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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 - 18:22 | 6150198 VW Nerd
VW Nerd's picture

That the central planners are contemplating and discussing the idea of banning cash amounts to a declaration of failure in my opinion.  As for the St. Louis Fed.....nothing angers evil decievers more than truth!  Thanks ZH.

Sun, 05/31/2015 - 18:30 | 6150213 Not if_ But When
Not if_ But When's picture

Well, Jamie Dimon recently called J.P. Morgan shareholders lazy for listening to reason rather than just giving him a lock-step pay increase.  This occurs about the same time they are laying off 5000 useless (therefore paycheck robbing) lower level employees who apparently provide zero value while raiding company coffers.

I know this sounds (somewhat) o/t, but nothing that J.P. Morgan does is really off topic when discussing the Fed.

Sun, 05/31/2015 - 18:27 | 6150203 saveUSsavers
saveUSsavers's picture

Sounds like a fucking plea for more free money to me, FUCKING PHONEY BANKSTER ARSEWHOLES

Sun, 05/31/2015 - 18:27 | 6150206 goosee
goosee's picture

Why no mention of the Hedges that have gobbled up so many houses and exert rent inflation

Sun, 05/31/2015 - 18:28 | 6150209 techstrategy
techstrategy's picture

It is ultimately the Fed's owners, the TBTJ fractional reserve banking control fraud operators, who have crashed the US economy.  Abby system run for those who consume and destroy value at the expense of those who create it is certain to collapse in real terms and eventually fail.  The ENTIRE privately controlled fractional reserve banking "money" (phantom debt) system is at its core, a control fraud.  Private seigniorage (for ORDERS OF MAGNITUDE MORE "MONEY" CREATION THAN THE FED) and public inflation.  At least with Sovereign money, the seigniorage goes to the public coffers.  In fractional reserve banking, it is just theft from producers and those who invest of savings by a few families and TBTJ banks.

Sun, 05/31/2015 - 18:50 | 6150273 El Vaquero
El Vaquero's picture

The kind of BS we are witnessing is baked into the cake with fractional reserve banking.  We hit a wall in 2000, and since then, the so called growth has increasingly been based on fraud and bullshit. 

Sun, 05/31/2015 - 21:41 | 6150625 STP
STP's picture

Fraud and Bullshit?  That's a nice euphemism for "Hope and Change".  The Wall Street Playahs, have Hope, that the way it is, will NEVER change.  But we know better, bitchez!  I can smell the fear, from here.

Sun, 05/31/2015 - 18:31 | 6150215 rejected
rejected's picture

There is no need for central banks. They're nothing but a backstop for their counterfeiting member banks. The Treasury is what should handle the nations money. To say a central bank is somehow immune to politics is hilarious.

What is happening right now was predicted by those trying to talk sense to irrational people before Congress approved it. They were the tin foil hats of that day just as ZH is today. Problem for the bankers and industrialists is,,, they were/are both right.

They have turned our money system into a credit usury nightmare. They want to complete the job before their time runs out by trying to eliminate the commoners last grasp of independence and dignity.... cash.

The bank needs to be nationalized, it's worthless debt money burned and a real money system re-established. Never again should we use debt money and an independent audit of the Treasury at reasonable intervals should be established and available to the public. Any fraud of the type we are experiencing now should be cleaned up and those guilty severely punished. 

Exactly how to resolve this,,, hopefully peacefully,,,  is unknown to this poster but nevertheless something needs done.... stat!

 

Sun, 05/31/2015 - 18:42 | 6150252 Nimby
Nimby's picture

I see a role for a "central bank" (or some other similar entity) in maintaining a national currency, which would be pegged to a basket of state currencies.

But that will only happen on the flip side. 

Sun, 05/31/2015 - 18:51 | 6150279 El Vaquero
El Vaquero's picture

I see no role for a central bank.  Any currency needs to be tied to something hard and in a very hard way.  CBs will fuck it up. 

Sun, 05/31/2015 - 19:08 | 6150318 techstrategy
techstrategy's picture

Wouldn't be that hard.  Have US Treasury buy up nearly unlimited gold via futures and the entire GLD. If the GLD cannot deliver the allegedly allocated and audited gold, the Sponsors and Authorized Participants (a who's who of TBTJ banks) would unequivocally be guilty of fraud...   The US Military could truly be a force for good and ENFORCE all the gold contracts, reacquiring all the gold from the banking families and TBTJ banks, thereby ensuring complete restitution for a century of ill gotten gains from private seigniorage and public inflation.  US Treasury again controls the nations currency and the bankers have to actually add value (through lending to producers with 100% reserved funds) rather than effectively stealing from producers and those who invest of savings via their fractional reserve banking control fraud.

There is 1 and only 1 semi stable path out of this mess.  Liquidate their control frauds (TBTJ mark to unicorn "equity" and negative cash flow from Operations and Investing Protection Rackets like AMZN and NFLX) to acquire real options without expiration senior to their phantom claims -- that would be physical cash, ST UST and gold.  Once you build a huge buffer (30% of gross assets), redeploy to domestic producers who have been systematically undermined by the TBTJ/Fed's attempt to perpetuate the financial asset and consumption ponzi.  

Let PBOC, BOJ, SNB and the TBTJ control fraud operators buy the financial asset and consumption ponzis while you redeploy to invest in our domestic self sufficiency and resiliency (and real assets of course)...

Mon, 06/01/2015 - 00:21 | 6150728 honestann
honestann's picture

Can't work.  Doesn't work.  Never has worked.  And definitely never will work.  PERIOD.

-----

As long as human are morons and believe "fictitious entities" are real, human predators will rape everyone else.

As long as any kind of fictional "authority" is widely recognized and accepted, and "power" exists, no matter what forms, the worst human predators on the planet WILL gain control and manipulate those fictions to screw all honest, ethical, productive, benevolent human beings.

NO RULERS... is the only "system" that works.

Mon, 06/01/2015 - 11:12 | 6151763 dizzyfingers
Sun, 05/31/2015 - 18:31 | 6150216 sTls7
sTls7's picture

Exerimentation and Keynesian economics right out the window.  Crash baby crash. Let it happen.

Sun, 05/31/2015 - 19:25 | 6150236 knowshitsurelock
knowshitsurelock's picture

Alot of fancy charts and long winded sentences with multi syllable words.  Let me sum it up for ya.

The banksters created a bubble of debt, tapped everybody out, leveraged everything out several decades into the future, then pulled the plug and shrunk the money supply, bankrupted the middle class and stole their homes, and transferred all the liabilites to the public side.  AND now they come to us and tell us that they can't fix their raping and pillaging fuck up?

I'm sorry but most of us don't give a shit.  We are not going to buy their products, drink their fluoridated water, eat their GMO foods, or buy their overpriced houses, or take on any more of their loan sharking interest rates for credit cards or auto's

In other words, we don't want to play "rape and pillage" anymore with the pirates of Wall Street, or their cronie globalist butt buddies.  So let the chips fall where they may, and don't ask us to go globalist fiat monetary system either when the current one collapses.  I ain't buyin that lie either.

continuing my rant

I'm one of those who lost their house and their savings.  They came after me for credit card debt and there was nothng left to get.  I live in an overpriced rental, driving a 10 year old rig, and live paycheck to paycheck.  I have no more debts, and I have no assets to take. My credit is shot.  My neighbors are getting evicted as the rental market has reached peak pricing.  I don't know whose couch they are sleeping on, but their credit is screwed where they can't rent anything.

So, if no one can afford to rent and no one can afford to buy, then how do they plan on keeping the ponzi scheme going?  The jig is up I think.

Sun, 05/31/2015 - 18:39 | 6150239 kchrisc
kchrisc's picture

Ever since the dollar began its, in my view, artificial and engineered rise, the bankster grifters have become way more forthright than normal (ever), and that has my "tin hat" a tingling.

Since, to me, it is obvious that the dollar is up on "exit," it would seem to me that either the banksters are in CYA-mode, or are reading from a script. I lean to the latter.

Regardless, it does not bode well for the future when the thieves begin to espouse truth.

Liberty is a demand. Tyranny is submission..

Sun, 05/31/2015 - 18:56 | 6150285 El Vaquero
El Vaquero's picture

I lean towards the CYA mode.  I'm sure they've seen a lot of talk about things like rope and lamp posts and guillotines and want to be able to say "but, but, but we WARNED you!" 

 

Most people are too ignorant to understand that, once Lehman broke, a few diligent people figured out how the system really works and warned them, while they continued with BAU.  Tough shit, Douche Bank. 

Mon, 06/01/2015 - 16:31 | 6152988 TeethVillage88s
TeethVillage88s's picture

Maybe this is how they formed the big kingdoms in the past.

A slow but steady pressure and buying up of smaller kingdoms, putting them under Norman Lords, Barons, Kings... or Roman Rule by force and Regulations.

It doesn't have to be a new Kingdom, could be any Dictator system... Under Treaties, Trade Deals, Central Government.

Honest & Forthright shows power & authority. Confidence.

Prussian Educational Goal: The State is the Ultimate Authority, before individuals, family, God, State, Constitution.

Sun, 05/31/2015 - 18:52 | 6150281 techstrategy
techstrategy's picture

Tyler's: why don't you clarify that "Central Planning" is really just trying to perpetuate a monetary system that is, at its very essence, a control fraud.  And that the Fed is controlled by TBTJ banks?  Call this crap for what it is.  A century of private "money" creation from accumulated and derived phantom fractional reserve claims with socialized losses via inflation...

Then the TBTJ control fraud operators use three "money" they've created from nothing to buy the regulators, Department of "Justice" and the rest of government.  

 

It's good to be "Chosen" and run the Capital Committee, feeding yourself from "money" created from nothing while engineering duress for everyone else.


Interest rates have had to drop or the fractional reserve banking phantom debt ponzi would collapse as cash flows cannot service the accumulated and derived phantom claims.  In the past, the TBTJ banks have benefitted from boom/bust cycles because they stayed in senior (though phantom) claims, taking possession of real and productive assets as others overlevered...  Because there is no trust left and those with financial assets are older, no one is leaving bonds which are senior assets (though completely unproductive...).  

 

There is 1 and only 1 semi stable way out of this mess... Reliqifying the system and inflating away ponzi debt via gold.  Stay gold Ponyboy.  Stay gold.

Sun, 05/31/2015 - 18:58 | 6150291 El Vaquero
El Vaquero's picture

I don't see even a semi stable way out of the mess.

Sun, 05/31/2015 - 22:08 | 6150679 honestann
honestann's picture

Most people assume STABLE === STATUS-QUO.

-----

So if accept that meaning of stable, there CANNOT BE a stable way out of the mess, because the status-quo scam rewards INEFFICIENCY and rewards DEBT.

While an individual, corporation or fictitious nation is going deeper and deeper into debt, their "apparent" or "current" economy looks GREAT.  That's because borrowing to buy stuff pulls goods, goodies, demand, production and economic activity from the future to today.

THE FUTURE HAS ARRIVED.

BUT THE FUTURE HAS ALREADY BEEN SPENT.

For the past 30~50 years individuals, corporations and fictitious nations have been GOING DEEPER AND DEEPER INTO DEBT.  This necessarily created unnatural and inherently non-sustainable economic activity for those 30~50 years while individuals, corporations and fictitious nations spent their income PLUS all they borrowed.

-----

The predators-that-be are 100% dedicated to the proposition that THEY will remain rich and powerful, no matter how egregious the consequences to everyone else.  Which is probably why many of them intend to oversee the extermination of 90% to 99% of the world human population to "solve that problem".

Far too high a percentage of individuals, corporations and fictitious nations are already so far in debt that they cannot continue to increase their debt much more, or much longer.

At some point, an individual or corporation or fictitious nation spends so much servicing their past debt that they have insufficient funds to stay alive or continue current operations.  But it never gets that far, because someone in the chain always decides to stop supporting the borrowers.

In a sane world, that would have happened decades ago.  But in a world totally based upon fiat, fake, fraud, fiction, fantasy, fractional-reserve debtware... insanity can be pushed to extreme lengths before the system explodes.

And it has.

But even that scam is getting beyond the point where it can continue.  The only way to go much further is to make the entire world economy 100% fiat in every way... totally fake, which means, total central planning.  But that is the least efficient way for humans to function, and so reality will put a stop to that rather quickly as productivity drops through the floor.

Already productivity has dropped very substantially... if you measure productivity in any honest manner.  If the quantity of fiat generated the past 7 years had been invested efficiently, the world economy would be booming.  But central planning is ALWAYS inefficient and ALWAYS self-serving to those who control planning and execution.

And so... GAME OVER.

The only question that remains is... how fast the system explodes, and how it happens, and who gets trashed the worst.

On that topic...

A message to anyone who has savings and no debt...

YOU ARE THE TARGET.

Get yourself and your wealth outta dodge, and well hidden... because the predators-that-be WILL SOON STEAL ALMOST EVERYTHING FROM YOU.  By outta dodge, I mean at least the large western nations, but probably 3/4 the nations on the planet.

Time is short.

Time to act.

Mon, 06/01/2015 - 01:38 | 6151007 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Always good posts from you, Honestann. Frankly, I am starting to fret about pulling my money because if banking goes down I will not have access to alternative banking either. So, I agree that I should seriously start thinking of pulling my money from the TBTF right now, but realistically I should wait until the last few days before the run manifests. I suspect that if Greece does go I will have to pull my money here in CANADA within two weeks of their contagion run. They are running today, but contagion has not quite hit yet. I figure two more weeks and Greece will be telegraphing BIG time. You are bang on with this call to get the fucking hell out of TBTF right now, I fully agree with that.

Tue, 06/02/2015 - 18:47 | 6154500 honestann
honestann's picture

If you are VERY observant, and VERY good at reading signs... you MIGHT be able to get some of your assets out before the predators stop you.

But I believe you are taking an ENORMOUS risk trying to extend the "convenience" of letting others hold onto your savings.  After all, you're gonna have to deal with this eventually, so I can see no way to justify taking the degree of risk you are taking.

I don't think extracting yourself from TBTF is sufficient.  The TBTF have the power and the will and the incentive to suck ALL funds from ALL financial companies of ALL types, and they already have the power to do so (total control of the predators-that-be AKA federal-government).

If you want to wait until the last week, day, hour, minute... that's your decision.  But I think that's just crazy, and suggest you convert your savings into physical gold and/or silver, and HIDE IT WELL.  And get outta dodge!

Mon, 06/01/2015 - 05:25 | 6151198 Tinky
Tinky's picture

Good, clear, relatively terse post, Ann. 

Hope you're well.

Sun, 05/31/2015 - 19:05 | 6150305 gatorengineer
gatorengineer's picture

Well maybe just maybe the fed is waiting out Europe, Japan, and China.....  All three are teetering pretty badly, they go in the drink and its king dollar time.... for a while at least.

Sun, 05/31/2015 - 19:20 | 6150312 cherry picker
cherry picker's picture

Off Topic

Why aren't Constitution and Bill of Rights minded Americans filling the streets of DC in support of those 3 senators opposing the Patriot Act?

Or do the citizens like to be controlled and told what they can or cannot do?

Sun, 05/31/2015 - 19:12 | 6150325 Well Hungarian
Well Hungarian's picture

Way to go Tyler...it must be nice to have free rent in that douchebag's head!

Sun, 05/31/2015 - 19:18 | 6150328 MagicMoney
MagicMoney's picture

For Janet Yellen to "plan a housing crash" would go everything she was trained for and everything she believed in. Yellen comes very much from modern monetary policy theory that is basically neo-keynesian - to fix the problem of poor growth and high unemployment, the central bank must accomodate or create some inflation, because inflation = growth! That's what she believes in. I would imagine it would be difficult for her to change her thinking to the opposite direction. 

 

About the Fed lying. Of course the Fed will not admitt there is problems. It all goes back to the psychology-linked animal spirits of Keynesianism. If you simply mislead people into thinking the economy is ok, then people will have invest, and spend based on the wrong impression, but even investors must know that the Fed's stories are not true, but it shows how rigged and controlled the market is by what the Federal Reserve says matters more than the actual state of the economy. It's investors that are reacting to the Fed, not the actual economy itself. As if the economy itself doesn't matter, only what the Fed says, and does. That's how much control the Fed has over the economy. Not matters reality, only words from the supreme institution.

Sun, 05/31/2015 - 22:00 | 6150671 STP
STP's picture

The Markets are duplicating, exactly, Pavlov's Dogs Theory!   Every few months, the markets await for the magic words from an FOMC meeting about raising the rates.  They salivate and drool all over themselves until the 10 AM Press Release and suddenly, bam, the words come out:  "Accomodative", "Patience", "Maybe later on (much later on, like never)".   And the result is the market shoots upwards and Unicorns barf Skittles into everybody's trading accounts.

They talk about leaked information, but that's just some of them, hearing the can opener.

Mon, 06/01/2015 - 00:15 | 6150894 Pareto
Pareto's picture

+1 for the Neo Keynesian review.  Its important to see that because inflation doesn't equal growth.  First inflation is an increase in the money supply - any older dictionary tells you that.  But second, price inflation doesn't equal growth - it only means that the price of shit has gone up and that can be for a variety of reasons that have nothing to do with "growth" - presumably economic growth.  There is a littany of work that has been done on this since the late 40's, culminating with Lucas (1976), in my opinion.  There has been jack squat done on this since.

I think the FED can no longer be seen as a credible institution for managing money or pretty much fuck all else because they continue to employ the same rhetoric while praying for different results.  They will never figure this out becasue the market is always ahead of them doing the exact opposite of what the FED expects.  They have never gotten it right and they will get this fucking unwind wrong too.  The FED has destroyed capital, price discovery, and has aggressively overestimated the value and availability of collateral.

Indeed, it is a supreme insititution spewing supreme bullshit and eventually the market will call them out one way or another.  It always has, and it always will. 

Sun, 05/31/2015 - 19:15 | 6150331 reader2010
reader2010's picture

"For the west, I do not feel hatred. At most I feel a great contempt. I know only that every single one of us reeks of selfishness, masochism, and death. We have created a system in which it has simply become impossible to live, and what’s more, we continue to export it."

- Michel Houellebecq, Platform

Sun, 05/31/2015 - 19:17 | 6150335 JLM
JLM's picture

Once you understand that the Fed exists only to serve the interests of the rich, everything they do makes sense.  Trying to understand their actions in terms of economic theory is an act of insanity and will only frustrate you.

Sun, 05/31/2015 - 19:21 | 6150340 TulsaTime
TulsaTime's picture

Any engineered crash at this point is lunacy. The entire system is so over inflated from the oligarch's feeding frenzy that it is one day away from the global meltdown that they feared in '08. Greece could kick it off, or China could kick it off, or Russia v Ukraine, or any of a thousand corporate collapses that are hanging by a thread. And they speak of interest rates with a straight face? 

IT.IS.TO.LAUGH

Sun, 05/31/2015 - 19:34 | 6150369 BoredRoom
BoredRoom's picture

There are but three truisms in the world of BoredRoom
1) BoredRoom is STD Free as of 5-29-15
2) Lil'Debi is disease free as of the same date.
3) Lil' Debi enjoys grinding her snatch on...................BoreRoom posts at record lows

Sun, 05/31/2015 - 19:36 | 6150371 lindaamick
lindaamick's picture

The fact is that since the 2008 crash wages have deteriorated and asset prices have risen.  Any high school economics student understands that the masses spend their money on basics thus creating demand and keeping money circulating.  

Providing trillions of dollars in zero percent loans to financial institutions who crashed the system in the first place and who are crooks and therefore distrust other financial institutions because they are crooks as well, has led to our current situation. Banks aren't lending.  They are speculating at the global casino tables.

Either the plan is to create a plantation with a few overlords who ride roughshod over the rest of us or the plan is for the elites to take their cash and move to Geneva or somewhere else and leave the US to rot.   Hard to know.  

At any rate I find it very hard to believe that the past 7 years is the result of misguided leadership.  I think these people know exactly what they are doing.

Sun, 05/31/2015 - 20:10 | 6150420 Sandmann
Sandmann's picture

Bankers are like Lawyers existing only to exploit the situation for personal gain.

Neither is supposed to be anything more than a service provider but both have swallowed the economy in rampant rent-seeking activities and become bloated Mafiosi

Sun, 05/31/2015 - 22:46 | 6150767 Mr. Bones
Mr. Bones's picture

What baffles me is the idea that somehow "misguided" leadership is better than evil leadership.  Choosing ignorance in ignorance vs malfeasance doesn't change the outcome.  As has become abundantly clear, when the little people are unsuccessful they pay for it - and their motives are never questioned.

Sun, 05/31/2015 - 19:41 | 6150375 GRDguy
GRDguy's picture

Geez, it was obvious to clear-thinking men even in 1913:

"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson] signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill."

"From now on, depressions will be scientifically created."

-- Congressman Charles A. Lindbergh Sr. , (1913)  Yes, the famous aviator's dad.

Sun, 05/31/2015 - 19:59 | 6150390 Doug
Doug's picture

Deutsche Bank??  Joe LaVorgna... is that you??

Sun, 05/31/2015 - 20:21 | 6150427 God Bless The V...
God Bless The Virtuous's picture

Spot on!

We are mired in a deflationary depression caused by the progressive policy makers who always know best!

Academic's like that asshole Alan Blinder, Robert Reich and of course Bubble Blowin Ben!

Don't get me started on Barney Frank,Chris Dodd, Hank Paulson, Geithner, Gensler, Sperling and on and on

This shit has gone on way to long, my concern now is the Soros funded and Clinton controlled PROGRESSIVES of both parties(Obama is just a useless idiot, he is to much of a true radical socialist for the likes of the Clinton's), are ready to drop the hammer! What does the endgame look like? The useless pricks at the SEC and all the other wonderful rule making bastards are secretly doing their witchcraft far from the light of day and the eye of the American worker!

We need,more than any point in this Republic's history, for men and women who respect the constitution and love the country to restore her honor and glory, not let it be lost or "Transformed" into a socialist Alinsky paradise after

One, Big, Ass, Mistake, America!

Sun, 05/31/2015 - 20:17 | 6150437 fremannx
fremannx's picture

The Fed's debachle handling of the economy for the last four decades is the cause of the largest credit (debt) bubble in the history of mankind...

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...

 

As for another housing crash, it is inevitable...

http://www.globaldeflationnews.com/inflation-vs-deflation-part-3how-the-...

Sun, 05/31/2015 - 20:21 | 6150454 BoPeople
BoPeople's picture

The Fed and the other parasite cronies are not wrong.... they simply lied.

Sun, 05/31/2015 - 20:43 | 6150503 gwar5
gwar5's picture

ZH is really pissing off TPTB. They must be feeling a little desperation. And David Andolfatto sounded a little unstable to me in his tweet. So these are the unelected, unaccountable creepy people that would presume to run the world?

Gotta love it. Dandolfa better be careful because mental bankers have been known to fall off tall buildings. Personally, I rather thought he was forensically leaking because global warming is another fraud to pay moar taxes... to pay the bankers. Same same.

Mon, 06/01/2015 - 04:37 | 6151165 BoPeople
BoPeople's picture

I am pretty sure the bankers do not think of themselves as evil, only wishing to benefit themselves and those that they perceive as their own or helping their cause. They may feel that others do not matter or possibly are in competition with them.

They and their friends get fiat rich and "to hell with the rest of us".

From one perspective ZH is shining a light on the hypocrisy that allows them the delusion that they are not evil. This may be the realization that Dandolfa is trying to deny. (anger, denial ... blah, blah). He tied his ass to Satan and now he is questioning why things are getting warm.

Mon, 06/01/2015 - 05:03 | 6151186 BoPeople
BoPeople's picture

BTW, TPTB do not care about how they stay in power, only that they do. One way they have historically done this is to control both sides of the argument (for example, they control both democrats and republicans) ... and sell-out the old to control the new.

They truly only fear the populace and depend on keeping the populace either hopeful or fearful.

Sun, 05/31/2015 - 20:54 | 6150523 Duck and Cover
Duck and Cover's picture

Full Moon ........

Monday night .....

 

Sun, 05/31/2015 - 20:56 | 6150527 chistletoe
chistletoe's picture

won't be no stinkin housing crash, this time around, on account of,

while the Fed raises the rates a notch or two up front,

they will ALSO be buying houses to add to their balance sheet, out the back ....

Sun, 05/31/2015 - 21:12 | 6150556 gimme soma dat
gimme soma dat's picture

The "next housing crash" already here.  FYI. 

Sun, 05/31/2015 - 21:17 | 6150568 J J Pettigrew
J J Pettigrew's picture

The Dow was making new highs in 2007 with near 5% interest rates..

now, the Fed is scared to death to raise 1/4 pt.......... in fear of creating a market selloff..

heaven forbid the market goes up and DOWN..

academics in power is the most dangerous situation

Sun, 05/31/2015 - 21:18 | 6150569 J J Pettigrew
J J Pettigrew's picture

The Dow was making new highs in 2007 with near 5% interest rates..

now, the Fed is scared to death to raise 1/4 pt off of ZERO.......... in fear of creating a market selloff..

heaven forbid the market goes up and DOWN..

academics in power is the most dangerous situation

Sun, 05/31/2015 - 22:09 | 6150683 STP
STP's picture

Funny, how they have all these 'Circuit Breakers' on the Markets, in case they go down too far, too drastically, but there's nothing like it, for the other direction...

Mon, 06/01/2015 - 04:49 | 6151174 BoPeople
BoPeople's picture

They are not so worried about it going up and down as being exposed as the cause of it both going up and down. It would reveal that there is no market and if there is no market then every bit of money taken from people, using the market, has been done under fraudulent circumstances.

Wall Street would of course never have to answer for that fraud and make recompense. However, they should.

The Fed and the corrupt crony international banks that own it would most likely prefer not to be known more broadly as the bane of humanity. It would limit their ability to lie, cheat and steal and to control humanity globally.

Imagine if one day politicians were confronted with a populace, (including a military, police force and other government workers) who woke up to the fact that the politicians have been accepting bribes to allow the banks to steal from and enslave the people. The politicians would have no place to hide and would be forced to take actions against the banks or else suffer consequences themselves.

If this happened en masse then it would be bye-bye bankers.

Sun, 05/31/2015 - 21:21 | 6150578 sevensixtwo
sevensixtwo's picture

The Fed's plan is to crash the economy.  That is the only end-game to cover up the crimes committed to usurp control of at least some significant portion of the Fed from its rightful owner.

Mon, 06/01/2015 - 02:28 | 6151069 bunnyswanson
bunnyswanson's picture

Hope you do not mind if I sneak this latest Karen Hudes video onto the thread.

The links she offers are essentially copies of emails or observations/recorded actions Karen has taken over the years to reveal corruption within World Bank, IMF.  These banking institutions, Karen states, have been hijacked by this arm of financial bandits and are to blame for the banking debacle we find ourselves in.  According to her, a group are preparing a currency to replace FR notes and introduce them to the US before the dollar loses all value. 

Can we have a discussion about this, please Tylers?  Should this be ignored is what I wonder.  Many are holding onto her information like a life raft.

https://www.youtube.com/watch?v=MhTvsDuP-rg

The Network of Global Corporate Control May 12&26 Karen Hudes (60 min)
Sun, 05/31/2015 - 21:24 | 6150590 bugs_
bugs_'s picture

Its OK for Zerohedge to pick on the Fed but HEY didn't DB  get bailed out?

Its like Gross bitching at the Fed but only AFTER he unloaded his toxic assets to them.

Sun, 05/31/2015 - 22:20 | 6150702 JoWazzoo
JoWazzoo's picture

FUCK all banks, central banks and ALL bankers.  Fuck em all!

Sun, 05/31/2015 - 22:25 | 6150714 Bear
Bear's picture

I'm glad someone in the FED system is reading ZH

Sun, 05/31/2015 - 22:28 | 6150722 spanish inquisition
spanish inquisition's picture

The Fed will not do anything until Blackrock and GS have sold/covered their positions.

Sun, 05/31/2015 - 22:32 | 6150731 moneybots
moneybots's picture

"And now, 7 years after the start of the Fed's grand - and doomed - experiment..."

 

How was it an experiment, when Bernanke knew in 1988 that it wouldn't work?

Sun, 05/31/2015 - 22:35 | 6150739 moneybots
moneybots's picture

"consumer demand is decidedly weaker than it was pre crisis."

 

Of coarse.  Nothing has been fixed.

Sun, 05/31/2015 - 22:41 | 6150752 Porous Horace
Porous Horace's picture

This can't be right. The FED employs more PhD economists than anybody, and they have economic models running on huge super-computers with lots of blinking lights and pinging noises. Why don't you trust your masters, ummm... I mean public servants? As usual, I will withhold judgement until I hear what Jim Cramer has to say.

Sun, 05/31/2015 - 23:11 | 6150813 JoJoJo
JoJoJo's picture

More good news about Fed- Fed low interest policies has robbed savers of over 470 billion dollars (very conservative number). "Robbing Grandma to Pay Goldman" Source: Report from Swiss bank Re as American banks not so anxious to report such truth

Sun, 05/31/2015 - 23:16 | 6150818 dexter_morgan
dexter_morgan's picture

raise rates. brilliant

Mon, 06/01/2015 - 00:28 | 6150921 SirBarksAlot
SirBarksAlot's picture

Is this a test run for the ensuing blame game?

Or are they just going to nuke us into oblivion and skip the explanation?

Maybe the plans to nuke the nation have been met with opposition by brave generals in the army, who get fired en masse and people whose planes later crash while flying over France and generals in Oklahoma who get fired for refusing to attack their own nation.

Maybe this is a test run for "Plan B" just in case they run out of traitors who will sell out.

Mon, 06/01/2015 - 00:36 | 6150942 LightWalker
LightWalker's picture

  It just kills me when people say the Fed doesn't know what they're doing.

  This isn't their first rodeo, these multi generation banker familys have done this for centuries, although this time they intend it to be the last grand finallie. They think they have still got the people brainwashed and asleep that they can suck out every last drop, burn down the system and start again with total control.

  But they didn't comprehend the scale of this mess and the real number of people that know or are learning of the true corruption and fraud they have enslaved the world with. Some of these psycopaths think they still have it in the bag, but many have realized and switched sides or been removed, nail gun suicide....wow.

   The Fed is out ,done, stick a fork in it!

Mon, 06/01/2015 - 00:42 | 6150951 acetinker
acetinker's picture

I admit, I didn't read all that, but it feels good to be dead, don't it?

Mon, 06/01/2015 - 03:52 | 6151143 foghorn leghorn
foghorn leghorn's picture

I read it. Its pretty much everything zerohedge has been posting here all along with an I told you so added to it. lol who's the one wearing the tin foil hat right now?

http://cdn1.politicaloutcast.com/wp-content/uploads/2013/11/krugman-tin-...

Still looking for aliens to bail out the economy.

Mon, 06/01/2015 - 02:48 | 6151097 hedgiex
hedgiex's picture

The poison to foist by CBs in raising nterest rate is to protect further erosion of trust in fiat currencies. Far more disastrous for the Oligarchs. Rasing interest rates while spinning on inflation from an improving economy is a  damage control to themselves LIE.

Yes, the poison shall cause unsustainable debt leading to collapses thus what really matters to preys (unemployment). Hopefully, no doomsday as many retards around that still suck the spins and let this needed debt eradication to fall where it deserves. Meantime, you bet the Oligarchs are not in the rain though they may take a small harcut and keep the game going.

Surely, debt forgiveness will be more equitable but never the intent to administer it as the multiplier effect is a far greater uncontrollabe haircut.

All have been calculated.

Mon, 06/01/2015 - 04:11 | 6151153 UBC
UBC's picture

Want to increase the velocity of housing?  Repeal Section 121(b)(1) of the tax code.

(a) Exclusion

Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.

(b) Limitations

(1) In general
The amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000.
Mon, 06/01/2015 - 04:15 | 6151154 foghorn leghorn
foghorn leghorn's picture

Whatever increase in demand (goods, healthcare etc.) that we've had up till now is more due to an increase in both legal and illegal immigration than anything else the Fed has done.  This is equivalent to taking out loans to pay off your ever growing debt. It won't last for long which is why the oligarchs have sent their manufacturing, money and even themselves to foreign countries away from the USA. These oligarchs speak a lot of junk but their actions actually speak much louder than words. For those of us who have studied anthropology we know that actions speak much louder than words.

What the Fed and the banksters are doing is equivalent to a homeowner who has an above ground pool with a tiny hole in it. Rather than drain it then patch it up, the homeowner decides to pour in more water. As the hole gets bigger the homeowner increases the amount of water into the pool but unbeknowest to him his back yard is already drenched with water. Never mind the water bill because the intention is to not pay it in full.

So one day the owner notices that the yard is now full of water and that it may actually seep into the house. So he takes all of his belongings and family out of the house but leaves all of his servants (maids and other workers) and their belongings in the house. He at the same time hires more servants but forbids any of them from going anywhere near the yard. So no one but the owner and his family know what is really going on. So now that the whole in the pool has grown even bigger and the water bill is through the roof. The owner (Fed) decides to increase the water supply (QE) to make up for the gaping hole. Its not until the pool completely busts and floods the entire house that the servants decide to take matters into their own hands but by then its just too late.

Mon, 06/01/2015 - 04:58 | 6151180 BoPeople
BoPeople's picture

They want to allow immigration because that is the only way they can see to continue the (false) growth paradigm in a post industrial society.

They need to continue the illusion of growth because that allows them to continue to inflate.

It is a very ignorant macro view. Rather than address the real problem, throw more bodies at it to cover it up.

Mon, 06/01/2015 - 05:50 | 6151214 KashNCarry
KashNCarry's picture

This is one long ass article for something many here have seen coming for quite awhile.

Stackin & preppin...

 

Mon, 06/01/2015 - 06:29 | 6151238 Comte d'herblay
Comte d'herblay's picture

Or not.

Mon, 06/01/2015 - 06:32 | 6151239 Last of the Mid...
Last of the Middle Class's picture

The fed is the biggest fraud perpetrated on the people in the history of the world. The curtain has been partially removed showing the great oz being buggered by the 1%. End of story.

Mon, 06/01/2015 - 06:37 | 6151242 Stopped Out
Stopped Out's picture

 

"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."       "Quirky"   High level analysis summed up as "Quirky"    Owner occupied housing has to be coupled with Investment property ownership vs rental housing. The former driven up as the value of cash deteriorates.  Hard assets and all.  

 

Mon, 06/01/2015 - 07:06 | 6151266 overmedicatedun...
overmedicatedundersexed's picture

why would the CB's and banksters across the west want to change anything?some apartments in manhattan are selling for 95 million or more..is the snow in davos not white? are the beaches of monaco not sunny?have the limo drivers not shown up for work?..life is still very very good at the top, on ZH we have the common folk waking up to the fact that: IT's a big club and You and I are not in it.

as the elite see us: the majority of EU and American folk live 1000% better than just a few centuries ago why some of us even have too much right now, but that is being corrected as we post, poverity for the masses seems a small price to pay for their continued luxury - all at no risk to themselves..genius.

Mon, 06/01/2015 - 07:24 | 6151273 smacker
smacker's picture

"If we could reset house prices 30 percent lower and fast forward a few years, the economy would probably be meaningfully more dynamic"

So the Fed believes in the broken window syndrome.  Let's destroy the world because rebuilding it will generate impressive GDP.

Mon, 06/01/2015 - 07:33 | 6151279 foghorn leghorn
foghorn leghorn's picture

Krugman believes that an intergalactic war with space aliens is the greatest thing for the economy. Then these Keynesian clowns claim that we wear a tin foil hat.

 

Mon, 06/01/2015 - 09:52 | 6151558 The Count
The Count's picture

Whatever happened to Paulson, who essentially held the entire country hostage when he demanded Bush Jr. sign that paper giving Paulson unlimited funds and full immunity. Bush should have had him arrested on the spot. But even presidents bow to the FED or have an unfortunate ending like Kennedy.

Mon, 06/01/2015 - 12:28 | 6152049 the grateful un...
the grateful unemployed's picture

Paulson was brought on prior to the 2006 midterms. Just to back track, the first UST for Bush2 was O'Neill, who was CEO of Alcoa, replaced by Snow who was CEO of a (CSX?) big railroad. Bush had this idea to run a corporate WH, and they had corporate style meetings. Paulson came from Goldman, and in the early months of 2006 prior to the midterm elections, Goldman did a small adjustment to their widely followed commodity index. They dropped GASOLINE, altogether. th result was that hedge funds and investments which mirrored the index sold their GASOLINE futures position, the price of gasoline dropped just in time for the November elections. its such a small thing really compared to the whole tanks in the street, martial law blackmail. Bush2 is by accounts the Manchurian president. from the movie the Manchurian Candidate, about a brainwashed soldier. his appearance suggests to some evidence of Fetal Alcohol Syndrome. the most obvious criminal act was the deal forced on Ken Lewis and BofA shareholders. but there were others, but lets move forward here.

Bush3 is running, it seems likely all the boys were running money for the Contras. that may be where Bush2 got the blow he used while he was staying in the WH with poppy. i would say Bernanke was a somewhat unwilling accessory to the fact. speaking of immunity and unlimited power.. its a crime syndicate and all of them should be arrested. throw in Obama for obstructing justice. Holder for dealing guns to the cartels. the Bush2 people were considering cancelling the election, running a false flag operation, when it became evident that a financial crisis might achieve the same goals. at the very least it poisoned the ground for the successor, just at the moment when it became obvious that would be a Democrat. (the alternative was McCain who the Bush people think is a too liberal to carry their water) but Bush2 has no business arresting anyone.

Mon, 06/01/2015 - 11:34 | 6151841 Absalon
Absalon's picture

The writer has the wrong end of the stick.  The real problem is the fiscal drag / deflation created by Chinese merchantilist policies, Chinese corruption, Russian corruption, American and European tax avoidance by parking income in offshore tax shelters.   The Fed has been keeping the system afloat so the politicians don't have to confront the real problems.  

Mon, 06/01/2015 - 12:59 | 6152142 cheka
cheka's picture

frbny bought 14 billion in mbs in one week in may.  housing bubble blowing firmly intact

Mon, 06/01/2015 - 13:09 | 6152169 foghorn leghorn
foghorn leghorn's picture

There is another danger here especially with rising rents and property taxes. Soon housing will become so unaffordable that those with skills will choose to live in another country with lower costs of living even if that means they must work for a lot cheaper. You see if housing sucks up most of your income then it doesn't matter how much you get paid. You are going to struggle no matter what so other foreign countries where housing is cheaper all of a sudden starts to become a much better deal.

Mon, 06/01/2015 - 13:12 | 6152179 BI2
BI2's picture

Of course she is. She can destroy people's livelihood because Obviously she's suffering from the Syndrome=> http://wp.me/p4OZ4v-1CZ

Mon, 06/01/2015 - 15:38 | 6152779 MeelionDollerBogus
MeelionDollerBogus's picture

*yawn*

So when does Deutsche hire on Gartman as their lead economist?

Mon, 06/01/2015 - 16:21 | 6152953 ShorTed
ShorTed's picture

Tyler, can you link the actual report pls?

Tue, 06/02/2015 - 23:01 | 6157956 rbblum
rbblum's picture

Worse than not having the wherewithal to maintain a healthy system of western money and banking is having paid so much money for the higher level of education to be 'qualified' and selected to be in such a position of power and control. 

 

And, the band played on. 

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