The Federal Reserve has pulled out all the stops since 2008. They’ve used every extreme method to keep the oligarchs fat, happy and rich. The Fed helicopters have been flying over Wall Street for the last five years dropping $3 trillion of fiat and scooping up trillions of toxic assets. It has failed. The country is in far worse shape today than it was in 2008. The American people are $6.5 trillion more in debt, paying twice as much for gasoline, with 7 million more people on foodstamps. More people have left the workforce than have gotten jobs. But the.1% have done splendidly, which was the Fed plan all along. But now the unintended consequences have arrived. Currency wars and inflation in emerging markets are going to bring the mountain of debt tumbling down. The secular bear market that began in 2000 will resume. There is a 50% fall on the horizon. Janet Yellen is the dupe. She just doesn’t know it yet. Richard Russell knows.
Via King World News
“The bear market that started in October of 2007 continued through 2008, but at the 2009 lows the Fed intervened with all the ammunition at its command, and halted the bear market.
What we’re seeing now is the primary trend overpowering the Federal Reserve. We’re now seeing the resumption of the bear market that was interrupted at the 2009 lows. All bear markets are international in scope. Thus the primary bear trend that we’re now in will affect everything on the planet. Already we hear reports of a slump in China’s manufacturing. When new Fed Chairwoman Janet Yellen takes command, she will have to open the spigots wide in an effort to halt de-leveraging and deflation.
Interestingly, fiat currencies around the world are sinking. There’s only one currency that represents safety, and that currency is gold. Which, by the way, is higher today. I expect to see further semi-crash action in the days ahead, as the primary bear market resumes. I think investors will remain hopeful as long as this decline remains this side of 10%. But if the decline surpasses 10%, I believe we will see panic action as investors realize that this is not a correction, but a bear market.” – Richard Russell
Gallup’s daily tracking of America’s Economic Confidence took a 10-point hit just from the slight dip in the stock market last week (see here).
They also had another poll that seemed to suggest most people don’t even know who Bernanke is, so I doubt the vast majority of Americans know who Yellen is, either.
When the bear market takes over, a whole lot of people are going to wonder what on earth happened. They won’t have any clue.
“But the.1% have done splendidly, which was the Fed plan all along.”
I’m thinking that the banks were by-product beneficiaries. This was a bid to bail out pension funds.
We should really feel sorry for the bankers.
Bob
Millionaire UBS CEO Wants Everyone To Stop Picking On Banks For Being Unethical
By Mary Beth Quirk January 27, 2014
(twicepix)
(twicepix)
Listen, you guys. We know it makes you feel better to pick on banks for all those ethically dicey financial things like manipulating interest rates and making other questionable decisions. But the CEO of UBS wants you to cut it out, because while sticks and stones may break his bones, words will never hurt him. Sniff. Sniff.
Europe has been in the midst of a financial crisis for some time now and as such, banks are hearing a whole lot of frustrations from the public and investors. But apparently banks have been just biting their tongues and taking it. Until now.
Sergio Ermotti is the head of UBS and it sounds like his feelings have been hurt by all bank-bashing going on, reports the Wall Street Journal.
“Life is hard enough, and I think this constant lecturing on ethics and on integrity by many stakeholders is probably the most frustrating part of the equation. Because I don’t think there are many people who are perfect,” Ermotti said in an interview at the World Economic Forum in Davos, Switzerland. “We are far from being perfect…but it’s not going to be very helpful to be constantly bashing banks.”
Wow, all I can say is wow, what a disconnected, clueless criminal fuck.
Link to whole article:
http://online.wsj.com/news/articles/SB10001424052702303277704579344221997427410?mod=WSJ_hp_LEFTWhatsNewsCollection
In A Typhoon, Even Pigs Can Fly (For A While)
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Here’s the global financial crisis in a nutshell: access to easy credit can solve a temporary liquidity problem, but it can’t increase the value of collateral or generate income.
The Chinese culture has a wonderful vocabulary of colorful analogies and metaphors, and today’s title refers to the typhoon of liquidity (freely available credit) that has flooded the global economy for the past five years.
The source of the phrase is Liu Chuanzhi, the Chairman of Lenovo and the iconic figure of Chinese manufacturing. When asked a few years ago why 60% of Lenovo Group’s profit came from asset investment and only 40% came from manufacturing. He said “when the typhoons come, even a pig can fly in the sky. Everybody is profiteering from this. Why can’t we?”
The typhoon in this case is China’s credit/liquidity-driven real estate speculative frenzy, in which the only losers are those who don’t borrow to the hilt in the shadow banking system and buy, buy, buy empty flats in vacant buildings.
The critical distinction to make about typhoons of credit-driven speculation (in China, Japan, the U.S., Europe, etc.) is between liquidity and valuation.
Let’s take a household as an example to explain the difference. Say the household owns a $300,000 house with a $150,000 mortgage. The household has home equity of $150,000.
Let’s say one of the household loses their job and the sole remaining income is not enough to pay the monthly bills. This is a liquidity crisis. The household could borrow money based on the collateral of the home equity to tide them over until the second worker finds a new job.
A valuation crisis is different: let’s say the household decides to sell the house and discovers the market value is only $150,000–the same as the mortgage. After deducting the real estate transaction costs, the household has negative equity. So instead, the owners claim the house is worth $250,000 and try to get a home equity line of credit to solve their income/liquidity crisis.
Here’s the global financial crisis in a nutshell: access to easy credit can solve a temporary liquidity problem, but it can’t increase the value of collateral or generate income. The owner can misrepresent the value of the asset to borrow money based on phantom collateral, but that doesn’t change the market value of the underlying asset or increase the income needed to make loan payments.
Simply put, credit/liquidity cannot solve valuation/collateral crises. Correspondent J.B. recently addressed this issue:
“RE: accounting and real life. Sometimes they differ but over the long run they always synch up. For instance let’s say a bank has a lot of quality assets but a liquidity issue. It will take that good paper to the Fed to get liquidity for the bank to get through the hard time (no write down required and it works out). On the other hand if the bank has a bunch of bad assets, it now has a solvency issue and not a liquidity issue (i.e. not marking to market does not agree with reality). Sure if CRE goes bad it can postpone marking it to market for a while but soon it has no cashflow and accounting does not matter because it cannot pay its bills, payroll or redeem demand deposits. The failure to properly mark assets to market will not save it and ultimately accounting and reality will re-synch.”
The world’s central banks and governments have tried for the past five years to fix a valuation/collateral/income crisis with liquidity. No wonder they’ve failed–enabling insolvent owners to borrow more money doesn’t make the borrowers any less insolvent.
Once the liquidity typhoon dies down, the insolvent pigs will plummet back to earth. That’s what we’re seeing in the periphery economies and shadow banking systems around the world.
The Fed did not stop the bear market in 2009, in my view.
Like EVERY other market there is, it got way oversold, made a new low as the momentum of decline was waning, and exhibited a V-shaped rally.
I simply don’t find credible the notion that a group of smug central bankers can get everyone lathered up about stocks. I think the predisposition to getting lathered up has to occur FIRST, and then when all the party-goers belly up to the bar, the Fed slips some crystal meth into their Scotch-and-soda.
And not to be a broken record, but the Fed almost entirely “printed” IOU-dollars, not paper money itself. It helped flood the world (again) with promises to deliver dollars, which people equate to dollars, which they equate to money.
At the end of the day, it is value production that matters. This FDR/Nixonian/Reagan-Bush-Clinton-Bush-Obama orgy of debt creation simply placed more claims on the ability to produce value, debasing all prior claims.
It remains my belief that prices in the marketplace are being propped up by both paper money (small amount) and “I Owe You-money” (VAST amount) and that prices will collapse along with the value of those promises (bonds).
Only after the ocean of IOU-money is drained will prices bottom and the Ruling Clowns decide to reflate the money supply by printing actual greenback cash and embark on the Zimbabwe Option.
If all this occurs then at that point one might find a golden anchor or oceanfront property to tie onto to ride out the ensuing typhoon.
What happens when the Fed “opens the monetary spigots” and bonds/stocks/RE still continue to collapse?
What are they “collapsing” against?
England has had a central bank since the 1600’s. Why, if central banks actually CAN keep things moving up on just their say-so, does not the UK have a 400 year history of uninterrupted bull market?
The biggest bubble in existence today is the erroneous belief in the power of the Fed.
“We are far from being perfect…but it’s not going to be very helpful to be constantly bashing banks.” ~Ermotti
I’m sure this infante terrible will feel much better after he gets home, kicks the dog, screws his mistress, downs a bottle of Dom P’erignon and pelts the hired help with Petit Fours.