We are discreet sheep; we wait to see how the drove is going, and then go with the drove. We have two opinions: one private, which we are afraid to express; and another one – the one we use – which we force ourselves to wear to please Mrs. Grundy, until habit makes us comfortable in it, and the custom of defending it presently makes us love it, adore it, and forget how pitifully we came by it. Look at it in politics.
- Mark Twain
Humanity’s most valuable assets have been the non-conformists. Were it not for the non-conformists, he who refuses to be satisfied to go along with the continuance of things as they are, and insists upon attempting to find new ways of bettering things, the world would have known little progress, indeed.
- Josiah William Gitt
The media I’ve had a lot to do with is lazy. We fed them and they ate it every day.
- Michael Deaver (Former top aide to President Reagan)
Has The Fed Waited Too Long?
Those that know me understand clear as crystal that I don’t approve of massive money printing. I think it is theft, plain and simple, and represents an egregiously deceptive manner of transferring wealth from the poor to the wealthy and from the productive to parasitic financial oligarchs. That being said, the world we live in is being led by a bunch of crooked banksters and the Central Planners that do their bidding. At the top of the Central Planning global ponzi pyramid, is our very own Federal Reserve, headed by master Keynesian magician, the Wizard of Eccles, Ben Bernanke. For the vast majority of 2012, the Federal Reserve has been playing a very, very dangerous game. This game has been to pretend that they will not be printing any more money in an attempt to get commodity prices down as low as possible before they proceed with the inevitable. While they have done this on a smaller scale many times in the past, this particular game of chicken has in my opinion gone dangerously wrong. You see, ever since the 2008 debacle the Fed has been quite aggressive and more or less “ahead of the curve” when it has come to feeding new liquidity into the system…until now.
All of the prior programs were ready to go at the first hint of economic weakness. Even if they weren’t launched right away, the intention to print was made clear and this stabilized the system in the short-term. Not this time. This time the Fed realized that their models weren’t working. Employment continued to be weak as inflation picked up. Everyone was starting to complain about gasoline and the public was increasingly making the connection between Central Banking/fiat money and the rise in their cost of living. Occupy Wall Street emerged on the scene. All of these things put Bernanke and all his other vampire brethren on the defensive, and indeed in a box. They increasingly had to rely on less effective, more opaque means of providing liquidity. The Fed swaps to Europe was one example. The European LTRO was another. All of this has been done and all of it has now proven to be a failure. The periphery of Europe is in mired in an all out Depression and many of the BRIC countries are much closer to being in a collapse than many want to admit. That said, there is still this consensus that the U.S. is experiencing decent growth that will continue and perhaps accelerate into 2H12. Not only do I not agree with this, I think there is a good chance the U.S. is now experiencing negative growth. I think May represents the first month of real domestic weakness.
Stocks are Collapsing on Bad News
What I have noticed this quarter more than in any other in recent memory is that names are vaporizing on even the hint of bad news. Let me show you some frightening examples.
Fossil
Dell
Cisco Systems
JC Penney
If the market was confident that this was just a blip I do not think these stocks would have responded this way and then barely rebounded. Similarly, there are many names that have put up strong results, only to have sold off on the news. HD, COH and RL come to mind. To me this is evidence of the market sniffing out economic weakness ahead, and more importantly a Fed that is behind the curve for the first time since 2008.
The BIG Print is Coming
Momentum is a strange thing in general, and social experiments as large and complex as massive economic systems are not immune to its mysterious ways. Once momentum gets going it is extremely difficult if not impossible to reverse in the near-term. This is why I have been pounding the table on China not doing anything as things unravel over there. In waiting so long to try to respond to their major slowdown, they have now seriously risked a hard landing, unless they have a plan (this is not clear as of yet) as I outlined in last week’s piece China Better Have a Plan.
Here in the U.S., I think that The Bernank’s plan was to pretend they didn’t need to print more money, get commodity prices down and then hope that the economy would respond favorably to that development. This wouldn’t have negated the need for more printing; however, it would have bought time and allowed for a potentially lesser degree of action. Instead, what has happened is that the global ponzi is completely and totally incapable of holding itself together without consistent and increasingly large infusions of Central Bank money. The debt burden is too large, the mal-investments too pervasive, the corruption too systemic. The whole house of cards that is the global economy will vanish into dust rather quickly without more and more printing. So what do you think they are going to do?
If I am correct, and the U.S. economy itself is now in the early stages of what will probably turn into a serious economic slowdown, then it will not be easily stopped with incremental Central Bank policies. The fact that they have waited this long and the fact that the global economy is in the midst of a serious slowdown tells me one thing. They are way behind the curve and by the time they realize this it will be too late to stem the momentum. That said, I do expect them to respond and the fact that things will have gotten much worse than they expected will mean a major response. I’m not talking operation twist part deux. I mean a serious print. Potentially the BIG ONE.
In this sort of scenario, the inflation hedges will sniff it out first. So I would expect the precious metals to bottom well before everything else does. In fact, we could be looking at a situation where the metals and their shares rebound sharply while the U.S. equity markets continue to decline. This could last many months. I want to point out that the GDX bottomed in October 2008 and was up 100% before the S&P 500 bottomed in March 2009. So over a five month period the GDX doubled while the SPX declined 25%. Don’t think that can happen again?
Peace and wisdom,
Mike
With the way they're printing they don't dare lend money to people; that would precipitate inflation. What they say not withstanding, the last thing Bernanke et al wants is everybody with a job right now and the velocity of money juiced up.
Not that I don't agree. But cherry picking 4 stocks to make point is worthless.
JC Penny? They are fucked. Mall retailers are all fucked. Fossil is a clothing company that sells their stuff at said fucked malls. Fashion goes in and out of style and so to fashion companies.
Dell computers suck, they just sell a lot to enterprise users because they are the cheapest of the lot (kind of like Ford fleet vehicles). Name a non tech company that likes buying new computers all the time?
Even during good times you can find 4 stocks of well known companies that are tanking.
Dell actually produces and sells something. P/E is around 7 or so when social media darlings are trading at P/Es of around 100s or multiple 100s.
That's the problem with the stock market and why I've stopped investing.
If it doesn't make any sense to me, I don't care how well crafted the explanations are. I don't get it and I don't want any part of it.
It's perverse.
Why not buy HPQ? The stock price has completely collapsed, the P/E is 7, and it pays a decent dividend. The balance sheet is not as pristine as it once was, but it's hard to imagine they will disappear.
Even during good times you can find 4 stocks of well known companies that are tanking.
It seems until recently stocks were closely correlated across the board regardless of fundamentals. Now we are seeing companies with poor fundamentals getting hammered. Look at USG, why were they going up with the rest of the market? Commercial construction has been in a death spiral since '08.
Take heart, America!
We can expect a coming golden age ....for pageants and grand masquerade balls at the great estates of the rich. We'll be standing in muck with the rest of the paysanos watching and cheering in our hoodies as the party guests go by in gilded coaches. We'll even get the deeply ironic retro-humor! No cheesy 50s nostalgia is good enough for them, no. They'll want to relive the 1750s all over again! Oh what a wonderful time we can look forward to
Hazzah old chap! I'm planning on designing and selling cod pieces. That would put me close to the seat of power. If I had a daughter I could sell her. Barley is satisfying. Of course our Masters will need swordsmen, brutal swordsmen.
Yes! And henchmen and torture chamber attendants. But there's a lighter side too: troubadours, jugglers and jesters. That's where I come in: full-service court jester. Hey it beats being a castrated page boy
"Oh what a wonderful time we can look forward to"..............as extras in Hunger Games II.
Doubt it... Law of numbers says someone will kill them. That's just science!!
Well Facefuck better start going down again soon. This 10% ramp job in two days is making a Tuesday morning buyer of Facebook look pretty good.
I thought I smelled a short squeeze trap with that one. It would be very easy for Goldman to plow a few hundred million into that shitload to kil off shorts once again.
Overt QE ain't coming yet get over it.
Eventually, sure. But, don't get your hopes up for a few months.
We'd need a MAJOR implosion for them to send the choppers in June.
Too much room for lower rates by euro banks which will come first.
S&P at 1320 requires more monetization? Would that be the reason? If so, then it would indicate complete failure in the "all is well" campaign since all indexes are down 30% + compared to the US indexes. Just glancing at the global indexes shows the least need for monetization to be the US. Plus it will send gold to the moon, and nothing in the world pisses off a central planner more than runaway fucking gold prices.
They would shoot their grandmother in the head to stop it if they thought it would.
i concur. the Fed's waiting on the rest of the world to monetize first.
The stock market might respond to a big PRINT but not the economy.
The thing to do is the thing that should have been done 4 years ago if we had a President with any integrity.
Purge the bad debt from the system. Arrest and prosecute any person involved with the meltdown (including sitting and past Senators and Congressman).
Bring back mark to market accounting. Bring back 10:1 fractional reserve banking.
Don't allow any investment banks the privilege's of a savings bank. Speculate with your own money NOT MINE!.
it's like going to a bar that doesn't purge the tap lines. sometimes you get sick but you keep coming back
Hey batter batter batter batter.....PRINT!
Let's hope you are right, my mining stocks MACD at like -.80 and at an almost three year low.
With any major print the commodity sector would ramp up price in one day and any savings we are currently seeing would be gone. It's not going to happen. Unless of course Bernanke is insane. Which can't be entirely discounted.
since bernanke is insane as is the entire debt driven ponzi sysytem i would guess they will print. if we changed the system the central bankers would lose all control. they will try to keep it going as long as possible. we should just shut them down and change the system. has to happen sometime. why not now.
The problem is that they will lose control of inflation this time and it will happen quickly. Once you lose control of price inflation if that's the choice the consequences are major. Remember every commodity is priced in dollars. Rhetoric to print will go on and on and should if it does any good. There is no way they are going to print in large QE(uantity) because the Dow is off a few hundred points off of a four yr high. No chance unless as I said Bernanke is just nuts. Shear stupidity to do it now unless of course it is conjunction with letting Greece out of the EU. I can see some merit then but only then and even with that I think it sets the wrong precident.
Perhaps a Greek collapse and exit from the Euro will be conveniently used as the rationale for QE3 and all just in time for Obama's reelection. I see no Brady bonds waiting in the wings here. And oh, they've lost control of inflation before a la the 70s mess. Big Time. History will rhyme and repeat simutaneously if the occasion calls for it.
Every time I hear "they wont do that" I think of the 70's and it didnt bother them then. They just waited until it was just about to hyperflate and then raised interest rates to the moon for a few years, no problem.
Governments always procrastinate difficult issues until the problem gets too big to ignore. Many polititians don't even see the problem. But when the issue blows up, of course it's not their fault. Their only proposed solution to fix any problem is more taxes and less freedom...just a matter of time. It's a slow train coming.
Once, even if it's only once, I'd like to see someone who actually understands our monetary policy.
that is:
We are captives of a debt money system. Debt money is designed to make a very, very few very, very wealthy... and the rest of us debt slaves... which we are. Our only value to the state is our ability to borrow money, as that is the only way new money can be created to feed the debt. When we cannot borrow, the debt money system demands the central bank print money.
We live under a monetary system best suited to a growing economy as only a growing economy can support debt money. Well, guess what, we no longer have a growing economy: China does but when no one buys from them, they'll crash too.
There is no way out...
And the Fat Lady, Chindia, is warming up for her aria right now.
removed
The BDI is rolling over past 30 days. Signs, signs, everywhere there's signs.
Of course they will print, the question is how much. The absolute minimum is whatever it takes to float gov debt, with the high end being enough to guy all the fraud at par. Where while it be in between those two extremes, I doubt even Zimbabwe Ben knows. So lets take the safe approach and just look at floating the gov debt. Since the USA will never come close to a balanced budget on this current trajectory, and realistically the budget imbalances can only grow, the amount needed to be printed each year will grow. This growth of the money supply effectively will run so long as the status-qua runs. The problem the US faces is the confidence issue. Can the dollar withstand the loss of confidence when every dollar holder around the world starts getting a little squeamish? Ben need not print anymore for a dollar failure, the dollars already exist. The only way to delay the inevitable would be to make other currencies look worse, so the dollar looks like the best horse in the glue factory. Taken to the extreme if the US could force all countries to peg to the dollar at a fixed rate then this game cn g on a while before global Wiemar.
"a fed that is behind the curve for the first time since 2008"
These suckers have been there for the past 4 years !
They have ALWAYS been behind. Example, they should have raised rates in 2003 to 6% not waited until RE had doubled in price by the end of 2005.
Of course the big print is coming. They do not care. More fudged inflation numbers. The propraganda machine will be turned on and tell everyone to like it.
Now take for $6.00 gas and eat your peas.
There just ain't enough ink.
I think we are all wrong. Deflation, inflation, we will have all of it. Prices are going up for what we need, and down for what we don't. Yet, every single collectible and trinket known to man is for sale on craiglist now. People have to be hurting terribly. These are mildly hard times, and they are going to get worse, either slowly or fast.
Top pillar of your investment portfolio: physical Gold, cash, gun!
the banksters have been at this for centuries and are old hands at this game
Fuel prices are the only thing the dumb sheep understand, "up bad, down good, must fuck something, yap on Facebook, shit in shower stomp down drain, cop a buzz, go to sleep"
They will have gas cards to eliminate that pain soon enough.
Hey Booboo, sounds like the voice of experience. Said in the sing song melliflous tones of Yogi bear..
Maybe "The Big Print" hasn't happened yet because the oil producing states have said "no dice". I can't imagine they are too thrilled at the prospect of trading their oil for "money" that has just been created in the trillions out-of-thin-air.
The oil states (Arab rulers) do whatever it takes to maintain power over their people. They get paid and maintain social structure. Top dog in the desert.
Or they can go the Saddam or Quadaffi rout. And they know this.
Really Mr. Bernanke, do you really believe that at some point there will be a sufficient reflation so things will go on without further injections? Where is the logic for that to occur? Aren't you just trying to instill confidence in the system? Well, i've got some news for you. In my opinion the con game is over. We need corrective action, not more of the same easy money.
More ridiculous Fed quantitative easing (QE) does nothing but hurt the real economy. America is experiencing the worst economic recovery from a recession, ever! QE only helps inflate the stock and commodity markets.
President Obama, if he wants to lose in 2012, will let Bernanke print more money.
I don’t think so!
Lots of wonderful oldtimers posting...something is in the air...
I had Mexican for lunch...
I had one meal in south texas, flies and all.
That was a meal to remember. It got me 2000+ miles non stop.
Sharks and blood, it's in the water too
At some point you must give up trying to prevent the crash and work on planning to crash. Combining mega-printing, twisting and monster debts had some potential but it has failed. We are going to crash and it's way past time to start planning for it.
down the green brick road to the dark ages.
http://covert.ias3.com/expose/
Can anyone recommend a good wheel-barrow ETF? Preferably one made in the USSA...
What form will the printing take?
Will Bam "demand" Bennie crank up the helicopter before or after the election?
Is Romneed going to let Bennie have his wish to prove/disprove his doctoral thesis?
I think they will print, but it will be "stealth-mode" so as to benefit the insiders/bankers the most and keep commodity prices down. They have ways to inject liquidity we cannot even fathom, and the numbers are not going to be realized/published for a long time. Bennie Bucks will be available to those who are willing to play by his rules, and that precludes driving up the price of food or oil too much.
Stagflation, or bi-flation, call it what you will. But middle America is about to get squeezed and see their standard of living be on par with the Chinese. But we will be told that all is good ... war is peace.
sschu
I sure hope he waits a little longer to print. I need more silver. And canned goods. And a generator. And a solar array. And a few water tanks. Like to get that stuff before it takes a million $ to buy a generator.
This NWO fuck buddy coalition is really starting to irk my nerves.
The hedge is food stocks.
HRL
"Here in the U.S., I think that The Bernank’s plan was to pretend they didn’t need to print more money, get commodity prices down and then hope that the economy would respond favorably to that development."
it is reacting favorably. and will continue to do so. the usa is in fact doing bettor than eur/jap/china/russia/ etc. weak by historical standards, but much stronger on a relative basis to the rest of the world.
patience wins now. no question.
it all makes math sense.
sorry to be soooo repetitive about this, but dog gone it, if the math holds, who but zh could get them to listen?
:)
WORLDWIDE CALL FOR MORE QE GET’S LOUDER AND LOUDER
ECB to add liquidity, cut rates: J.P. Morgan
China must cut reserve ratio further, paper says
IMF says Britain needs further monetary easing
BOE May decision on bond buys ‘finely balanced’
we wil write it and live it together. Hope you know your neighbors and that your whole block is "well positioned" defensively speaking.
shhh... Neighbors, its what for dinner !!!
Both Marc Faber and Jim Rogers say printing will continue. What are the chances of both of them being wrong?
Eurogeddon crash fund ;)
Eurogeddon already earned more than 15%http://www.rybinski.eu/2012/05/eurogeddon-juz-zarobil-ponad-15/
http://translate.google.pl/translate?sl=pl&tl=en&js=n&prev=_t&hl=pl&ie=U...