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Guest Post: Print It And They Will Come

Tyler Durden's picture




 

From Peter Tchir of TF Market Advisors

Print It And They Will Come

I have to admit, I never understood Field of Dreams.  I "get" why it was popular - a quasi-mythical figure who just "knows" things.  Some good looking guys with enough sentimental moments to make women happy, and just enough baseball to make guys not cringe.  But honestly, I never understood the movie.

So, what does that have to do with printing money?  I guess I just don't understand the fascination with it.  Why is printing money the best solution?  Why isn't trying to pick up the pieces after some defaults, a better solution than printing.  With stock futures down again already, and Jackson Hole coming up, you know we will hear Wall Street (and anyone caught long) clamoring for the Fed and ECB to PRINT more money.  It seems to be the only "solution" to the debt burden too many countries are facing.  I agree that it is the only way to avoid some defaults and some pain.

But is the cure worse than the problem?  There will be problems if we let Greece default. It would drag down some banks, which would not be good - short term.  But I remain convinced that in 10 years, economists will praise FDR's patience.  They will talk about how waiting for the system to recalibrate was a difficult but important decision.  Only once the system had "reset" would the policies work to create a great rebound.  We will learn that throwing money out of a helicopter only gets the money caught in the blades, destroying most of it, and possibly damaging the helicopter.  Those who felt Countrywide needed to be saved, or Bear Stearns had to be saved, will be vilified.  Those that let Lehman go, will be questioned on why they didn't do a couple of things (guarantee swap lines, for example) but in the end, will be respected for their willingness to let excesses collapse, and let those that were prepared to prosper.

Every time we come up with a new "solution" to our problems, we gravitate towards "unknown" unknowns.  Maybe we should just take our medicine and try and deal with "known" unknowns.  I don't know much about Rumsfeld, but that phrase resonates with me.  We continue to put out new policies, attempt to solve problems, but only seem to create new ones, that are even bigger and more complex.  The Fed can misuse words like transitory or unintended consequences as much as they want. But many of the "unintended" problems could have been (and were) foreseen.  And even Dorothy couldn't just click her heels and wish bad things away as easily as Ben thinks he can make them disappear by uttering the word transitory.

I had a boss once who explained the difference between a structurer and a structured trader.  The structured trader would try and come up with a solution that left more risk, but the risk was quantifiable, and hedge-able.  They were nervous and analyzed their positions daily and tried to constantly adjust to a changing world.  The structurer would create a solution that solved most things that were likely to occur, but was left a few  disaster scenarios in place.  And the solution was unhedge-able.  All you could do was own the risk, and hope for the best.  The "structurers" were arrogant and were dismissive of anyone who questioned their idea, and somehow any rational argument about the potential downside was twisted, with a wave of the hand, a raising of the eyebrows, and a lightly uttered "hrmph" made it look as though you were arguing that leprechauns existed.  All of the Central Bankers, IMF, and World Bank, "Chairman", "Managing Directors", "or Supreme Commanders" are structurers.

So, we will get money printing.  That to me, is dangerous, since we don't know what printing so much more money will do. It doesn't in any way, shape, or form address the root cause of the problem.  It is hard to hedge (buy more gold?) and it potentially unleashes problems we haven't even contemplated.  Hyper-inflation causes riots in countries where China bought land to produce food and gives them an excuse to enforce their rights by sending in troops?  Maybe that is crazy, but in my defense, I am wearing my IG200 hat, not a tin foil hat.  I am not sure what can or can't happen in a world where we decide that printing money is the best way out of our problems.  So many bizarre things have come out of our alternative solutions, and few of them good, that we should spend more time thinking about accepting the default of the weak, and seeing what we can do with that.

If Greece defaults and there is a run on weak sovereigns, stocks will go down.  Things like gold will go up, though they may be held back by profit taking since so much else will get hurt.  Basic soft-goods probably hold in, as people still need to eat.  Steel and energy will go down, but maybe that isn't bad for most of the 6 billion in the world. 

We spend so much time worrying about the stock market (well, those of us not glued to American Idol, Jersey Shore, or Housewives of some city), but if QE2 showed us anything, it is that the wealth effect is exaggerated.  The wealth effect impacts a small portion of society, and the companies they buy stuff at - tiffany's.  The majority of people have very little invested in the market.  Maybe their 401k's are invested in the market, but few people are so stupid to get excited that their measly 401k is up 20% when everything else points to reduced pensions, reduced health-care, and higher taxes in the future.

I am short the market.  I felt that we were not going to get any new support announced over the weekend and I believe Europe will struggle tomorrow.  But at some point it will be time to cover.  The voices of important, smart, powerful, and rich people, will drown out any objections the fringe may have and government will embark on a program of printing. In the short term, that will be positive for risk assets.  In the long term, I suspect it will be disastrous.  I continue to hope that some leaders have the conviction to try and stop the "pretend and extend" program now.  It will be painful, but I think we could still pick up the pieces.  The longer this goes on, the harder it will be to fix it.

As an aside, if the dot-com bubble and Enron brought intense scrutiny on to Wall Street and to fortune 500 CEO's, shouldn't this crisis bring the same level of scrutiny on government?  Shouldn't Sarbanes-Oxley be adapted to fit government?  Maybe we should have access to their e-mails where they tell a colleague that there is no way we default, but that he (or she) is going to tell the press that the government might because it will scare the bejeezus out of their constituents and ensure that their next fundraiser is full of high paying donors.  Or that next time someone writes in a private e-mail that they agree with a bill but think if they hold out a bit longer, they can get a little earmark in the next bill, the public should know.

 

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Sun, 08/21/2011 - 21:53 | 1584684 Newsboy
Newsboy's picture

Banks will get more fiat, but how long will the world accept it?

Sun, 08/21/2011 - 22:01 | 1584727 CosmicBuddha
CosmicBuddha's picture

I like your picture Newsboy!

Sun, 08/21/2011 - 22:05 | 1584734 Newsboy
Newsboy's picture

Daibutsu of Kamakura.

I used to live there.

Is your Buddha from Thailand?

Mon, 08/22/2011 - 06:42 | 1585273 Optimusprime
Optimusprime's picture

I remember gazing up in awe as a six-year-old.  Many years ago.

Sun, 08/21/2011 - 22:12 | 1584755 oogs66
oogs66's picture

that seems to be the key...china and everyone else is getting sick of paper money

Sun, 08/21/2011 - 22:28 | 1584780 DormRoom
DormRoom's picture

No QE3.

 

The parameters for QE2 were a high USD, and low inflation.  Now we have a very low USD, and above 2% inflation in Europe.  Even worse, for the emerging markets, especially China

 

QE3 would cause more instability (yen spike->yen carry trade unwind->systemic risk)

 

Also, current data indicates stagflation, not deflation.  More monetary stimulus is not the proper course of action. see Volcker case study

 

Bernanke will be like Noda.. He'll try to talk down the markets.

Sun, 08/21/2011 - 22:41 | 1584820 dwdollar
dwdollar's picture

Since when do they follow their own rules?  If the 2% mandate get's in their way, they will change it (either officially or through bastardization of it's meaning) or simply ignore it.

Sun, 08/21/2011 - 22:56 | 1584847 DormRoom
DormRoom's picture

externalities.  The Fed may weigh in externalities.  QE2 aided the Arab Spring. QE3 aids European Riots? But no quesiton Japan would break. Enter bond wolfpack to tear @ Japan.

 

Now you have 2 failing fronts: Europe & Japan

 

In order for there to be global price stability you need a stable reserve currency.  QE undermines this assumption.

Mon, 08/22/2011 - 10:09 | 1585749 ATM
ATM's picture

I think you are assuming that the rulers at the Fed want global stability where I would argue they certainly do not and prove it daily.

Mon, 08/22/2011 - 16:18 | 1587411 bid the soldier...
bid the soldiers shoot's picture

You're not going to get an argument from me.

What we are seeing is the strengthening of the American Banks by the Fed, before Peak Oil turns the world upside down.

Thu, 08/25/2011 - 07:11 | 1598520 thewhitelion
thewhitelion's picture

And also assuming that the actions of those in power affect us al in a similar way.  Cui bono?

Sun, 08/21/2011 - 22:40 | 1584824 Newsboy
Newsboy's picture

MUST...SAVE...GLOBAL...BANKING...

Sun, 08/21/2011 - 22:44 | 1584836 dwdollar
dwdollar's picture

And that is the Federal Reserve's one and only true mandate.  It always has been.

Mon, 08/22/2011 - 00:08 | 1585006 slaughterer
slaughterer's picture

It has been clear for the last year to most everybody that the Fed will print into the next Presidential term.

Sun, 08/21/2011 - 21:50 | 1584698 TruthInSunshine
TruthInSunshine's picture

PaaaaaRinttttt and hand out more fiatskis to the Wall Street/Banking elite, Bernanke, just like you really, deeply, urgently want to - do it again, Bernank!!!

Fiatski in the form of a massive Taxpayer Teet, milking that host dry - do it Bernank! Do it!

Wall Street Aristocracy Got $1.2 Trillion in Fed's Secret Loans
Bloomberg

Wall Street Aristocracy Got $1.2T in Secret Loans

Sun, 08/21/2011 - 21:54 | 1584705 Lazlo Toth
Lazlo Toth's picture

I really like your posts so no offense. But you should really re-watch the movie.

Sun, 08/21/2011 - 22:09 | 1584748 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

I'm sure you mean Fight Club, not Field of Dreams...  ;)

 Lazlo Toth PO Box 245 Fairfax, California 94930

Sun, 08/21/2011 - 22:10 | 1584751 oogs66
oogs66's picture

c'mon, this movie probably inspired the whole ethanol theory - if corn fields are only good for attracting ghosts, they might as well use food to make expensive gas?  beats outright subsidies, no?

Sun, 08/21/2011 - 21:57 | 1584716 HUGE_Gamma
HUGE_Gamma's picture

id be shorting AU above 1400 tonight

Sun, 08/21/2011 - 22:09 | 1584745 Newsboy
Newsboy's picture

Let us know how that works out.

Sun, 08/21/2011 - 22:17 | 1584769 MsCreant
MsCreant's picture

Why?

Sun, 08/21/2011 - 22:09 | 1584744 Ezra Pound
Ezra Pound's picture

i'm wearing my IG-88 hat

Sun, 08/21/2011 - 22:43 | 1584834 snowball777
snowball777's picture

Oblique Star Wars reference...you may not be able to get the Feeb's attention with that one.

Sun, 08/21/2011 - 22:14 | 1584761 Destinapp
Destinapp's picture

Ben Dandy Bernanke is leaking his next move, via the WSJ, that he will buy foreign bonds to "help" Europe.

"according to people familiar with the matter."

"said the people familiar with the matter say"

"said a senior executive at a major European bank who has participated in the talks"

"a senior bank executive said"

http://online.wsj.com/article/SB1000...LEFTTopStories

From the article:

"Until recently, that hasn't been a problem. Thanks partly to the Federal Reserve's so-called quantitative-easing program, huge amounts of dollars have been sloshing around the financial system, and much of it has landed at international banks, according to weekly Fed reports on bank balance sheets.

This spring, foreign banks were able to build up ample cash cushions, thanks largely to quantitative easing

The latest Fed data "could be telltale signs that foreign banks are in need of dollars again"

So the foreign banks just "park" those worthless Italian and Greek bonds with the Fed, and Ben loans them money at face value.

It doesn't need congressional approval since Ben doesn't mark to market.

The stock market will rally and treasuries and gold will fall due to the fear premium diminishing.

But the Dollar will also fall causing food and gas prices to SOAR.

Too bad that it only helps the top 10% since they own 80% of stocks and spend on average 2% of their income on food and energy.

We the bottom 90%, will see our food and energy cost as a percentage of income go from 15% to 25%

I think Bernanke will have to wait for Europe to implode and the stock markets to go down further before we the sheeple allow him to buy Italian bonds "to save the economy" just like we allowed the first bailout.

Sun, 08/21/2011 - 22:20 | 1584779 MsCreant
MsCreant's picture

"Bond"age.

Sun, 08/21/2011 - 23:03 | 1584886 oogs66
oogs66's picture

i am scared you are right :(  but now that wsj is tied to squawk box all is good...full journalistic integrity

Sun, 08/21/2011 - 23:16 | 1584908 topcallingtroll
topcallingtroll's picture

It sucks to be bottom 70 percent.
The top third does ok. Not just top ten percent.

Sun, 08/21/2011 - 22:15 | 1584764 Diogenes
Diogenes's picture

They don't print because it is the best solution. They print because it is the easiest solution.

Sun, 08/21/2011 - 22:18 | 1584771 toady
toady's picture

I keep hoping, but it just won't change!

Sun, 08/21/2011 - 22:22 | 1584781 chump666
chump666's picture

actually the Sun Tzu/Taoist saying is: "To know before knowing."

the Ben Bernanke's on the world are stuck in an academic and arrogant minded feedback loop.  They're probably slowly going insane.  And they know nothing.

As for the markets, yeah relief rally coming pre: Bernanke's QE3 announcement on Friday...But, volatility will still rule the game, might be tighter in the spreads, but I can't see HFT's adjusting that well to a investment bank bull run.  Sell on rallies galore

+ the global economy is a c-hair away from a total collpase

Sun, 08/21/2011 - 22:33 | 1584806 mcguire
mcguire's picture

my instinct: no qe3.  i think things have to get worse... the deflationistas need to be getting bloomberg airtime before qe3 can be announced.. but i was wrong last year on this, no where near the pain that i imagined would be necessary. 

Sun, 08/21/2011 - 22:25 | 1584791 mcguire
mcguire's picture

"But is the cure worse than the problem?"  of course it is, but from whose perspective.   "tin foil hat" logic demands that you consider the possibility that the disastrous consequences of quantitative easing are the desired outcome, not the unintended one.  "ordo ab chao".  

aaron russo does a good job here of setting the right perspective: http://video.google.com/videoplay?docid=-1656880303867390173

Mon, 08/22/2011 - 10:19 | 1585779 ATM
ATM's picture

Of course they are the desired outcome. Everyone knows what the outcome of printing money is so there must be a concerted effort to create that outcome.

As I view it the winners are those that take complete power once the system completely collapses and a new system rises from the ashes. They are the same people who are going to print us to oblivion and cause the collapse. 

They're banking on the stupidity and wails fromt he starving masses to herd us into cages but they still have some very large problems to overcome - namely the new conectivity of the masses and of course the prevalence of weapons in private hands.

Sun, 08/21/2011 - 22:29 | 1584792 Drag Racer
Drag Racer's picture

did the BOJ just print as they had warned??? Asian market just jumped and JPY took a straight step down

Sun, 08/21/2011 - 22:32 | 1584803 IMA5U
IMA5U's picture

perpare to feel some pain peter

 

feels like some cooridnated international government magic is in the works to buy more time for the politicans to scramble for solutions

lybia is already falling.  there will be constant chatter of stimulus and currency manipulation to deflect from merkel's pushback of the eurobond.  obama will push a jobs bill and an infrastructure bank.  and if all else fails, The U.S. will kill Satan on 9/11 to show we are winning the war on terror

Mon, 08/22/2011 - 01:21 | 1585076 MsCreant
MsCreant's picture

They will dump Satan's body at sea because of his religious beliefs.

They will have DNA evidence this time because Michele asked to have the penis so she could stuff and mount it. The NSA likes it because it will keep her occupied.

Yes, that was awful of me to say and I intended all of the puns in there.

Mon, 08/22/2011 - 11:48 | 1586137 tamboo
tamboo's picture

i hope she likes em circumcised.

the Synagogue of Satan

Sun, 08/21/2011 - 22:34 | 1584807 tictawk
tictawk's picture

Ben can print money but but he cannot print WEALTH.  Wealth has to be created and earned.  We will have reached a point shortly where I think a declining dollar will not help the stock market and it will hurt the bond market.   The Fed cannot afford to f+*k with the bond market.  It has the potential to destroy all the credibility of the borrower.   Our lenders are acutely aware of this and I hope Bernanke is.

Sun, 08/21/2011 - 22:46 | 1584809 ShouldveLeftHer
ShouldveLeftHer's picture

Fuck it bro. Get a bunch of credit, buy everything you'd ever need or want, including mad gold, make your minimums and wait for debt liquidation and evaporation. If it never happens then what's changed? In the current system you're born with debt and mostly die with debt. I haven't trademarked it yet but I'm the new breed of American born in the 80s. I read some old science books. Some bullshit about turning other elements into gold. So I applied it to the confines of our fucked up American life. I got some plastic and turned it into gold. The life of a Plastic Alchemist

Mon, 08/22/2011 - 10:09 | 1585750 RKDS
RKDS's picture

I can't tell you how many times I've thought about doing just that.

It just makes less and less sense to be an honest player in this economy.

Mon, 08/22/2011 - 10:42 | 1585850 ATM
ATM's picture

There is the answer ofr the little people. Borrow as much as you can and get real things and "pay back" those lenders with worthless scrips of paper. No need to even default and ruin your credit rating! In fact you'll be AAA!

Trying to do a cash out refi right now. They say I have equity. LOL

Sun, 08/21/2011 - 22:36 | 1584816 I am Jobe
I am Jobe's picture

Is Germany's Commerzbank in Need of Another Bailout?

http://globaleconomicanalysis.blogspot.com/

Sun, 08/21/2011 - 22:53 | 1584867 TzaristBondHolder
TzaristBondHolder's picture

It seems that Commerzbank bailout is a good laugh  http://fiveup.com.au/request/arrange-bailout-funding-for-commerzbank

Sun, 08/21/2011 - 22:39 | 1584822 Drag Racer
Drag Racer's picture

good for Korea.

 

Deutsche Bank Says Four Employees, Securities Unit Indicted in South Korea

The six-month ban was the first business suspension of any foreign brokerage in South Korea since the Financial Supervisory Service was set up in 1999, according to FSS data. The supervisory service is a privately funded agency that enforces policies set by government regulator FSC.

Korea Exchange Inc., the nation’s bourse operator, on Feb. 25 fined Deutsche Bank’s local brokerage a record 1 billion won for violating exchange rules.

http://www.bloomberg.com/news/2011-08-21/deutsche-bank-says-four-employe...

Sun, 08/21/2011 - 22:41 | 1584827 IMA5U
IMA5U's picture

thanks but shhh....

 

over the weekend i was out with some friends that don't follow the financial markets and i told them how fooked up europe was

they were shocked.  and said "but aren't europeans so much smarter than us?  they will be fine"

the general populace does not really want to believe there's a problem because its not on u.s. soil.  they think the sell off is because of the u.s. downgrade

Sun, 08/21/2011 - 22:43 | 1584831 Boston
Boston's picture

So, we will get money printing.

Nope.

Ben Bernanke's bitch at the Fed---Jon Hilsenrath---has just pretty much guaranteed that Ben will NOT announce more QE:

At Jackson Hole last August, Mr. Bernanke heralded a second round of bond-buying aimed at propelling the economy known as quantitative easing, or QE2. The Fed's recent declaration that it's prepared to take other measures to promote the recovery clearly opened the door to QE3. But don't expect the Fed chairman to rush through that door on Friday.

Hilsenrath has been spot on, for years now, with respect to Bernanke's intentions.  THIS is a tell.

I wouldn't be surprised if the markets are disappointed on Friday at Jackson Hole....

http://online.wsj.com/article/SB10001424053111904070604576518861203898904.html?mod=WSJ_hps_RIGHTTopCarousel_1

Sun, 08/21/2011 - 22:52 | 1584859 IMA5U
IMA5U's picture

joking aside peter, good post

 

structurers are bankers.  

bankers create the world's problems.  and traders have to deal with them.

Sun, 08/21/2011 - 23:06 | 1584889 TzaristBondHolder
TzaristBondHolder's picture

Peter Tchir is short.    He is not the only one.  I find it difficult to cut through the noise as one day we are down 5% another we are up 5%.  Looking at the Israeli Stock Exchange that is open on Saturdays  http://www.tase.co.il/TASEEng/  they were down 4-5% over the weekend.

Marcus Rose created an interesting software that suggests the market turn dates, continuing the research by Donald Bradley: www.rosecast.com

He feels the stock market (S&P 500) will make a closing price low on August 25, 2011. See the chart attached and visit Marcus' website for explanations:  http://inkom.com.au/sites/default/files/market%20turns.jpg

Three days to go?

Mon, 08/22/2011 - 08:33 | 1585429 fajensen
fajensen's picture

Yup - The volativity created by the insane amounts of "stimulus" sloshing around in the markets must already have caused a lot of financial alchemy to blow up - imagine f.ex. writing a LEAP option in January and hedging it, assuming that volativity would be 2% based on historic data + fudge. OUCH.

Deutche Bank lining up again?? I am not suprised about Dexia, btw. Snot-rollers and navel-defluffers the lot of them!!!

Sun, 08/21/2011 - 23:09 | 1584890 JR
JR's picture

It was never about public service - from the men who would manage our nation’s finances. It was from the beginning - the secrecy, the Fabians, the London School of Economics, the Communists, the Montagu Normans, the Keynesians, Rothschilds, Warburgs, Morgans and all the rest.

It never was ineptness, policy failures or economic accident. It was design: debt as a weapon, debt as power, debt as the ladder to tyranny, debt to control congresses and parliaments, kings and presidents.  From slippery souls like Bob Rubin, to the water carriers like Professor Benjamin Bernanke, they chose to finally control us or ruin us.

This is a managed crisis - built on debt and threats of bankruptcy. It’s not socialism; it’s Stalinism; it’s oligarchism; it’s simply bankers pocketing and controlling the money… and the power.

In the Rise of the House of Rothschild, Count Egan Caesar Corti details how “some of history’s more sinister characters have steered nations into bloody conflicts as a way of forcing them to borrow.”

Says John McManus: Not only does heavy borrowing reap large interest benefits for lenders, it can lead to a loss of a nation’s ability to act in its own self-interest.  Heavy indebtedness can, in fact, cost a nation its sovereignty and its people their freedom. No one should delude himself into thinking that our leaders are unaware of these consequences of horrendous debt…

“The Federal Reserve and the government produce nothing and, by their actions, are prosperity inhibitors. Prosperity (wealth) is productivity. Any nation whose people are free to take the raw materials of the earth and produce goods from them is prosperous. Whatever actions hinder wealth production…will reduce prosperity…

If the money destroyers aren’t stopped, says McManus, those who have brought on debt and deficits will readily “propose that our nation accept world currency,” and "give up her independence” to a centrally managed economic control system.

The power to issue unbacked money, QEI, QEII, QEIII, QEIIIIIIIII, is the power to destroy the existing basis of American society. It destroys the value of the medium of exchange. It destroys thrift and savings. It encourages speculation instead of real production. It produces tyranny.

Sun, 08/21/2011 - 23:17 | 1584909 TruthInSunshine
TruthInSunshine's picture

+ Great thoughts embodied in what you wrote.

 

I agree.

This is all coordinated and from a long-held plan.

Some people will call us conspiracy types, but I am merely a realist and objective observer.

Mon, 08/22/2011 - 05:18 | 1585226 Alpha Monkey
Alpha Monkey's picture

So buy gold and take away the value of their paper.  Problem solved.

Mon, 08/22/2011 - 08:51 | 1585497 11b40
11b40's picture

Nice 2nd anniversary post, JR.

Sun, 08/21/2011 - 23:07 | 1584892 topcallingtroll
topcallingtroll's picture

Why print money? Prices are sticky downwards.

People resist taking a lower paying job and resist selling their houses and businesses resist selling widgets at lower prices. Markets freeze up and a downward rebalancing, when necessary, is needlessly prolonged and worsened without some inflation. This is the lesson Ben claims he learned from the great depression and why the rest of the world got out of the depression faster than the usa.

People are fooled by nominal prices, so when downward adjustments are necessary due to previous malinvestment and excessive credit, all markets clear better if nominal prices are the same or higher, even though real prices are lower.

The trick is not letting it get out of control, but we probably have too many distortions built in to the economy and excessive debt for this strategy to work smoothly this time.

Sun, 08/21/2011 - 23:30 | 1584936 JR
JR's picture

Inflation? It's just less fabric...

NEW YORK (AP) -- Stores are trying everything they can think of to disguise the fact that you're going to pay more for clothes this fall.

Some are using less fabric and calling it the new look. Others are adding cheap stitching and trumpeting it as a redesign. And the buttons on that blouse? Chances are you're not going to think it's worth paying several dollars more for the shirt just to have them.

Retailers are raising prices on merchandise an average of 10 percent across-the-board this fall in an effort to offset their rising costs for materials and labor. But merchants are worried that cash-strapped customers who are weighed down by economic woes will balk at price hikes. So, retailers are trying to raise prices without tipping off unsuspecting customers.

"Let the consumer trickery begin," said Brian Sozzi, Wall Street Strategies retail analyst

Retailers have long tried to mask price hikes -- for instance, jacking them up more than needed so that they can offer a "sale" on the higher price. But the new strategies come as merchants' production and labor costs are expected to rise 10 percent to 20 percent in the second half of the year after having remained low during most of the past two decades. Costs can quickly add up: Raw materials account for 25 percent to 50 percent of the cost of producing a garment, while labor ranges from 20 percent to 40 percent, analysts estimate.

Some merchants are making inexpensive tweaks ---- additional stitching, fake button holes, fancy tags ---- to justify price increases. Those embellishments can add pennies to $1 to the cost of a garment, but retailers can charge $10 more for them, said Marshal Cohen, chief industry analyst with market research firm The NPD Group…

Spencer Elmen, owner of Cupid's Lingerie, which operates five stores in Arkansas, said he is seeing more items in his store that are even skimpier than usual, from underwear to mini dresses. He says that's because designers are finding clever ways to conceal the fact that they're clothes have less fabric

"They're just being more creative with less fabric," Elmen said...

http://finance.yahoo.com/news/Higher-prices-the-big-trend-apf-2391795776.html?x=0&sec=topStories&pos=7&asset=&ccode=

 

Mon, 08/22/2011 - 04:39 | 1585201 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Solution!!!

Don't buy ANY clothes!

How many clothes do people need anyways, I still wear stuff I've had since I was a teenager (I'm 28). Decent qulity stuff should last at least 10 years. Fuck fasion - I never even folled it in prosperous times. Take a look at the people in clothes shops paying $40 for a t-shirt they don't need - worse still look at women (not even rich ones - nurses, teachers, secutarys) paying $800 for a handbag or pair of shoes!

As so many people on this site say: bullets, beans, , guns, PMs, medicines, tradable items like lighters, seeds, maybe some mining stocks...and that's it - don't buy anything else! - ie fancy meal in restaurants, clothes you don't need, expennsive nights out with collegues you don't even like, cinema tickets to see crappy films...forget about all that...and try to take only 3 minute showers too, and don't leave the hot plate on the oven on!

Mon, 08/22/2011 - 05:57 | 1585248 disabledvet
disabledvet's picture

No. The solution is don't WEAR any clothes. Soon we'll be full on "naked news" and everyone will be happy again! Remember "make love not work!"

Sun, 08/21/2011 - 23:14 | 1584902 Caviar Emptor
Caviar Emptor's picture

This week You, the US Taxpayer are playing Let's Make A Deal and here's your host Ben Bernanke!!

-Now for the Big Deal of the Day do want what's behind Door #1, Door #2 or Door #3? 

-Door #3 it is! Tell us what's behind there, Timmah.....

-It's a brand new Fiscal Stimulus! Loaded with shovel ready jobs and infrastructure projects it's sure to impress. With provisions for further bank assistance, inventory building and new auto swapping the total value of your deal is: 1 trillion 565 billion and 79 cents! 

Sun, 08/21/2011 - 23:39 | 1584957 zorba THE GREEK
zorba THE GREEK's picture

Why is it so hard for most people to understand that because we did nothing to deal with TBTF and the dark CDS market

that there is no choice at this point in time but to throw money at every problem that could trigger a CDS event. The consequences

of any country or any major bank defaulting would trigger a CDS event that would cause a total world financial collapse.

By the time a solution could be decided on and put into effect, the crisis would get out of hand. Discussing solutions to the

current crisis such as allowing haircuts on bonds of PIIGS without considering the consequences of triggering CDS's is just

foolish prate. The world must first find a solution to the $600 trillion CDS problem before any solution to the financial crisis

can even begin to be discussed seriously. Until then, only bail-outs of all major banks and all debtor nations will prevent

the house of cards collapsing. Therefore, you can expect all central banks to intervene, no matter what public headwinds

they may encounter. If the flack from the public gets too strong, the central banks will simply continue the bail-outs in

secret, behind closed doors. This is not a new revelation, I have been telling my friends this for years. QE has to continue

and the only protection against it is owning PM's.

Mon, 08/22/2011 - 01:41 | 1585093 MsCreant
MsCreant's picture

Can it go on forever though? And if the answer is no, then they might as well just let those CDS unwind. Yes, it will rip the world apart, but it is going to anyway. No one is saying "Oh boy, I got a break, let me unwind some of this mess while I can." Instead, they double down when they see nothing bad happening. The "doubling downs" exponentially "flash mobbing" across the face of the globe is merely winding the spring even tighter. Waiting makes this worse, they should know better.

Almost makes me believe it was done on purpose. I can see it and I am no one special. OF COURSE THEY CAN SEE IT TOO.

Mon, 08/22/2011 - 05:45 | 1585241 gwar5
gwar5's picture

Yes, $617 Trillion is a very deep hole. The status quo is to continue as we are and make it a Quadrillion in short order.

 

The banks played, they lost, they lose. They take the haircut. The more the ponzi goes on the worse it will end. Nationalize the banks, strip out the toxic assets, and re-IPO them. End the Fed, go on gold standard again, and start over. Dramatic, but that's the way out. Throw off the parasitic monetary system, which has many constitutional flaws and irregularities, anyway. 

The alternative is financial repression for years, or sudden devaluation of the fiats and people suffer for years -- all just to the pay the banks back and make them whole, at the expense of everyone else. The US and Euro are gold superpowers. Russia, China, Brazil, not so much. We'll be fine.

Iceland, bitches.

 

Mon, 08/22/2011 - 08:40 | 1585458 fajensen
fajensen's picture

Do I give a shit about "global financial collapse". No!

I don't own any of that "finance"-business anyway, on the contrary: People like I, who can think and adapt, will gain from the opportunities arising from the present "elite" and their government enforcers and enablers going bust - and I even dont care about suffering because "they" will suffer more! The ride down is much, much harder than the way up.

Just void all CDS; if they are proper derivatives they should sum up to zero anyway.

Mon, 08/22/2011 - 00:22 | 1585024 Mediocritas
Mediocritas's picture

The reason that money printing is the "best" solution (from the perspective of our overlords) is simply that it distributes pain as widely as possible. Newton's Third Law is in play:

To every action there is always an equal and opposite reaction: or the forces of two bodies on each other are always equal and are directed in opposite directions.

An enormous amount of credit was extended in a concentrated manner, leading to highly targeted inflation of select assets (real estate). Just as credit can be extended out of thin air, it collapses into thin air through deleverage. The snap return to reality of a popped bubble means heavy concentrated losses as defaults occur and assets are marked to zero. The Grand Game is simply to take those highly concentrated losses (born by the financial sector) and distribute them as widely as possible, to make the broader population pay for it.

We all know it. Although a lot of angry words fly about the ether regarding whether we have deflation or inflation, the truth is, no/in/de flation is irrelevant. Doesn't matter how *flation plays out, the guarantee is that there will be PAIN and that pain will not be felt by those who created the pain. The Grand Game is to offload that pain to the wider population in any way possible. Everything is therefore on the table: snap deflation, then inflation, constant stagflation, sudden default, any could happen.

In keeping with Newton's Third Law, people will push back with a force equivalent to what they are pushed with. Our overlords will therefore use all their "skills" to ensure that pain is metered out in doses that are small enough to push a man as close as possible to his limits without pushing him over. So far, the overlords have been pulling it off in the USA (just a few suicides here and there), but they're badly fucking it up in Europe (austerity induced street riots) and they REALLY fucked it up in the MENA. They live in fear of MENA happening at home. It needs to.

Mon, 08/22/2011 - 01:49 | 1585097 MsCreant
MsCreant's picture

They played it out over hundereds of years in the roman empire. They at least got to let off some steam with some fighting over that period of time. I think the flash mobs are a sign that things are starting to get a damned sight more interesting than I am psychologically ready for. You should see the news casters reporting this stuff. Scares the shit out of them.

Carry em' if you got em.

Mon, 08/22/2011 - 05:32 | 1585235 gwar5
gwar5's picture

In their minds the bankers rationalize it that way, spreading the pain was wide as possible, except to them.

 

But since the banks played and lost, and are a criminal enterprise, they need to be nationalized, broken up, and resold after the toxic debt is taken out, then return to a gold standard. The Fed needs to go away and excorcised with the pertinent clause (30?) of the Federal Reserve Act.

Otherwise the average citizens are going to suffer for years and years, no end in sight. Either a few of the richest of the rich suffer to get this over with quickly, or 300 million of us suffer. Same with Europe. Pottery Barn rules are in play here. 

 

 

Mon, 08/22/2011 - 01:27 | 1585082 baby_BLYTHE
baby_BLYTHE's picture

G. Edward Griffin on Debt & Inflation (the author of The Creature from Jekyll Island)

The Mandrake Mechanism

The American dollar has no intrinsic value.  It is a classic example of fiat money with no limit to the quantity that can be produced.  Its primary value lies in the willingness of people to accept it and, to that end, legal tender laws require them to do so.  It is true that our money is created out of nothing, but it is more accurate to say that it is based upon debt.  In one sense, therefore, our money is created out of less than nothing.  The entire money supply would vanish into bank vaults and computer chips if all debts are repaid.  Under the present System, therefore, our leaders cannot allow a serious reduction in either the national or consumer debt.  Charging interest on pretended loans is usury, and that has become institutionalized under the Federal Reserve System.  The Mandrake Mechanism by which the Fed converts debt into money may seem complicated at first, but it is simple if one remembers that the process is not intended to be logical but to confuse and deceive.  The end product of the Mechanism is artificial expansion of the money supply, which is the root cause of the hidden tax called inflation.  The expansion then leads to contraction and, together, they produce the destructive boom-bust cycle that has plagued mankind throughout history wherever fiat money has existed.

Addendum: Debt-Cancellation Programs

Because banks lend money that does not exist prior to the transaction, many debtors have concluded they are not obligated to repay. This is a compelling concept in view of the fact that bank and credit-card loan contracts typically lead customers to think they are borrowing someone else's money, which is why they are willing to pay interest. When challenged in court, these contracts often are judged to be fraudulent, and there now are companies offering "debt-cancellation" services to challenge these contracts with the end in mind that debts will be canceled.  

 

http://www.activistpost.com/2011/08/g-edward-griffin-mandrake-mechanism-and.html

 

Mon, 08/22/2011 - 05:23 | 1585227 gwar5
gwar5's picture

The Mandrake Mechanism. Named after 'Mandrake the Magician' because banks are making money out of thin air.

 

Which is why Banks, who are 'capitalist', love socialism and the big fat, endless, government social welfare statist spending. War spending, all spending, all deficit spending. Little wonder Wall Street pushes political agents of the banks, like Schumer and Weiner, for more government spending and the Wall Street debt-money train. 

 

 

 

Mon, 08/22/2011 - 02:45 | 1585130 TwoShortPlanks
TwoShortPlanks's picture

"Why is printing money the best solution? Why isn't trying to pick up the pieces after some defaults, a better solution than printing."....ummmm, let's see now....because the debts are really 2 to 3 times the size that's currently being thrown around?!
Shadow Banking Bitchez!

Mon, 08/22/2011 - 03:53 | 1585166 celticgold
celticgold's picture

1896 usdollies and climbing , looks like 1900 before the end of the year was a pretty safe call ..... wheres johnny naaaaaadler???

Mon, 08/22/2011 - 05:50 | 1585243 Cult of Criminality
Cult of Criminality's picture

Seems Kind of assinine that people are flocking to treasuries thinking it is a safe haven (hate that term)

dollars crashing and they think it is safe to own more dollars.

 Did I get up to early,too much coffee?

Mon, 08/22/2011 - 13:14 | 1586538 boiltherich
boiltherich's picture

Nattering and annoying isn't it?  Like a severe itch you can't quite reach. 

They, media as well as those licensed financial professionals who know better, keep referring to treasuries as "risk free" when the only risk they are free of is outright default risk on the face value.  Of course the treasury/fed will make good on the debt and pay every single cent of that debt with interest, but such default risk is the least of our worries, there is more than one risk involved.  The risk that when you redeem your bills, notes, and bonds that they will buy you much less to near nothing when they mature is a far bigger risk, and to be honest risk is not even the right word since it implies at least some fractional aspect of mystery about what the future holds, the loss of wealth via inflation by holding treasuries, even the inflation adjusted TIPs, has no such mystery.  There is no question you will lose wealth, the only question is how much wealth you lose.

So, why are so many buying into treasuries?  So irrational when they have got to know there will be a huge loss down the road.  Herd behavior maybe, but that can only partly explain it, and the more money that piles in the less of a workable answer herding is.  I am thinking that the real answer is that it is not a herd buying in at all, it is all the Fed (and ECB and BOJ, PBOC, etc.) and to an extent a few primary dealer banks that would not be doing it without an apocalyptic carrot and stick.  There is not even one bank that is clean and healthy, thus being so sick they either play the game they are told to or they are dead.

But, this also all implies that if average people or even hedge funds are buying treasuries it can only be because there are no better alternatives in the investing realm.  Think about what that means, that you go to a horse race and intentionally place a losing bet, or should I say place your bet in spite of the fact that you know no horse will win, how bad do things have to be that you would invest in something you know you must lose a portion of your investment upon?  

Because any potential gains in equities (or any other investment) will suffer the same loss of future buying power as bonds but also have the real risk of capital loss.  Anyway, modern accounting practices make any logical determination of risk/reward futile.  Commodities?  PM's?  You might be able to store some wealth there, but history shows time after time people getting burned doing this, unless you are an insider or have a supernatural understanding of timing, and again, any capital gains will suffer loss of buying power in future.  Just add insult to injury if you do have any real gains from that PM trade you will be taxed out of them because you will be the only ones with anything to tax.

People are not as blind as many believe, they see the crumbling infrastructure, they see the people in line at the grocery on food stamps, they see the businesses folding up and ever longer unemployment lines.  Figuratively anyway, in fact those things have mostly been made invisible, you can hardly tell food stamps from a debit card now, unemployment is done in private over the phone, but empty shop windows at the mall are real, unmaintained houses in foreclosure are real.  Desperation politics (on both sides) are real.  And for way too many of us it is not what we see but what we are going through ourselves.  Fifty plus million on fixed incomes and at least 12 million with no incomes.  Homeowners hostage to underwater mortgages, vast lost equity for those that still have any at all.  And prices for everything you can carry feeling more parabolic by the day. 

Humanity is more at risk right now than it ever was in the past.  The best we can hope for is a medium-term stabilization here or just a little lower in living standards, but long-term the prospects are really dim, and I am an optimist about most things, man is screwing himself badly by allowing this to happen, but then man could fix every possible problem you can think of and still die under the sheer crushing weight of overpopulation which I assure you he will not correct.

Mon, 08/22/2011 - 06:09 | 1585257 disabledvet
disabledvet's picture

What's too big to fail? WASHINGTON DC YOU MORONS. This has never had anything to do with banks "per se." If money is to be printed it's to finance something. Hmmmmm. I wonder what that could be? Oh look! An oil rich country has just collapsed. Move along.

Mon, 08/22/2011 - 06:58 | 1585286 gianakt
gianakt's picture

Hearing that Fed will openly allow for the US Dollar to devalue as long as it gets the economy growing and re-target inflation at 4 %. When a depression is staring you in face shock and awe measures need to take place. The real solution out of the Great Depression was that prices were inflated 1000% from 1935 to 1955.

Mon, 08/22/2011 - 08:04 | 1585369 Miss Expectations
Miss Expectations's picture

I admit that Field of Dreams was a little out there...but thinking about the movie doesn't get me to "print it and they will come."  Where do dead ball players come out to play?  Zero Hedge.  Once you believe, you will find yourself here. We've wondered in from all over the place.  I think I've always believed in goodness.  What is new to me is my belief in evil.  I see it playing out every day.  I am haunted by it (too).

“I see great things in baseball. It's our game - the American game.”  Walt Whitman
Mon, 08/22/2011 - 08:50 | 1585492 curbyourrisk
curbyourrisk's picture

Let's get one thing straight.  The US does not PRINT money.  They print debt.  The difference being......INTEREST and the inablitly to ever pay it.  We continually role it over and just keep paying the interest.  If we just PRINTED MONEY, our debt level would be about 1/3 of where it stands......and inflation would be a continual in your face challenge for the insolvent American worker.

 

So lets, stop kidding our selves when we say the Government prints MONEY.

Mon, 08/22/2011 - 11:11 | 1585862 baby_BLYTHE
baby_BLYTHE's picture

The Federal Reserve does print/monetize debt when the US Treasury issues bonds. A simple keystroke on the FED computer credits the Treasury's account at the FED creating demand deposits that can then be circulated in the economy. The same practice is done by Foreign Central banks via liquidity swaps it preforms in cahoots with the FED.

So you are right to say our money is debt based mechanism related to the Treasury's ability to issue bonds (New debt), but make no mistake the US can and does print money via the Federal Reserve in their various Open Market Operations.

Mon, 08/22/2011 - 15:33 | 1587247 bid the soldier...
bid the soldiers shoot's picture

I agree with your notion that the government prints debt and there is a difference between between printing money and printing debt.

But isn't this ameliorated by the fact that we are printing debt service as well?

Mon, 08/22/2011 - 08:57 | 1585512 dizzyfingers
dizzyfingers's picture

Dear Tyler:

Thiese two questions are far, far too intelligent for the USA.

Mon, 08/22/2011 - 09:32 | 1585607 seenod2010
seenod2010's picture

Perhaps a little off the overall topic, but I figured this is probably the best avenue to ask.

"I have to admit, I never understood Field of Dreams.  I "get" why it was popular"

Technically due to the literary formula "Field of Dreams" follows, the movie is technically a Hero's Epic even though the timeframe is technically shorter. It's much shorter than other films that follow the formula like 4-6 of the Star Wars trilogy. Similarly, Star Wars 1-3 follows the literary formula of a Hero's Tragedy, which I forget which ancient story this more or less follows between the "Illiad" or Homer's "Odyssey"
Since it's often difficult to understand a films popularity without knowing the formula used, I'm curious; whether, you knew "Field of Dreams" largely follows the literary formula of a Hero's Epic?

Mon, 08/22/2011 - 11:07 | 1585939 boiltherich
boiltherich's picture

First TD and others still using the six billion number... "Steel and energy will go down, but maybe that isn't bad for most of the 6 billion in the world."

If you deal daily in numbers and hope to retain credibility you can stop using the 6 billion number any year now, for several years we have been closer to 7 than 6, but for those that refuse to round even you are out of date as we officially gained our seven billionth human about a month ago.  Just a mini rant to get my week started.

As for "PRINT IT AND THEY COME" I have to ask what do you think they have been doing since Nixon was in office and in earnest since Raygun was bending us over and slipping us the stiff end of corporate government?  It culminated in the BushCo II years with global debt so huge and so intractable that there is no arithmetic way it can ever be settled, you cannot even arrest it's growth at this point.  The investor class no longer needs markets with it's pesky decision making and annoying risks, markets are now nothing more than theater sets painted with absurd accounting to look like the real world.  All through the article you post I read what looks to me to be authentic astonishment that our owners would do this to us, and I wonder what planet you have been on the last 30 years. 

Did you fail to notice a few weeks ago when as a prerequisite for any budget deal both parties stopped bickering for 2 hours and voted to all but end end any meaningful future COLA's for SS and disabled/retired people?  Was there no clue in that for you?  And why do they do it?  How many were arrested or killed in the riots following that vote?  Oh, that's right, there were no riots, in fact I am the only one who seems even to have noticed it, even though it will in our lives be a final dismal end to our already shredded social safety nets.   

I suspect that some posts at ZH are tongue-in-cheek, or written to intentionally gather as much reaction as possible.  Or, were you seriously credulous when policy makers and the 1,000 or so top corporate execs changed accounting rules so that they could insert any numbers they chose to any place they wanted?  Who among us has failed to notice that money is free speech and once that ruling was handed down it became obvious that money was the ONLY speech that would ever be heard again.  So to speak.  We the people, meaning the non investor class, and by the way if you are reading this you might have some small amount of money "invested" in something, but you are not of the investor class, we the people are in a desert left to wander and fend for ourselves and there will be no manna from heaven, only crumbs from the tables of our owners. 

Here is a link to an opinion column at CNBC this morning that opines what the Fed should and might well do at Jackson Hole and in the next few months, it clearly outlines the printing to come, coupled with another article that outlines tax cuts for the wealthy, you do not need to be a genius to figure out what is coming, and all you need to do to be happy even is a suspension of disbelief and a good dose of amnesia regarding past living standards.  http://www.cnbc.com/id/44223463 Bernanke May Go For 'Shock & Awe': Pro and also  Spending Cuts, Not Tax Hikes, Best for Deficit: NABE 

The wealthy have, are, and always will act to protect their status, even at the expense of global destruction.  Why do you think underground shelters is such a "booming" business?  Complete with faux sunlight and parking spaces for 8 of your most expensive cars?  Anyway, other than print, print, print, or else defaults that can only hit the wealthy who own all that paper that suddenly becomes worthless, what other solutions have ever been offered?  Debt cannot now be paid down, it cannot now be grown out of, Ron Paul, Dumbledore, and Jesus H himself put together will not fix the financial and economic mess we are in, there will be a reset but till there is there will be welfare for the super rich, and it will be real wealth that is transferred, dynastic wealth that the plebs cannot touch.  Want to see where we are going?  Head to Tijuana for a few days, but keep in mind the wealthy that own 99.9% of all wealth there do not live in the shit and the mire with the unwashed.  Want a cheaper way to see it?  Rent Fritz Lang's 1927 silent classic Metropolis, I like the version with the Queen soundtrack. 

Mon, 08/22/2011 - 12:15 | 1586258 AcidRastaHead
AcidRastaHead's picture

Many of these rabid free-market advocates constantly chirp about government involvement and spending, yet if it helps their portfolios they're all for it.  They also seem to be for bank bailouts since I didn't see any of them clamoring to let the TBTF deal with their losses the good old fashioned free market way.  There is more socialism going on in the 'free markets' then there are for .. uh .. actual social issues.

Mon, 08/22/2011 - 15:56 | 1587325 bid the soldier...
bid the soldiers shoot's picture

As long as the Whiz Kids here at ZH can't see the connection between the Fed's astonishing and continual printing of money and Peak Oil, no one here will know what's really happening until it's too late to duck.

But there's absolutely nothing anyone can do about Peak Oil. Except accept its reality and drift further and further into the morass that Peak Oil will become. The earth living every year with less and less petroleum.

A career in the Military is the only way to go.

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