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David Stockman Warns "Dread The Fed!" - Sell The Bonds, Sell The Stocks, Sell The House

Tyler Durden's picture




 

Submitted by David Stockman via Contra Corner blog,

There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen’s press conference. She did not say one word about the real world; it was all about the hypothetical world embedded in the Fed’s tinker toy model of the US economy.

Yes, tinker toys are what kids used to play with back in the 1950s and 1960s, and that’s when Janet acquired her school-girl model of the nation’s economy.

But since that model is so frightfully primitive, mechanical, incomplete, stylized and obsolete, it tells almost nothing of relevance about where the markets and economy now stand; or what forces are driving them; or where they are headed in the period just ahead.

In fact, Yellen’s tinker toy model is so deficient as to confirm that she and her posse are essentially flying blind. That alone should give investors pause—-especially because Yellen confessed explicitly that “monetary policy is an exercise in forecasting”.

Accordingly, her answers were riddled with ritualistic reminders about all the dashboards, incoming data and economic system telemetry that the Fed is vigilantly monitoring. But all that minding of everybody else’s business is not a virtue—-its proof that Yellen is the ultimate Keynesian catechumen.

This stupendously naïve old school marm still believes the received Keynesian scriptures as penned by the 1960s-era apostles James (Tobin), John (Galbraith), Paul (Samuelson) and Walter (Heller).

But c’mon.Those ancient texts have no relevance to the debt-saturated, state-dominated, hideously over-capacitated global economy of 2015. They just convey a stupid little paint-by-the-numbers simulacrum of what a purportedly closed domestic economy looked like even back then.

That is, before Richard Nixon had finally destroyed Bretton Woods and turned over the Fed’s printing presses to power aggrandizing PhDs; and before Mr. Deng had thrown out Mao’s little red book in favor of a central bank based credit Ponzi.

As you listened to Yellen babble on about the purported cyclical “slack” remaining in the US economy, the current unusually low “natural rate” of federal funds, all the numerous and sundry “transient” factors affecting the outlook, and the Fed’s fetishly literal quest for 2.00% inflation (yes, these fools apparently think the can hit their inflation target to the second decimal place), only one conclusion was possible.

To wit, sell the bonds, sell the stocks, sell the house, dread the Fed!

In a global economy that is plunging into an epic deflationary contraction, Yellen & Co still embrace mythical and unmeasurable benchmarks for domestic full employment and other idealized performance targets.

Indeed, they operate in what amounts to the pseudo-scientific realm of economic policy numerology. Their model can be reduced to a voodoo style formula expressed as “2,3,4,5”.

That would be 2% inflation, 3% real growth, 4% normalized Federal funds and 5% unemployment. Any difference between those targets and current readings is defined as “slack” or performance shortfall that the 12 apostles on the FOMC have been mandated to close; and to do so with the blunt force instruments of money market rate pegging, yield curve repression (that’s what QE is) and wealth effects levitation of financial asset prices.

At the end of the day, the only thing worse than Nixon’s final destruction of sound money at Camp David in August 1971 was the passage of the Humphrey-Hawkins Act seven years later.

To be sure, the act itself was merely an exercise in political messaging. It did not confer open-ended power on a monetary politburo to literally hijack the price-setting process in the entire financial system. Instead, it was a rubbery sense of congress resolution that encompassed unquantified and purely aspirational goals for maximum employment and price stability.

It was the power-hungry academics and policy apparatchiks like Alan Greenspan, Alan Blinder, Donald Kohn, Ben Bernanke,  Frederic Mishkin, Janet Yellen and the B-Dud who turned it into today’s monetary central planning machine.

The hard core reality, however, is that the very foundations of the Keynesian full employment model cannot be measured, specified, validated or achieved. For all practical purposes there is no such thing in today’s world as potential GDP, full-employment, a natural rate of Federal funds, NARU (natural rate of unemployment) or quantifiable price stability.

These are all self-serving fictions fabricated by a small community of monetary central planners and their Wall Street henchmen. And they do one big but destructive thing: Namely, they are used to justify endless manipulation and falsification of the single most important set of prices in all of capitalism—-the price of money and financial assets.

Consider Yellen’s absolutely foolish discussion of the 2% inflation target, the transient factors currently impacting it and the Fed’s insistence on symmetry between under-shooting and over-shooting the target.

In the first place, by one good measure of consumer inflation—-the 16% Trimmed Mean CPI—–the Fed has been hitting its target all along. To hit the magic 2.00%, the monthly change needs to be in the 0.16% range; and, as shown below, its pretty hard to see that they have missed by much, or that there is any kind of worsening trend during the last five years of so-called recovery.

But then, of course, Yellen actually swatted away a questioner’s observation that the Fed was already at its 2% target based on a similar median CPI published by the Cleveland Fed.

Why, no, our intrepid school marm replied - here in the Eccles Building we hold strictly to high church liturgy. Nothing less than the PCE deflator will do when it comes to the sacrosanct inflation target.

I’m sorry but that’s obscurantist malarkey of the first order. Over any reasonable period of time there is not a dimes worth of difference between the government’s various measures of consumer inflation on goods and services. And that’s ignoring the fact that all of them under measure it, anyway.

As shown below, the 16-year CAGR since October 2000 was 1.82% for the Yellen’s PCE deflator, 1.92% for the CPI less food and energy and 2.12% for the regular consumer price index for all urban consumers. Only in the Fed’s tinker toy model of the world could those fractional decimal points of difference actually make any difference.

Indeed, neither the centered 2% trend of all three indices since the year 2000 nor the short-term divergences among them during that period have anything to do with real GDP growth. On an LTM basis, the latter ranged from a positive 5% run rate to a negative 3% rate, but there is absolutely no correlation with the modest oscillations and divergences of reported consumer inflation during the period.

So what was Yellen obsessing about? Well, on a one-year basis, the PCE index is up 0.2%, the CPI has gained 0.1%, the PCE less food and energy is higher by 1.4% and the CPI less food and energy is up by 1.9%.

So what? Can you say global oil and commodity price collapse?

The essence of Yellen’s “transient” factor discussion is that the chart’s lower right-hand readings for October/November are purportedly the bottoms for iron ore, copper, crude oil and the other commodities; that these plot points will anniversary next fall; and that the year-on-year inflation rate thereafter will normalize toward 2% when the statistical drag of commodities passes through the index.

It’s just math. Yes, and a blind squirrel occasionally finds an acorn!

In truth, Yellen & Co have no clue as to when the current massive commodity gluts will be absorbed or how the leads and lags in the global commodity price equations will play out.

In fact, since we are dealing with massive over-investment in shale, tar sands, iron ore mines, aluminum smelters, bulk carriers etc., it appears that supply could still be rising for several year as cheap credit-fueled projects come on stream. At the same time, global demand continues to falter owing to collapsing incomes and wage bills in the primary materials, manufactured goods and transportation/distribution sectors.

So it could be years before Yellen’s mechanical anniversary factor shows up in the inflation indices. During the interim, moreover, the flow-through impact of still lower commodity and processed materials prices on the global manufacturing and consumer goods supply chain is all but impossible to calculate; it’s transmission will be shucked and jived by the currency exchange rate interventions of dozens of significant central banks.

And that points to the larger truth. The whole 2.00% inflation obsession is pointless, and not only because there is no scientific proof anywhere that 2.00% inflation is better for growth than 1.20% or 0.02%. The dispositive point is that the Fed can do virtually nothing about present inflation readings, as reflected in the primitive CPI indexes for the domestic economy.

There are actually four relevant components to an honest reckoning of inflation—–commodities, tradable goods and services, housing rents and purely domestic services. None of them lend themselves to Fed micro-management or inflation-pumping.

Housing rents as measured by most private sector indices are running at 3-5% annually. There is no inflation deficiency there.

Likewise, the BLS measures of purely domestic services are a second cousin of random noise. Does anyone really believe that medical care costs have rising at only a 2.9% annual rate since Obamacare incepted in 2011? Or that education bills have risen at only a 3.5% rate during the past three years.

And how do you measure price change for services provided by yoga studios, gardeners, delivery boys, dog groomers, home cleaning vendors, tutors and trainers etc. when there is no standard unit of product? The BLS numbers are a random approximation, and the so-called “inflation rate” of domestic services need not be managed by the Fed anyway.

When it comes to the myriad of ever changing domestic services, tens of millions of consumers will slice, dice, repackage and substitute their way to a satisfactory solution with no help whatsoever from the Eccles Building.

By the same token, the price of tradable goods and services is being set now, and for a long time to come, by the vast excess of manufacturing and transportation capacity that has been generated by the world’s $185 trillion credit bubble over the last two decades; and by a surfeit of cheap labor that was uprooted from traditional villages and rice paddies by central bank enabled economic booms and malinvestment.

There is no telling how long it will take to absorb all of these capital and labor excesses or when the price of manufactured goods will get up off the economic floorboards.

Stated differently, the price of goods and commodities has been baked into the cake by the massive credit and CapEx spree the global economy has experienced since the early 1990s. Whatever the Fed does at its next several monthly meetings or over the course of the next few years is of absolutely no moment.

In the credit swollen global economy of the present era, trying to manage the domestic inflation rate to the second decimal place is about as useful as manufacturing buggy whips. And the odds of hitting a 2.00% target are as likely as a room full of monkeys typing the Declaration of Independence.

The only thing that made less sense during the course of Yellen’s blathering was her constant reference to “slack” in the labor market, and the repeated expression of confidence that with a little more expert help from the Eccles Building it will be fully absorbed.

But that’s just the 50 year-old factory based model of “potential GDP” and full employment based on a census style count of job holders versus what was then mainly an adult male work force.

By contrast, in today’s world of global labor competition in goods, off-shored business services, episodic domestic gigs, temp agency labor delivery and Wal-Mart style labor scheduling by the hour and time of day, week, month and season the whole idea of “full employment” is a relic. And a stupid one at that.

The only common denominator left is the adult population, which numbers 255 million by headcount and 510 billion by standard work-year hours count.  Over and against that, the US economy is currently utilizing about 250 billion labor hours annually according to the BLS.

No, that doesn’t mean that we have a 50% unemployment rate. But it does underscore the fact that in today’s world there are no “natural” or structurally fixed coefficients for withdrawal of available population hours from the labor force owing to retirement age, disability rates, election to non-monetized homemaker status, student status, or lifestyle preferences for malingering, begging, free charitable endeavors or asceticism.

Self-evidently, these decrements from the nation’s 250 billion odd un-deployed potential labor hours are effected by tax and welfare policies, accumulated retirement savings and an endless list of cultural and psychological factors.

They have little to do with any measurable business cycle; and they shift and morph steadily over time and in response to new technological and cultural developments. They are utterly beyond the reach of 25 basis points of interest rate shifts on the money markets.

In short, there is no bathtub of “aggregate demand” to be filled to the brim by the monetary central planners in the Eccles Building. Nor is there any inflation and employment numerology that can measure full employment, full inflation (e.g. 2.00%) and full utilization of all other economic resources.

The fact is, you cannot even measure the utilization rate of say an auto assembly plant in today’s world. It is all a function of line speed, robot function and capacity and vehicle configuration and complexity; and the latter, in turn, are the result of discretionary choices as to capital investment levels and vehicle design.

The bottom line is simple. There is no such thing as potential GDP, yet in Yellen’s model that is the only thing.

So as she and her posse of money printers attempt to achieve impossible macroeconomic targets embedded in a tinker toy model of economic reality, there is only one implication. That is, look out below!

The only thing they are doing is deforming and inflating the Wall Street casino.  As we have demonstrated so many times, the household credit channel of monetary policy transmission is over and done because we have reached a condition of peak debt.

Consequently, the one-time parlor trick of leveraging-up household balance sheets was exhausted long-ago by Yellen’s Keynesian forbearers. Consumer spending is now strictly a function of current production and income, and that is punk owing to Washington’s smothering of supply side energies with taxes, regulations and cheap foreign goods.

Household Leverage Ratio - Click to enlarge

Household Leverage Ratio – Click to enlarge

In fact, notwithstanding the boom in student loans and auto finance, nominal household debt has been stagnant. That fact alone is dispositive.

Monetary policy works not through magic and sentiment, but via cheap interest rates that encourage people to borrow more than they would otherwise. They haven’t.

In point of fact, the primary source of private sector credit growth since the pre-crisis peak has been in the business sector. Credit market debt outstanding in nonfinancial business has risen from $10.6 trillion on the eve of the financial crisis to $12.6 trillion.

Yet the lion’s share of that $2 trillion gain is accounted for by the surge of high yield loans and bonds, which have more than doubled from $1.2 trillion to $2.6 trillion during the same period.

levdebt-480x326

And one thing can be said with authority with respect to this soaring pile of junk. Namely, that it was overwhelmingly used for financial engineering in the form of stock buybacks, M&A deals and LBO’s. It thereby help to drive up the price of existing financial assets, not expand the US economy’s productive capacity and efficiency.

Leveraged Loans Vs. All Commercial Bank Lending - Click to enlarge

In this context, the march of the junk debt yield curves shown below says it all. The Fed’s heavy-handed financial repression did not trigger a domestic investment boom as Bernanke promised the Congress over and over during his twice yearly forays in deception on Capitol Hill; it simply stampeded yield-starved money managers and retail investors alike into the junk bond market regardless of risk.

Stated differently, the major channel of monetary policy transmission that actually worked during the past seven years was the junk debt market. And that $2.6 trillion enterprise in the mispricing of risk was the primary driver of $5 trillion in domestic M&A deals and stock buybacks since the crisis.

Yellen and her cohort have no clue, however, that all of their massive money printing never really left the canyons of Wall Street, but instead inflated the mother of all financial bubbles.

So they are fixing to blow-up the joint for the third time this century.

That was plain as day when our Keynesian school marm insisted that the Third Avenue credit fund failure this past week was a one-off event - a lone rotten apple in the barrel.

Now that is the ultimate in cluelessness.

 

 

 

 

 

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Fri, 12/18/2015 - 12:52 | 6939575 order66
order66's picture

100% right. It's all coming down.

Fri, 12/18/2015 - 13:03 | 6939615 Soul Glow
Soul Glow's picture

The puppets of the Fed set it all up.  They pumped the system to dump the system.  They have pilfered all the gold vaults and will leave the poor pensioners to clutch worthless 401ks.  They will be on islands and in remote fortresses, while people in the cities fight for bread.

Fri, 12/18/2015 - 13:06 | 6939628 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

First of all shound't we be down 400 - 500 points already today and “What you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.”

Fri, 12/18/2015 - 13:28 | 6939722 toady
toady's picture

Sell The Bonds, Sell The Stocks, Sell The House, Sell the Kids!

I'M NOT COMING BACK! 

 

Fri, 12/18/2015 - 13:56 | 6939843 Manthong
Manthong's picture

Yep Janet and her Fed are living in a dream world.

But, at least we have the myth of AGW to believe in.

It will sustain us during those freezing solar minimum nights after the respite of this El Nino year.

Fri, 12/18/2015 - 14:56 | 6940126 FringeImaginigs
FringeImaginigs's picture

At least the scientists agree on AGW. But they are only scientists,of course, and they do need their research grants and fancy offices, BMWs and megayachts! Meanwhile Janet has her tinkertoys as it is so nicely put. Can you understand the difference between tinkertoys and science?

Fri, 12/18/2015 - 16:29 | 6940561 Jack Buster
Jack Buster's picture

I tried to +1......not taking plusses I guess.

AGW = Al Getting Wealthier

Fri, 12/18/2015 - 13:31 | 6939735 J S Bach
J S Bach's picture

Reading all this crap about Yellen & Co. "not having a clue" makes me angry.  They know goddamned well what they're doing.  It's the whole reason for debt-based-fiat currency... so THEY can reap the rewards of their well-planned-business-cycle-credit-contractions-and-expansions.

These criminals need to be put up against a wall and shot - along with their Madoff-scheme monetary system.

Fri, 12/18/2015 - 14:22 | 6939933 Manthong
Manthong's picture

Don’t waste the bullets.. rope is reusable and more apropos for thieves, cattle rustlers and other undesirables.

 

Fri, 12/18/2015 - 13:32 | 6939747 Soul Glow
Soul Glow's picture

For some it is too much to consider the world around them has been marginilzed to fit like a steel cage.  That the bread they eat and water they drink is poison.  Many would rather sit in their warped mind spending their adult lives building cars like legos and throwing dollars at girls they will never touch.

Yet there exists a reality outside of that.  A reality that is universal.  Laws that connect the heart with the mind.  Nature before the soul can appear cold and harsh to the aforementioned, but to those who understand its infinite being it is a wonder to behold.

So this world, it can be controlled by the Fed and other evil forces, or it can be held in splendor as an all being realm.  We each choose what we wish to believe.

Fri, 12/18/2015 - 14:20 | 6939931 Billy Shears
Billy Shears's picture

Soul Glow, insightful commentary and always entertaining; thanks for your contributions to this site, they are unique and valued by some.

I'd like to pass this along and hope you find it worth you while to check out.

 

http://truthcontest.com/

Fri, 12/18/2015 - 13:36 | 6939761 JRobby
JRobby's picture

What, uh, channel are you watching?

Fri, 12/18/2015 - 13:38 | 6939769 I woke up
Fri, 12/18/2015 - 17:26 | 6940815 jerry_theking_lawler
jerry_theking_lawler's picture

Closed down 370 points..pretty close to your 'theoretical' 400.....so he may be onto something after all??

Fri, 12/18/2015 - 13:25 | 6939704 JRobby
JRobby's picture

They are flying to Uruguay and Paraguay for the holidays

The banking holidays that is

Fri, 12/18/2015 - 18:20 | 6940980 turnoffthewater
turnoffthewater's picture

Soul Glow

"The puppets of the Fed set it all up. They pumped the system to dump the system. They have pilfered all the gold vaults and will leave the poor pensioners to clutch worthless 401ks. They will be on islands and in remote fortresses, while people in the cities fight for bread."

+100
Then the banks (and their lackey off-shore corps) who were infused (see the greatest robbery of all) with currency in 08 will go around the globe and purchase all USD denominated debt. And the squid grows another tentacle.

Then when the smoke clears, the slowly wakening Joe six pack will say, "Hey, I didn't sign up for this shit" and then might do something about it. Until then enjoy the new police state courtesy of CISA.

Merry fucking xmas

Fri, 12/18/2015 - 13:35 | 6939759 slaughterer
slaughterer's picture

Stockman on one side.  Tom Lee and Lazlo Bryani on the other.  Lets have a death match.  The result is ES futures.  

Fri, 12/18/2015 - 13:36 | 6939764 slaughterer
slaughterer's picture

I want the "deer in headlights" photo with a Santa cap on it after the close.  

Fri, 12/18/2015 - 14:07 | 6939887 yrad
yrad's picture

Second!!

Fri, 12/18/2015 - 18:03 | 6940594 herkomilchen
herkomilchen's picture

When, dude.  It's beyond pointless to say that without saying when.

You are looking at a smoldering volcano proclaiming, "It's going to erupt."  Duh. It could erupt tomorrow.  It could erupt in 500 years.  Human lifespan and investment horizons means the "when" question is the question that matters.

BTFD may be the only profitable strategy for decades to come.  It would have been in Japan in the 90's as Japan continues to slog through decades of central bank imposed misery and continuously inflated asset price bubbles with no signs of it all "coming down." 

If you think the current time is different, then make your case it will come down within the next month, or year.  Then you'll actually be saying something rather than just diffuse doom frothing that does no one any good.

Fri, 12/18/2015 - 12:53 | 6939580 stant
stant's picture

Cash us $ dalla. For the foreseeable future

Fri, 12/18/2015 - 12:55 | 6939581 Dr. Engali
Dr. Engali's picture

The problem the the sell everything idea is that the markets have been so distorted there are no buyers.

Fri, 12/18/2015 - 13:27 | 6939716 bbq on whitehou...
bbq on whitehouse lawn's picture

Like a yard sale after the second day. The assets only exist on spreadsheets.

Fri, 12/18/2015 - 13:35 | 6939758 kralizec
kralizec's picture

The beatings will contine...even when the beaten are pulp.

Fri, 12/18/2015 - 12:56 | 6939589 KnuckleDragger-X
KnuckleDragger-X's picture

To everybody still in the markets, stay in and double down because nothing could possibly go wrong.......

Fri, 12/18/2015 - 12:58 | 6939599 Tinky
Tinky's picture

Damn good rant.

Fri, 12/18/2015 - 13:02 | 6939603 Quinvarius
Quinvarius's picture

Except the Fed is about to trash the USD, prop up stocks, prop up Treasuries, and prop up housing derivatives.  We have not even built any ghost cities yet, people.  We have only just begun to print money!

Fri, 12/18/2015 - 13:18 | 6939607 Normalcy Bias
Normalcy Bias's picture

Sell the house. Sell the car. Sell the kids. Find someone else. Forget it. I'm never coming back. Forget it.

Lieutenant Richard M. Colby: [Richard Colby's last letter to his wife, as read by Willard]

Fri, 12/18/2015 - 13:02 | 6939609 JRobby
JRobby's picture


"Sell The Bonds, Sell The Stocks, Sell The House"

Convert to dry stores, fuels and ammunition. Wise policy.

Fri, 12/18/2015 - 13:04 | 6939621 Bunga Bunga
Bunga Bunga's picture

What do I buy?

Fri, 12/18/2015 - 13:06 | 6939627 Vlad the Inhaler
Vlad the Inhaler's picture

Learn some real skills, learn to live with less, make friends with your neighbors.  The rest can and will be taken away.

Fri, 12/18/2015 - 13:14 | 6939658 I am Jobe
I am Jobe's picture

Is there an APP for that? 

Fri, 12/18/2015 - 14:17 | 6939919 Charles Wilson
Charles Wilson's picture

Vlad and Jobe-

You have exquisitely summarized the situation in your 2 Posts.  I don't want to "get by on less".  The promise of "Computers and Apps" and all of the arcana of modern life were supposed to get us to an era where we could HAVE a higher Standard of Living.  The cream, however has been skimmed off and all we are left is the skim milk.  <Blaach!>

 

So: "You, you disgusting PROLE, must get by on less and have YOUR Standard of Living reduced!  Mine, not so much..."

 

CW

Fri, 12/18/2015 - 14:34 | 6940002 Vlad the Inhaler
Vlad the Inhaler's picture

I dunno, I am kinda looking forward to a simpler life of real production.  It's the civil unrest that worries me, I think about 15-20% of the population would love nothing better than to bash some heads in for ideological purposes.

Fri, 12/18/2015 - 13:18 | 6939668 Bangin7GramRocks
Bangin7GramRocks's picture

Simple. Act like a real American and go to your local Apple Store and buy one of everything.

Fri, 12/18/2015 - 13:18 | 6939672 One Solution
One Solution's picture

Rice...beans..lead

Fri, 12/18/2015 - 13:05 | 6939622 boeing747
boeing747's picture

Great time to buy high-end houses, .gov bonds and commodity stocks. Wolf will not attack sheeples when they are aware.

Fri, 12/18/2015 - 13:14 | 6939657 JRobby
JRobby's picture

What, uh, channel are you watching?

Fri, 12/18/2015 - 13:29 | 6939724 JRobby
JRobby's picture

In other news: The newly expanded FEMA & US Military "Security Forces" are taking possession of large high end homes to set up multiple local bases of operations

Fri, 12/18/2015 - 16:10 | 6940484 Oxbo Rene
Oxbo Rene's picture

Just join the winning side .....

Fri, 12/18/2015 - 13:06 | 6939626 wmbz
wmbz's picture

Poor old Granny Jack and her buds are so misunderstood.

They care deeply, deeply about prosperity, lining pockets & enriching bank accounts.

Just not for the serfs! Now get your sorry ass back to work and pay your taxes so the top tier can steal it!

P.S. Enjoy your bowl of gruel for Christmas, your lucky to get that!

Fri, 12/18/2015 - 15:30 | 6940318 Budd aka Sidewinder
Budd aka Sidewinder's picture

Janet and her buddies don't celebrate Christmas

Fri, 12/18/2015 - 13:08 | 6939631 Grandad Grumps
Grandad Grumps's picture

If the first mandate of the Fed was not to maintain the existing power structure then they would have a lot more freedom to act and their life would be much easier.

I think I will keep the house. I like having a roof over my head.

Fri, 12/18/2015 - 13:07 | 6939632 Mark Mywords
Mark Mywords's picture

OT, the Corporate Democratic establishment has put the nail in the campaign of Bernie Sanders.

http://www.huffingtonpost.com/entry/bernie-sanders-dnc_5674205ae4b06fa68...

What luck for the Clinton campaign and Debbie Wasserman-Schultz.

Fri, 12/18/2015 - 13:07 | 6939635 JenkinsLane
JenkinsLane's picture

What is Stockman's annual median return on his own P&L over the last 10 years? 

Fri, 12/18/2015 - 13:33 | 6939746 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

I would also be interested in knowing that, but we should remember to compare his results to those of the other outsiders since thats what we are as well

Fri, 12/18/2015 - 16:14 | 6940497 herkomilchen
herkomilchen's picture

If by outsider, you mean non-cartel connected, then yeah.  If by outsider you mean contrarian, then no way, that's the point of doing the comparison.

Fri, 12/18/2015 - 13:09 | 6939639 conraddobler
conraddobler's picture

I'm going to amend my statements on the FED being trapped to say that they are forever trapped in QE.

They can raise the short term rates if they want to a point and get away with it ONLY if they offset this with stealth QE we don't know about.

In the aggregate if they keep QE the same or start to pull it back in any really meaningful way this whole shit show goes up in flames.  

So when those of us are saying they can never raise rates are saying this we were all implying that raising rates was equivalent to removing QE.

Technically if they can raise rates but offset this with QE they could make it look like they were raising when in fact they were actually pouring on the gas for QE.

The system is fubar and only extradinary off balance sheet measures could possibly prolong this.

Any attempt to cluelessly imply they think removing QE in actual fact is ok is completely unbelieveable to me.

Fri, 12/18/2015 - 13:13 | 6939654 I am Jobe
I am Jobe's picture

American Inbreds think that homes are their best investment. Genes are being diluted. 

Fri, 12/18/2015 - 13:26 | 6939707 Dragon HAwk
Dragon HAwk's picture

A paid off house is a nice investment, it is always worth whatever you would have to pay in rent. when i was young i paid over 70k in rent, because of course your young and nobody will lend you  any serious money. I bought a small house paid it off early.. it's a beautiful thing..  you have to live somewhere. if you use your brains it works.

Fri, 12/18/2015 - 14:05 | 6939879 Dirtt
Dirtt's picture

That assertion is loaded without preference to variables. I'd rather be paying a $650 per month mortgage payment than $1500 per month in rent for the same roof over my head. Scant crime, clean water and very very very few Allahu Akbars.

Fri, 12/18/2015 - 13:17 | 6939663 Gold Eyed Cat
Gold Eyed Cat's picture

Next week my baby sister is signing paperwork on a 4k square foot McMansion north of Atlanta, and she doesn't have a care in the world.  I kinda miss being so blissfully unaware.  I sure worry about her! But on the plus side, her wonderful hubby has a nice government job.

And the FED will save us.  right?

Fri, 12/18/2015 - 13:24 | 6939701 lordbyroniv
lordbyroniv's picture

i hope ur baby sister gets traded around town for cans of ravioli in the coming apocolypse

and her hubby is hung by his balls

than MAYBE we will be approximating something resembling a just world

 

Fri, 12/18/2015 - 16:23 | 6940533 TheFulishBastid
TheFulishBastid's picture

Oh a troll!!! He's trolling people on ZH everybody!

 

See? Nobody cares.

Fri, 12/18/2015 - 13:34 | 6939740 JRobby
JRobby's picture

I was snickering, even thinking <sarc> until I got to "government job"

Have to assume a government employee claims all of that babysitting $$$ on his tax return......

Fri, 12/18/2015 - 13:55 | 6939813 Gold Eyed Cat
Gold Eyed Cat's picture

Well he manages a national park and fights forest fires, so it's not a horribly evil government job.  And at least they can both shoot, camp and hike very well.  But I hate that they are moving to Atlanta, especially right now.

LB, I didn't down vote you.  I find your anger perfectly understandable, and I know you can't mean her personally any actual harm.

Fri, 12/18/2015 - 14:19 | 6939918 JRobby
JRobby's picture

Well, Byron was legendary for his excesses.

He may find the park he is responsible for growing in lodger population. Now that is stressful!

Do not concentrate your anger on individuals. It is a good way to get shot in the back. The enemy is vast in numbers.

Fri, 12/18/2015 - 16:08 | 6940474 herkomilchen
herkomilchen's picture

Sounds like her blissful, unaware financial bets are paying off a lot better for her than anyone's angst-ridden, aware financial bets around here!

Fri, 12/18/2015 - 13:20 | 6939677 the grateful un...
the grateful unemployed's picture

core inflation does not count food or energy, and Yellen is counting energy, and the dampening effect. the chart of inflation in services w/o energy is pretty impressive. theres lot of inflation, once the HY bubble gets burst and malinvesment in shale and fracking stops the market will turn quickly. suppliers will hold back from the moment they see the turn, (you dont sell something cheaply today if you know it will be dear tomorrow) there will probably be all sorts of shortages (gold?) and the expectation of higher inflation will take hold and then you want those stodgy old TIP bonds. the government run stock market will not return 10% a year, more like 2%, the more the politicians embed themselves in the wall street economy, the less there is for the gamblers. by analogy compare the calfornia school system before and after they made the lottery the primary source of income, and look at the returns on the lottery. playing the lottery is a joke, and playing the stock market is not much different. right now they are in high marketing mode, the reality will far less. stockmans right get out now, but people will still need to invest, so make some solid decisions, dont listen to the hysteria.

Fri, 12/18/2015 - 14:29 | 6939970 frankly scarlet
frankly scarlet's picture

Hell the Fed et al don't even include debt as a factor of economic influence in their calculations so right there they're fucked. But the kingpins that own majority shares in the big banking establishments and entourage know exactly what's going down and the FOMC is just there to sound sensible enough while they obfuscate as much as possible...and that is what they get the big bucks for. Stockman knowing this gets to have a field day but to what avail. Steve Keen commented saying the Fed's dashboard was missing several important instrument clusters and that brainiac says it's all coming down eventually just as soon as the bankers decide to quit wall papering over the spreading corruption.

Fri, 12/18/2015 - 14:49 | 6940062 the grateful un...
the grateful unemployed's picture

in the first instance traders are giddy that the government is backing the stock market, but when the rush wears off you're stuck with a government run stock market. who wants to invest in that?

Fri, 12/18/2015 - 13:24 | 6939703 SillySalesmanQu...
SillySalesmanQuestion's picture

Silly fools, the 0's and 1's that we create out of thin air, are only for the .01%...
Best,
Janet, Ben & Alan
Thanks for playing, here's your free Darth Vader towel.

Fri, 12/18/2015 - 13:31 | 6939739 alangreedspank
alangreedspank's picture

Not sure the hike itself will pop the bubbles, but if markets somehow interpret future policy as tightening, on every meeting, then we'll see something happen.

Fri, 12/18/2015 - 13:38 | 6939756 sgorem
sgorem's picture

all the light post's in DC are all VERTICAL, wonder why? long rope......short bureaucrats.............thanks David.

Fri, 12/18/2015 - 13:39 | 6939767 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

If the DOW keeps dropping, folks may be returning expensive presents before they give them.

"Hmmmm... Those tins of stale popcorn will do!"

               "I'll take ten!"

Fri, 12/18/2015 - 13:38 | 6939770 katchum
katchum's picture

2015, 2014, 2013... We're going back in time on the S&P.

Fri, 12/18/2015 - 13:47 | 6939804 FreeNewEnergy
FreeNewEnergy's picture

Stockman nailed it.

Ya gotta believe he knows more about the economy than dumbass Janet.

Fri, 12/18/2015 - 13:56 | 6939844 Tinky
Tinky's picture

Yeah, but sadly, so do I.

Fri, 12/18/2015 - 13:56 | 6939845 Dr.Engineer
Dr.Engineer's picture

Stockman, thank you.  Your eloquence only matches your facts in beauty.

Fri, 12/18/2015 - 13:57 | 6939850 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Stockman says the global economy is plunging into an epic deflationary contraction.  I'd actually like to believe it, because I'm sick of all the lies, but I'm still a doubter and I'll believe it only when I see it all around me, which I presently do not.

Fri, 12/18/2015 - 13:58 | 6939854 Dirtt
Dirtt's picture

Truly one of the most consice reads blending finance, "economics", culture, anthroplogy, mathematics (and lack there of), humanity (OR lack there of), policy, arrogance, corruption, graft, comedy, tragedy, foretelling, forthtelling, history, lies and truth ALL IN ONE PIECE. 

All for the gain of so few at the expense of so many. Did someone once say history rhymes.

Eh em! Allow me:

 

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
Four-score Men and Four-score more,

Could not make Humpty Dumpty where he was before.

 

Fri, 12/18/2015 - 14:03 | 6939873 gcjohns1971
gcjohns1971's picture

2% (net price) inflation is desirable, in the 'monetary politburos' opinion, because it indicates there has been enough new currency created to make it possible to roll over yesterday's debts, which backstop today's dollars.

Simple.

The concept beyond the reach of thousands of economic professor's nationwide, is that printing money to the tune of 20% of the money supply annually for nearly 10 years has warped the structure of the productive economy to one oriented on servicing the lucky recipients of newly printed money...which is to say the finance industry, transfer payment recipients, and the MIC...and of course all their cronies in globalist corporate industry.

Think about it. 

What does an EBT-buyer buy that an independent contractor, or small business person would not?

iGadgets. Bling. Entertainment.

What does Wall Street buy that is different in proportion to Mainstreet?

Stawks.

What does MIC and the globalist corporate crony network buy?

They buy lots of industrial commodities destined to feed the desires of the preceding two.

 

And what happens when the Fed focuses on sopping up liquidity to force the interest rate upwards?

 

Either the EBT's, Wall Street, and MIC get the money OR the real economy.  It is a political discussion on who will get it.

REGARDLESS, with net decrease in currency and credit expansion someone's ox must be gored.

If it is the EBT crowd's ox, then we get riots.

If it is Wall Streets' then we get a credit and currency collapse.

If it is the MIC's...then we get war.

And if it is the real economy's...then we get to return to pre-industrial times, because the real economy is the bedrock upon which the other three stand...and it has been eroded such that it could form a sinkhole beneath any of the others at any moment.

Politicians being politicians, and Communist Elites being as they are, I expect they will try and sock it to mainstreet.   If they do, then western civilization will begin to unglue.

Fri, 12/18/2015 - 16:15 | 6940138 flysofree
flysofree's picture

Why is it that ZH gets all the idiots( mentally deranged economic know nothings) who froth at the mouth in rage and jealousy at the thought of some low income person getting their tiny share of national income?

The total amount of money spend on EBT is $130 billion and that's a benefit to 50 million. This is like pissing in the river and worrying about a flood.

It's the bottom that feeds the top. The top does not do anything, but pillage and profit from the bottom.

People like Stockman are charlatans. He works for people who made their money during the credit boom from 1980s, who now want to keep what they got and plunge eveyone else to 'who cares, as long as their own wealth is preserved.' Defation and Depression would be great for these types.

Fri, 12/18/2015 - 14:21 | 6939939 rbianco3
rbianco3's picture

What if the bank already sold the house - via open auction for $100, with fair market value 300K+ after advertising the sale in heritagefl.com news.  I wonder why the bank chose that newspaper in a metro area with millions of people? /rhetorical 

Why didn't ZH, Fox, Cnn, InfoWar, Guardian, Drudge, Orlando,Fl local media want to cover the conspiracy, that included cashier check images, bank statement showing receipt of money, and bank denial of receipt of money? /rhetorical

Why did complaints filed with fbi, florida ag, seminole cty fl sheriff, hamp fraud go nowhere, not even to contact us? /retorical 

The story proving government, banks, and joo ish news work above all law - is a non-story /fuckedup

Contact me for the story, house long gone so the risk of my having motive gone as well. I'll send a zip file.  What will you get? Satisfaction of helping another niave deadbeat that wanted to do the right thing instead of walking away from debt. :)

Fri, 12/18/2015 - 15:22 | 6940283 Ban KKiller
Ban KKiller's picture

RULE 12-6 (b) void judgment. You can go back and get your home. 

Have been right there! We just beat two foreclosure complaints, both dismissed against us. Two seperate cases, two different homes. Why? We demonstrated lack of standing by the lying, sister fucking banksters. Those are actual legal terms. Haha. 

DA, FBI and AG here don't give a shit about homeowners and are firmly in the pockets of the banks. Judges ruled for us because they HAD TO. 

I like being a deadbeat.... I just won't pay a debt that can't be validated. 

Fri, 12/18/2015 - 14:26 | 6939959 the grateful un...
the grateful unemployed's picture

its interesting that in order to get to the anti wall street screed i have to go through an Ameri-trade pop up

Fri, 12/18/2015 - 14:29 | 6939975 pankowboy
pankowboy's picture

Catechumen? Luv' yah David.

Fri, 12/18/2015 - 14:32 | 6939983 Stick in the Mud
Stick in the Mud's picture

The problem, David, is you are ranting against Janet's spin. The Oracle speaks in paradoxes and parables. Only Goldman Sachs knows why the Fed does what it does.   

Fri, 12/18/2015 - 14:48 | 6940056 cliccami
cliccami's picture

Interesting article! Short on the S&P500

https://sasafuturestrading.wordpress.com/

Fri, 12/18/2015 - 14:53 | 6940091 rejected
rejected's picture
Federal Reserve Act : Public Law 63-43, 63d Congress, H.R. 7837: An Act to Provide for the Establishment of Federal Reserve Banks, to Furnish an Elastic Currency, to Afford Means of Rediscounting Commercial Paper, to Establish a More Effective Supervision of Banking in the United States, and for Other Purposes

We're observing the "Other Purposes"

Give special thanks this Christmas to the 63rd Con-gress and President Wilson who gave birth to this monster.

Fri, 12/18/2015 - 14:54 | 6940104 robertocarlos
robertocarlos's picture

"Sell the house". "Sell the kids". "I'm never coming back".

Fri, 12/18/2015 - 15:13 | 6940228 Two Theives and...
Two Theives and a Liar's picture

I am with Stockman 100% on this...HOWEVER:

As Jesse Livermore so eloquently reminds us: "Markets can remain "irrational" [rigged] longer than we can stay solvent"

As I witness the +300 day then -300 day over and over and over...I keep wondering when we will finally see the -3000 day...then I will KNOW the jig is up! Until then I can only hope to see the vomiting clown, unicorn AND deer!

Fri, 12/18/2015 - 18:02 | 6940665 herkomilchen
herkomilchen's picture

Exactly.  They can stay rigged longer than we can stay alive.  The schemes have the force of all the government's guns backing them and funding by expropriation of the entire populations productive might fueling them.

Fri, 12/18/2015 - 15:14 | 6940233 rejected
rejected's picture

Stocks on their way back up as of 13:00 CST...

BTFD !

Fri, 12/18/2015 - 15:14 | 6940236 Herdee
Herdee's picture

I sense an elevated level of Volatility going forward into the winter months.Just add in a lot more geo-political events and stir it in.

Fri, 12/18/2015 - 20:56 | 6941455 deKevelioc
deKevelioc's picture

Stockman knows his stuff, but doesn't want to delve into the central bankers' motives at the very top of this pile of shit.  That, to him, is speculation.

Fri, 12/18/2015 - 23:13 | 6941859 Celotex
Celotex's picture

Stockman and XHers have been screaming about quantitative easing and loose money for many years now. So when the Fed begins to tighten, this too is a wrong decision in the eyes of Stockman and ZHers. Jeez, you really want it both ways.

Sat, 12/19/2015 - 13:16 | 6943109 RMolineaux
RMolineaux's picture

I waded through the elaborate prose of Stockman's essay looking for any positive alternate suggestions.  And guess what !  I found it.  It consists of just two words: "SUPPLY SIDE," about two thirds of the way through.  These were the scrambled economic recommendations put forth for public consumption by the Reagan administration, in which Stockman participated.  This vague meme was used to distract the public while the Reagan administration handed out boatloads of favors to the corporate sector.  This was a sea change in government in the US which ceded the executive power and congress to special interest money. We have never recovered from this kidnapping.  And the captains of industry will not be satisfied until they have destroyed the last vestiges of responsible government such as social security, protection of the consumer, environmental responsibility and a living wage.

Wed, 01/06/2016 - 22:48 | 7008398 El Hosel
El Hosel's picture

Janet Yellen -  "She did not say one word about the real world"  Ah ha!

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