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Charting The Latest Iteration Of Moral Hazard
Since this chart from the WSJ sums up petty much everything about the "efficient market hypothesis" or whatever it is those wacky Chicago PhD's call their multi-variable, self-similar, Lorenzian "strange attractor" equations that describe human irrationality to the dot, there is little need for commentary (those who wish to do so, can read more about it at "Fed Faces Old Foe as Hazard Returns")
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Faqirs
Chicago Ph.D. ?? I think not. Sounds much more like mutual fund salesmen blather to justify marginal returns for high management fees; sounds more like Smith Barney and Merrill Lynch lying their way into your pocket.
Despite the gnashing of teeth, hasn't the USD enabled consumption been great -- all the Fed/US Treas/EU effort is to keep it going a little longer -- the real losers are the population in the commodity rich/defenceless countries who have disgorged their natural wealth for bits and papers!
All the rest is just hypocricy and denial...
"the real losers are the population in the commodity rich/defenceless countries who have disgorged their natural wealth for bits and papers!"
That's the scariest part- we've exported inflation (in the form of worthless bits of paper and data entries) while importing real goods, like oil, iPhones and Barbie dolls. When that tide turns- and we can see the waves lapping at the shore today- we are going to see the value of the dollar plummet in value in a manner unseen in history. One day soon, dollar holders overseas are going to see the writing on the wall, and the slow trickle of repatriated dollars will become a flood. No one wants to be left holding the bag. The governments that hold US debt will be loathe to do it- they know that when they do they will have to revalue their "marked to fantasy" US holdings, which will hurt their economy- but when the dam breaks, it will be better to lose 50% of their value than 99%. The loss in value will be swift, and will devastate the US (and world) economy.
That day is fast approaching, and I fear it's going to be sooner than we think...
An Inefficient Market Hypothesis
Fox News is suddenly "in bed" with Ron Paul:
http://www.foxnews.com/politics/2011/08/28/paul-fema-is-real-disaster/
http://www.foxnews.com/politics/2011/08/28/paul-bernanke-is-out-options-...
In a democracy, the 51% pretty much make the rules for everyone, including the 49% who dissagree. There is a problem when the majority wants to enact some law over the minority though. This has been seen in voting rights for blacks, women, and other disinfranchised peoples. So now we get to see what happens when the "young people" who did not vote to give out money, finally get a voice. Ron Paul will be the front man for that voice screaming, "It's not my debt!!!"
We don't have a democracy NOR a republic.
We REALLY DO have a kleptocracy whereby 0.1% make the rules for everyone, and the system is hopelessly broken.
Ask any politician or regulator in government who really owns them (and then ignore their response & FOLLOW THE MONEY).
Exactly. Let's all us ZH posters agree to agree that the US of A is not a democracy. That's the low-hanging fruit, in terms of thought work.
Reasonable prefixes to join with "ocracy" in the context of the USA are "plut-" "klept-" "idi-" and the like.
IPACocracy
Yeah.. the 0.1% really were chomping at the bit for a vastly expaneded Healthcare Welfare program. (Let's not call this insurance.)
I think you mean 51% of voters. When you consider elections have very low turnout the actual "lawmaking" arm of the voting population is quite small.
Good catch Ahmeexnal... The 2nd link is a good watch for Ron Paul debunkers. Fox spent serious time with Paul to allow hime to make some points. He is right about FEMA if debunkers think about what he is saying. He is not a JFK, Clinton or Reagan when it comes to excitement but his message is spot on if you want this country to get back on track.
Ron Paul: "FEMA creates many of our problems because they sell the insurance because you can't buy it from a private company, which means there's a lot of danger, so we pay people to build on beaches, and then we have to go and rescue them," he said.
There is the nuclear industry in a nutshell as well. What insurance company would cover a nuclear power plant? Look at the Japanese debacle.... So, the gov't insures them and that creates moral hazard. If private insurers were on the hook the maintenance and upgrades would have to be done to prevent "accidents". But no, these things cost money and the cost of the electricity to the end user would go up. So, government is subsidizing YOUR power costs. Moral hazard at work.
I fear that the good doctor will be co-opted once TPTB realize the support he is capable of obtaining.
Let me be clear. I do not think that Ron Paul will compromise. But I think it would be hard to resist getting swallowed up by them once they decide to endorse him in some fashion. Easier to direct his course, then to let him do his thing.
And our government will collapse.
The...horror.
Nothing wrong making some money going long to the bottom.
Hope and change at it's finest!
Yes sir, but behind door two was McCain/Palin (Deep sigh, shaking head,)
Upside: This train would be fully wrecked by now. That's the optimistic view.
"No one saw this coming," they testitifed.....
OT, but OH SO Worth it:
In the mean time, The New York Times (of all papers), comes out with a major piece by Grethchen Morgensen, saying "oh noes! The bailouts didn't help Main Street, and Paulson, Geithner & Bernanke have lied to the American People" -
- but wait for it; Morgensen says the Bernank WILL DO IT AGAIN, but that this may be a "tough sell" to the American People.
DUH.
The best part of this article is having a former Cleveland Federal Reserve Attorney spill the beans on the SHAM & SCAM & RACKETEERING OUTFIT THAT IS THE FEDERAL RESERVE (down with The Fed & ALL FIATSKI-FRACTIONAL RESERVE PONZIS).
Published: August 27, 2011
The Rescue That Missed Main Street
+ 10 Long but good post.
It's shortened, now, by magic.
I didn't edit it. Ghost in the Machine.
Excellent post. I am reading her book now...excellent also ....a little depressing.....
"But fiat paper money also creates moral hazard for the money users — the citizens, the banks, and the governments — because they sooner or later realize that the masters of the printing press have the power to bail out any bankrupt firm or government. They engage in reckless financial planning, expecting that the monetary authorities will not allow too many reckless planners to go bankrupt. This speculation has been borne out by the last thirty years. Public and private debts are at record heights all over the world."
http://wiki.mises.org/wiki/Moral_hazard
Snarkasm Flashback to the 'aughts.
"But if we sent you a $600 stimulus check, $1800 if you aint a homo, would you join us? How about we throw in the ole' secretary of treasury spot?"
Monetary is Central banks. They fired every wad they have. Fiscal is politicians and there are many more pages to add to the tax code to get this economy going good and proper. My point is many of us sound money advocates on ZH and other places are not adressing the particular printing press causing the true problems.
Yes, but with sound money, the only way the .gov can spend money is by direct taxation. Taxation which is burdensome and unpopular will make politicos think twice before handing out the fruits of their constituent's labor to their pals. Furthermore, when people directly experience the negative effects (taxation, null results) of the latest and greatest porkulous, they'll probably think twice before electing Mr. Promises and probably think twice before shunning Mr. Reality.
Nothing changed, just some nebulous words, The market goes where it's told to go when volume is low. The robots will pump it up again so we can make more money going down again through the same territory. Do they publish a chart of when they will tell the bots to move down? (sarcasm). Not sarcasm is where is the best place to check on how short the market is because my guess is the market will turn down when 'they' determine there are enough sheep on board to the rally-express to be worth shearing.
It's easy to know when it will go down. Right after they ban shorting.
Wondering why all these graphs don't show a downline ending in a big swirling toilet bowl? Banzai? Fuck 'Moral Hazard', I want Turdbowl 'Punch In the Face' Hazard. Something that gets the attention of the electorate and gets some meaningful change underway, whether with dropped Chads or Chads with UZI's. Otherwise who cares what the 'hazard' is? It's going to end the same way if not. Screw the system that has been screwing us. All you assbags that voted for 'Change', here's your chance to redeem yourselves; light yourself on fire and go hug your favorite elected official. A nice warm hug will do. You're obviously too brain deficient to be worthwhile to those that saw through the smoke and mirrors...
You may want to consider increasing your meds.
Nah, can't afford them. Beer works fine. Just venting after a weekend of listening to friends/relatives and reading posts of Obamanaut apologists singing the praises for O's magnificient handling of a 'historic hurricane' and psycho-babble on his handling of the economy and how Irene will give a boost to the economy thanks to the almighty O'. Try explaining the Broken Window Fallacy to the Progressive-minded. The storm cleanup hasn't even started and the '...if this is O's Katrina, he did WAY better than Bushy...' is being spewed. Had already read/saw RP's stuff on Fox(oops) and it just set me off. The title bar on the chart says 'hopes, hopes, hopes' which pretty much says it all about this economy. Everyone 'hoping' things will work out but not many seem to be doing much about it. RP is, always has been, the voice of reason and even here he gets panned regularly, sometimes by those who admit to voting for Obama on the premise that the 'Hope and Change' thingy would work out for them. What a laugh. And how pathetic. Had they backed RP maybe the dead horse that was McCain wouldn't have been resurrected so easily and there would have been a viable alternative in '08. Nah, still probably wouldn't have worked but at least you could say you didn't vote for the current DIC (Disaster In Chief) in the WH. I stopped talking prepping, PM's, and politics with these people years ago and now I can't even get through hurricane season without more endless blathering on how O' is helping US 'recover' from one thing or another. Actually I take back my initial statement and will just stick my head in the toilet bowl and give myself a swirly. It'll cool me off, wash some of the BS from my ears, and prevent me from hearing anymore of these whiners for a brief moment...and to the 6 downers, if you voted for O, fuck you. If not, thanks...
Nice rant! The only caveat I'd add is that we really don't know where we'd be without the onslaught of "stimulus" and all the other money thrown at the problems. I'd rather have had the money not spent at all, but it is impossible to prove the proverbial negative. If the wasted money spend on the oligarchs has done anything at all it has allowed me extra time to buy the precious metals that I'll hold through the coming maelstrom. I can be thankful for that at least.
People had better start understanding how many voters there are going to be in next year's election that truly want the opposition _dead_. Not defeated, and not just the politicians. Dead, and including the voters too.
We're headed for probably a Corn-pone Hitler (as Kunstler puts it), which describes the Republicans well.
(And that's if we (and I don't think we will) get that far.)
it's a kommunist market. when the government wants you to take risk, take risk. and when they want the market to crash, they let it
What, they couldn't have worked "Bernanke Put" into the copybook heading?
Asia is up
ES is up tonight
Could be a big day tomorrow.
Robo you strangely disappeared during the big selloff
Yeah Robo we missed you, no one to bust on....
Hey RoboWanker, it may take a few days to get a big sell off so you go into hiding again, but at least you'll go into hiding again.
Now give me my cash, teller boy.
Don't be so hard on him. I for one, appreciate his dumb money indications.
or the dax could trade down another 3%.
its a crap shoot. not a market.
There must be wailing and gnashing of teeth for the FOMC meeting to provide cover. The crystal ball ball is a bit fuzzy in the short term but the wailing and gnashing as Bennie walks into the meeting that's something I'm betting on. How high can it rally short term and still have the required angst in three weeks? Not very.
this is a suckers rally...the market will short insurance/banks/transport/retail...everything. reparitation trade after a disaster.
could be wrong, or i could be right.
but I think I am right, EZ endgame is creeping up
The real hazard comes when you breathe your last breath and go to your final accounting.
with a bit more detail
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s206018187]&disp=P
the last stimulus (QE2) produced little stock market gains and virtually zero economic progress. Imagine what happens to the markets when QE3 proves that printing can not cure a debt loaded economy?
In a rigged casino, always bet with the house. Better yet, stay out of the casino.
> In a rigged casino, always bet with the house.
You can't even do that in a regular casino.
I fear we'll be back to a position where the worse the data, the more the stocks rally on the hope of even more stimulus. The disconnect between fundamentals and the market is astonishing.
The only stimulus required is economic growth at a minimum of 4-6 % per quarter, by unleashing a starving private sector. Something an elite government stateist can never begin to comprehend.
The only stimulus required is economic growth at a minimum of 4-6 % per quarter, by unleashing a starving private sector. Something an elite government stateist can never begin to comprehend.
At ease, Gentlemen. This is just validation that Keynesianism is effective. We've got markets going up with liquidity increase to suppliment demand! Even animal spirits!
Ugh.
Is it just me? usd/jpy looks like it want's to break that H-1 Parabolic line. London?
Tossers and wankers, the lot of 'em . . .
Want to have some fun this week? Easy. Everybody just convert all your demand deposits to FRN's. Banks would have to cash in their reserves at the fed, therefore reduce their liabilities, call in loans etc. due to reserve requirements. A run. Easy. It's coming sooner or later. Why not next week? I did a 60k last week. They really had to scramble, took them a week to get the FRN's from the fed. It's all just funny money printed by the banks & fed anyway.
+ 1 more Great move!
And remember, paper fiat is better than electrons (at least for a while). Also, with interest rates so low, there is NO opportunity cost to holding long green. Everyone ought to have a few thousand lying around the house in case of a Bank Holiday...
Consider buying some gold with all that yummy fiat you took out!
Thanks,
Everything but the 60k is in AU & AG in my possession in a fire & water protective safe.
The Bernanks stimulus works. Just ask any billionaire.
I treated my wife and kids to a "Robo Sunday" today. I am not making this up. We had lunch at Chipotle, bought a bunch of overpriced shit at Lululemon (it is very upsetting that they make their sales staff wear skimpy yoga outfits, I had to endure this for like 25-30 minutes), finally got a White iPhone 4, and we just finished watching a movie on Netflix.
Don't buy his bullshit.
A true RoboTarder Sunday is wankin it to a re-run of Three's Company, eating a frozen burrito cooked via microwave from 7-11, and talking to LuLu, the weird, foreign neighbor, through the paper thin drywall separating RoboTarder's apartment and his.
“The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy: neither its pipes nor its theories will hold water.” - John W. Gardner
I am really looking forward to more comments by reader2010. You are off to a great start.
I just sent that to a few of my friends, reader2010. Great quote.
+100!!!
QE3 will be a flop. China and EZ will forcefully plea that maniacal madman to go QE3light (very light) or operation twist ad infinitum.
IF Another wave of inflation comes from 'Chairsatan' (haha), you might as well lock in a war (major) next 6mths
QE2 didn't work because it just wasn't big enough ... but this time will be different!
Bend over bitchez.
Go big or go home!!
bernanke's favorite word is 'credibly', his second favorite is 'threaten'.
PhD should only be awarded to Engineers and not economists. We are seeing the stupidty and the waste of Education eppecially those from ivy league Schools.
Yep. Economy is not a science, it's a game. A game of skill, strategy and psychology. Basically like just poker.
Maybe we should just have tournaments then to see who the best economists are.....
Ya gotta admit, that chart's pretty funny. I think it shows that the Bernank has a sense of humor, albeit rather twisted. Kinda like messin with your dog by fake throwin the tennis ball. I bet Ben's laughin.
There are major cracks now in evidence in the very foundations of the global economic system. It's big stuff we're facing now. Not just banks and stocks like in 2008. The problems have now exceeded the scope of the Fed to deal with them. There is no questions that the decsions and actions taken in the next few months will decide the fate of the next bunch of years. Hang on to yer seats and yer gold
Well said as usual Caviar. Train wreck dead ahead.
Hey DoCHen...
Agree. My take on the Jackson Hole inaction is that current policies have reached an impasse. In a word, the risks of immediate QE exceeded the possible benefits. Of course to realize this the Fed had to first nearly destroy the global economy. After 3 decades of addiction to the Fed's every word, every action and non-stop addicition-feeding, WS and the financial system are going to be forced into detox. Ouch. But worse, the big decisions will now be political
Caviar, why do you attack Ron Paul but believe the same things he does? I can't figure you out.
It's one thing to deplore the status quo, yet another to take steps to fix it.
US fixed Income analysis and charts
http://capital3x.com/?p=436
In some far distant future world (Fuckyoushima permitting, or enabling?) a new species might have evolved, which does not have the temerity to call themselves "sapiens" before actually proving to have wisdom.
Flight of fancy:
They might still have access to Plato's writings and so will know that when Socrates got accused of being the wisest man in Athens; he was bemused and spent years questioning people who claimed to KNOW this and that and were confident in their 'wisdom'. But, as he discovered, they all disagreed with each other on matters of religion, politics, morality, law and economics.
Socrates got forced to conclude that such wisdom as he had resided in his ignorance ... not being able to believe in anything that those around him espoused as certainties.
Nearly 2500 years later, nothing has changed.
The Ancient Greek empires collapsed, the Roman Empire collapsed, all empires have collapsed, or are collapsing.
Read all about it in Plato's "Republic", including why 'democracy' does not work.
He likened 'democracy' to boarding a ship and then voting for a captain on the basis of charisma and rhetoric, rather than any actual navigational skills. Ring any warning bells?
If you have the endurance needed to read the "Republic" more than once and absorb, then you will discover the truism that everything said and written, since Plato, is just a footnote.
Maybe some future species will understand that.
Meanwhile wars rage, in large part because the Chicago School of Economics claims to have 'wisdom' ... pah, no one does.
I like the definition of democracy as two foxes and a chicken voting about what to have for dinner. Funny that you mention Plato, I was just thinking about him and Aristotle. I've come to the conclusion that if I were stuck on a desert island and had a choice between reading Plato or Aristotle, I would choose Aristotle. I used to be a big Plato fan, but his theory of forms, I think, should be taken literally, in which case it's pure bunk. Politically I think he represents the first apologist for elitism, believing, as he does that philosopher kings should rule. Funny how people criticize Marx because in practice communism turned out to be a disaster, yet people are completely willing to take Plato at face value. I think Plato is a very persuasive propagandist with his use of Socrates, his allegory of the cave, and his spelling Truth with a capital T. But nowadays, I think the world in general is fed up (pardon the pun) with elite rule. I recall that back in the 80's, Plato was very popular among the arch conservatives hailing from the University of Chicago. One guy from there was an intellectual named Allan Bloom who had a great audience on Wall St and in the Ivy League business and law schools. http://en.wikipedia.org/wiki/Allan_Bloom
You can tell a lot about an author by who his/her audience is. Just consider Ayn Rand. Not saying you shouldn't also read the author, particularly someone as important as Plato. I've read the Republic a couple of times and many of his other dialogs. The irony is that Socrates was a real exemplar of "Question Authority", yet Plato himself was a staunch advocate, as in the Statesman, of authoritarian rule.
I used to run a fairly large business in Chicago... had 30 employees, etc. And one common element I found about U of C graduates is that they are all hat and no cattle. They "believe" they are smart, but when it came to actually working, boy would they be fast to take a pass, bullshit, obfuscate, over analyze... basically anything but doing the work.
Worst hirees and partners ever.
Euro charts and analysis. EURO may not be the best short candidate out there according to this piece.
http://capital3x.com/?p=325
I don't think, I know that the market and nearly everybody has not yet grasped the significance of the Jackson-Hole non-starter. This is a huge turning point.
I think the script is pretty well laid out going forward this fall. The Bernank is looking for some political cover in the near term to get the pressure off his back to do something, but he won't wait too long until he unleashes QE3.
Like Jim Rogers said, the only think Bernanke knows how to do is to print. He doesn't understand finance, currencies, or economics, all he knows how to do is print money. The Bernank spent his entire academic career studying a depression from 80 years ago that isn't particularly relevant at this point, never mind - he'll still go back to the only playbook he knows and follow the thesis. To the academics, the only thing wrong with QE2 was is wasn't big enough, so expect QE3 to be even bigger.
Looking forward to upcoming events in September to see how this will play out - Obama about to unveal his jobs/stimulus package in hopes of getting re-elected. Where is that money going to come from? Read the Pritchard article from earlier today - Germany will tell the EU and ECB to get lost and then Bernank will have to backdoor save Europe again with some funny money to hold things together.
The scenario looks a lot like 2010 to me again, but we haven't had a flash crash yet to trigger the event Bernanke needs to fire up the presses and get the ball rolling. We came close - just not there yet.
The only purpose for banks & paper money is to mediate loans between savers & entrepreneurs to grow the real economy with interest rates set by the market to correctly allocate capital & labor.
With interest rates set at artificially low levels & paper money being used like poker chips by the banks & markets is it any wonder why the real economy isn't going anywhere?
We don't need no fucking federal reserve.
This is exactly the hazard that free market and Austrian economics warns of. In a centrally planned and manipulated economy all eyes are on the political decisions of the central bankers and the government. Earnings, P/E ratios, free cash flow, market shares, etc. are all paltry distant considerations. It even comes down to who the government will bail out, Lehman, no, Goldman, yes! You invest primarily on the actions of the planners who are at best mere mortals and at worst fools. Even gold is a political animal. It is the short sale of currencies and even central planning, in general.
Welcome to the centrally planned all powerful state. Invest accordingly.
+1!!!
Until freedom in money, property and contract is restored, and aggression and unfettered action by government dramatically curtailed, the world will continue to slide towards chaos.
I wish that big-assed black swan would swoop down. This shit is wearing me out. The fat lady has been tuning up way too long. Get yer fat ass on stage already.
A good person to read on Bernankes lack of understanding of the depression, and therefore of our current depression, is Steven Keene. He wrote a paper on that topic specifically. See
http://www.debtdeflation.com/blogs/2010/01/24/debtwatch-no-42-the-econom...
There is a strong possibility that the author of the linked article has absolutely no understanding of 'moral hazard' (not that i read the piece- the chart said it all.).
a deal has been done...the TBTF always win...it's axiomatic
Lehman's must be SO fucked off...why them?
now the scumbags are rigging it for end of month, behead them all, publically.
Hang on guys here we goooooooooo
ONE WORLD ORDER IS THE ORDER dejour, excuse me if I have misspelt that for our french speaking readers.
If the investment / trading world has reached a point where it awaits the breath of 1yep just ONE individual to exhale from his mouth his plans for the good of the WORLD and of course taking his ORDERs from Walll st, then we have a HUGE problem.
This individual whats his nickname? Chairsatan, hmmmm wonder whey he has that plastered against his reputation.
I had a read of Rev 13: some time ago about giving breath to the image of he Beast and discounted it, but you know I think John the Revelator had some Revelations to talk about. Something to consider! The things that make you hmmmmm.. . . . . .
The stock market gains have become another government subsidy, to be doled out. Equities welfare, Bitches! Traders are waiting for their stock market extensions handed out by the Fed the same way people line up for food stamps.