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On Liquidity And The False Recovery
David McWilliams (of Punk Economics) is back (previous discussions here and here) and this time he takes on the the flood of liquidity and the false recovery that has been created. Starting with a discussion of gas prices and the central banks' recklessness behind it, he swiftly shifts to the 'shambles in Greece' where more debt is supposed to solve the problem of too much debt yet again. From extreme highs in Greek rates to extreme lows in rates among the major developed economies he juggles with the conundrum of injecting liquidity to reflate a bubble in order to avoid the consequences of the bursting of a bubble - brilliant (as those Guinness chaps would say) - as this merely pushes the next crash out a few more years but making it bigger and more devastating. Global Central banks have pumped $8.7tn into the banking system to 'save the world'. Saving the banks has cost more money than it cost to fight WWII, the first Gulf War, put a man on the moon, clean up after last year's Japanese Tsunami, and the entire African aid budget for the last 20 years all put together. Context is key - is it any wonder asset prices have risen since there has been so much cash looking for a new home - why hold something that is printed everyday (cash) when you can hold something that is actually running out like oil or gold. The punchline is what goes in must come out - and that means inflation - as the 'trip' of excess liquidity comes home to roost. Must watch.
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http://interloping.com/2012/03/27/beware-the-prince/
This guy started a blog to basically use it as public confession. He seems very bright profession wise and quite complicated life wise.
Please, read it. You may find yourself, you may see where you may be headed. I don't wish you get to where he is right now.
I'm going to read it right now.
Sorry for bitching, It's just as a technician first and foremost I pay very careful attention to my emotional state and I feel like I may be compromising my results. I always get nervous when I see a trend in a few stocks driving a trend in one market and little to no confirmation from peripheral markets. Right now my main concern is the base metals and treasury markets. I run a relative strength point and figure chart for those two markets going back a long time and the buys and sells have been phenomenal in switiching near equity market tops and bottoms. After favoring treasuries since may 4, 2011 it finally switched to metals last week. WAY late for the equity markets which tends to signify an approaching whipsaw and now I have the correlation in copper and treasuries on the upswing. Yikes! I can't get signals from markets moving in lockstep. AND with shit like TWIST I can't help but question how valid tools like this will be moving forwards.
How can one argue from a fundamental perspective that copper and treasuries should ever trade in similiar directions? The only way I can find it possible if there is too much fiat and not enough growth markets to dump it in. I'm very concerned.
http://www.nola.com/business/index.ssf/2011/11/warehouse_space_in_limited_sup.html
http://ftalphaville.ft.com/blog/2012/02/28/900711/a-little-case-of-copper-collateral-double-counting/
I am 'kris' as a commenter.
What is so hard to understand about the Fed buying Treasuries and propping that market up while the money they print flows into other assets? Why are you using TA in a fake market?
If you are not 30% economist, 30% bullshit detector, and 30% historian, you are not going to understand a damn thing about what is happening. Buy gold and silver. Hide it.
It is a tough market to manage money in especially if you're really looking out for your clients. Greed is starting to set in with some , which I find disconcerting. But my view is the Bernank is gonna keep a put under this market until the whole thing blows up. The problem is everything is moving with a correlation of one. So when he does blow it up everything will deflate. There will be no place to hide.The other thing that drives me nuts is when I'm talking with clients and I recomend they take a portion of their assets and buy precious metals they look at me like I'm nuts. Even the clients I've worked with for years. The best I can do is get them into some gold stocks or gold / silver funds. I can probably count on one hand the amount of clients who will go out and buy PM's.
For people who have lived under communism in the past like me, it is quite amazing how over-estimated is government power deemed to be in USA and Canada. Gov is not that powerful. Can't control much.
My life tells me that.
The trend is not your friend in this regard ..... The Feds are working to get hold of and use former Communist block levels of government power.... See The National Defense Authorization Act (NDAA) for Fiscal Year 2012.
I apologize for not knowing how to present this but it is---the best I can do with my limited training and intellectual capacity.
A curious coincidence:
"Central banks have pumped $8.7tn into the banking system to 'save the world'" from this article
And the $8.682 trillion shown as total assets of the twenty-five largest banks holding derivative contracts in this article from March 26, 2012:
TBTF Get TBTFer: Top 5 Banks Hold 95.7%, Or $221 Trillion, Of Outstanding Derivativeand on the chart from the article entitled "Notional Amount of Derivative Contracts---------------December 31, 2011, $Millions" under the "Total Assets" column of the 25 largest derivative-holding banks---the figure "$8,682,613".
Interesting to me that the 'bailout amount' from above matches the total assets---is this what saving the banks means-----at least---full disclosure om
Interesting to me that the 'bailout amount' from above matches the total assets---is this what saving the banks means-----at least---full disclosure
**************
It was not really to save the banks-all the banks are insolvent and nothing can change that and there is no amount of money that can unwind their steadily growing derivative ledger as all the assets (mainly housing) as the (CDO's/CDS's) etc.-now the leverage ratio winds up negatively as the value of the assets drop out from under the debt-
It took that amount of so called "money" to unwind the asset to debt gearing enough to un-thaw and to keep un-thawed the credit markets--remember when this first happened the banks would not even lend to each other until the money spigots opened and ZH had a few posts about the Fed Swap lines that flowed into all world central banks in order to get some liquidity flowing through the system so as to be able to have even a halfassed functioning banking system-the banks are hooped but those who own them are faring quite well with your money-
Had a friend try to pull $8000 in cash from his checking account (so called "demand deposit") today. They only had $4000 and told him to come back Monday for the rest!!
Pretty normal--banks don't hold a lot of cash in smaller branches for obvious reasons. Most people don't withdraw large amounts of cash for any reason anymore. It's a good point, though--you should be able to get your cash when you want it and not have to wait.
What I'm getting tired of is whenever I buy some bigger-ticket item the seller having the expectation that I am some penniless asshole who has to finance it! The fuckers always act surprised when I just pay for whatever it is. Not everyone is a broke piece of shit that can't hold onto money, you know?
I am with ya.
I just find it interesting that reality does not meet theory. Just goes to show that trying to get your cash (meaning actual Federal Reserve Notes) into alternative asset classes can meet with practical limitations regardless of statute. This definition is from the Federal Reserve:
demand deposit
A deposit that the depositor has a right to withdraw at any time without prior notice to the depository institution. By law, no interest can be paid on such deposits. Demand deposits are commonly offered in the form of checking accounts.
Bank: Store your money with us!
Customer: Ok, I'll give to you what is mine because you promise to keep it safe. I can get it back whenever I want though, right?
Bank: Oh yes we will keep it nice and safe for you, look at all these other people that trust us. Of course you can have it back whenever you want. It is yours after all.
Customer: Ok. Great, here is $10K.
1 year later....
Customer: I want to withdraw my $10K now.
Bank: Oh are you sure Sir? Did you find another bank? Is there anything that we can do for you?
Customer: Just give me my goddamn mutherfucking money now.
Bank: Oh no sir that just won't do all we have is $4K right now. You have to come back at a later date for the rest.
Customer: But, but, you promised.
***Lesson = Sheeples are suckers. I rather take a shovel and dig a Safety Deposit Hole (SDH). It's Fire Proof, Bankrupt Proof, I have sole possession/knowledge of local, no record, and so on.
They actually asked why he wanted so much cash and what he was planning on doing with it.
I would like to Joe Pesci the banker MF'er that asks me that. Or if they told me to come back for the rest of my money another day.
I bet banks would start to pony up real quick then.
But it's really about submission and conditioning that what is yours, is not yours. That you have no power, which is true when you relinquish your money to anyone else. They(banks) have all of the power.
Hey Sam, since you obviously have been sleeping the past few years...
Go ahead and Joe Pesci the banker and find out how few of the rights you nearly died for are still around.
Bankers are the government and actions against them will be considered terrorism.
Even if the actions are attempting to retrieve your OWN money.
Fiat on.
Bankers are now required to file reports with the Feds on "suspicious" cash transactions. Withdrawals as well as deposits. No longer just cash deposits of $10K or more. Part of a "Big Brother is Watching You" fear campaign to discourage bank runs?
go and thank the "War on Drugs", the "War on Terror" and all the others...
Ha Ha! SDH! Brilliant!
Just so long as you own your own back yard...
Here's something enacted in 2010 that Americans don't know about (yet). We were all told, but nobody I speak with understands the real ramifications.
Any NON-interest bearing account (ie, the majority for the small biz and little guy), can have funds held INCLUDING outstanding checks, at ANY time, for 30 days at the FDIC's say-so.
This was the "trade" for "our" accounts to be insured up to $200k.
So, they implement a law that will keep cash from people that don't have $200k, to protect those that DO.
Welcome to the Centrally Planned Stripping of America.
Make sure to smile at your banker, he owns your ass.
A pound of gold would not buy one ounce of beans from me in a food shortage.
...unless the guy next door was selling beans for less.
Senate Republicans today foiled President Obama’s plan to strip $24 billion in tax subsidies from the country’s largest oil companies, potentially fueling an election-year issue among voters disgruntled by escalating gas prices.
The 47 senators voting against the bill have received $23,582,500 in career contributions from oil and gas companies.
Just sayin.......
Those tax breaks are by and large equipment writeoffs, 179 depreciations of capitalized costs. Lets look at why barackahole wanted to pull the "tax breaks" oh yeah to punish the evil oil speculators for making 7-8 cents epr gallon of gasoline. Government in my state makes 47 cents per gallon, peddle your stupid shit elsewhere..
Fukkin keyboard DP!!!
They made 35 billion in profit, 24 billion of which was subsidised by the state, why does only the oil industry get those tax breaks?
Which part of my post is untrue?
Rayes le Bled?
Italians have been left shocked by two cases of men setting themselves on fire in the past two days in protest at their financial hardship.
A 58-year-old builder accused of tax evasion set himself alight in his car in Bologna on Wednesday.
Another builder, a 27-year-old Moroccan, set himself on fire outside the town hall in Verona on Thursday, saying that he had not been paid for four months.
Both men are being treated in hospital.
The man in the first incident had reportedly left a suicide note to the tax agency, protesting his innocence.
http://www.bbc.co.uk/news/world-europe-17556273
Whiteboard porn!
Do u have also one?
Gun buyers swamped retailers nationwide last year, prompting a record 16.4 million instant criminal background checks of potential owners, up 14.2 percent from 2010, according to FBI figures.
More:
http://www.secretnews-compact.com/index.php?option=com_content&view=article&id=146:gun-sales-soaring-driven-by-obama-re-election-concerns&catid=1:latest-news&Itemid=50
Buy Silver, don't stop buying silver and tell all that will listen, as to why they should be buying silver.
The video has been taken down. Did anybody think to save a local copy?
Yes - and neither is it shown on his own website http://www.davidmcwilliams.ie/. What could have happened?
Yes as in you saved it? Any chance you could re-up it?
Yes as in "it's taken off". Unfortunately I saw the note only this morning and thus do not have a chance to see the video
here's the link :) http://www.youtube.com/watch?v=wDFgtb0by4E
here's the link to punk economics lesson 3! http://www.youtube.com/watch?v=wDFgtb0by4E
here's the link to punk economics lesson 3! http://www.youtube.com/watch?v=wDFgtb0by4E
US to ease derivatives regulations
http://www.imackgroup.com/mathematics/793307-us-to-ease-derivatives-regu...
WASHINGTON - The House is nearing bipartisan approval of two bills easing requirements that President Barack Obama's overhaul of financial regulations imposes on some exotic financial instruments.
Both bills are expected to pass easily later Monday. Lawmakers say they are relaxing rules that could otherwise inhibit companies' profits and ability to create jobs, but consumer groups say relaxing the rules would be too risky.
The video has been taken down. Any mirrors?
here's the link! http://www.youtube.com/watch?v=wDFgtb0by4E
nat gas? in a recovery it moves higher- msnbc tells us we are in a major recovery, nat gas goes lower?
over supply via new wells? used to be the co's just shut down production at prices higher then this..
looked at the debt level of E&P co's and oh my debt on books is massive.. so they gotta produce to cover the nut.
nothing makes much sense in these markets..how to trade ..flip a coin.
Stock market bottom April 2012 - http://stockmarketbottom.com
Video removed by user?
here's the link! http://www.youtube.com/watch?v=wDFgtb0by4E
here's the link! http://www.youtube.com/watch?v=wDFgtb0by4E
Removed by user. Huh. Black helicopters?
here's the link to punk economics lesson 3! http://www.youtube.com/watch?v=wDFgtb0by4E
here is the correct link to punk economics lesson 3 -- that one is broken: http://www.youtube.com/watch?v=wDFgtb0by4E