Tag Archives: Ben Bernanke

Rasmussen: 81% of Americans are Paying More for Groceries

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What?!  Someone get the Bernanke on the line ASAP!  Apparently the remaining 19% of Americans work at TBTF banks and the Federal Reserve.  From Rasmussen:

Most adults continue to say they are paying more for groceries than they were a year ago, and they expect that amount to be even higher next year.

A new Rasmussen Reports national telephone survey finds that 81% of American Adults are paying more for groceries than they were a year ago, down from 86% in March but generally in line with previous findings. Just 12% say their grocery bills are no higher than they were last year. 

It’s interesting that even after adjusting for fake tuna and horse meat, prices are still climbing.  These Americans are clearly conspiracy theorists (if you want to know whether you are one or not click here), everyone knows there is no inflation and that Oceania has always been at war with Eastasia.

Full story here.

In Liberty,
Mike

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Godfrey Bloom of UKIP: Central Bankers Should be Arraigned as “War Criminals”

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Coming off the heels of a fantastic performance in recent local elections, the UKIP under the leadership of Nigel Farage continues to make waves in both the UK and the Continent itself. In this case, I refer to a recent powerful performance at the European Parliament courtesy of Godfrey Bloom (UKIP), member of the European Parliament.

For many years, I have stated that Ben Bernanke was and is committing crimes against humanity, and would one day stand trial much like the war criminals at Nuremberg. It appears I am no longer alone in echoing such sentiments, as Mr. Bloom has just done so before the European Parliament.

I once said that Nigel Farage is Category 5 political hurricane.  That hurricane has landed.


h/t to globaleconomicanalysis.blogspot.com for unearthing these gems.

 

Fed Statement is Laughable: The Precious Metals Consolidation is Over

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I haven’t written anything about the markets in a very long time due to the experience in extreme boredom that they have become as of late.  The election came and went and now that we are just ahead of the Holiday Season the apathy has hit monumental proportions.  More significantly, what was the point of doing anything ahead of today’s Fed meeting?  There wasn’t any and so nobody did.

Now that the announcement is out, I think in retrospect today will turn out to be a meaningful turning point.  Not so much because of what they said, but because of where certain markets are and because of what they didn’t say.  Let’s start with the latter point.

From the statement, we found out that the Fed is set to launch an unsterilized buying program of $85 billion per month ($40 billion in mortgage backed securities and $45 billion in treasuries).  This part was widely flagged already.  The more interesting part is the language in the text discussing how the Fed will essentially link their low rates to unemployment, with 6.5% being the threshold.

This is all within a text that attempts to portray a very benign and healthy economy, one described as having an improving labor market, a housing recovery and anchored inflation expectations.  Sounds pretty good to me; so then why accelerate the aggressiveness of their radical money printing policy?

The answer is that the Fed realizes its policies haven’t worked and are convinced they need to do more and more to prove an academic point that man is indeed more powerful than nature.  At first, they said a stock market rally would set a fire under the economy.  That hasn’t worked.  Then they said a new housing recovery would do it.  Once again, nein.  So now their answer is just print money like crazy and eventually it will work.  Yes, they are insane, but we already knew that didn’t we.

Actions always speak louder than words and their actions demonstrate a deep concern for the real economy and an unspoken understanding that things are not going well underneath the layers of propaganda.

Now onto the second point.  I think today will mark an important turning point in the markets not just because of what I wrote above, but because of where things stand.

Continue reading →

The Gun Has Been Fired: Precious Metals to Hit New Highs

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So I was dead wrong about what the Fed would do in the video blog that I put out last night.  I did not expect them to expand their balance sheet with asset prices as high as they are and the economy supposedly growing.  This is THE signal I have been waiting for (and the spark that I mentioned in my recent GoldMoney interview) to be sure that this latest rally in the precious metals is the real deal and that new highs are in the cards.

It doesn’t take long to realize how bullish this is for gold and silver.  Everyone I know has been waiting for new QE to really make serious changes and now we have it.  This action will lead to two questions being asked by investors.  First, if the economy is recovering why do this?  Second, if they are doing this now what do you think they will be forced to do when things get worse?

The elephants of capital will now move and the ground will start to shake.  The one asset class I think should suffer the most from this is credit.  Yield will not be en vogue in the inflation that is coming.

From the Fed statement:

If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. 

I always wondered what it would be like to trade in Zimbabwe.

 

 

Video Blog #2: What to Expect from the Fed Tomorrow

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Since nothing else moves the markets these days besides the utterances of insane Central Planners armed with printing presses, I figured it would be a good idea to preview tomorrow’s Fed decision.  I find the setup particularly interesting since the consensus seems to be expecting QE3 and I do not.  Have a watch!

Picture of the Day – Ponzi Rock!

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If you haven’t been to Arches National Park in Moab, Utah I highly suggest you put it on your list.  It is truly one of the most spectacular places I have been in the United States and I spent six weeks driving around the country in the summer of 2010.  That said, I suggest not coming in July when the average high is 100 degrees!

So in the park there is a structure called “Balanced Rock,” which is giant boulder that seemingly defies gravity.  In any event, the picture I took of it very much reminded me of the current state of the financial system.  Although, of course, this rock will still be standing far after Bernanke’s ponzi party has blown itself to smithereens.  Likely within 3-6 months after the U.S. Presidential election on November 6, if they can keep it going another three and a half months.  Hope you enjoy the photo!

Ponzi Rock

TWISTED

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Zealotry of either kind — the puritan’s need to regiment others or the victim’s passion for blaming everyone except himself — tends to produce a depressing civic stupidity. Each trait has about it the immobility of addiction. Victims become addicted to being victims:  they derive identity, innocence and a kind of devious power from sheer, defaulting helplessness. On the other side, the candlesnuffers of behavioral and political correctness enact their paradox, accomplishing intolerance in the name of tolerance, regimentation in the name of betterment.
- Lance Morrow

It is unclear how disarming law-abiding citizens would better protect them from the dangers and threats posed by those who would flout the law. It is at just such times that the constitutional right to self-defense is most precious and must be protected from government overreach.
- Rick Scott

TWISTED
In my email of two weeks ago I wrote the following:

Barring a market catastrophe in the next two weeks I do not expect the Fed to act at the June meeting.  With rates where they are and stocks where they are there is little upside to action; however, this lack of action is precisely what will set the stage for the massive action that must come later.

Well the Fed meeting came and went, and in my opinion, they did less than zero.  The extension of operation TWIST is the biggest non-event, nonsense move in the history of the Federal Reserve.  In fact, it does more harm than good on several fronts and it would have been smarter to have done nothing at all.  Most significantly, the fact that they felt the need to “do something” should tell you something.  With stock prices near their highs and the 10 year treasury at 1.60%, or just shy of record low yields, what is the rationale for any action?  The answer to this question of course is that many of the world’s economies have been in recession for much of the year and as I have said for weeks, publicly and privately, I believe the U.S. joined the recession club at some point in May of this year.  I think The Bernank understands this but dares not say it.  Just like he rambled on about how “there was no housing bubble” and that the “subprime crisis was contained” back in 2007/08 as the world tipped into financial implosion, he employs the same strategy today.  The core strategy at the moment, as I mentioned previously, is “talk up the economy, talk down printing and pray.”  While this is all well and good, the biggest problem that the Bernank now faces is that the financial markets are such a distorted hologram that all asset prices are vulnerable to flash crash type moves.  No one believes in their positions (other than people that hold hard assets like precious metals outside of the banking system and will not sell until the system is reset), rather investors and traders are forced to be involved in positions as a function of their mandates.  Their decisions are no longer driven by economic or business prospects but rather by some view on what the Central Planners of the world will do next.  The markets seem calm but there is a storm brewing beneath them and the pressure will be released one way or the other.  We are now in the crucial six week period between Fed meetings.  The reason I think this is such an important time is because not only will investors come to grips with the reality on the ground (recession) but it is also earnings season.  As I pointed out during the last earnings period, stocks that had even a whiff of weakness in their numbers or outlook were decimated.  Even names that had good results did not break out.  This sent a clear signal that too much goodness is priced into many shares out there.  Today we see a similar sign with Bed, Bath and Beyond.  Another high flier returns to earth…

Bed, Bath and Beyond Chart       

The Saudi Stimulus
In my recent piece titled Saudis Pump All Out as the Global Economy Crumbles, I outlined how the Obama administration and the Saudi government clearly came to an arrangement.  Bascically, the U.S. and other OECD nations would not release SPR (strategic petroleum reserves) oil in exchange for the Saudis pumping all out.  Of course, when faced with an SPR release the choice for the Saudis was pretty simple.  At least this way if prices are headed lower they can sell the volume.  I believe that with the Bernank terrified to act given the populist backlash (and rightly so) agaisnt the Federal Reserve, this was the “stimulus” that the administration agreed upon.  It was a very crafty move.  This is because 99% of investors out there have no idea what is really happening in the oil market and all of the geopolitical forces involved in the recent manufactured crash.  As a result, your average investor, and more importantly, your average computer algo just sees oil collapsing and thinks this will be some boost to the economy.  The following chart sums up this brain-dead trade perfectly.

Oil vs. the SPX

Disneyland Lives!
No ladies and gentlemen, oil is not falling from the sky like manna from heaven.  No ladies and gentlemen, the Bakken shale is not a global oil supply game changer.  Yes, the Saudis are purposefully crashing the price.  Yes, demand is plunging as the world economy tips into recession.  So where does this leave us?  In a very, very bad position.  First of all, just like all of the other “stimulus” this is a band-aid kick the can down the road move.  Sure the Saudis can live with low oil prices for a while, but certainly not forever as their population is young, restless and needs consistent payoffs.  Second, all of the new sources of supply are expensive, such as oil shale, oil sands and deepwater.  Projects will be canceled en masse at these prices.  Then, when the Central Planners of the world finally give in with the Big Print oil will skyrocket higher as confetti money meets supply declines and any economic recovery gets stopped dead in its tracks once again.  Also, what about the fact that oil shale has been one of the highlights of the U.S. economy over the last few years.  You think it is just a coincidence that North Dakota has the lowest unemployment rate in the United States at 3%?  Of course not.  The oil boom has been the one bright spot in this disaster financial ghetto economy we’ve got, and at $80 oil that doesn’t work.  The oil shale workers can sadly now join the ranks of Obama’s food stamp nation.  Oh and I’m sure green energy will really be stimulated at these prices!  Great work guys.  You are killing an entire nation to maintain your petty little power structure.  But it won’t work because we are in the Forth Turning, and when it all blows up, trust me, we will never forget who’s responsible.

Peace and wisdom,
Mike