Federal Reserve Bank

"This is why Putin is Public Enemy Number 1. It’s because he’s blocking the US pivot to Asia, strengthening anti-Washington coalitions, sabotaging US foreign policy objectives in the Middle East, creating institutions that rival the IMF and World Bank, transacting massive energy deals with critical US allies, increasing membership in an integrated, single-market Eurasian Economic Union, and attacking the structural foundation upon which the entire US empire rests, the dollar." Up to now, of course, Russia, Iran and Venezuela have taken the biggest hit from low oil prices; but what the Obama administration should be worried about is the second-order effects that will eventually show up...

• Police Surround Paris Terror Suspects Near CDG Airport (BBG)
• ECB Said to Study Bond-Purchase Models Up to 500 Billion Euros (BBG)
• How OPEC Weaponized the Price of Oil Against U.S. Drillers (BBG)
• German Industrial Production Falls Amid Plunge in Energy Output (BBG)
• Car Loans See Rise In Missed Payments (WSJ)
• Jim O'Neill threatens he will replace BRICs with ICs (BBG)
• Oil heads for seventh weekly loss as supply glut drags (Reuters)
• Armed man takes hostage in kosher grocery in Paris (AFP)
• Janus Chairman Didn’t Know Details of Gross’s Investment (WSJ)
• Kaisa Bondholders Dream of White Knight as Default Becomes Real (BBG)

Less drilling will not only lead to a loss of jobs for oil workers, but the services that pop up around drilling sites – restaurants, bars, construction, and more – are feeling the slowdown as well. States like Texas, North Dakota, Oklahoma, and Louisiana have seen their economies boom over the last few years as oil production surged. But the sector is now deflating, leaving gashes in employment rolls and state budgets. With such extensive dependence on oil for prosperity in these states, the pain will mount if oil prices stay low.

Apparently taking a page out of China's book, Factually reports the Philadelphia Federal Reserve office (apparently aware of the worthlessness of their fiat currency) sends old currency to local power plants, where it's burned for electricity. As WSJ reports, The Fed destroys more than 5,000 tons of U.S. currency a year - most of it once went to landfills, but the central bank has pushed for years to go green with all that green. It appears we have come a long way from the Federal Reserve Bank of Richmond’s 1953 annual report when it boasted it had "money to burn."

Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."

Remember: deflation is bad, evil, horrible...  except when it involves tumbling crude oil prices: then it is "unambiguously good" for the consumer and a "tax cut." Which is why we are moritifed to report that for the second month in a row, alcohol prices have dropped, and are down 0.1% from a year ago. Surely, time for more QE to reset US consumer inflation expectations?  Or maybe not, because if said Keynesian US consumer is drowning his sorrows from declining alcohol prices in, well, alcohol, all shall be well if on the side said consumer orders some steak: with a price increase of 28.6% from a year ago, this is the biggest annual jump in beef prices since 2003.

"My Helicopters Are Ready. You Will All Be Trillionaires." Must see chart of gold in German marks from 1918 to 1923. The Fed - "Silently robbing your purchasing power since 1913 ... "

You thought gold was "only" for wealth preservation? You ain't seen nothing yet.

Did you know that there exists a federal Immigrant Investor Program that grants “EB-5? immigration visas to foreigners who provide at least $500,000 to U.S. projects that create 10 or more American jobs? Apparently the good folks at the Pennsylvania Turnpike Commission are well aware of it, and are using it to raise $200 million. Here’s what we’d like to know. Who are these investors and who vets them? It is a known fact that corrupt Chinese officials and businessmen are scrambling to get themselves and their money out of their homeland as the government cracks down on corruption. How many of them are going to use this program to get into the U.S., and what will be the long-term impact to our society?

Nobel Prize Winning Economists, Federal Reserve Chair and Other Top Experts: War Is BAD for the Economy

Dudley’s overall message is that the US economy is doing great, but it’s not actually doing great, and therefore a rate hike would be too early. Or something. "The sharp drop in oil prices will help boost consumer spending?" We don’t understand that: Dudley is talking about money that would otherwise also have been spent, only on gas. There is no additional money, so where’s the boost?  This is just complete and bizarre nonsense. And that comes from someone with a very high post in the American financial world. At least a bit scary.

Central bankers reached a new low overnight when Swiss National Bank President Thomas Jordan warned of "disastrous consequences" from a pulpit in a church on a historic hill in the town of Uster, Switzerland, which Bloomberg dubbed the 'sermon on the hill.' "Hungry people don't stay hungry for long, they get hope from fire and smoke as they reach for the dawn..."

"This last 1900 point Dow Jones push upwards - and the Ebola events leading into it - it was so orchestrated and heightened at critical points but the ascent and push straight up in price, and sideways nonreaction after was completely unlike anything I've seen before.   After going up for a record-breaking amount of time the last five or so years, in a nonlinear exponential mania type of ascent, there should normally be tremendous volatility that follows... After this year and especially this last 1900 point Dow run up in October, and post non-reaction, that I am 100 percent confident that that one buyer is our own Federal Reserve or other central banks with a goal to "stimulate" our economy by directly buying stock index futures."

Just days after the NY Fed ousted an employee for providing confidential information to a Goldman Sachs banker (who formerly worked at the NY Fed - and has since been fired by Goldman), Bill Dudley - the president of the NY Fed - will face a very skeptical Senate Banking Committee this morning investigating so-called "regulatory capture." Of course, their eyes were finally opened after Carmen Segarra, a former employee, leaked 47.5 hours of taped conversation (as we discussed in detail here), exposing the dismal reality of the relationship between the 'regulator' and the 'regulated' as New York regulators were deferential to Goldman bankers for a supposedly "shady" deal. Dudley's defense (not denial) so far:  "We understand the risks of doing our job poorly and of becoming too close to the firms we supervise. Of course, we are not perfect. We sometimes make mistakes."

A week ago, we penned "The Real Reason Why Germany Halted Its Gold Repatriation From The NY Fed", in which we got, for the first time ever, an admission by an official source, namely the bank that knows everything that takes place in Germany - Deutsche Bank - what the real reason was for Germany's gold repatriation halt after procuring a meager 5 tons from the NY Fed. Some took offense with this pointing out, correctly, that the gold held at the NY Fed in deposit form for foreign institutions had continued to decline into 2014 even despite the alleged German halt. Well, today we finally know the answer: it wasn't Germany who was secretly withdrawing gold from the NYFed, contrary to what it had publicly disclosed. It was the Netherlands.  Why did the DNB decided it was time to cut its gold held at the NY Fed by 122 tons? "It is no longer wise to keep half of our gold in one part of the world," a DNB spokesman said.