Carlos Lam

Goldman mega call: No Fed rate hikes until 2012.

They're right. Chmn. Bernanke's career is a testament to the fear of "deflation." He will continue to run the printing presses at full speed until his bogeyman fades. Moreover, the market is now addicted to ZIRP. What would happen to mortgage rates, gov't debt rates, and politicians' re-election chances if the Fed raised rates NOW?

Trade Deficit, New Home Tax Credit and Easy Fed Policies Threaten Double Dip Recession

"When the tax credits and Federal Reserve subsidies are withdrawn as planned in 2010, home prices could plummet again, and a downdraft in consumer spending and residential construction could result."

The author makes one critical mistake: the tax credits and Fed action WILL NOT be withdrawn. The tremendous debt overhang (household debt is at 100%+ of GDP) means that consumers are hamstrung in their ability to borrow and spend. Indeed, consumers are paying down their debt.

The feds and The Fed are so frightened by this turn of events that they will continue to borrow, print, and spend money at every turn. Indeed, when the new homeowner's tax credit was going to end, Sen. Johnny Isakkson ("Republican" - GA) pushed for its extension, which passed Congress. Instead of not borrowing money to fund the TARP, Pres. Obama now wants to borrow money that "was not used" to fund a jobs program. In short, they will continue to "stimulate" because they have not allowed our debt to be liquidated.

Facing political pressure to abandon fair-value accounting for banks, FASB's chairman will call today for the "decoupling" of bank capital rules from normal accounting standards, so that regulators can adjust rules in realtime: "Handcuffing regulators to GAAP or distorting GAAP to always fit the needs of regulators is inconsistent with the different purposes of financial reporting and prudential regulation."

Translation: We won't treat banks like we do other companies.
Unsaid: Because banks have a lot of political muscle.
FASB = sellout

What's the Point of Bashing Bernanke?

Chmn. Bernanke has swelled the Fed's assets/level of base money, thereby depreciating the dollar. He assisted Sec'y Paulson in the potentially illegal sale of Merrill Lynch to BAC. He has used the Fed to support housing prices by the purchase of MBS-es, a job that is totally outside the Fed's purview. Finally, he has missed warning signs along the way--remember how he said that the sub-prime mess was "contained" within that sector?--that he should've spotted. The public is correct to call for his job; I just wonder who the 21% are that want the U.S. Senate to confirm him.

Mr. Bernanke Goes to Washington ... My Sympathies

On Dec 06 05:03 PM shemp2112 wrote:

> I think the author's point was more a shot at congress than support
> for Bernanke, and in that I totally agree with him. Neither of the
> preceeding commenters made a case for Bernanke's replacement, if
> you cannot provide a replacement then you are not qualified to judge
> Bernanke.

Given Chmn. Bernanke's reckless printing of currency, I can make a case that my three-year-old (who knows how to say "No" much more than Chmn. Bernanke) would be a better Fed Chair.

If I was President, I would nominate Walter Williams of George Mason University to head the Fed. He's eloquent (unlike Chmn. Bernanke), straight-forward, and--since he's in the twilight of his career--will be willing to make the tough decisions required of a Fed Chairman. Oh, and he's black, so it would put in a quandry those Senators who would vote against him because of his libertarian views.

Another potential nominee is Prof. Walter Block of Loyola University in New Orleans. He's an anarcho-capitalist, so he may not accept the nomination, but his spat with the Loyola administration has shown that he is willing to do the right thing even if the higher-ups disagree.

Gold: Expect a Technical Correction Before the Final Frontier

On Dec 07 09:24 PM Paul H. M. wrote:

> Also, as science advances, they will figure out how to produce gold
> in the lab.

I doubt it. Alchemists have been trying to create gold in the lab for thousands of years, all to no avail. The atomic properties of Au are VERY difficult to duplicate. Indeed, the cost of producing Au at the atomic level (even if possible) would dwarf the cost of mining it from the ground.

November Employment Numbers: Here's What's Wrong

"And finally, readers should note that this had nothing to do with BLS bias, manipulating the numbers, or creating "phantom jobs" on demand for President Obama."

This is a good article, and you are correct that the survey approach appears to have its problems. Nevertheless, you cannot categorically dismiss the possibility of bias or manipulation from the Executive Branch. Remember:

* the BLS employees are part of the Executive Branch, and their budget is determined by the White House Office of Mgmt & Budget, so the BLS has an apparent incentive to please the White House.

* Presidents have interfered before when stats aren't to their liking. Both John Williams of Shadowstats.com and John Michael Greer of the Energy Bulletin have detailed how Pres. Lyndon Johnson would send GDP figures back to the Commerce Dep't until the department got the "right" figure.

Simply put, you believe the chance of bias or "massaging" of data is non-existent. It may be low or even very low, but a categorical denial of the possibility is irrational.

Gold: Expect a Technical Correction Before the Final Frontier

Thanks, Dian. The Fed keeps churning out worthless paper. 'Nuf said.

Though there's speculation that the Fed will raise rates in H1-2010, I don't buy it. Look at Chmn. Bernanke's academic and Fed career. He has always advocated and erred on the side of easy money, whether it be as a professor at Stanford, as a member of Greenspan's BoG, or as Fed Chairman.

Chmn. Bernanke's pet theory as an academic--expounded in a June 1983 edition of the American Economic Review--is that banks curtail lending "too much" during economic downturns, which further depresses aggregate demand. This somewhat explains his desire to shovel as much cash as possible into the banks, though not his policy of paying interest on the banks' reserves. As part of the Greenspan Fed, Chmn. Bernanke voted to to leave rates low for way too long, a consequence of which was the housing bubble. And, need I point out, that it is Chmn. Bernanke who has lowered interest rates to zero. Simply, put Chmn. Bernanke will not tighten until he is forced to do so, and I'm sure a lot of kicking and screaming will accompany such an act.

Government Payroll Data Is Good, TrimTabs Begs to Differ

Of course the BLS figures are way off. Their methods are archaic and inaccurate.

One data point that should concern us all is the level of long-term (more than 6 months) unemployment. When somebody is out of work for 6 months or longer, their skills dull and they become out of touch with their field. This means that they are not as efficient or effective in their chosen field.

Commerical Paper's Outstanding Contraction

Interesting data. This seems to show that there are (a) fewer firms issuing CP because they're hoarding cash and/or (b) fewer firms issuing CP because they've gone out of business. Either way, seems like firms are playing it pretty conservatively with respect to raising credit.

Latest BLS Stats: Bah, Humbug

I trust TrimTabs' numbers much more than the foolishness coming out of the BLS. I like the fact that they use real-time tax deposit data. I don't think there's some sort of conspiracy at the BLS; I just think their methods are asinine. The TrimTabs data showed a loss of 255K, which makes much more sense with the initial claims, ISM, and Business Roundtable Survey data.

Analysts React to Surprisingly Good BLS Report

On Dec 04 07:53 PM Soh Roneri wrote:

> Oh no! It's lies. All lies. That communist Obama is fooling around
> with the numbers.

First, Obama's no communist. If anything, he's proven himself to be a corporatist in the mold of George W. Bush.

Second, your comment totally ignores the divergence between the BLS figures and (a) ADP, (b) ISM, (c) Business Roundtable surveys. Simply put, there IS something fishy about the report, and maybe we'll get one of the famous "revisions" in a few months. If you want to go long with leverage, have at it. I will not be doing so.

Finally, An Encouraging Jobs Report

On Dec 04 10:42 AM Mr. Big wrote:

> Yes, I agree with Jeff. This jobs report is a little odd......considering
> the following:

All your points re: the oddness of the BLS report are correct. The divergence between the BLS figure and ADP is on the magnitude of 1400%! Moreover, the participation rate dropped as well, as people withdrew from the labor market.

Two figures of the report are interesting:

* Avg hrs worked by product'n workers rose to 33.2 (SA) & 33.5 (NSA). We need to see if these figures keep rising.

* Avg weekly overtime rose to 3.4 (SA) & 3.6 (NSA). Again, let's see if these figures keep on an uptrend.

What's Going to Happen to the Rest of the IMF Gold?

What a difference a few months makes! When news that the IMF was going to sell some of its gold began percolating, the gold bears were trumpeting how the sale would depress the price of gold. Then, when India scooped up the 200 tons, the price actually increased because it showed central bank BUYING as opposed to selling, which occurred during the earlier part of this decade.

Gold still has room to run. First, as stated above, central banks are becoming buyers, not sellers. Second, gold production has actually declined since 2001, even as gold's price has been marching upward during the decade, which means that supply will be constrained. Third, central banks continue to churn out fiat currency, which means that things with intrinsic value (commodities) will require more fiat currency each to purchase. Fourth, gold producers (like Barrick Gold) are eliminating their hedgebooks, which shows that the insiders have confidence that the spot price will be trending upward. Finally, the general public has very little of its assets in gold; if and when the middle class in the West begins to pile into gold, a mania will develop that will drive the price higher.

Mr. Bernanke Goes to Washington ... My Sympathies

I totally disagree with the author. Not only has Chmn. Bernanke proven himself to be incompetent, he is a true believer in Keynesian and Monetarist policies and is using his power to debase the currency.

First, Chmn. Bernanke was part of Chmn. Greenspan's Board when the real estate bubble was blown up; he helped create the problem. Then, in March '07, he announced that the problems in subprime had been contained. In July '08, he told us that Fannie and Freddie were "adequately capitalized." Every step of the way, Chmn. Bernanke has been wrong.

There's also the fact that Chmn. Bernanke has used the printing press to increase the Fed's balance sheet, which is now over $2 TRILLION. His solution has been to throw fiat money at a problem when in reality debt MUST be liquidated before we can have true, organic growth. In the 1980s, Nike commercials featuring Bo Jackson stated, "Bo knows football." The Fed's movie theater commercials should say, "Ben knows printing."

I, for one, am glad that Congress has finally woken up and is (maybe) exercising more oversight over monetary policy. In a free society, there is nothing wrong with the Fed being more transparent.