KSengineer

How The Federal Reserve Is Monetizing Debt

How much agency debt remains out there? Is there more than enough to outlast the current economic trouble? If not, what happens when Ben has bought is all? Net imports have shrunk, sending fewer dollars overseas each month to fuel foreign investment in treasuries. Could this become a problem?

Just wondering.

51.68% in 165 Days

Was there a Goldman Sachs in 1929-1932 with a direct dollar pipeline to the Fed? Much of what we see today, IMO, is smoke and mirrors designed to make us feel good. In today's America, feeling good is more important than reality. Or, perhaps we believe feelings create reality.

Japan has languished because they refused to deal with their economic colapse according to reality. Aren't we doing exactly the same? Did the investors who created this mess lose their money? Not yet. But a lot of others have. Have the bad loans been dealt with? Not yet. And we all know it. What has happened is the Fed has pumped dollars into the "too-big-to-fail" companies (the one's who should of lost it all) and the government has handed money to it's citizens to "stimulate" things.

Oh yes, and the media has pumped persistently positive news to the citizens designed to change moods rather than report fact.

Bernanke thinks he has it figured out. That he can engineer a graceful recovery and save the world. I think he's convinced has a lot of new tricks up his sleave that will make it different this time. I'm just afraid that his power is still inferior to the market's even though he has a infinite number of dollars to play with.

And when the market decides to take over once again, look out below.

Why This Rally Will Continue

I believe this rally is mainly about the Fed pumping billions into the stock market to put a positive spin on market psychology. What about the realities of the market? The banks that brought this disaster upon us got off scott free. In fact, they're making billions now. How is it that we have escaped the consequences of the massive theft that took place the past few years?

There are no green shoots. The headline writers continue to write misleading headlines every single day. Many countries, in their back rooms, are plotting the demise of the dollar as the reserve currency. I guess we can push that problem into the future too (it's become the American way). The US debt is already increasing exponentially from severe lack of self control and all our leaders want to do is pile more and more costs on us as healthcare reform and save-the-plant initiatives (then lie about how it'll be cheaper in the future). I feel like I live in the Twilight Zone. Serious problems face the citizens of the US, but what we mostly get is marshmellow news.

What has happened to all the bad loans that caused this problem? Where are they? Who is taking the loss? If you believe the news, they must have simply disappeared. There's no word of them, no sign of them. Yet, forclosures continue to climb at an alarming rate. Perhaps bad loans are just one of those "lagging" indicators that don't factor into the future.

The US is self destructing and we're being lead down that path by the so-called smartest of our society. I've had enough of the brainiaks. Give me someone with common sense for a change. The Fed is in the process of creating another bubble by pushing the problems forward. However, the cost of doing that will be too great for us to bear when the time arrives.

Revenues Down, Profits Up: Is This a Problem?

"The very fact that profits rose, despite the fall in sales ..."

I'm pretty sure profits did NOT RISE. For the S&P 500, operating profits are expected to be down about 31% y/y. "As reported" profits will be much worse.

That statement is what's so amazing about the news reporting these past few months. How many times have I heard "green shoots" when what is being reported is a slowing rate of decline. In my garden, green shoots rise up. That is not the same as a slower decline. A month-over-month increase in housing sales would qualify. But the term has been used a million times.

I think the prevailing economic philosophy is that the economy is what people perceive it to be. So our perceptions have been tinkered with in hopes of creating a recovery out of it. Tinkering with the data by not reporting it or mis-characterizing a negative as something positive, is dishonest. Manipulating people is wrong.

My belief is that it will end up hurting people who trust what they read and hear from the main stream media. It will also hurt those trying to invest based on the facts (since the up-front, reported facts are very distorted).

Key Factors Driving the Market

Can someone explain this "sideline" money to me. Every time a stock is sold, an equal amount of money is exchanged. For every dollar going to the sidelines via a sale, a dollar must come from the sideline via a purchase.

I can understand money flowing from bonds to stocks, or cash being added to workers 401k's each month or companies purchasing their own stock.

What am I missing? What is meant by "sideline" money?

On Jul 23 09:08 AM Roger Knights wrote:

> Don't forget money on the sidelines as a driver.

Why It's Actually Different This Time

My, you're obviously one of those tollerant liberals ... "Throw the beggars that don't think like me in jail!" People like you are dangerous to democracy. Unfortunately, the government is full of your type right now.


On Mar 12 09:06 AM Oquichtli wrote:

> Pathetic fear mongering. You should be punished to the for spouting
> such fear. I know, fear sells papers and gets fools to read pathetic
> blogs like yours. Why don't you inform the dumb masses how to profit
> in this environment(i.e. highly volatile markets make fortunes for
> options trading) instead of scaring the hell out of their weak minds?
> Oh I know why, you are protecting the business agenda of the masters
> who own you. Just like that fool Ron Paul. Trying to scare the zombie
> sheep. You all should be put to justice.

What Happened to Demand?

Excellent article that hits the nail on the head. It also implies the solution. Since credit created this problem, creating more credit is obviously (or should be obvious) not the solution. We must return to a lower, safer level of credit. Therefore, we must recede, regress (recess). I think we should focus on accepting this recession as a good thing that will return our economy to a stronger, healthier level which will bring a better future. Rather than trying to reverse it's effects, we should focus on programs to help us get through this without destroying the innocent.

Wall Street Breakfast: Must-Know News

"Bernanke suggests need for new regulatory approach"

II have a sneaky suspicion that if Fanny and Freddie would have held their standards at the expected level all along, our current problems would be much smaller and confined to the private sector where the risk/reward equation could be working it’s magic without bringing the entire system down.

What I mean is if Fanny and Freddie would not have purchased those innovative investments, like CDO’s, which contained non-conforming loans and would have limited themselves to purchasing investment paper that conformed to the same risk level as CONFORMING loans are supposed to represent, my guess is this contagion would have been greatly limited. But they set the tone by purchasing high risk investments.

So, it seems to me we already have the regulations in place. What we don’t have is the discipline to live by them. The government set the bad example and now they want to regulate more. Someone needs to bring some sanity to the system. Unfortunately, I don’t’ have much hope that will ever happen since greed and self-interest is carrying the day in the USA.

Bullish Sentiment Trend Continues Lower

Someone please explain how this chart tells us when to buy or sell. I cannot see a correlation between the bullish sentiment trend and a low or high in the S&P500, at least for a medium or long term trend.