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The Scary Math Behind The Mechanics Of QE3, And Why Bernanke's Hands May Be Tied
When it comes to the NEW QE, everyone has an opinion, and most seem to believe that the NEW QE will come next week, now that the US economy added "just" 96,000 people (but, but, the unemployment rate 'fell'). Certainly, and far more importantly, if the most recent FOMC minutes are any guide, the Fed shares this view. Sadly, as so often happens, most, and this includes the FOMC's various voting members, have once again made up their minds without actually evaluating the limitations posed by simple math. After all it is far easier to form an opinion, and actually think about the underlying facts later. The math, for those who actually have looked at the numbers behind the scenes, is scary (in UBS' words, not ours).
Here is the math.
As part of its Operation Twist, the Fed is buying long-term bonds, and selling short-term (0-3 years) bonds. As we reported in April, the biggest limitation for the Fed is that it is rapidly running out of short-term bonds to sell. There is a fix to this: the Fed will simply have to sell longer dated bonds from its SOMA portfolio, first up to 5 years, then 7, and so on. Of course, this will also force the Fed to extend its ZIRP language by an appropriate amount of time, through 2017, then 2019, and so on (which also means all bets that the Fed will hike any time in the next 5 years will be immediately null and void, and one can position accordingly in the Eurodollar space).
This move, however, will simply permit the Fed to extend Twist 2 beyond its year-end maturity. As a reminder, the primary role of Twist, aside from that stated one which is to keep the curve as flat as possible (i.e., boost housing which as we showed yesterday is not working, as refis have plunged recently despite record low mortgage rates), is to absorb virtually all the long-end supply: after all, it is all about the funding of the US $1 trillion+ annual budget deficit.
Said otherwise, when it comes to the 10-30 year sector the Fed is already monetizing all new issuance. This is part of the entire flow argument which we have been discussing for the past 6 months, and why we, correctly, say that Operation Twist is really QE 3 and QE 3.5 (for the recent extension of Twist). So far so good.
Here comes the important part.
Three weeks ago we presented a video courtesy of Stone McCarthy which showed a timelapse of the "takeover" of the Fed as the primary holder of public debt. For those short on time, here is how the Fed's holdings portfolio looked like then...
and now:
The shaded region is important for two reasons: this is where the Fed will be buying new bonds as part of any new QE Large Scale Asset Purchase program, and it tells us all there is to know about how big and how effective QE3 (really 4) will be. The bottom line, as calculated by UBS' Michael Schumacher and confirmed by anyone with access to the detail behind the Fed's SOMA holdings, which incidentally just hit a record 116 months two months ahead of Twist 2 schedule, is that "the Fed owns all but $650 billion of 10-30 year nominal Treasuries." Also as pointed out above, Twist 2, aka QE 3.5 is already absorbing all of the long end supply. And herein lies the rub. To quote UBS: "Taking out, say, $300 billion in long-end Treasuries almost certainly would put tremendous pressure on liquidity in that market....Ploughing ahead with a large, fixed size QE program could cause liquidity to tank."
In other words, anyone expecting a full blown LSAP focusing only on US Treasurys will very likely be disappointed as the Fed will certainly realize, quite soon we hope, that it has only $650 billion in total 10 year + bonds available in the entire private market!
Well, perhaps the Fed will just monetize MBS, as Bill Gross has been betting on for nearly a year now. It could do that... but when once factors in "math", the results are once again quite startling. Quote UBS again:
The alternative of tilting purchases toward MBS implies that the QE program would need to be quite protracted. Monthly supply of conventional 15yr, 30yr and 30yr GNMA has averaged about $85-90 billion over the past year and the Fed is already buying about $25 billion. The Fed might be able to buy another $40 billion without disrupting the market. Assuming that the Fed does a $600 billion program with 75% in MBS, it would need to buy $450 billion in mortgages, so in our estimation the program would need to last nearly a year.
UBS conclusion is self-evident:
We doubt the market would respond well to that prescription from Dr. Bernanke.
Bottom line, if and when someone does the actual math on what the Fed can do, the results are quite disturbing, as they indicate Ben's hands are very much tied, and the Chairman no longer can conduct the type of bazooka event that most have expected. It certainly means that the Fed can not engage in anything remotely resembling the $1 trillion LSAP in QE3 (sic) that has been whispered.
Most importantly, all of the above actually confirms our biggest worry: the Chairman is well aware of the math behind this analysis, and is the reason why month after month he has been forced to pull a 'Girl with the Draghi Tatto' and jawbone the market into submission, hoping nobody else does the math on what Bernanke's real options are, because once the details are out there, and everyone can do the math on their own, only disappointment can follow.
As it turns out, Adam Yogi Berra Smith Dzhugashvili was right: there indeed is no such thing as a free lunch, especially not under central planning.
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It's Jugashvili. What are you Russian?
Costs what 100k to make a 15k GM car.
And it costs $100 of high quality virtual linen to print one virtual $10 bill.
high quality h2o
http://www.youtube.com/watch?v=cwpBARkIi1o
Tyler is maybe underestimating the creativity of the people at the Fed in coming up with new ways to flood the economy with dollars. Since the Israeli and Swiss central banks have been buying stocks already, what would prevent the Fed from secretly buying stocks? There you would have your newly freshly printed money.
yeah! now we can frontrun our great great great great grandkids stock purchases
“Eventually,” says Nouriel Roubini, “if everything goes wrong, they can even buy equities."
Yes, Virginia, there is a Santa Claus!
It’s known as the Plunge Protection Team, operates under Executive Order 12631, and consists of the Chairman of the Federal Reserve, the Secretary of the Treasury, the Chairman of the Securities and Exchange Commission, and the Chairman of the Commodity futures Trading Commission – all Jewish.
On September 16th, 2001, The Guardian reported "that a secretive committee... dubbed 'the plunge protection team'... is ready to coordinate intervention by the Federal Reserve on an unprecedented scale. The Fed, supported by the banks, will buy equities from mutual funds and other institutional sellers... "
As defined in the Daily Bell Glossary: “The Plunge Protection Team exists. Its mandate – brief – is to manipulate markets, apparently with a special emphasis on the stock market and maintaining the public's confidence so the fiat-money wealth redistribution game can continue to limber along. Can there be any question anymore as to whether America has free markets.”
Of course we all know Ben does "manipulate the equity, gold, FX and Treasury markets through collusive behavior" with his insider Wall Street banks. On July 18, 2012, Business Insider had this to report:
Roubini told Reuters that the Fed could even try to buy stocks to keep things afloat at some point:
"There might be a weak rally because people are being cheered by more quantitative easing by (Chairman Ben) Bernanke and the Fed, but if the economy is weakening, that is going to put downward pressure on earnings growth," said Roubini.
Roubini said the Federal Reserve may be pushed toward unconventional policy options as the stimulative effect of successive waves of quantitative easing - effectively printing money to buy government bonds - diminishes over time.
Unconventional policy could include "targeting the 10-year Treasury at 1 percent, doing credit easing rather than quantitative easing, targeting nominal GDP, price-level targeting and lots of stuff that is more esoteric," said Roubini. "Eventually if everything goes wrong, they can even buy equities."
Read more: http://www.businessinsider.com/roubini-federal-reserve-buying-equities-2012-7#ixzz25pveCHMb
I do not understand the article's conclusion. The warning is that the Fed's QE3 is going to cause long-bond liquidity to "tank". That's the goal. The Fed does not want a market price for long bonds, it want's their price. In order to do that they buy it all up. The math is not scary to the Fed - the math is exactly what they want. For about a trillion a year they can cap long bond rates indefinitely.
The 70% limit is not going to stop them. The Fed can make deals with other central banks (you buy treasuries, I buy gilts...).
This is the fiat currency end-game, they will go down swinging. That means the balance sheets of the Fed, the ECB, the BOE, and the BOJ will all balloon to unimaginable proportions, much of it with each other's sovereign bonds.
I have to laugh at Draghi's "unlimited monetary firepower". Zimbabwe has unlimited monetary firepower.
I sure do wish someone would wanky my Bernanake.
Who the fuck needs QE3 when we have an official market breakout in the US on our hands based on pure bullshit and manipulation?
There's already been QE3, but when it comes it will still be called QE3.
Who the fuck do you think is keeping these markets up? Lucky Charms?
Without a major disruption this market just cleared the hurdle for SP 1500 in no time and is going to float up right into the election.
Fucking sick. Everything is under tight gov't control, and im sure it's lawful under all the bs laws they pass left and right.
In fact, laws have no meaning anymore. We're talking total collapse so they will do what they want when they want.
Oh and good job by yahoofinance in problem solution control and recognizing the problems. Of course their solution is still higher market prices. This is like throwing a 50lb lead weight into an ocean of fucking cheerios and just happening to land on the one spot in 10 gazzilion square miles where there is a concentration of bullshit deep enough to keep it from sinking. Very precarious situation indeed.
But they want a stock market bubble, that is why they are piling on monetary stimulus. That was the plan all along, as was the housing bubble the plan to recover from the late 90s stock bubble. That's all this is about. Creating bubbles to create fake, temporary wealth and the appearance of a successful recovery. The planners then retire and go on the lecture circuit and write books about what geniuses they were, followed by the "It wasn't my fault it blew up" books. Each time the capital misallocation is greater and the ultimate cost is greater - rates have to go lower each time to make it happen, more debt has to pile on the US balance sheet as an end result.
Guys we are have ths same thought and conviction regarding the disadvantage of any other QE3 round but would like to ask you why we are loosing money and trading the commen sense that QE3 or OMT wont happen or fighting the central bankers, while the idiots are buying everything and winning, the SP was jawboned more than 100 points and we got fucked . why dont be idiots and win and use those winnings and buy gold and silver
Terrific analysis once again. All these charts appear to be those of a dying man, which makes sense. The social welfare state are fiat money are dying. They think if they just keep pumping in more steroids it will come back to life, but the charts just get worse and worse. Instead of focusing on how to reduce regulation, reduce capital misallocation, lower the costs of education and doing business and healthcare and welfare programs, government policies are doing the exact opposite. The worse it gets, the more they double down and conclude that they haven't done enough dumb things.
As for Central Banks, they continue to make the Lehman mistake of acting like the problems are ones of liquidity, when they are ones of solvency.
The well runs dry at some point - raid the ATM's good bye checking, savings IRA - "The TaxMan Military CON-fiscation Cometh."
MUST WATCH VIDEO: Banker left Speechless by Irish Journalist
Approved, it's a must watch, and I still miss an appropriate answer. I do also wonder what other people do think of that they're forced to pay for bailing out banks they never had any affiliation with in the first place.
I still have the guillotine clean and waiting...
but God's work benefits us all !!
Everyone should watch this! The ECB represantative dodges, uses jargon and double-talk about how they have to save the 'Financial System', but that Irish journalist dogs him and puts him into the corner!!!
Priceless!!!
And the same thing will happen here!
Douchery of this magnitude has, until now, not been witnessed. The maniacle, psychopathic, lying bankers try to bullshit the geezer asking the question and the punk ass banker knows he has been unmasked.
Death to the bankers!
I am spending all of my money while I can still get something for it. Then I won't care when they burn the banks!
1) Put 1 pint of petrol in tire.
2) Sieze banker
3) Place tire over banker's around neck
4) add fire
5) watch banker dance
Just a matter of time.
Irish Wanking Bankers - An Irishman Abroad.
http://www.youtube.com/watch?v=koY6kXhQDQo
Wall Street Wankers - An Irishman Abroad
http://www.youtube.com/watch?v=cIL22kPUILU&feature=endscreen
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Punk Economics, Lesson 2: ‘How Germany is Squeezing Greece Using Banking Fraud’
Posted on February 24, 2012 by maxkeiser
http://maxkeiser.com/2012/02/24/punk-economics-lesson-2-how-germany-is-s...
Seriously, why is Ben limited by NEW MBS issuance? Why can't they start buying toxic MBS from insurance companies, banks and investment funds?
Why can't he buy my mortgage from the secondary market, today?
Plenty of toxic paper to buy. Not so different from the ECB buying up Italian or Spanish paper.
I don't get the premise here.
Because that is illegal, but that did not stop them before.
"Just One fix"
by MINISTRY
Blood keeps drinking away
Certain of it's destination
Driving through new orleans at night
Gotta find a destination
Just one fix
Life keeps slipping away
Fighting in a war with damnation
Poised, keep cutting away
I'm looking in through to salvation
Just one fix
Like if I boarded a train
Trying to take in another station
Join us and the choice will be made
Unless we kill the lie as a nation
Only PINKO COMMIES Want/Need/Beg for QE: Off with their Socialist/Communist/Fascist Heads!
We Won't Name Names, But A Wall Street Analyst Just Sent This Animated .Gif Out To Clients
Many mainstream pukes coming forward stating there will be fed action. My guess is since the fed now owns the majority of bonds. They will position themselves for a massive stock sell off and are already in a position to benefit from a flight to "safety" in bonds.
Wait, you make it sound like the fed is an organization looking out for its own interests and not the U.S. economy. /s
go ahead and tie his hands.
has anyone unplugged his printer?
right, i thought not.
not enough debt out there for the Fed? Just move the goalpost. Lot's a ways to do this. Coming soon to a theatre near you...
- Increase that deficit! Sure we can do that without much effort. All in the greater good, just ask Paul Krugman or Dick Cheney...see both sides agree!
- Might take a bit of laundering / swap lines / etc. but plenty of foreign debt out there. Hey the ECB told us there will be guaranteed rate caps coming for the Euro stuff
- How bout dipping into some corporate debt. ECB told us they might do so, so why not here too?
John Prine Pretty Good
http://www.youtube.com/watch?v=n0PGJzpSuzo
.
John Prine Pretty Good Lyrics
Songwriters: PRINE, JOHN
I got a friend in fremont, he sells used cars, ya know.
Well, he calls me up twice a year
Just to ask me how'd it go
Pretty good, not bad, I can't complain
but actually everything is just about the same
I met a girl from venus, her insides were lined in gold
Well, she did what she did said "how was it, kid? "
She was politely told
"pretty good, not bad, I can't complain
But actually everything is just about the same."
Moonlight meets me dizzy
Sunlight meets me clean
Your light is the sweetest thing
That this boy has ever seen.
Molly went to arkansas, she got raped by dobbin's dog
Well, she was doing good till she went in the woods
And got pinned up against a law
Pretty good, not bad, she can't complain
Cause actually all them dogs are just about the same
Moonlight meets me dizzy
Sunlight meets me clean
Your light is the sweetest thing
That this boy has ever seen.
I heard allah and buddha were singing at the savior's feast
And up the sky an arabian rabbi
Fed quaker oats to a priest.
Pretty good, not bad, they can't complain
Cause actually all them gods are just about the same
Pretty good, not bad, I can't complain
Cause actually everything is just about the same.
Excerpt from the Bernake Speech at Jackson Hole one week ago as per John Carney of NetNet CNBC.
Here's Bernanke himself:
One possible cost of conducting additional LSAPs is that these operations could impair the functioning of securities markets. As I noted, the Federal Reserve is limited by law mainly to the purchase of Treasury and agency securities; the supply of those securities is large but finite, and not all of the supply is actively traded. Conceivably, if the Federal Reserve became too dominant a buyer in certain segments of these markets, trading among private agents could dry up, degrading liquidity and price discovery. As the global financial system depends on deep and liquid markets for U.S. Treasury securities, significant impairment of those markets would be costly, and, in particular, could impede the transmission of monetary policy. For example, market disruptions could lead to higher liquidity premiums on Treasury securities, which would run counter to the policy goal of reducing Treasury yields. However, although market capacity could ultimately become an issue, to this point we have seen few if any problems in the markets for Treasury or agency securities, private-sector holdings of securities remain large, and trading among private market participants remains robust.
Thanks for the excerpt. We were distracted by the political circuses for the last two weeks.
I live in the mid Atlantic and I haven't really noticed any less economic activity. I see prices going way up, portions getting smaller and a lot of restaurant making new menus (raising prices). Ten bucks for a large Sake at the sushi joint is taking it's toll. I have been waiting for overt signs of economic slow down but, I still can't find a parking space any closer at the shopping mall. I am starting to doubt my short positions.
I don't see any complaints from seniors. If the economy is that bad why am I not seeing it?
I am the worlds biggest pessimest but, I am not seeing ruin everyone has predicted.
Great observations.
My take, from my own observations:
- People go to the malls because they've got nothing else to do. They do not buy much, but mostly they just hang around.
- It depends on the definition of "ruin". What I mean by "ruin" is the 'end of easy life', not lack of food. USA and Canada have quite ample supply of food, great areas of arable land etc. Food is not a problem.
- The Gov will always provide money to the people for Food and basic expenses. Check food stamps that actually are debit cards. Only 20% of that money is used for food. The rest is used for any kind of expense. People who use food stamp debit cards go to shop with their cars.
- As long as there are chinese quasi slaves to over produce stuff for the USA, Canada and Europe, basics need of life won't be lacking.
- But, vacations, eating out often, useless schooling, 2 or 3 cars, big house, early retirement (earlier than 70 I call early retirement) are gone for a good stretch of time,probably 10-20 years. That's the "ruin".
I get to travel to China every year, am going back over Christmas, and it will be interesting to see the dollar's buying power.
The exchange rate hasn't changed since I went last time but, I'll see if inflation is as bad over there as it is here.
While the Chinese don't roll like Americans...."vacations, eating out often, useless schooling, 2 or 3 cars, big house"......They have seen an incredible increase in their standard of living since I have been going there.
I consider the Chinese rich by our standard and they invest public resources in infrastructure and such. It will be nice to ride the new subway through Chengdu they have been working on for the last few years. I rode on the high speed rail last time I was there to visit Taoist Mountain and I was impressed and am baffled as to why our gov't doesn't invest in basic infrasructure improvements. They certainly take enough out of our paychecks to pay for it.
I must defend China because I think they have a better, more centralized and therefore, more effective system of Gov't. I know what people say about China being oppressive but, I think they are less so there than our gov't here. I don't see their police shooting pepper spray, point blank, into the faces of college students. Before you bring up Tianamen Square think about Kent State.
The Peoples Army in China is just that. When they have disasters, like earthquakes, the Army is deployed within hours, on the scene and helping civilians deal with catastrophy unlike here. When I was in NO during Katrina I saw more Blackwater private contractors than National Guard and they dropped those psychopaths into the city before the first bottle of water was delivered.
In China you can do anything as long as you don't talk about it or speak against authority. Here it has become even more authoritarian with "free speech zones" meaning you cannot protest without a permit, no more free speech:
http://www.salem-news.com/articles/august192012/marine-fakcebook-arrest-t.php
Since our Gov't is not really centralized but, rather, a collection of 50 different gov'ts being oppressed by a central authority I think it might be better for, either, the Federal Gov't have greater central planning authority or seccession of states that want to handle their own affairs. This system just isn't working, the Congress paralyzed by Wall Street money that only benefits a few thousand people on the island of Manhattan which, I believe, we should lay seige to and excommunicate from the Union and let them pay their own way.
I say our system of government is a sham and a rip-off, fear the police here and I consider them an extention an oppressive authoritarian system. Just look at how they treated OWS.
Tom Waits - Bottom of the World
http://www.youtube.com/watch?v=vMP9e3cqKns
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again, the time was right ....
Fucking Cramer. Talking China "road building" shit! Jimmy "Crapolla " Cramer is probably the #'1 guest on the "Ghost City" monorail tour! Fuc.ing ass hat!
Cramer is a fast-taling Wall Street tool. He's scum.
During his years at Harvard Law School, Cramer worked as a research assistant for Alan Dershowitz. He assisted Dershowitz's campaign to acquit alleged murderer Claus von Bülow despite the fact that Cramer admitted to himself that von Bülow was "supremely guilty".
Could it not also be that by printing more, the paper industry could massively benefit and spark a rally ?
Just an idea, why always look at the glass half empty....
Oh, No!..(Fed's) Cat's out of the bag!...
Any volunteers?...Ben, needs help!
this is really bad everyone. In case you missed it in the previous article, and the one before that and the one before that and the one before that. The market is gonna crash.........some day. You mark our words. Its really, really, really gonna happen. We have upped our certainty level here at ZH to "double DOUBLE (that's two doubles) dog sure". One of these days.....in the future.
The markets crashed in "08" Idiot! Central bankers have spent over "10 Trillion dollars" since then, to keep the illusion alive!
Now go get me a bag of Doritoes!
They will crash again when almost nobody expects it. It is always like this.
QE or no QE, Seniors are getting thrashed.
Those who thought they could live on their $400k stash and get a solid 5% return on CDs, and a better COLA with SS are now chewing into their principal to survive due to the 0.1% ben is giving them. A tiny COLA of 1.3% will further push this group of retirees over the edge perhaps---- paying the mortgage, help out the kids, eating every once a while, etc. will create a larger group of 'poor."
This is just one more reason I do not see the house price plunge stopping any time soon.
"help out the kids" right help the kids, grandkids, etc. ad infinitum right into debt slavery to pay for all the programs seniors voted and continue to vote for as the largest voting block in the country.
Cry me a river grandma and grandpa, the trick is to cash out BEFORE the Ponzi scheme implodes and hope the ones you sold into it never realize.
Twist was not QE "light".
QE3 never happened. Bernanke decided to "twist" because full on QE was expected and the element of surprise would have been vaporized. The effects of QE2 were already pretty subdued.
QE is now more expected than ever. Ask any cabby or shoe shine in NYC. They all talk about QE or so it seems ...
Draghi's announcement yesterday and previously came as complete shocks and surprises. He's a talker. I wonder if he's talking like a true Italian with both hands. I'm sure he's wearing the heels on his shoes in the front and will tip over and do the opposite of what he says. It's the Italian thing to do. Maybe that's why there's not more outcry from EU nations which are supposed to foot the bill of "unlimited bond purchases".
Are the MUPPETS biting? Is Wall Street able to offload their portfolios to the muppets? That's the real question. They certainly have all the backing they need from their coach.
This boils down to MATH vs. MAFF, and I think we all know that Community Organizers do MAFF as do their Flunkies, so the math is irrelevent.
GUYS YOU WILL NOT BELIEVE THE IDIOCY OF THE TITLE FROM HUFFINGTON POST
YOU SEE A PICTURE OF BERNANKE AND A TITLE ~SAVE US~, I thought I would agonize in a mixture of hilarity and rage at the same time!!!!
http://www.huffingtonpost.com/
I was just thinking Obama's "You didn't build that" comment was his "Fuck you San Diego" moment.
If, when we get around to hanging Bernanke and Draghi, somebody makes it a pay per view event, we're gonna see an economic bump.
"A Locked Down, Preparedness Mode": QE4, 'Contrived Collapse' And Russian Spetsnaz In America - The Signs Of 'The End'
Anyone considered the nuclear... "interest on reserves" option?
Right now FRB pays 25 BPS on reserves, both required and excess.
http://www.federalreserve.gov/monetarypolicy/reqresbalances.htm
So why not face the mathematical reality (which I have to assume BB is aware of) and charge banks - at least on their excess reserves?
It would likely have little impact on lending (truly, there are very few lending opportunities out there other than refinancing loans held by your competitors). But it would continue the piper's tune of "doing something."
My prediction: higher deposit account fees for consumer and commercial depositors beginning 1Q 2013.
I don't know if you all have noticed that, in the past ten years, the FRBNY and cohorts have effectively eliminated cash from the markets. I don't want to sound like a "know it all" but, all anyone uses is plastic. You can't even hold up a convinience store any more because there is no cash in the till.
Direct Deposit is being forced on all employees and taxpayers so "the man" will, always, have your money....ummmmm....credits or whatever you call what used to be cash. Soon they will charge you a percentage of your balance or fees to keep your money. Negative interest is coming.
Whoa.
All the better reason to be your own central bank with PMs and some FRNs.
Shhhhh.
My tenants started paying me in cash and I, gladly, accept it and forget about it. When the three day bank holiday comes I will be ready. This holiday will only be possible when the troops are here instead of Afghanistan and Korea.
The scary thing is that many are still convinced that debt is wealth to a creditor. But in the end, debt isn't wealth, it's just debt. In 2006, homebuilders would take out a 250K loan on a spec home. At balance sheet snapshot, they would just claim the unbuilt home would be worth 375,000 when sold within 12 months. CA of 350K, CL of 250K; the balance sheets looked great, until the time came that the houses wouldn't sell. The Fed has been playing the same game, floating a liquidity value of assets that could potentially crash in value. Thus an objective audit of the value of the Fed's assets is verboten, and the chance of a slingshot ride into hyperinflation grows every time monetization is played.
First, I am astonished that the employment data came out and I have seen NO reference either here or certainly at CNBS/Bloomberg or anywhere else today to the Birth Death adjustment for August 2012.
Go take a look for yourself and be prepared to be amazed that nobody has said anything so far....
http://www.bls.gov/web/empsit/cesbd.htm I tried hitting this link and it does not work but that is the page to see, it will work if you open a new window and paste the link in at the address line and hit go to...
That's right, of the 96,000 "new jobs" added in the month 87,000 of them were BLS hocus pocus. Meaning in total we probably got all of 9,000 minimum wage no benefit part-time jobs last month. When we know damned good and well it takes more than 100,000 month in and month out forever just to accommodate new population increases.
Hands tied? The situation is this, we have a near depression with incomes falling, household wealth destroyed, real unemployment probably in the 12% range and total under employment including unemployment of closer to 17%, labor pool kicking out working age people needing jobs by the millions, the fed feeding trillions to the banksters who are pushing up commodity prices so inflation for necessities is raging in at least the 10% range and I say a damned sight higher than that.
There have been enough QE's and bailouts and "tax cuts" for the wealthy and corporations, the banks and bankers and investor class are shocked and embarassed at how well they are doing but all that has made it to Main Street is the inflation and other side effects of the economic chemo, and the patient is dying not from the cancer but from the cure.
We must have change now or we will just not make it. We need a partial jubilee via dollar devaluation which will devalue equally both debt and assets and it has to be universal, it has to be at the very least 70%, we have to reinstate Glass Steagal, we have to tax all income other than that which is loss replacement at a flat 30% with zero deductions for anything and maintain that until the government (s) federal and state are debt free, and we need a constitutional amendment dictating governmental balanced budgets at all levels with NO exceptions not even for war, if you make an exception you will find that that we will just always be at war, or always have xyz emergency. If the ruling elite want a war let them raise the money for it and see how many people go along with their plans. Suddenly they may want to question where the intel is coming from and what the motives are for projecting some expensive force in the world. We need simple, transparent markets with draconian punishments for frauds and abuse, and rigorous enforcement. We need accounting standards that are set in law rather than by a board of private accountants owned by KPMG and Price Waterhouse Cooper. We need Citizens United overturned and an investigation into how the SCOTUS could have ruled the way they did in the first place. If corporations are "people" then I want to see the birth certificate and I want to know where the jail is I can send them to. Time to abort that little fucker for sure. We need to restore one man one vote, and make all corporate donations to politics illegal, call it what it is and always was, bribery. We need a voting standard for all 314,000,000 Americans that is the same everywhere and do away with the electoral college. We need to update the bill of rights to include privacy and bring it into the 21st century as to our "papers" so they include cell phones and GPS data. We need to end plea bargaining, it might save a county a few bucks but it has done more to damage justice than anything since King George personally selected colonists to hang. If you cannot prove a citizen guilty of a crime in front of a jury of their peers as we are guaranteed then do not charge them till you can. Holding someone in jail for more than a year without reasonable bail is an invitation to abuse of the system.
There at least 100 other ways the nation has been subverted that I can say we could fix very simply, just do it. We don't need a multi billion per year war on drugs that erodes all civil liberties, to get rid of that scourge for example, just put a bounty on pusher/distributor heads DEAD or ALIVE, make it justifiable homicide to kill pushers. But, draw a rational distinction between a little pot or other in truth harmless recreational chemicals like steroids and the real deal like heroin or meth, and make sure people know that if they get involved and fuck up they will pay the price, no vigilante defense in court.
And we can't just go back in time to a paternalistic era of women knowing their place and gays staying in the closet and abortions being outlawed, you want freedom and government out of your life then it has to be equal under the law. You might not like that and I really think that is why the GOP does not ever seek real change either good or bad, because there are some genies that just can't be put back into the bottle without shooting your own foot in the process.
It will all make no difference because nobody reading this is willing to take the good with the bad in order to fix the mess we are in. We will never be free again as long as some of you make dealing with our troubles conditional upon putting women and fags in their place before dealing with economics and graft. So the math that TD is trying to get across, nonsense, the Fed and the Treasury can do what they like using any math they want to, just a few accounting rule changes and presto, all fixed, bankers happy, government happy, slave revolt put off for a while....
1 out of 7 people on food stamps reeks of depression to me. The USDA food debit card is the new soup kithen line. People would be on the street begging for money but, unfortunately, no one carries any cash anymore. What's a begger to do?
Get a card swiper for their iphone?
"Brother can you spare a $20 debit"
CNN Money –“The highest concentration of food stamp users were in California, Florida, New York and Texas -- where more than 3 million residents in each state received food stamps in May (2011).
The states with the highest Hispanic populations are: 1) California; 2) Texas; 3) Florida; 4) New York. *Note: Over half of the U.S. Latino population lives within California, Texas and Florida.
“*Note: Over half of the U.S. Latino population lives within California, Texas and Florida.”
http://www.newstaco.com/2011/06/14/the-top-10-states-with-the-largest-latino-populations/
So.... Dick O'Bama's plan to use illegal mexicans to crash the economy is working, then.
Try Real Genuine Depression and 25% unemployed. That's a start.
Look very closely at the image on the right. After you begin to suck down the new QE3 protein food mandate, you’ll end up taking a dive. The idiots are getting so sloppy, it has become comic relief for many.
If you don’t see it, pretend you're looking at a inkblot test.
http://www.letsmove.gov/
Click to enlarge
Big word for some, Codex Alimentarius
http://www.fsis.usda.gov/codex/index.asp
Think about the pink slime headline. These folks are simply monetizing debt to fill the central planners pet projects.
That's the old math. Just as Newton needed to develop calculus to explain gravity, Ben just needs to show the rate of change in rates as he chases the last few of those collector's items known as long term Treasuries. Think of the bidding war! It's going to be more fun than when Malcolm Forbes chased Faberge Eggs or Stevie Cohen single-handedly tried to turn Willem de Kooning into Vincent Van Gogh, minus the Don McLean ode. Since bond yield is inversely related to price, Ben is going to make the Swiss jealous. Debt monetization gets turbocharged when Ben offers to pay a trillion for the last 30-year remaining in the wild.
The last to know will be watching a MSLSD channel. The Breaking Wind News story will be hosted in HDTV for elevated viewing pleasure.
The Scary Math Behind The Mechanics Of QE3, And Why Bernanke's Hands May Be TiedI liked the headline. But I was waiting for the kicker where Bernanke's feet are in a bucket of concrete as he dangles off the end of a pier.
Tyler,
I think I speak for a vast majority of the regular site visitors in offering a heartfelt Thank You for your consistent critical analysis and insights.
In a true sign of a Master, Yoda, Rabbi, etc., you make the extraordinarily complex .... understandable.
Thanks Man.
DW
Divine Wind,
Don't you think Bodhisattva would be better description? He seems to take the middle path.
cnn was cooing tonight over qe and how indispensible it is for central state planning.....just another fascist network touting totalitarianism....and now that the fed is land holder just as the aristocracy in england is, everyone else can settle into slavery....
currency debasement has never ended nor has the cornering of property and plundering of wealth....the rockefeller axis of evil and bush crime syndicate of whom obama is the latest incarnation are the barbaric vikings who are destroying the land....
the only problem to their schemes is the price of gold....its rise will crater the wall street banksters and their short positions.....they are 40,000 tons short of gold....bernankula cannot debase too much more because of the gold chastity belt....the kleptocracy will continue however.
"Wars in old times were made to get slaves. The modern implement of imposing slavery is debt." – Ezra Pound (March 25, 1943)
Or until China does something with its 'mysterious' purpose for acquiring all the GLD it can import.
Other than all out nuclear war, no conventional Bankster Army (NATO) can defeat them if they create a GLD-backed currency.
They have a reason for loading up.
Announcements and actually doing something are two distinct things. Just as companies can announce stock buy-backs, but do they actually buy back their stock and at what price - who tracks this? The manipulated jobs report gives the Fed cover for *announcing* QE whatever - clearly aimed at the election / politics. For a no-spin numbers offered, like a costco food sample cooked by a Boomer on the extended retirement plan in the store aisle, with some political opinion sprinkled on top to give the numbers some "taste", see:
http://www.youtube.com/watch?v=BrdI72hhgNU&feature=g-all-u
I predict no more (unsterilized) QE until it looks like the end of the world is here. Last year Ben said he would rely on communication, read propaganda and he and his WSJ buddy have been doing an excellent job using the last bullet in the gun. Everything is rosy looking and the world fully believes in the Obama's hope and change strategy.
On a completely unrelated note does anyone know how much stock the Mormon church owns? Are there any LDS HFT owners? Just curious now that every index has bumped up to the top of the trend lines. The last two days have looked like such a huge set up. I think we're going to look back at these last couple days and just shake our heads.
"Grandpa, tell us the story of the September, 2012 stock market!"
I like collecting aluminum cans and pushing all of my belongings around in a stolen shopping cart. The kids even enjoy sleeping in the tent at the homeless park and have more fun playing with the enibriates. I am so thankfull for all the progress we have made with this recovery. I could actually afford a new tent this year! I hope they keep bailing out the banks so I can afford new sleeping bags for the whole family by christmas. Last year was a little tough all I could afford was a new tire for the rickshaw.
It's a good thing you can still afford internet access.
Just wondering where we stand philosophically on Ron Paul vs Chris Hedges. If a typical ZH'er could choose either for president and then provide him with a magic wand to change to face of the legislative and judicial branches, who would he choose, Ron or Chris?
Up arrow me for Ron, down arrow me for Chris.
Please excuse my ignorance, but who is Chris Hedges?
08 September 2012
Friday Night: Chris Hedges and Jonathan Haidt on Corporations, Liberals, and Conservatives
http://jessescrossroadscafe.blogspot.com/2012/09/chris-hedges-and-jonath...
Author, brilliant one at that, and pulitzer prize winning journalist.
http://www.alternet.org/authors/chris-hedges
AIPAC Works for the 1 Percent |Truthdig | a Chris Hedges’ column…
Quote:
And since our elites have no vision it is up to us. The uprisings from Tunisia to Egypt to Greece to Occupy Wall Street to our gathering outside AIPAC’s doors in Washington are the same primal struggle for sanity, peace and justice, for a world wrenched free from the grip of those who would destroy it. And the abject fawning of our political elite, including Barack Obama, before AIPAC and its bank account is yet another window into the moral bankruptcy of our political class, another sign that the formal mechanisms of power are useless and broken. Civil disobedience is all we have left. It is our patriotic duty. We are called to make the cries of mothers, fathers and children in the squalid refugee camps in Gaza, in the suburbs of Tehran and in the bleak industrial wastelands in Ohio heard. We are called to stand up before these forces of death, the purveyors of violence, those whose hearts have grown cold with hatred. We are called to embrace and defend life with intensity and passion if we are to survive as a species, if we are to save our planet from the ravages of corporate greed and the specter of endless and futile war.
http://www.truthdig.com/report/item/aipac_works_for_the_1_percent_20120304/
Hedges is a Marxist.
Go with Libertarianism.
Do you all remember the Hunt brothers, they bought a shitload of silver back in the early 80's and they became "THE MARKET" as they owned most of the silver in the planet...........Silver subsequently collapsed in price.....
Take this Bernank!!! Bonds will collapse the same way!!
Fast forward to the QE Bernanke years, he literally has very little short dated bonds as most of his portfolio is skewed towards the long end of the bond market, just like the Hunts, they are rapidly becoming "THE MARKET" for long dated bonds, at some point ... very soon... rates will skyrocket exponentially or parabolically causing the bond price parabola to crash just like silver did. The silver crash happened in a few weeks to a few months, The long bond crash may take a few months to maybe a year!!!!!
The writing is on the wall..... cornering the long dated bond market will have a catastrophic finale as when rates start going higher .....much higher than the few basis points that have occurred in the last three weeks will result in a very significant expense for the US government making Greece's defiicit look like an austere country. in the last 2 weeks bonds have lost about 10% in price for a few basis points increase in rates..... imagine interest rates increases in the 5, 10 and 30 year bond in multi 100 basis point increases......
That's the immediate future 12 months out, unless of course the CB's and the Bernank change direction which may have a temporary drop in rates as stock markets crash making money flow into bonds big time allowing the Bernank to offload some of his long dated bag of shit, setting the stage for the next cycle of QE's in a couple of years or so..........
This will probably cycle itself a few more times over the next 10 to 20 years while this depression unfolds.
Did somebody mention IRAN? I swear somebody mentioned IRAN!
That's it they're messing with our oil again, admirals...
The Hunt Bros corner of the silver market was popped by the Government, which put in place rules requiring liquidation. Essentially, TPTB pulled the plug on the Hunt's once they realized what the Hunts were trying to do. Who is going to pull the plug on the Fed? Nobody.
"The Hunt Bros corner of the silver market was popped by the Government"
Likewise, The Bernank cornering the bond market will be popped by the $700+ Trillion derivatives out there .........markets will take care of it!!!
If the boat is heavily loaded to one side as would be the case with the situation Bernanke's in , market forces would tilt the boat the other way....
How else do you explain that with operation TWIST the sequel, bonds have lost 10% of their value in three weeks and I suggest to you my friend this is the market rebalancing the boat which was tilted too much in one direction........
Also, the commodity complex can have an effect as well to even things out, the world market is way too big for a Draghi or Bernanke centrally planned games.......................
Ben is tied to the whipping post.
And death by bunga will be his fate...borrowing from the bunga bunga joke.....
Good Lord, he must feel like he's dying! Love the Allman Brothers.
In the past 12 months money supply has grown by $610 billion dollars.
It sure is good that there was no QE3 going on.
Nothing to see here, move along sir.
I have a medical background(RN). My other interest was English and grammer. Math and finance have always made me stumble. I did have an algebra teacher in the eleventh grade who made sense to me. Hasn't ever happened again. I read this entire article. I didn't understand much of it. The thought in my head at the end, was inflation. Maybe hyper-inflation. How far off am I?
jabu,
I guess in the end it would be hyperinflation, or worse.
take care,
George
Many posters on ZH have insisted there will be no QE3.
They also seem to be the same people who try to convince everyone not to vote because there is no difference between obongo and Romney.
Oblahblah and Romney different? You may want to take the time to listen to Chris Hedges.
http://www.youtube.com/watch?v=jvj0C7Qx9Rc&feature=player_embedded
C'mon y'all! Y'all 'Muricans! You can do without the jetski, the hot tub, the jacuzzi in the master bathroom, the ski-doo, the Ram Charger, the pontoon boat, the trampoline, and even the Outback Steakhouse. Well maybe not the Outback Steakhouse. You are the product of the free'est society this planet has ever seen, to paraphrase Saint Ronnie. Buckle down, buckle up and vote for Mittens 'cause his dad was born in a polygamist cult compound in Mexico, unlike the current president who is a muslim, commie. Have fun.
It does not matter what Draghi does or FED does. Charts suggest that final target for EURUSD in this move to 1.2840 has been attained. Now we look for opportunities to short it back to 1.2550.
http://capital3x.com/trades/performance-for-week-7-sept-2012-mt4-stateme...
Bukowski is my favorite author. I wish he could have started writing earlier in life.
“Some people never go crazy. What truly horrible lives they must lead.”
? Charles Bukowski
They "increased" liquidity for stocks by turning n the bots, why can't the same be done for treasuries?