basically, they all think the same thing.

Now imagine, Ben Bernanke, realised that all the FEDs economists were all pretty much on the same wavelength but he still commissioned the reports.

He then just read the summaries of these reports. In the time he saved he went home and read the paper and watched the TV to get an idea of what was really going on.

In 10 minutes he came across his first ad for a NINA (No Income No Asset) mortgage, in 20 minutes he had seen 2 ads   .........

Ben then realised something was seriously wrong, mortgages based on no income and no assets. WHAT!

Following this through he discovered securitisation, CDOs etc   .....  and the 2008 crash was averted.

I wish.


Sun, 05/31/2015 - 16:24 | 6149888 besnook
besnook's picture

this is sort of a typical way the rulers of the universe tend to get their point across. if i were a company in the borrowing market and the interest rate commissioner was threatening to raise interest rates i may decide to expedite my borrowing to get under the pending rate rise, just like the inflation argument is used to explain how people will buy today if they think the price will be higher in the future.

the fed is acknowledging the recession by trying to get more money borrowed to ward off a recession.

Sun, 05/31/2015 - 16:37 | 6149911 LawsofPhysics
LawsofPhysics's picture

enough of this bullshit already.  don't confuse the death of fiat and bankers/financiers with "economic activity".  These are two very different things.  There are 7+ billion people on this rock that still require real goods and services.  They are already choosing alternative mechanisms for the exchange of real goods and services.  Fuck the bankers and financiers, feed the guillotine.

Sun, 05/31/2015 - 16:51 | 6149965 Kirk2NCC1701
Kirk2NCC1701's picture

Oh I agree, but I also suspect that the reason there is the sudden urgency in passing the TPP and TPIP trade deals is to forestall/frontrun the BRICS and AIIB, and keep the Dollar's status as the Global Reserve Currency (GRC).

The more We The People participate in the Parallel* Economy, the more we do to fight for Freedom.

* Cash, Barter, PM...

Sun, 05/31/2015 - 19:59 | 6150391 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Haven't you heard? Using cash for purchases is now considered a form of money laundering.

Mon, 06/01/2015 - 13:32 | 6152234 Franktastic
Franktastic's picture

I would gladly take that job as executioner....but I want the crooks slipped in face up so i can see their faces as the blade is coming to meet them.

Sun, 05/31/2015 - 16:33 | 6149915 wendigo
wendigo's picture

I'm not terribly smart, or well connected, but this sounds like my financial moves were right all along, namely get out of debt and buy real assets. 

Sun, 05/31/2015 - 16:34 | 6149916 SilverDoctors
SilverDoctors's picture

Housing market doesn't need Yellen's rate hikes to crash...its already rolling over on its own. 

Sun, 05/31/2015 - 16:48 | 6149954 Pure Evil
Pure Evil's picture

The corpse has been rotting from day one, the real problem all along is that we've just gotten used to the stench.

Sun, 05/31/2015 - 18:34 | 6150225 sTls7
sTls7's picture

There is some truth to that.

Sun, 05/31/2015 - 16:34 | 6149917 Longduckydong
Longduckydong's picture

Having a negative market view for the past 6 years isn't right, it's simply wrong. Having a positive view for the past 5 years and a negative view today is much more constructive. Timing is everything.

Sun, 05/31/2015 - 16:39 | 6149933 Bay of Pigs
Bay of Pigs's picture

Do you work for Douche Bank?

Sun, 05/31/2015 - 16:48 | 6149956 Consuelo
Consuelo's picture

But that's just the nut of the matter, longduck: This isn't about 'positive vs. negative'.   It's about the Truth of a matter, vs. Falsehoods, Obfuscations and/or outright economic Chicanery.    There is a Grand Canyon's worth of differentiation between positive/negative and Truth vs. Lies.

Sun, 05/31/2015 - 16:51 | 6149964 Tyler Durden
Tyler Durden's picture

Since you, like all ZH critics, have never actually read a single post on this website, here is what has really been going on: from day one, we have pointed out that the market is a broken, manipulated farce: a claim has been empirically confirmed by the DOJ itself.

The one thing we have done, is shone light on just how broken the so-called market, which incidentally has not existed since 2009, is.

We have never had a "NEGATIVE" market view, since there is no market - we have never told anyone to short the market, in fact if anything we said nearly three years ago go long the most shorted names, a trade which has been the best generator of alpha since 2013, as well as to frontrun the Fed and all those who fail to grasp that the only security that is increasingly more scarce, is the one the Fed is buying, i.e., Treasurys.

As for timing being everything, you are absolutely correct: another person who may accuse us of being "negative" was China's richest man. Or rather, he was the "richest" man, until he tried to sell his fraudulent Hanergy stock, incidentally a fate which will befall countless US investors when the Fed finally pulls the plug on the farce that "capital markets" became many years ago under central planning.

 

Sun, 05/31/2015 - 17:13 | 6150000 falak pema
falak pema's picture

"under central planning?

So Lehman and Merrill Lynch and the derivatives bonanza in City, JPM etc. were all central  planning since shadow banking became the big game in WS? And Gl-St revoke was to allow MOAR Central Planning or more private bank shenanigans?

Since when has a PRIVATE BANK like the FED--something ZH has repeatedly said in its historical surveys on this crisis--ever been an instrument of Central Planning; aka state planning?

the FED is OWNED by the TBTF private banks, who handle ALL their derivative trades (700 trillion nominal) on OTC basis, outside central regulation. You have always defending that line of reasoning based on factual evidence. 

Your words betray you deliberate attempts now to confuse ISSUES as the private FED and those who run it and have created this global mess are now labelled as "central planners"; akin to socialist minded governments.

You know and I KNOW you know that this whole scam is : "socialising debt" and "privatising profits" from day 1; a repeat of the 1929 Gatsby game!

So put your words in line with the facts that you have exposed here for 6 years. 

Semantics is apparently not your forte, and there are too many intelligent Tylers for you to pretend its just a "slip of the tongue", a loose and unintentioned play on words ...

Shape up ZH, we are not seeing Central Planning, we are seeing Private capital raping the public with the consent of the bought out elected. This is neo-feudalism akin to a system run by an Aristocracy. 

That is not what Central Planning à la Jacobin was all about in History. In history it was an ideological bent that ousted the "privileged" class, replacing it in principle by a merit class (something that became corrupt as well I grant you).

And here the US Oligarchs since Reaganomics days  all have FALSE Central Bank noses! 

Sun, 05/31/2015 - 17:35 | 6150109 Squid-puppets a...
Squid-puppets a-go-go's picture

dude, in a plutocracy it follows that acts of central planning come from the private sector.

sheesh, relax.

remember the real enemies.

Sun, 05/31/2015 - 17:40 | 6150121 falak pema
falak pema's picture

Long live his majesty Ronald Reagan and her highness Maggy T ! May their memory live on forever like those of all those royal blooded before them. 

The real enemy is us...unfortunately, as we do nothing to remove them. Democracy only means something if we act on our convictions. 

I guess you are not a man who believes truth and lies mean the same thing. So a republic cannot be run by a King or an aristocracy. 

Sun, 05/31/2015 - 17:50 | 6150136 Anusocracy
Anusocracy's picture

The problem seems to be forcing one's convictions on others.

Sun, 05/31/2015 - 22:49 | 6150758 forexskin
forexskin's picture

i accept that there are a few'conventions' based on reality, and that opposing them will result in reality forcing itself on those too stupid or greedy or power hungry or just plain evil to accept it themselves. *i* do not apply that force. to the extent that i am in accord with principles at the foundation of reality, i will do ok, if not, reality will have its way with me. the difference is, i reserve the right to get smarter, and wish no harrm except that necessary for my own self defense.

that is my conviction, hopefully shared by a majority.

your generalization is not informative.

Sun, 05/31/2015 - 18:35 | 6150188 Bay of Pigs
Bay of Pigs's picture

What do you propose we do then?

And as far as "central planning" goes, if you look at the FED, IMF, and especially the BIS, I think the term fits perfectly for these Zionist NWO freaks.

Sun, 05/31/2015 - 19:27 | 6150355 OC Sure
OC Sure's picture

 "So a republic cannot be run by a King or an aristocracy."

A republic has to be run by a tyrant or an oligarchy.

Stay away from Plato's Republic and look to Aristotle's Politics for the identifications of differing bodys of governance.

The gist being that a republic is communism and that a tyrant is the corruption of a king, an oligarchy is the corruption of an aristocracy, and a democracy is the corruption of a constitution. The US has pretty much been in a tussle between democracy and oligarchy for 200 years as the constitution was trampled underfoot before the ink could dry. 

 


Sun, 05/31/2015 - 21:59 | 6150669 conscious being
conscious being's picture

Aristotle considered an enlightened kingship the best form of government.

Sun, 05/31/2015 - 23:22 | 6150825 Clowns on Acid
Clowns on Acid's picture

Yeh ...it was just that secession thing that has historically caused problems

Mon, 06/01/2015 - 02:43 | 6151086 OC Sure
OC Sure's picture

 

 

Maybe, but the context of the document, Politics, is still an excellent source for the principles of governing bodys. (The document is only partial as the rest of it was lost.) 

The USA founders were well read of this document, his Nicomachean Ethics and Metaphysics.

It is no surprise then that his conclusion for a Constitutional form was chosen by the founders since its purpose was the best means in the Founders time to secure what Aristotle taught in his Nicomachean Ethics. This is where the phrase, "Life, Liberty, and the Pursuit of Happiness" was derived.

Aristotle taught, and rightly so,  that for Humans that the "pursuit of happiness" was the purpose of life, that the end good toward which all other actions are the means is happiness (Eudaimonia), and that the purpose of a governing body is to secure an individual's ability to achieve this end.

 

 

Mon, 06/01/2015 - 04:25 | 6151159 BoPeople
BoPeople's picture

If true, then a logical definition of good and evil emerge.

Good: Allowing others the freedom to pursue happiness.
Evil: Denying others the freedom to pursue happiness.

It would be nice though, if there was a greater purpose to life than to just be happy. It seems that one interpretation of that would lead to Crowley-esque behavior.

Mon, 06/01/2015 - 09:12 | 6151441 OC Sure
OC Sure's picture

That is a very good start. However, you can still go further back with your concept and attach them directly to percepts. We can still deduce the most irreducible primary by asking 2 questions.

How do persons pursue happiness? How is freedom denied? One pursues happiness by producing values and exchanging them with others and this exchanging of values as the means to pursue happiness can only be denied by compulsion. 

Therefore, the most irreducible primaries of good and evil are: 

Productive work is the essence of good. Compulsion is the essence of evil.

I don't know what crowley-esque behavior is but as long as it does not impede my right of way as an individual then it doesn't concern the nature of Individual Rights. The nature of Individual Rights as derived from the concept of voluntary and involuntary demand and as it relates specifically to the morality identified above is very well explained here in paragraphs 9 through 14:

http://ocsure.blogspot.com/

 

 

 

Sun, 05/31/2015 - 21:15 | 6150562 TeethVillage88s
TeethVillage88s's picture

Central Banking was Outsourced Offshore to a Private Contractor.

It fits my meme.

Technically Private and Technically our official Central Bank Planner.

The Character of the Private FED could be much different though.

Our FED supports this British Free Trade Economic Model which includes ignoring domestic production Jobs and the People's Middle Class.

The British Empire Collapsed it seems from adopting this Liaise Faire attitude about Jobs that create and Maintain a Middle Class while completely supporting the Nabobs who operate the prime trade cartels (Did they learn this from the Chinese or vice versa?)

Anyway, NOW they are doing it to the USA (they being a huge collection of thugs, mafia, Nazis, Zios, Royals, Royal Wanna-bes, Knights, and Religious Leaders).

What? everyone forgot how the British Empire Died? Wikipedia not valid?

Sun, 05/31/2015 - 17:50 | 6150137 mobius8curve
mobius8curve's picture

It's all centrally planned if you care to look:

Isaiah 45:7  I form the light, and create darkness; I make peace, and create evil. I am Jehovah, that doeth all these things.

Ephesians 1:11  in whom also we were made a heritage, having been foreordained according to the purpose of him who worketh all things after the counsel of his will;

Every man on the earth is made by Him for His purpose:

Romans 9:20-21  Nay but, O man, who art thou that repliest against God? Shall the thing formed say to him that formed it, Why didst thou make me thus?  (21)  Or hath not the potter a right over the clay, from the same lump to make one part a vessel unto honor, and another unto dishonor?

And in the end everyone will acknowledge who He is:

Romans 14:11  For it is written, As I live, saith the Lord, to me every knee shall bow, And every tongue shall confess to God.

So yes there is one "central planner" over it all:

Daniel 4:34  And at the end of the days I, Nebuchadnezzar, lifted up mine eyes unto heaven, and mine understanding returned unto me, and I blessed the Most High, and I praised and honored him that liveth for ever; for his dominion is an everlasting dominion, and his kingdom from generation to generation.

Mon, 06/01/2015 - 00:10 | 6150882 Kirk2NCC1701
Kirk2NCC1701's picture

It is ALLEGED that this Central Planner/Scrutinizer is real and that this is indeed his agenda and will.

The real issue is NOT "Belief", but "Credibility", i.e. the Vetting of ancient texts and ancient people.

Has it ever occurred to you, how hyper-ironic it is, that you and millions/billions of others are not willing to accept the Worldview of many a learned person today, but you are willing to accept the Cosmic and Terrestrial worldview of long-dead tribesmen?  Tribesmen with limited literacy and even more limited and outdated education about the world and the universe.  Tribesmen, whose hygiene is on par with most poor people in the MENA today.  I suspect that ISIS members have better hygiene.

I don't know about you, but if I'm not inclined to accept the philosophies and worldview of down-and-out street-people (some of whom had a good education and good jobs), then I certainly am NOT going to accept the worldviews of said ancients.  I don't know if you're nuts, or your CPU is on the Fritz, but I'm not nuts and my CPU works just fine.

And IF some day some ET being flies or beams down, I'm inclined to ask for some ID, and some robust series of questions about the Universe, and the Laws of Physics, Math, Chemistry and Biology.  As a species, as a People and as Individuals, we have eveolved to where we won't be satisfied with 3000 year old stories (revised over and over), but deserve and demand more.  Much more.  Maybe you don't, but I do.

Mon, 06/01/2015 - 08:52 | 6151384 fiftybagger
fiftybagger's picture

19 For the wisdom of this world is foolishness with God. For it is written, He taketh the wise in their own craftiness. 20 And again, The Lord knoweth the thoughts of the wise, that they are vain.

1 Corinthians 3 King James Bible

Mon, 06/01/2015 - 12:01 | 6151968 NihilistZero
NihilistZero's picture

Fuck your stupid religion and it's dick of a God whom so many have killed in the name of.

Fight Club bitch! :-)

Sun, 05/31/2015 - 17:00 | 6149985 Hero Protagonist
Hero Protagonist's picture

True, but is it a market if "timing" is based upon predicting whether someone will arbitrarily use the power they are given objectively or to support a certain group of folks?  

I think there was a time, although I may be naive, when the focus of the "market" was on whether a company created value based upon the product or service they sold, not on what a small group of folks picked as a "winner" or "loser". 

Sun, 05/31/2015 - 17:08 | 6150007 Squid-puppets a...
Squid-puppets a-go-go's picture

i would argue that such 'good value' companies pass away in this market. You find a company with a good product and prudent financial status, and that will be aggressively taken over by any of a number of competitors who have the backing of banks who enable an otherwise imprudent leveraged buyout. 

Sun, 05/31/2015 - 21:22 | 6150581 STP
STP's picture

Value only counts on what the 'Assets'  are valued at, when a KKR, Cerberus, or Bain Capital is planning on an M&A or Takeover.  The rest of the activity in the market is a an invisible  army of the HFT Algo's battling it out for pennies on the nano secends.  Or the final option, Stawk buybacks to make that 2nd Quarter, only look half as bad as the first one.

"Why not, it's free money, you just have to buy, before others, do.  You have to buy the dip, if you don't, you' re a fucking idiot."

Sun, 05/31/2015 - 17:04 | 6149995 Squid-puppets a...
Squid-puppets a-go-go's picture

A failure to be 'negative' about the market for the last 6 years is the very catalyst for what will eventually be unsurpassed volatility and capital destruction.

Embracing negativity when it is correct and truthful to do so is a crucial function of price discovery.

But I suppose you, longduckydong, are only in this market to make a buck. You probably dont care that people's lives and the very vitality and viability of nation states swings in the balance of honestly priced markets

Sun, 05/31/2015 - 18:01 | 6150155 Professorlocknload
Professorlocknload's picture

++ on that squid,,,,and add "Honest Money."

Sun, 05/31/2015 - 19:30 | 6150360 Calmyourself
Calmyourself's picture

Longducky: thats called being lucky..

Sun, 05/31/2015 - 16:37 | 6149929 Wait What
Wait What's picture

the hypocracies and contradictions pile up when one is constantly lying. the Fed doesn't like ZH because it's constantly pointing them out. Now the Fed won't like Douche Bank for the same reason. Go along to get along ain't working so well anymore, is it, Mr. Yellen?

Sun, 05/31/2015 - 16:40 | 6149934 ajkreider
ajkreider's picture

As before, if the rentel home owner has to sell, who gives a damn. It's a second income for them. Who loss a job, a place to live? Nobody. Let it pop. We're not in a construction bubble or an investment bubble. (Or even a rent bubble).

Sun, 05/31/2015 - 17:31 | 6150100 BoredRoom
BoredRoom's picture

-1, and that was just up to the spelling error.....I wasn't going to read the rest after that, except for the EXCEPTIONALLY POOR PAGE LOAD TIME FOR THIS SITE

Sun, 05/31/2015 - 16:44 | 6149945 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Well, at least bullshit is sticky.

Sun, 05/31/2015 - 17:04 | 6149955 asiafinancenews
asiafinancenews's picture
As one of Ms. Segarra’s senior colleagues stated to her when she refused to alter notes that she had taken at a meeting between officials of the New York Fed and Goldman Sachs:   “Credibility at the Fed is about subtleties and about perceptions, as opposed to reality.”   Source:  “This American Life,” National Public Radio (NPR) (September 26, 2014

 ).  
Sun, 05/31/2015 - 16:48 | 6149957 Hero Protagonist
Hero Protagonist's picture

Problem is that the Fed is now in a binary box (1 = game over 0 = continue the game).  

At $18Trillion Debt and $3-500 Billion interest expense, they can double to $36Trillion Debt and 600 Billion-1Trillion interest expense, triple $72T Debt and $1.2 to 2 T interest expense and maybe one more $144T Debt and 2.2 to 4 Trillion before Debt Service => Tax Revenue.

That's a long way and a very high stock market before the inevitable return to Earth.

Sux for savers. 

Sun, 05/31/2015 - 17:10 | 6150011 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

In other words, no matter how you figure it the Central Bank is on a suicide mission that will end badly for everyone, including themselves.

Sun, 05/31/2015 - 18:03 | 6150158 Hero Protagonist
Hero Protagonist's picture

Yep, and the "horror" of the entire thing is you either have to live on your savings (which is diminishing due to ZIRP and inflation) or participate in the casino. 

Sun, 05/31/2015 - 16:55 | 6149968 khakuda
khakuda's picture

That was the most long-winded obvious waste of time I've ever read.

For the past 20 years housing prices have inflated way faster than wages. The move ended in a complete bubble and tried to correct back to reality and then the Fed arrested that correction to save the banking system, allowing Blackstone and others to buy up all of the residential real estate available and turn them into rentals.

It was not a free lunch. You didn't get a banking system collapse, but you get a slow recovery as a result.

Our economists at the Federal Reserve and other central banks globally get an F for a grade because they do not believe a free-market system is capable of correcting it's excesses. In reality, it is the only system capable of correcting it's excesses.

Sun, 05/31/2015 - 19:01 | 6150295 Ckierst1
Ckierst1's picture

If we had free markets we wouldn't have the fucking Fed!

Sun, 05/31/2015 - 16:58 | 6149980 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

QE Infinity was used by the CB to buy time to ring-fence their bad investments, and BUG out to safer pastures whilst allowing the entire unworkable framework of contemporary society to deteriorate to the point of civil war and chaos. There is no alternative way forward for the entire United States of America, European Union, or CANADA, for that matter. The house of cards is their accounting methods, legislative deregulation [Glass-Steagall], and imbecilic understanding of society, and economics, not to mention the fact that they cannot comprehend basic mathematics.

The central banksters, and their wealthy 'masters', cannot survive no matter which way they turn to escape their collective fate of death. In point of fact, 'we the people' plan on tracking them down like Nazi concentration camp SS and sending them to the gas chambers where all economic SS Nazis belong. This includes all the wealthy Jews in New York City, and Israel, London, et cetera. Imagine how all those wealthy Jews will feel when they are collectively sent to concentration camps for becoming economic Nazis in the end?

 

Like the Blues Brothers, I don't like Illinois Nazis either.

Sun, 05/31/2015 - 17:02 | 6149991 q99x2
q99x2's picture

Move the military in now. Take over the FED and arrest the banksters. All of them.

Sun, 05/31/2015 - 18:55 | 6150284 Ckierst1
Ckierst1's picture

I think the vigilantes are a better solution.

Sun, 05/31/2015 - 17:08 | 6150006 Ms No
Ms No's picture

Off topic but since people have indicated a desire to keep updated of possible Jade Helm related incidents... There was an armed protest this weekend in Phoenix (about 500) surrounding a Mosque.  There were also decent numbers protesting on the other side.  No violence occured but it was tense and rather strange.

The flames were fanned by a "draw Mohammad contest" and members of the protesting group are claiming threats from Isis.  Strange days.

Sun, 05/31/2015 - 17:11 | 6150019 Clesthenes
Clesthenes's picture

“The more we dig into this, the more we are afraid they (Fed) do not… understand the nature of the economic problem.”

Let’s do a reality check: the criminal class never does anything unless those pulling the strings have a particular purpose in mind.

In this case, the purpose is a centuries-long aim to annihilate American ideals.  An early mention of it surfaced in the London Times over a century ago,

“If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe.” -- The London Times responding to Lincoln's Greenback notes

Actually, this operation has its origin in debates in the English parliament when the Treaty of Peace of 1783 was forming.

What we are witnessing now is probably the final stage of this English (and their Judeo-Bolshevik money lenders) attempt to “return America to obedience”.

The evidence is all around us, even in publications issued by the Fed and US Government.

I recently examined a Financial Report of the US Government. I found, for example, that government accountants made 75-year projections as if the government would not pay interest on its debt instruments during that time.

And then there were street gangs and drug cartels, the government’s – and China’s – role in arming, protecting and forming alliances with such gangs and cartels… and a dozen or so other items.  They all point to a conclusion that a vast operation is being perpetrated…  I began this Part 2 (of my examination) with the question, ‘What financial shock do Judeo-Bolsheviks plan?  (Part one and Part two)  Do they plan to inflate the dollar to zero… push stocks to 300 times PE, then slam them to 5%-10% of highs… repudiate the federal debt… replace Federal Reserve bank notes with Treasury bank notes…?’…  And, how do China’s ghost cities fit into this unprecedented operation?  ... I would like to think that Americans could stop this horror; but, I don’t think it’s possible.  They are a conquered nation; not by ordinary warfare, but by a lethargy induced my medication, an ignorance molded by indoctrination, to name a few degradations.

Mon, 06/01/2015 - 10:55 | 6151723 dizzyfingers
dizzyfingers's picture

Excellent link. Thanks

Sun, 05/31/2015 - 17:13 | 6150026 Herdee
Herdee's picture

And here I thought that The Fed never paid attention to The Tylers.Looks like James Rickards was right.Personally I still think they should all be arrested and jailed as national security threats.I still can't understand why The U.S. Government hasn't seen it yet and why they can't see the economic dangers which are destroying the country.Ya got to wonder how they let a gang of crooked banksters wipe out one of the greatest countries ever.

Sun, 05/31/2015 - 17:31 | 6150098 lasvegaspersona
lasvegaspersona's picture

Bankers just play their part.

It was the government with the spending and the debt (driven by us the voters, always happy to get a little more easy money) who got us here. Monetary policy is the usual suspect. Printing fiat is sooooo  easy. If savers could step aside and keep the value of their savings intact this whole show would just be boring. As it involves our retirement funds and the ability to keep employment it has everyone's attention.

Sun, 05/31/2015 - 18:43 | 6150254 El Vaquero
El Vaquero's picture

"I still can't understand why The U.S. Government hasn't seen it yet and why they can't see the economic dangers which are destroying the country."

 

Siimple.  Their paychecks depend on them not seeing it.

Sun, 05/31/2015 - 20:18 | 6150441 Calmyourself
Calmyourself's picture

ELV, right to the point of it as usual.  That is key all of them. MIC, Pols, Elites depend on it which is why this shitshow will continue for years unless there is a triggering event and really it must be so climactic as to negate the power of the printing press, now what could that be: WAR.

Sun, 05/31/2015 - 18:44 | 6150258 Ckierst1
Ckierst1's picture

I suggest you do some serious research at www.LewRockwell.com and at the von Mises Institute website.  Long story short, there is some serious and treasonous collusion and corruption occurring and the political process is badly short circuited and ineffectual.  It may be that a major governmental and economic shock must occur to jar a sufficient segment of the voting populace from their Kardashian navel gazing to actually restore the republic, assuming they accidentally stumble into voting for candidates who can provide real leadership and solutions.  That's asking a lot of zombies and politicians.  They do still have the vote, after all, although I have more confidence in a positive outcome from four high schoolers, a case of beer and a red Dodge Hemi.

Sun, 05/31/2015 - 17:15 | 6150033 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

I'm guessing Joe "The Forehead" LaVorgna doesn't have an office adjacent to the author of the DB piece.

I worked at a smaller, regional investment bank for 8 years. While the research wasn't coordinated, there was rarely directly contradictory research coming out of any areas of the research department. I'm certain this was no accident, as the department heads within research had meetings to (no doubt) come to various macroeconomic consensus opinions.

Is DB just so fucking big that they have these disparate opinions or is it somehow intentional..?

Sun, 05/31/2015 - 17:16 | 6150039 Herdee
Herdee's picture

I should clarify,I'm talking strictly about The Fed and The International Banking System Members (BIS) being gangsters and a threat to The U.S.

Sun, 05/31/2015 - 17:21 | 6150051 saldulilem
saldulilem's picture

Housing crash = deflation = NIRP?

Sun, 05/31/2015 - 17:25 | 6150072 Atomizer
Atomizer's picture

When I began financial blogging in 2007, Mrs Atomizer and I would fight like cats and dogs. Over the years of my lecturing she has become very bright. Ask her about AIG, Bear Sterns, Lehman Brothers, MF Global, London Whale, LIBOR, etc. She can stand on her own feet today. It wasn't a easy feat on my part. She banned me from logging onto Zerohedge many times. 

The last couple of weeks, including this morning. We need to prepare for the real-estate fall out again. Buy up new properties, exclaims Mrs Atomizer. 

 

 

Sun, 05/31/2015 - 20:23 | 6150461 Calmyourself
Calmyourself's picture

"The last couple of weeks, including this morning. We need to prepare for the real-estate fall out again. Buy up new properties, exclaims Mrs Atomizer."   I am missing the sarc right...

Sun, 05/31/2015 - 23:30 | 6150819 Atomizer
Atomizer's picture

Regretfully no. We're ready to buy more Quantitative Easing properties that have gone tit's up. She has been torturing me for the last three days to do my research. I just give her demographic direction, then head for the beach. 

No sarcasm tag, it's the truth. Been in the doghouse for not being more throughly specific.

She is too preamped, cannot tell her that. Rather keep her in a cognitive mode, will move on when time is right. Just glad she has awaken to our current surroundings. She even is rattling off suggestive stock investments. 

My reply, great honey. Let me check the P/E and how much this company is tide into government subsides. Someone may take the candy away from the baby. 

I love her so much.  :) 

Edit: she doesn't understand put options, have to school her on the logical approach to this fraudulent stock market. 

Sun, 05/31/2015 - 17:26 | 6150074 lasvegaspersona
lasvegaspersona's picture

PCE= personal consumption expenditures?

In medical literature all abreviations must be defined the first time they are used in an article. It makes reading easier and more reliable. Imagine some one reading this at a future date when PCE has a different meaning. It will be gibberish.

Fofoa has a better way to view the mess. I leave it to the individual to sort things out for themselves however.

Sun, 05/31/2015 - 17:29 | 6150086 Q-Q-Q
Q-Q-Q's picture

We are all just sat helpless in our aeroplane seats with Yellen at the controls. A wing is breaking off, an engine on the good wing is out of fuel but we are comforted by the soothing words from the cockpit.

Everything is okay until suddenly it isn't.

Sun, 05/31/2015 - 22:37 | 6150742 Mr. Bones
Mr. Bones's picture

Paraphrased from an actual line in a flight manual:

 

"Please avoid the maximum wing load factor, pilots have reported that the aircraft becomes difficult to control after the wings rip off."

Sun, 05/31/2015 - 17:29 | 6150087 kw2012
kw2012's picture

The Fed will do the same thing as last time, extort the banks to lol off 30% of the mortgage or they will either force someone to jail or force them to take back their toxic paper

Sun, 05/31/2015 - 17:38 | 6150117 aqualech
aqualech's picture

I think people are reading the article wrong. Doosh Bank is saying that it is NOT time to raise rates, and the whole housing argument is just a weird tangent that they blather about to show how smart they are. But...they probably have bad exposure in derivatives and would be hurt if rates rise. So, they are just talking their book when they dis the fed for suggesting a rate hike.

Sun, 05/31/2015 - 17:55 | 6150144 Hyjinx
Hyjinx's picture

"Either way, the idea that the economy is “ready” for a removal of accommodation and that there is any sense in it from the perspective of rising inflation expectations and a stronger real growth outlook is nonsense."

 

So basically the Duchebags at Deutsch Bank still don't get it despite all their "analysis."  We desperately need interest rates to go up to start popping all the motherfucking bubbles the Fed has blown THEN we might consider some semblance of recovery.  So the Duchebags are just advocating more of the usual extend-and-pretend tripe, not much news here other then they are not cheerleading for the Fed anymore. 

Sun, 05/31/2015 - 20:40 | 6150145 Paul451
Paul451's picture

They're only saying what most other CBs are also thinking, including the Fed. The Fed has to unwind. Some day. Somehow. Their problem is they are scared shitless of the consequences because, to paraphrase Gen. Colin Powell "You break the market; then you own it." It's their ass on the line now and the only thing they see is the frikkin' corner they've painted themselves into. Sure, keep telling us rates are going to rise. As if that will cushion the blow. Not a fucking chance. You ARE the market, Ms Fed Chairman. When you raise rates, the real economy will re-assert. Here's a newsflash: the REAL economy is a piece of shit that has had it's price discovery brain sucked out of its skull for the last 7 years. When it awakens, the first thing it will do is eliminate every goddamned mal-investment that has crawled out of the woodwork - and that is just about everything.

Deleveraging looks a lot more promising in hindsight, doesn't it?

Sun, 05/31/2015 - 18:07 | 6150162 datura
datura's picture

Central bankers in general seem to be stupid as hell, because their views do not correspond to reality, they are unsustainable and even if they wanted to restart the "cycle" somehow, they cannot do it the way they are doing it. The biggest problem is that their principle is wrong not just ethically (who cares?) but most of all mathematically and economically. In other words, no matter what they do, it cannot work. 

"Many of the USA founders had also come to appreciate that a system of slavery made no economic sense at all, since it would replace potential consumers with unfree laborers, who could not purchase goods. From 1730s, an increasingly loud chorus of Patriots argued against slavery in general and slave trade in particular both for its immorality and its disastrous economic consequences. Slave societies, they argued, could never be consumer societies."

Adam Smith said: "the work done by freemen comes cheaper in the end than that performed by slaves."

But now of course most people are debt slaves and thats exactly the problem, why consumer societies are collapsing! The bankers are attempting to beat the laws of nature and that just doesnt work. This cannot be solved economically, so perhaps they will start WWIII? But the idea that another world war can restart economy is a very dangerous illusion. We are not in 1930s, the USA does not have the robust industry it had then, weapons are much more destructive and would destroy all economies, there would be no (economic) winner left in fact. And you may include the risk of nuclear winter, which would mean that our dear bankers would die as anyone else. So what now? They are now in a blind alley with no possible solution. 

Central bankers are essentially managers (very stupid managers) and they do not understand reality. They are too retarded to understand anything. It reminds me of this video and the most hilarious words: "So what exactly is stopping you from doing it?" "Geometry." "Just ignore it."  Unfortunately, most Westerners are even more stupid than the bankers, so they keep playing these utterly stupid games with them. What does that say about humanity. It seems that as a species we are failing miserably. Perhaps now monkeys will get their chance. Rest assured that there will be no real NWO, because that goes against the laws of nature. For example, try to have a total control over a complicated ecological system and you will instead only destroy it. Anything too much controlled and uniform (and too big) dies fast in this universe, because it looses its ability to adapt to forever changing conditions. And nature keeps testing us all the time, if we are able to change fast enough or not. So NWO is impossible. In the worst case, the nature will just restart itself without us and try something else, when our species are proving to be the same mistake as dinosaurs. https://www.youtube.com/watch?v=BKorP55Aqvg

Sun, 05/31/2015 - 21:32 | 6150606 STP
STP's picture

Another very insightful post!  I remember the last, most excellent "Go Home Yankee" post,  just recently.  That was a good one too!

Mon, 06/01/2015 - 09:24 | 6151477 Quinvarius
Quinvarius's picture

Madoff was also doing something unrealisic over the long term.  But in the short term, he was having fun stealing everything.  I don't think we can say the banker motive has anything to do with economic success.  They are doing what makes them better off.  They have aquired the printing press and will use it for themselves and their friends.  They will make any excuse to use it for their own benefit.  But, if they don't like someone, say...Greece, they will withhold it.  They don't need to know anything about Adam Smith or the economy.  All they see is an easy way to get what they want for themselves today. 

Sun, 05/31/2015 - 18:10 | 6150168 the grateful un...
the grateful unemployed's picture

fed is a gse: yellen = obama: did you like the last eight years? want to do something about it? : vote for bush or clinton : rinse and repeat every eight years

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