• GoldCore
    12/18/2014 - 13:54
    Russia supplies China with hi-tech military hardware. Russia has negotiated two major natural gas deals with China in the last year. China expects to double its gas usage by 2030. From a Chinese...

TARP

Tyler Durden's picture

Mark Spitznagel Explains How To Prevent A Market Crisis





"When it comes to market events, there have been no impactful black swans - the so-called unexpected 'tail events," Mark Spitznagel notes in his excellent new book, The Dao Of Capital: Austrian Investing in a Distorted World, explaining that, "what were unseen by most, were indeed highly foreseeable" by others. The Fed planted the seeds for the last financial crisis and "when you prevent the natural balancing act, you get growth that shouldn't be happening." 

The financial crisis of 2008 could have been the wake-up tall that, like the Yellowstone fires of 1988, alerted so-called managers to the dangers of trying to override the natural governors of the system. Instead, the Federal Reserve, with its head "ranger," Ben Bernanke, has deluded itself into thinldng ft has tamped down every little smolder from becoming a destructive blaze, but instead all it has done is poured the unnatural fertilizer of liquidity onto a morass of overgrown malinvestment making a even more highly flammable. One day - likely sooner than later, it will burn, and when that happens, the Fed will be sorely lackng in buckets and shovels and must succumb to the flames.

 
Tyler Durden's picture

"MainStreet Bank" Chairman Stole Bailout Cash For Florida House Purchase





While unlikely to surprise too many people, the chairman of the ironically-named "MainStreet Bank" used over one-third of the TARP-supplied funds his bank received to buy himself a luxury home. Darryl Woods plead guilty to using $381,000 of the TARP funds to buy waterfront Florida property "at a time when many Americans were losing their homes," the US District Attorney exclaimed. Disgustingly, Mr Woods had previously written to TARP regulators describing Mainstreet as a small community bank and saying the funds "will provide vitally needed infusions to a bleeding patient." As The BBC reports, his wrongdoing was uncovered when regulators began examining how the money was used - which has so far uncovered 140 cases of misused funds...

 
Tyler Durden's picture

Gold Markets Get Strange – Is Economic Danger Near?





Traditionally, metals markets are supposed to be a solid fundamental signal of the physical and psychological health of our overall economy. Steady but uneventful commodities trade meant a generally healthy industrial base and consumption base. An extreme devaluation was a signal of deflation in consumer demand and a flight to currencies. Extreme price hikes meant a flight from normal assets and currencies in the wake of possible hyperinflation. This is how gold and silver markets were originally designed to function – however, welcome you to the wacky world of 2013, where bad financial news is met with the cheers of investors who believe stimulus will last forever, where foreign investors dump the U.S. dollar in bilateral trade while mainstream dupes argue that the Greenback is invincible, and where everyone and their uncle seems to be buying precious metals yet the official market value continues to plunge. The reason our entire fiscal system now operates in a backwards manner is due to one simple truth - every major indicator of our economy today is manipulated by our central bank...

 
testosteronepit's picture

The Verdict Is In: “The Banking Lobby Is Simply Too Strong To Allow It To Happen”





Last week: “A culture of dangerous greed and excessive risk-taking has taken root in the banking world.” Now: a quixotic moment for those senators from both sides of the aisle

 
Tyler Durden's picture

Frontrunning: July 19





  • Detroit ‘Gut Kick’ Poses New Test for Long Suffering City (BBG)
  • Florida lawmakers urge overhaul of 'Stand Your Ground' law (Reuters)
  • Investors pour huge sums into US equity funds (FT)
  • Snowden Standoff Threatens Obama-Putin Moscow Summit (BBG)
  • China, U.S. companies' great hope, now a drag (Reuters)
  • Morgan Stanley stock traders rebuild burned bridges (Reuters)
  • Huawei spied for China, claims ex-CIA head Michael Hayden (FT)
  • Gorilla Flipping Homes as Rebound Revives Rapid Trades (BBG)
  • BRICS joint action at G20 summit may be wishful thinking (Reuters)
 
Tyler Durden's picture

The Fed Is The Problem, Not The Solution: The Complete Walk-Through





"Perhaps the success that central bankers had in preventing the collapse of the financial system after the crisis secured them the public's trust to go further into the deeper waters of quantitative easing. Could success at rescuing the banks have also mislead some central bankers into thinking they had the Midas touch? So a combination of public confidence, tinged with central-banker hubris could explain the foray into quantitative easing. Yet this too seems only a partial explanation. For few amongst the lay public were happy that the bankers were rescued, and many on Main Street did not understand why the financial system had to be saved when their own employers were laying off workers or closing down." - Raghuram Rajan

 
Tyler Durden's picture

Guest Post: The Deflationist Error





Many people believe there is a significant risk that the Irving Fisher debt-deflation theory of great depressions is still an economic threat today. They overlook the fact that Fisher published his theory examining debt-deflation events under a gold standard, which does not apply today. Financial credit contractions therefore take a different appearance. It is indicative of our economic biases that we completely overlook the differences between the sound money of 1929/30 and the infinitely expandable money of 2008/09. We make this error because today’s economists lead us astray with a fundamental belief that the state through monetary intervention can fix everything. Even though today’s economists are a broad church they follow beliefs instead of well-reasoned economic theory. Beliefs are better left to clerics.

 
Tyler Durden's picture

The Toxic Feedback Loop: Emerging <-> Money <-> Developed Markets





Extreme Developed Market (DM) monetary policy (read The Fed) has floated more than just US equity boats in the last few years. Foreign non-bank investors poured $1.1 trillion into Emerging Market (EM) debt between 2010 and 2012 as free money enabled massive carry trades and rehypothecation (with emerging Europe and Latam receiving the most flows and thus most vulnerable). Supply of cheap USD beget demand of EM (yieldy) debt which created a supply pull for EM corporate debt which is now causing major indigestion as the demand has almost instantly dried up due to Bernanke's promise to take the punchbowl away. From massive dislocations in USD- versus Peso-denominated Chilean bonds to spiking money-market rates in EM funds, the impact (and abruptness) of these colossal outflows has already hit ETFs and now there are signs that the carnage is leaking back into money-market funds (and implicitly that EM credit creation will crunch hurting growth) as their reaching for yield as European stress 'abated' brings back memories of breaking-the-buck and Lehman and as Goldman notes below, potentially "poses systemic risk to the financial system."

 
Sprott Group's picture

The Dijssel-Bomb





This past March, Jeroen Dijsselbloem, the head of the finance ministers of the eurozone, shocked the markets with seemingly off-the-cuff comments suggesting that the Cyprus banking solution will, “serve as a model for dealing with future banking crises.1 Depositors across Europe took a collective gasp of horror – could banks possibly confiscate depositors’ funds in a form of daylight robbery? Indeed they could, and last week the Bank for International Settlements (“BIS”), the Central Bank's Central Bank, published what we have referred to as ‘the template’; a blueprint outlining the steps to handle the failure of a major bank and the conditions to be met before ‘bailing-in’ deposits.

 
Bruce Krasting's picture

What's a Fannie Worth?





The market is having a difficult time trying to figure out what Fannie is worth these days.

 
Tyler Durden's picture

Thought Experiment: Why Do We Bother Paying Personal Taxes?





Since Mr. Krugman tells us all this spending and debt issuance/guarantees are not only good and necessary but in the long run, painless, why are we bothering with personal income taxes?
 
The US government will collect approximately $2.0bn this year in Personal Income and Payroll taxes.  But why?  Why are we even bothering with this when today’s leading economists and politicians are telling us that debts/deficits don’t matter and running up astronomical debts is a long-term painless process?  It’s practically patriotic.  So why shouldn’t we just add our tax burden to the list of items the Fed should be monetizing?  Seriously.  Why not relieve the burden on every tax paying citizen in the United States (about 53% of us according to Mitt Romney)?  You want an economic recovery?  Reduce my taxes to zero and see how fast I go out and start spending some of that extra income.

 
Tyler Durden's picture

Dudley Terrified By "Over-Reaction" To QE End, Says Fed Could Do "More Or Less" QE





Up until today, the narrative was one trying to explain how a soaring dollar was bullish for stocks. Until moments ago, when Bill Dudley spoke and managed to send not only the dollar lower, but the Dow Jones to a new high of 15,400 with the following soundbites.

  • DUDLEY: FED MAY NEED TO RETHINK BALANCE SHEET PATH, COMPOSITION
  • DUDLEY SAYS FISCAL DRAG TO U.S. ECONOMY IS `SIGNIFICANT'
  • DUDLEY: FED MAY AVOID SELLING MBS IN EARLY STAGE OF EXIT
  • DUDLEY: IMPORTANT TO SEE HOW WELL ECONOMY WEATHERS FISCAL DRAG
  • DUDLEY SAYS HE CAN'T BE SURE IF NEXT QE MOVE WILL BE UP OR DOWN

And the punchline:

  • DUDLEY SEES RISK INVESTORS COULD OVER-REACT TO 'NORMALIZATION'

Translated: the Fed will never do anything that could send stocks lower - like end QE - ever again, but for those confused here is a simpler translation: Moar.

 
Tyler Durden's picture

Guest Post: The Empire's Next Effort To Extract Your Wealth





Since before the tech bust, we’ve been suggesting that while Americans “think” they’re getting richer... they’re actually heading in the other direction. They’re getting poorer. This proposition has been easier for folks to entertain since housing busted and the financial crisis reversed the “wealth effect” in 2008. With that in mind, let’s take a look at the logic of the American Empire and what you can expect in the year(s) ahead.

 
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