This page has been archived and commenting is disabled.

Bob Janjuah - "Central Banks Are Attempting The Grossest Misallocation And Mispricing Of Capital In The History Of Mankind"

Tyler Durden's picture




 

The always delightful Bob's World is out. Here are the fmr RBS strtgist's latst non-abrvtd thots:

When Money Dies

Before providing an update I wanted to refer readers to two items – which may in turn "give away" my thoughts "post-OMT" and "post-QEinfinity". First, readers may wish to reconsider a piece I wrote earlier this year in February entitled "Bob's World: Monetary Anarchy" (20 February). Secondly – and much more interesting in my opinion – all readers are urged to read the book When Money Dies by Adam Fergusson.

In terms of my thoughts, I think historically important events may be unfolding. I think that by their actions both Fed Chairman Bernanke and ECB President Draghi may have belied how deeply worried they are about our economies and the financial system. In short, I see fear in their actions. But what really concerns me is that their only responses are to effectively say "we give up", as they abandon the search for “real" solutions to our ills. Instead, by their actions, we can now clearly see that the only solutions that are offered by the Fed and the ECB are the extension of the same failed policies that got us into our financial and economic despair in the first place. Namely MORE debt, MORE bubbles and MORE monetary debasement. When future historians look back for the day that the West lost its status as global economic superpower, and for the day that the West lost its aspirational leadership in terms of sound economic and prudent financial system management, I feel that September 2012 may be seen as a significant pivot point.

Turning to a few specifics:

1 – Politics: Both Draghi and Bernanke now seem to have deeply and irrevocably immersed themselves into the realm of politics. A review of Draghi's speech made on the evening of 6 September seems to show, in my view, that he is deeply political and is prepared to use the ECB to further his own political agenda of a federal Europe. As for Bernanke, whilst he may not be so explicit, he will surely realise that his actions are likely to impact voters in the US elections in November. History tells us that politics and central banking should never be allowed to co-mingle. The results when this has been allowed to fester have usually been very undesirable. In my view, we have crossed a critical Rubicon here. My biggest fear now in this respect is that in Europe the (mostly) elected political leadership will – when it comes to delivering fiscal union – fail to follow through, and/or the people of Europe will refuse to co-operate in the Draghi-mandated push for federalism and fiscal union. And in the US, if Bernanke's actions are perceived by Republicans to secure Obama a new four-year term, I see it as now highly likely that the fiscal cliff will become a full-on reality rather than just a thing we worry about. After all, a Republican Congress will have little to lose and lots to gain potentially by triggering a fiscal crisis IF they conclude that Bernanke has become a political servant of the Democrats.

2 – Growth and inflation: Lest we forget, neither QE, nor the LTRO, nor the OMT either have, or will, do anything sustainably positive for growth. The evidence of the last four years is clear. In fact, all I think we are likely to end up with is WEAKER growth as consumers are forced to save more and as they see their disposable real incomes fall. The idea that consumers and/or corporates will now go on a leverage and consumption/investment/spending binge is based on nothing other than hope – I actually expect the opposite to occur. The emerging world will be forced to TIGHTEN policy as the globally traded prices of food, energy and other commodities will serve to generate real and significant inflation in these nations. These higher “headline" prices (in non-discretionary items) will – in the West – cause growth to weaken as (discretionary) demand will take the hit; Western workers have zero pricing power and aggregate employment in the West will not improve largely because QE and OMT do nothing to generate global demand. Some might feel that a weaker USD will benefit US exports. Here one should not forget that the West is and has for the last five years been in a race to zero when it comes to currency strength. USD weakness will not be tolerated for long by the rest of the world, hence any US “gains" would be purely temporary. One major lesson of the last five years has been forgotten, or indeed rewritten. The recovery from the 2008-09 collapse was NOT primarily caused by QE1. The real drivers were TARP (real fiscal loosening) and the USD4trn fiscal and bank-financed investment binge seen in China from late 2008. I think it is crucial to remember this when the Fed in particular is “judged" over the next few months.

3 – Credibility: Central bankers who lose credibility are a major problem. I will leave it for others to judge, but the success of central bank policy over the last four to five years when it comes to creating jobs, boosting real demand and improving Western worker competitiveness is, frankly, paper-thin. In fact, the opposite is easier to prove. I see nothing in this latest and most dangerous round of monetary anarchy that will reverse the process of deflationary debt deleveraging, other than a short-term impact on the pace of deleveraging, and whilst QE and OMT have and will boost asset prices, this is again a very short-term outcome, but possibly at a truly enormous cost. Further, specifically in terms of the Fed and QEinfinity, I am deeply worried that what Bernanke is now de facto saying is that the real underlying economic and jobs situation is much worse than we all think, that he has no idea how bad or for how long this situation will get or will last, and that as a result the only tool left is a permanently open monetary spigot. Anyone who carefully considers his actions will, I think, end up as concerned as me. Regarding the promise to keep rates lower for longer I can only conclude that either (a) this policy will succeed and so result in enormous inflation (eventually) based on the explosion in M0 and based on the Fed's 30-year track record of failing to take away the punchbowl before it's way too late, which will trigger the next collapse; or (b) the policy will not succeed (my base case). Either way, the Bernanke Fed, which helped cause the US housing bubble, then helped cause its collapse, who first told the world there was no housing bubble, who then told us that all we had a minor USD20bn-odd sub-prime problem, who went on to tell us that QE was a temporary emergency policy that would be soon reversed, and who persists in telling us that QE will help deliver millions of jobs and will bring us back to pre-crisis levels of trend growth (above 3%!) – he does after all keep telling us the problem is cyclical and not structural! – is now very much in the Last Chance Saloon. Markets and political leaders, and the US people, may well judge Bernanke in an extremely negative way over the next few months if this latest huge gambit fails.

4 – Demographics and Behaviour: These are areas which get little focus in financial markets and with policymakers, who are both generally always looking for instant gratification and doing anything to avoid the reality that money debasement solves very little in the short run and creates huge problems in the long run. But I think they matter. The demographics in the US, in Europe and in China are, at least for the next few years, very negative (i.e., rapidly ageing). Ageing populations grow slowly. They save more, they spend less, and they do not go on debt-funded consumption binges. If consumption is weak, if uncertainty is high, if fiscal policy is having to be tightened and if global central bank policy settings are already at such historically emergency settings, I find it extremely hard to understand why any CEO/CFO will feel that now is the time to lever up, to invest, to hire, or to grow. If I am right about the private sector response, then Bernanke and Draghi will have to imagine up new justifications for their actions at the very least!

"The bottom line is simple: The Fed and the ECB are directing
and attempting to orchestrate the grossest misallocation and mispricing
of capital in the history of mankind.
Their problem is that
their actions have enormous unintended and even (eventually) intended
consequences which serve to negate their actions in the shorter run, and
which could create even bigger problems than we currently face in the
near future. Kicking the can is not a viable policy for us now. The
private sector knows all this, consciously and/or sub-consciously,
which is why I feel these current policy settings are doomed to fail.
Having
said all that, the one area which for some reason still holds onto
hope that Draghi and Bernanke can still perform feats of "magic" is the
financial market, which central bankers assume, rely on and are happy
to encourage Pavlovian responses. The reality here though is that even
financial markets are, collectively, either sensing or assigning a
half-life to the "positives" of central bank debasement policies, which
to me means that even markets are only suggesting a short-term benefit
from the latest policy actions
. This is not what Draghi and
Bernanke are hoping for, but in order for them to see the half-life
outcome averted they know that we need to see major political and
structural real economy reforms which somehow make Western workers
competitive and hopeful again. The track record of the last
four to five years inspires very little confidence that we will see
such great necessary reformist strides taken anytime soon."

Notwithstanding this, in terms of markets:

1 – This Week: We are four S&P closes away from being stopped out on the bearish call outlined in my August note . It seems – let's see how this week plays out – that we were wrong to believe that central bankers would not become so “political". As we have captured around 300 S&P points in the sell-off that began in early April (1422 to 1275) and the rally that began in early June (1275 to 1425), and as the S&P traded at 1425 on the day my August note with its 1450 S&P stop was released, the extraordinary central bank actions of the last few weeks has resulted in a very small hit to “our year to date". As said, however, my stop loss will be triggered on this Friday's close if the S&P is still above 1450. So my stop-loss and I are at the mercy of the next four days' price action. Real-world risk takers/investors may choose to exercise any such stop sooner but I will wait/accept the risk. But to reiterate, if the S&P closes above 1450 on Friday, the bear call of August is closed and initially at least I'd choose to go flat/neutral on a tactical basis. If my stop-loss is NOT triggered by this Friday's close – a possibility, but not a probability – then I will write again, but my initial sense in such an event would be that the half-life upside cycle is even shorter then I currently think and has already played out. Let's see.

2 – Rest of 2012: Clearly the caveat/stop-loss above needs to be addressed first. Thereafter, I feel markets are now fully hostage to the data and in particular the political ebbing and flowing in Europe and in the US over the next few weeks and months. And for that matter in China too where, in my view, the growth slowdown seems to be accelerating, where handover to new leadership will delay until March 2013 any genuinely aggressive and detailed stimulus plans, and where the market is increasingly beginning to understand the huge risks inherent in trying to boost growth through another round of investment spending, where investment as a share of GDP will be at untenable levels (over 50%!) if all the stimulus headlines currently announced become a reality. Or alternatively, and in our base case, the market will quickly figure out that all/most of the currently announced investment plans are just that, merely plans, where little/no funding is in place and/or where funding plans are vague/non-existent, and where the market will figure out that the bulk of the announced spending plans are merely a restatement of existing plans. As such, of the USD2trn+ of plans announced, I expect only 5-10% to come to fruition on any reasonable and useful timeframe. Bottom line – in my view, and unlike in 2008-09, China capex is not going to prevent China's bumpy (at best) landing and is certainly not going to be a meaningful boost to global demand. In general I expect material data weakness globally. And as politicians have generally proven themselves to be unable to deliver the real structural changes we need, then being long risk over the next few weeks and months may feel like the right “trade", but I do believe that the maximum upside is around 10% to equity markets (from here), and furthermore, capturing this 10% will be one of the riskiest and most stressful phases of the market rally out of the 2008-09 lows. The scope for a complete reversal in sentiment and for gapping risk-off price action is very high, so being long risk over the rest of 2012 needs to be done with extreme caution, needs to be very tactical and liquid, and will require a willingness to potentially go against the Fed and/or the ECB. Probably the most important specific items the markets will now focus on are the US fiscal cliff and debt ceiling debate, where the risks of a negative outcome are, in my view, now higher after the recent actions by Bernanke, the lack of political follow-through and worse-than-expected economic performance with respect to Greece, Spain and Italy, and in general the outlook for global growth (where the US and China will, I think, disappoint).

3 – Longer term: No change here – we continue to favour/recommend high quality non-financial corporate credit and we continue to recommend any equity exposure be focused on high-quality, big-cap blue-chip non-financial global corporates. In essence, we still favour the “strong balance sheet" rule when it comes to investing (rather than trading).

Lastly, and for avoidance of any doubt, my 800 target for the S&P is truly alive and kicking. Actually, the recent Fed and ECB actions give me HIGHER confidence in this call. All that I think has really happen – at best – is that the August through November risk-off phase we forecast has been by-passed by the historic moves by the ECB and Fed, and we have now gone straight to the final leg of the 2009-2012/13 cyclical bull market, which I have talked about frequently. As set out in my previous few notes, we have long felt that we would get major QE/monetary debasement around December time, which we felt would take the S&P from 1100 (my target for the bear forecast we made most recently in August and which we thought we would see by November) up to new cycle highs out of the 2009 lows. A quick and dirty look at the charts would imply that by H1 2013 we could see mid- to high-1500s on the S&P. So as per above, if I adopt my most bullish stance possible, I can see the S&P rallying another 10% from here over the next two to six months. However, I believe that this will be the “riskiest" 10% to try and capture, that this possible 10% upside move can truncate and reverse at any time, and that it will be followed by what I think will be a severe repricing of risk over the rest of 2103 and 2014, which should deliver my 800 S&P target.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 09/18/2012 - 07:56 | 2806395 GetZeeGold
GetZeeGold's picture

 

 

Central Banks Are Attempting The Grossest Misallocation And Mispricing Of Capital In The History Of Mankind"

 

Stuck the landing.....attempting it hell.

 

Oh the humanity.....

 

Tue, 09/18/2012 - 08:48 | 2806540 rbg81
rbg81's picture

Both Draghi and Bernanke now seem to have deeply and irrevocably immersed themselves into the realm of politics.

The statement really says everything.  Bernake's actions reveal he is more worried about social stability than solving the long term fiscal health of the Economy.  If UST rates goe up, even a little, Government debt and the resulting flow of entitlements quickly becomes unaffordable.  Instead, he has chosen to keep the entitlement spicket open and keep mortgage rates at rock bottom.  However, he does this at the price of deny savers their income.  This lost income results in less demand among the people who really earn the $$.  The is last point is key.  Because Government will ensure that $$ flows from people who don't earn it at the expense of those who do.  More and more people are figuring this out and deciding they want to be the ones in the wagon rather than the ones pulling it.  Hence the explosion in food stamps and disability benefits.  We are eventually headed for negative UST interest rates and rock bottom asset prices.  The two support each other.  If you are likely to lose $$ on stocks, you are more likely opt to lose $$ more slowly in USTs in order to preserve your capital.  And, in such an environment, Government actually makes $$ off the deficit.  Our politicians have decided that the Poor can't be allowed to feel any pain, so the Haves will suffer.

Tue, 09/18/2012 - 10:04 | 2806771 sschu
sschu's picture

Bernake's actions reveal he is more worried about social stability than solving the long term fiscal health of the Economy. 

Like all politicians, Bennie is primarily worried about keeping his job.  Bam has let him know what will happen unless he gets this thing fixed and both have the fantasy that monetary policy is the magic elixir.

And we will all suffer greatly for their folly.

sschu

Tue, 09/18/2012 - 09:13 | 2806622 Snidley Whipsnae
Snidley Whipsnae's picture

This...

"Markets and political leaders, and the US people, may well judge Bernanke in an extremely negative way over the next few months if this latest huge gambit fails."

Tue, 09/18/2012 - 07:49 | 2806396 HelluvaEngineer
HelluvaEngineer's picture

He says that like it's a bad thing.

Tue, 09/18/2012 - 07:51 | 2806402 GetZeeGold
GetZeeGold's picture

 

 

Cats are just trying to make a living......what's the BFD?

 

Tue, 09/18/2012 - 08:52 | 2806553 new game
new game's picture

OT PM

no fucking mention of gold

that alone tells me the whole story.

these fucking guys, in the end, are shills for the system

don't be the mark...

Tue, 09/18/2012 - 10:39 | 2806907 sumo
sumo's picture

I remember watching a long interview with Ray Dalio earlier this year. Then I read the reviews of it, on conventional blogs like Ritholtz's, all professed fanboys of Dalio.

Dalio mentioned gold favorably. No mention of gold in the fanboy blogs - for the same reason that casinos don't have clocks.

Tue, 09/18/2012 - 11:28 | 2807103 OneTinSoldier66
OneTinSoldier66's picture

I thought the article was great. But after reading your comment I think you make an excellent point, there was no mention of gold. Now I find myself wondering, what does the guy really believe in? What exactly are his principles based upon?

Tue, 09/18/2012 - 12:26 | 2807388 blunderdog
blunderdog's picture

As Patrick Bateman put it: "Inside" doesn't matter.

Wed, 09/19/2012 - 23:18 | 2813803 Schmuck Raker
Schmuck Raker's picture

The guy recommending that everyone should read "When Money Dies" by Adam Fergusson wasn't enough?

Is that because he 'buried' that advice in the last sentence of the first paragraph?

Tue, 09/18/2012 - 08:13 | 2806445 Landotfree
Landotfree's picture

It's the Fed's mission to extend the timing of the collapse as long as possible, it is also their mission to make the system as large as possible before the collapse.  The Fed will not stop until the system has reached max potential, at which point there is nothing further for them to do.

It's a little late for everyone to be crying now.  

Tue, 09/18/2012 - 07:51 | 2806400 Quinvarius
Quinvarius's picture

S&P 800?  The bankers have 80 billion dollars a month and all the free credit in the world, being leveraged at 40 to 1 saying that ain't gonna happen.  Put a 2 in front of the 8.  I don't even like the economy and I am saying that.  You cannot have a banking panic in this free money to banks environment.  No banking panic, no collapse.

Tue, 09/18/2012 - 08:09 | 2806434 fonzannoon
fonzannoon's picture

the inflationary pressures on margins are going to crush earnings. not that they matter....

Tue, 09/18/2012 - 08:10 | 2806436 LawsofPhysics
LawsofPhysics's picture

No collapse?  No clearing of bad debt?  Okay, hyperinflation and war it shall be then.  Some things never change. 

Tue, 09/18/2012 - 08:12 | 2806442 bigdumbnugly
bigdumbnugly's picture

i agree, Q.

except the day they take the free money away... of course they'll be positioned beforehand for that scenario too.

Tue, 09/18/2012 - 08:23 | 2806467 Quinvarius
Quinvarius's picture

They seem to be unwilling to take their losses in the housing bubble as every Fed effort only goes into reflating it.  Until that monkey gets off their back, they will not be positioned to take the other side.  And since the Fed just subsidized the MBS market, we should get even more MBS.  The banking problem will probably get bigger and require more money printing.  We are probably going to get a lot more printing before they try to crash the markets again.

Tue, 09/18/2012 - 08:26 | 2806482 bigdumbnugly
bigdumbnugly's picture

also agree.

Tue, 09/18/2012 - 09:18 | 2806636 Snidley Whipsnae
Snidley Whipsnae's picture

Q...

Correct! ... and, when has a bubble been successfully reinflated?

"They seem to be unwilling to take their losses in the housing bubble as every Fed effort only goes into reflating it."

 

Tue, 09/18/2012 - 11:48 | 2807132 OneTinSoldier66
OneTinSoldier66's picture

As long as Fannie Mae and Freddie Mac are still in Government 'conservatorship'... They took over the housing market from the private sector. Same thing they are doing with health care. Same they did, or tried to do, with education, energy, etc, etc. The USSA.

 

Federal takeover of Fannie Mae and Freddie Mac
Tue, 09/18/2012 - 07:59 | 2806413 Peter Pan
Peter Pan's picture

What do you mean by "attempting" ? i could have sworn they have achieved it. If this isn't the worst, please advise which attempt in history was the worst.

Tue, 09/18/2012 - 08:06 | 2806423 GetZeeGold
GetZeeGold's picture

 

 

Yeah....that's a solid tick in win column....can't wait to see what they try next.

 

Tue, 09/18/2012 - 08:20 | 2806462 buzzsaw99
buzzsaw99's picture

yeah, i have some charts and graphs. game over, the bad guys won.

Tue, 09/18/2012 - 08:30 | 2806489 falak pema
falak pema's picture

I remember of a mythical flute player who used to entice humanity off the cliff; does that ring a bell?

Drowning by numbers is an  old game, when the going gets tuff! 

We always need a flute player, a Pan, to show the sheeple the way! 

Big Ben PAn! 

Tue, 09/18/2012 - 08:04 | 2806420 economicfreefall
economicfreefall's picture

Spanish bad bank loans climbed to a fresh high in July, with almost 10pc of households and companies now behind on their payments, as the country prepares to sell short term debt on the market.https://miningstockvaluator.com/news.php?id=139

There seems to be no end to the vicious cycle we're currently in. I hope we don't have to go too far down the drain before economic and social conditions start turning up again. Unfortunately history tells us things will probably get extremely bad before they get better. Too many wild cards in the deck at the moment. The very last thing we need is another unnecessary war!

Tue, 09/18/2012 - 08:07 | 2806430 kralizec
kralizec's picture

Risk?  What risk? 

Tue, 09/18/2012 - 08:07 | 2806431 Sudden Debt
Sudden Debt's picture

Here's my Stock Trading Tip:

GET OUT OF THIS MARKET AND INTO GOLD AND SILVER!

Buy it for as long as "normal" people thinks it's just stupid to do so!

And I'm not saying you should turn into a prepper buy you better have some reserves of your basics for about 6 months or so.

 

Tue, 09/18/2012 - 08:09 | 2806433 GetZeeGold
GetZeeGold's picture

 

 

Damn.....the barbarians are everywhere.

 

Tue, 09/18/2012 - 08:09 | 2806435 LongSoupLine
LongSoupLine's picture

total fucktard Charlie Evans on CNBS touting the brilliance of QE3.

makes my f'ing blood boil watching these crooks get red carpet treatment by the MSM shitheads.

Tue, 09/18/2012 - 08:11 | 2806441 LULZBank
LULZBank's picture

You only have yourself to blame for that.

Tue, 09/18/2012 - 08:39 | 2806517 new game
new game's picture

you can turn it off. and since you know in advance what is going to be said, you must get control of yourself!

it is not worth it.  say out loud "i am powerles over TPTB" - step one toward mental freedom to think clearly free from anger.

now you can put a constructive plan in place...

Tue, 09/18/2012 - 10:40 | 2806911 ZeroAvatar
ZeroAvatar's picture

Serenity Now!   AAAAAA    UUUUUUU     MMMMMMMMMM!

Tue, 09/18/2012 - 12:02 | 2807252 Svendblaaskaeg
Svendblaaskaeg's picture

you can turn it off.

Turn it off like a man, Elvis did, me 2

Tue, 09/18/2012 - 08:14 | 2806450 blindfaith
blindfaith's picture

The only ones listening, are the ones who can't seem to do a damn thing about anything.  Ron Paul, David Stockman, Paul Volker....on and on, and then there are all of us peons.

It should be painfully obvious to all of us that the Central Bankers and Wall Street thugs have the money, guns, poilice, and political power to tell all of us to go F%&k off.  All this fretting on Zerohegde is a lost cause.

These guys are building a CHURCH and a god to bow down to.  Best understand that, less you be subject to the inquisition of credit scores, account rifiling, cancelled credit cards, lost documents, endless 'on hold' customer service, and heaven knows what else they have planned.

I am going fishing, something tells me I am going to need the skills honed.

Tue, 09/18/2012 - 08:48 | 2806542 new game
new game's picture

blindfaith

"All this fretting on Zerohegde is a lost cause".

you have not thrown in the towel, but rather see clearly the foe.

that is most important as we forulate a defense, which may include running for da hills...

Tue, 09/18/2012 - 10:47 | 2806945 sumo
sumo's picture

"All this fretting on Zerohegde is a lost cause."

 

Respectfully disagree. For those who are just discovering ZH, the fretting is educational.

Tue, 09/18/2012 - 08:15 | 2806452 Oh regional Indian
Oh regional Indian's picture

Nice headline.

Interesting that here in India, loosening and flooding is on full bore, but the public is so dumbed down that th ehard questions never get asked.

According to popular opinion, dropping CB rates to lower car ad house financing is a "great move"....

The Inflation Exportation portion of the FED's UN-Mandate is going swimmingly here.

ori

Tue, 09/18/2012 - 08:24 | 2806473 Shizzmoney
Shizzmoney's picture

What is important to recognize in analyzing this shift in the locus of centralized planning is that the financial sector’s objectives are the opposite of those in the public sector. Democratic governments seek to increase employment, output and living standards. But relinquishing central planning to the banks, as the ECB and Washington Consensus wants to do, replaces democracy with oligarchy.

Under these conditions financial planning takes the form of austerity, lowering wages and living standards. The ensuing economic crisis is used as an opportunity to grab whatever property is in the public domain – infrastructure, real estate and mineral rights, and even the creation of new monopolies to sell off and use the proceeds to pay the debts. (Chicago, for instance, sold the right of Wall Street investors to install parking meters on its sidewalks – increasing the cost of driving and doing business.)

This is how the South Sea Bubble was orchestrated: Sale of the asiento monopoly on the slave trade with the Americas that Britain’s government had won from Spain. Stock in the company was sold to the public – with insiders making early gains and then selling out before sticking the public with the crash. This is basically the plan to privatize Social Security. It is Pinochet’s and Thatcher’s “pension fund capitalism” expanded to orchestrate bubbles by inflating asset prices on credit, and then letting the economy collapse as it becomes high-cost and insolvent. The process is capped by the government creating debt to bail out the banks, but to help the tangible production-and-consumption economy recover. So financial planning under oligarchic government is all about the FIRE sector.

Unfortunately, economic history no longer is taught as part of the neoliberalized economics curriculum, at least here in the United States. So people are not aware of how destructive financialized management and planning has been ever since the fall of Rome.

"The parasite will die with the host. That is what caused the decline and fall of the Roman Empire."

Read more at http://www.nakedcapitalism.com/2012/09/michael-hudson-on-how-finance-capital-leads-to-debt-servitude.html#uSvPeChbSC9isJBX.99
Tue, 09/18/2012 - 10:51 | 2806959 sumo
sumo's picture

Michael Hudson rocks. Always worth a read.

Tue, 09/18/2012 - 08:26 | 2806478 buzzsaw99
buzzsaw99's picture

central banks are functioning as intended

Tue, 09/18/2012 - 08:28 | 2806486 new game
new game's picture

the human experience as it relates to money/investments has become gambling.

ok, he says to bet against the fed(contrary to his overall thesis) for the last 10 percent with tight stop loss prevention; really!

gotta say i think i'll watch from the sidelines and armchair my losses fictisiously.  twighlight investing!

if you got your hands on it, it may be real; although even that can be manipulted too.  But at least ya own it!

soooooooooooooooo, fucking unreal, manipulated and fucking fake...

 

Tue, 09/18/2012 - 08:31 | 2806497 rustymason
rustymason's picture

Is it good to have a debt-based currency, to pretend that anti-money is really money, that liabilities are really assets? Is it really good to have constant growth? These are questions that the pundits, politicians, and polly-annas do not ask. Endless complaining about the trees and brambles, little examination of the forest.

Tue, 09/18/2012 - 08:43 | 2806529 spanish inquisition
spanish inquisition's picture

The big banks needed more money or they would collapse. Here is a video explanation. http://www.youtube.com/watch?v=stdi-1tIUhM

Tue, 09/18/2012 - 08:51 | 2806533 jjsilver
jjsilver's picture

Would you expect anything less from a criminal syndicate!

The Protocols of Zion

The basic premise of the protocols is that the end justifies the means.
 Here is a one page summary…
Goyim(non Jews) are mentally inferior to Jews and can’t run their nations properly.  For their sake and ours, we need to abolish their governments and replace them with a single government.  This will take a long time and involve much bloodshed, but it’s for a good cause.  Here’s what we’ll need to do:

    Place our agents and helpers everywhere
    Take control of the media and use it in propaganda for our plans
    Start fights between different races, classes and religions
    Use bribery, threats and blackmail to get our way
    Use Freemasonic Lodges to attract potential public officials
    Appeal to successful people’s egos
    Appoint puppet leaders who can be controlled by blackmail
    Replace royal rule with socialist rule, then communism, then despotism
    Abolish all rights and freedoms, except the right of force by us
    Sacrifice people (including Jews sometimes) when necessary
    Eliminate religion; replace it with science and materialism
    Control the education system to spread deception and destroy intellect
    Rewrite history to our benefit
    Create entertaining distractions
    Corrupt minds with filth and perversion
    Encourage people to spy on one another
    Keep the masses in poverty and perpetual labor
    Take possession of all wealth, property and (especially) gold
    Use gold to manipulate the markets, cause depressions etc.
    Introduce a progressive tax on wealth
    Replace sound investment with speculation
    Make long-term interest-bearing loans to governments
    Give bad advice to governments and everyone else

Eventually the Goyim will be so angry with their governments (because we’ll blame them for the resulting mess) that they’ll gladly have us take over.  We will then appoint a descendant of David to be King of the World, and the remaining Goyim will bow down and sing his praises.  Everyone will live in peace and obedient order under his glorious rule.

http://iamthewitness.com/books/Protocols.of.Zion/index.htm

I must not fear. Fear is the mind-killer. Fear is the little death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.
- Bene Gesserit Litany Against Fear

 

Tue, 09/18/2012 - 09:14 | 2806626 CaptainAmerica
CaptainAmerica's picture

You, sir, are a fucking whacko.

Tue, 09/18/2012 - 12:56 | 2807497 Cosimo de Medici
Cosimo de Medici's picture

Now you've gone and done it.  Made the poor slob even more paranoid than he was.  When you write "You, Sir" the guy thinks, "How did he know both of us were here?"

Tue, 09/18/2012 - 10:41 | 2806914 aerojet
aerojet's picture

There is far too much complexity within the human race for any complicated, inter-generation plot such as you describe to ever succeed.  I sometimes think that people like you must be very uncomfortable with randomness, so you try to ascribe some huge, complicated, overarching plot to describe everything you expereience in life. 

Tue, 09/18/2012 - 08:58 | 2806574 Vince Clortho
Vince Clortho's picture

There is a persistent notion from numerous writers that the Fed or the Central Banks are trying to "solve" the financial and economic plague engulfing the planet.  This is a fundamental misconception.  If the planners had truly been pursuing a solution, the last 4 years would have unfolded in a much different manner, with bad businesses and banks being allowed to fail, and protection being afforded to the victims of these tragedies.  We have seen the opposite.

The elite Bankers are filling their pockets to the brim, preparing themselves for the upcoming crash (that they themselves have manufactured).  The masses will suffer.  The Elite will have hoards of resources to comfortably weather the storm.  Then they will offer solutions to guide the people back out of the ashes, with the same elite once again positioned in the top perch.

 

Tue, 09/18/2012 - 10:50 | 2806958 aerojet
aerojet's picture

Some elites are undoubtedly taking advantage of the situation, but the rich get hurt by a crash just like everyone else because most of their wealth is all papper, too.  You think every billionaire is out buying up as many hard assets as possible?  I know Ted Turner bought up a lot of property in Montana and places, but there just aren't enough hard assets to go around for all the billionaires.  I think what the Fed is doing is trying to maintain the status quo, but not necessarily for any particular group of elites.  Bad businesses and bad banks weren't allowed to fail because they are politically connected.  But that is different than the conspiracy you are suggesting here.

Tue, 09/18/2012 - 10:55 | 2806972 sumo
sumo's picture

"You think every billionaire is out buying up as many hard assets as possible?"

Folks like Jim Sinclair and Robin Griffiths on KWN have been saying old money has been moving into hard assets for some time.

Old money is nervous money, always staying close to the exits.

Tue, 09/18/2012 - 09:03 | 2806589 SoundMoney45
SoundMoney45's picture

Assets, as collateral against loans, have collected on central bank balance sheets over the past few years.  This collection of assets as collateral at central banks is now accelerating.  If the central banks were to raise interest rates at some point in the future, all the collateral would likely be seized.  This would include all the pledged rehppothecated assets in the banking system. This implies that the central bank stockholders would have purchased a great many assets by simply hitting a print button again and again and again.  

 

"If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered."

– Thomas Jefferson


 

“Banking was conceived in inequity and was born in sin. The bankers own the earth. Take it away from them, but leave them the ability to create money and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But if, you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.“

- Sir Josiah Stamp, Director of the bank of England in 1928, reputed to be the 2nd wealthiest man in England at the time.


“Let me issue and control a Nation’s money and I care not who makes its laws. The few who can understand the system will be either so interested in its profits, or so dependent on its favours, that there will be no opposition from that class, while, on the other hand, that great body of people, mentally incapable of comprehending the tremendous advantage that Capital derives from the system, will bear its burden without complaint and, perhaps, without even suspecting that the system is inimical to their interests.” 

- Mayer Amschel Rothschild


Tue, 09/18/2012 - 10:31 | 2806874 Snakeeyes
Snakeeyes's picture

I wrote about the incredible distortion by the Fed by picking housing above everything else. We keep making the same mistake over and over again: housing at all cost!

https://confoundedinterest.wordpress.com/2012/09/13/fed-pulls-the-trigger-with-new-bond-buying-program-40-billion-in-mortgage-backed-securities-per-month/

Tue, 09/18/2012 - 10:53 | 2806966 imbtween
imbtween's picture

"attempting" lol

Tue, 09/18/2012 - 11:36 | 2807123 WhiteNight123129
WhiteNight123129's picture

JAnjuah Got it wrong,  the central bank are destroying the capital owners into converting capital back into circulation. ANd damn teh capital owners are fucking slow to get it. When they   finally get it, 30 years at 3.8% yield, nominal GDP at 4.2%,  equities sag and unemployment down, wages up faster than total output growth, median household income up 4.5% nominally, food prices up 8% , credit card debt down and household having an easier time paying their mortgages debt. New York real estate down 30% as the sellers of bonds and equities are getting fucked. Chicago real estate up (commodities).

 

 

Tue, 09/18/2012 - 12:55 | 2807484 boiltherich
boiltherich's picture

"Central Banks Are Attempting The Grossest Misallocation And Mispricing Of Capital In The History Of Mankind"

 

Tell us something we don't know, like WHY they are doing what appears to be a suicide run.  Actually a suicide run is not really accurate is it?  If it were a suicide run they alone would be killed by it, but they intend to take the world with them, so it is actually a murder-suicide, or genocidal suicide run.

So we are left to speculate on our own as to the reasons, and first up this very morning is Mr. Evans over at the Fed justifying why the doves destroyed the hawks and voted the largest ever welfare package for the uber wealthy:

Fed’s Evans: It Was Time to Act, Still More Can Be Done

The U.S. Federal Reserve's decision last week to launch a fresh round of bond-buying will provide "important added stimulus" to jobs and shore up the economy against possible future shocks, a top Fed official said on Tuesday.

http://www.cnbc.com/id/49070717

You know and I know and the Fed knows and even the retards at CNBS know that this will do nothing for the wider Main Street economy and will create zero jobs but will probably destroy more.  It was time to act alright, but the actions needed they will never do or even admit to.  And get ready because as Mr. Helicopter Ben and today Mr. Evans says, we will do more and we will do unlimited amounts of more at that.  It is TPTB writing the eulogy for our economy, but I ask again, why? 

Here is what Evans says:

"With the problems we face and the potential dangers lying ahead, it is essential to do as much as we can now to bolster the resiliency and vibrancy of the economy,'' Chicago Fed President Charles Evans said in remarks prepared for delivery at a breakfast sponsored by the Bank of Ann Arbor."

In other words they expect something bad to happen and it will be so bad that we will be lucky to get through it, the feeding frenzy of the rich welfare queens on Wall Street might be a sugar high but not to do it means we will not get through what they see coming.

What is coming?  A comet maybe, or a solar flare so large we need a human outpost on Mars (which is nearly completed perhaps and now just needs to be populated by the super rich who will return one day to a clean new Earth where no poor people survived)?  What?  Maybe something more mundane that they have actually planned like a world war following a strike on Iran?  Maybe it is just them saying they will keep the rich rich no matter what happens to the other 6.999 billion earthlings. 

Speculating on your own demise is not as much fun as I thought it would be, because something IS coming they say so, and they will get through it but we will not. 

Do NOT follow this link or you will be banned from the site!