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Grant On Bernanke's Continuing "Grand Manipulation"
In preparation for what we are about to receive from the Charmain of the Fed, may we be truly grateful, Jim Grant offered CNBC's Maria B the forthright advice last night "prepare for platitudes but watch what they are doing not what they are saying". The ever outspoken Grant notes that the Fed's balance sheet has been contracting (unlike Maria's mainstream perspective); for the past three months the Fed's balance sheet has contracted at an annualized rate of 10% - even as Fed-head after Fed-head talk up QE and so on. So unless they continue buying securities - since the short-dated positions will continue to roll off - the Fed's balance sheet will continue to contract and therefore the stimulative effect will fall. Grant does expect QE3 since it is the fun-drug that we have been using for 4 or 5 years and that Bernanke will need little pushing to continue the Grand Manipulation. He ends on a rather interesting note that the Wisconsin win and the potential for an Obama loss in November may be more of a positive driver for stocks since markets begin to revert to a free market once again - we suspect this is not the case given the donors/beneficiaries under Romney's wing. But rest assured - the bespectacled bear ends on the chilling note that 'the long-term implications are bad' for the ongoing manipulation that is now the status quo.
and from Goldman, if there was any doubt of Grant's comments on the implicit tightening - or inverse flow - as they present the embedded tightening opportunity cost for the Fed it does nothing.
The bottom line here is that if the Fed does nothing then there is an implicit 5-10bps of rate-hike tightening per quarter implicit in the balance sheet roll-down (50bps in next 3 years) - so when considering the Fed's actions, discount the effect of this automatic tightening before buying the S&P at 2000...
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Thanks for this ZH. I was looking for it.
Did you know? Bernanke provided the inspiration for the crack manufacturer on "Breaking Bad".
Ben will print, timmy will give it to europa and we will all be paying the tab soooon. This crack binge will last about a week.
you make it sound so negative....
YOU KNOW WHAT?!!
MEMO TO MYSELF : SEND HOLIDAY GREETING CARD TO A AMERICAN TAXPAYER!
Believe me, the person who'll receive it will feel a lot better!
I'll send it to.... Jhon Doe!
in.... Springfield!
on... Elmstreet!
number... 13!
I'm looking to move to a country or place than is immune to this stuff and is operated by sane, well-thought people. Any suggestions? Or should I open a unicorn ranch instead?
...operated by sane, well-thought people...
Wisconsin is open for business and has a sane leader who just overcame the forces of labor corruption.
Thank you, Scott Walker.
Singapore, bitchez!
I'm not a Singapore "expert", but have learned quite a bit over the past 2+ years working on a new product with a lifetime Singapore resident.
IIRC, Singapore requires a state-issued "license" to purchase residential real estate...and the tinest (by USA standards) condo (maybe around 1k sf) costs about $750k USD.
You can drive across the sovereign state in about 30 minutes.
...awe, Precious. http://www.youtube.com/watch?v=oGQUs6JG_fU&feature=related
Jim Grant man crush.
Dear God. If possible in our lifetime, please stop subjecting us to Buffett's hoary platitudes.
GOD: Dear Precious, I gave you gun powder and projectiles, the rest is up to you. Fuck, do I have to do everything!
Mr. Grant has not thought out the consequence of the shifting of risk-on and risk-off assets.
The movement to physical assets & rights to physical assets will not keep pace with the destruction of credit the lies in its wake.
The problem is, the only economic activity they can actively stimulate is not only not helpful to Main Street/jobs/middle class/housing, but actively destructive as it is parasitical, immoral and demoralizing to the public at large.
They......need......to.......STOP. Their 'friends' are the problem, not the solution.
He says " you have to watch what the fed is doing, not what they are saying" Yeah, some people call that lying, or deceiving.
Just watch Bernanks body language today. You'll understand what he means.
Ben's testimony will be like a hostage video. I hope Ron Paul rips this Fukker a new asshole!
PS: "Fight Club" is running on IFC this week, Awesome movie...
@3000000000000000000000
He's basically saying that the Fed has created a Pavlovian response among speculators. The Fed's plan would never succeed if the majority of market participants weren't so willingly buying into the notion that the Fed can save the day. The Fed can't, but a lot of speculators have made money off of the interventionist ATM.
The FED has saved the day for some people: speculators, stock market investors, TBTF institutions and government, for example. These are rich and powerful people. You can accuse the FED of being undemocratic, but the Bernanke isn't as stupid as some might think.
I haven't heard many people assert that The Bernank is "stupid". I am sure he is reasonably intelligent. However, I believe history will show that he made a number of terrible decisions.
The aforementioned rich and powerful people will be writing the history. The Bernanke will come out a hero.
how can anyone invest is this "free" market is beyond me-it hasn't been unmanipulated since Alan Greenhebe took charge of the Fed
Last summer and fall it was tradable.
After Twist and LTROs, all of the fundamentals and technicals were thrown out the window.
If yesterday and today do not convince you that there is no "market" anymore, nothing will.
Traders are now reduced to being "FED-watchers", just like the "Kremlin-watchers" in the good old USSR.
With "Fedlinology" the new Kremlinology, as scientific as Lysenkoism.
So, ZH, have a little fun place your bets/share your wisdom.
What do you think will happen today to USD, Oil, Gold, TS, and S&P if this morning Bernake hints:
1. big QE coming very soon
2. some QE sometime soon
3. QE possible if needed sometime in future, as required, we'll act then, blah, blah...
4. no QE needed, economy/market working on it's own
I'd guess #3
What do you think will be USD, Oil, Gold, TS, S&P reaction?
They will all go up and then back down except for gold, it will go up and up and up and up and up.
http://www.c-span.org/Live-Video/C-SPAN3/
Up, down or sideways ... ummh ... probably.
nice + 1
but is that really what you think? :-)
Should be 4 , but I'll go with 3 . He's going to dare a nice little crash .
@BlandJoe24
The majority of the market participants will hear what he says as #3, but he definitely won't be that direct about it.
What do you think will be USD, Oil, Gold, TS, S&P reaction?
@BlandJoe24
Who knows with this corrupt casino? If I had to guess, initial spike in all risk assets followed by selloff. I feel very confident that all risk assets will be much lower by the end of year.
I doubt Bernanke will commit to anything. And when he begins QE 3, I think it would be an error to announce it.
I agree but sooner-or-later they will have to give their apocalypse avoiding action a name...The Nothing.
http://suvudu.com/files/2010/10/The-Nothing.jpg
I doubt Bernanke will commit to anything. And when he begins QE 3, I think it would be an error to announce it.
I heard yesterday that "bicycle repairman" is a green job... Really WTF!
If you exclude the auto-generated methane, it is a green job. And I get carbon credits based on my income minus a deduction for the aforementioned methane.
"To find out what any company is doing, you dont listen to the CEO", yeah because they are ALWAYS full of shit
To say that we've been doing well since 1776 is an afront to the ideals of liberty that the founding fathers espoused and fought, at great cost, to obtain.
I was just looking at my 10 year old car, and thinking back then, when I bought it, I had a future. Actually up until about 6 years ago, when things started to go really wiggy with the McMansion based economy I had a future. Every QE is another nail in my coffin and that of anyone who wants a decent job.
"what if all this money printing created inflation????" wow what a concept.
Looming recession? Weaving a web of financial deceit and manipulation.
The problem is that if you "hope" this all stops, then you "hope" for a shitload of pain at the same time. No one sees the long term benefit over the short term pain.
"it's just a little pinprick"
That's the only think that's contracting with the "Money Honey"...take a look at her waist line recently!
Obviously this Tyler is a history buff.
Love the reference to the centuries old naval blasphemy
uttered as the enemy fires its broadside at you.
+100
Why doesn't the windbag Buffett just shut the fuck up.
He likes the flattery and attention he is getting.
I gave this art. a 5 because JG mentioned the bernank and platitudes in the same breath.
Like I told my kid today. If you are on a cruise ship and it sinks. Someone throwing you a life vest is a good thing. However, you are just bobbing up and down in the ocean, with no food or water, and you are hoping someone is actually going to rescue you before a shark eats you.
Shalom will go down in history as the greatest central banker in all the land. He saved the financial system while maintaining inflation at only 2%. Now the economy is slowly recovering, business profits are at an all-time high, CEO salaries are at an all-time high, housing is rapidly healing and even dumb Joe Sixpack is finding work again.
As the economy continues to heal and recover, the crumbs that have trickled down to the little stupid minions will start to circulate through the economy has people will be back to focusing on Kim Kardashian's sweet ass (I already am). LIfe is good except for the losers who question Shalom. Shalom is King.
OT but Holder is expected to be grilled on Fast and Furious, on C-Span right now. Conyers is blowing Skittle-colored smoke up his ass as I type...
http://www.c-span.org/Events/Judiciary-Oversight-Hearing-to-Spotlight-Fast-and-Furious/10737431314/
This should be good for a laugh...
Ben Bernanke, the thief, my CD gets sub 1% and inflation steals 2-4%. Thanks Ben, you jackass!
Shalom told you to invest in the Russell 2000. Had you done so, you would have earned 75 years worth of CD income. You questioned Shalom and didn't follow his advice. That's why you are mad. Be mad at yourself, not Shalom. Shalom tried to help you and you spit in his eye.
MDB, is that you?
sort of. he told you he was going to prop it up. he didn't tell you 'invest'. he was really saying 'speculate in'. because - i'm not an insider. so is he going to tell me when to take my profits?' NO. NO. and you can be sure as hell that he knows he's just propping up a dead cat and when his bosses feel they've made their profits - and i can't tell you when, they are going to sweep all the chips off the table.
i'm a humanist. bernake is not. he works for himself by working for the banks. and that is all he cares about. the banks want people to feel good (for the time) because they need a bonus.
It's depressing to realize that one of the main reasons Bernanke and pals are determined to hold this market up is because they have been counting (and budgeting on) the tax receipts on all that juicy IRA money out there that the Boomers are about to start coughing up. The higher the IRA portfolio valuation, the higher the taxes are on the RMD. Anybody out there have any idea re how much money we're talking about here, all growing untaxed all those years? Would love to see an article on that if the numbers are FOI.
Q: Does this mean the Fed might announce QE 3, a third round of quantitative easing to lower rates and raise stock prices?
A: Yeah, it means QE 3 through QE N.
Excerpts from Jim Grant's AP Interview posted on ZH on May 22, 2011
I am still waiting!
When Grant is talking about the collective memory of 2007, 08', 09', I get that he's talking about the ZH types. Those outlets who incessantly promote the next "crash". You know, all those "black swan" articles. With all the supposed "black swans" out there, I think it's the "white swan" which might show up and surprise people. What is all this doom and gloom trying to manipulate you into doing or keep from doing?
Was hoping we would slip back into recession so we could get out of the depression.
It's quite simple - people must comply with the Fed and the powers that be or be punished. Bears have been getting murdered for the last 3 years, not because they are wrong about the economy, but because they contradict that party dialogue (the ruling party that is). Bernanke's policies are intended to punish those who go against the grain, and the dials on his stock-market-controlling machine will be adjusted in order to inflict the most pain on those who are most contrary. Even Buffet doesn't have the balls to come out against the Fed. No one does (no one who matters at least)
Hey, ZH matters. And they pour over every word we write especially on those dateless Sat. nights when they pretend to BE us.
"the Fed's balance sheet will continue to contract and therefore the stimulative effect will fall."
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Makes me wonder whether TPTB are ushering in their next "Regime Change" for the U.S.
Not sure how long it takes for the stimulative effect, or dampening effect of Fed policies as the case may be, to affect the economy but if they're still tapping the brakes now, that can't be positive for the POTUS' reelection bid.