Is Battling Deflation the New 'New Thing' Again? [View article]
Credit rating gets downgraded, interest rates plunge, and Bernanke gets fresh political cover for further measures to stick the iron boot deeper into the throats of the world's savers and creditors...
Oh Fate, why must you make it so easy for the Dark Lord?
Turning to trading, Stan Druckenmiller says it's "complete nonsense" to believe low Treasury yields reflect a market copacetic with the state of government finances. "The market isn't saying anything about the future. It's saying there's a phony buyer (the Fed's QE) of $19 billion of Treasurys a week." Druckenmiller is long Treasurys. [View news story]
Copacetic –adjective Slang . fine; completely satisfactory; OK.
Silver Sell Off Hitting Historic Levels [View article]
More specifically, ProShares UltraShort Silver (ZSL) went from $13.03 at last week's close to $24.34 at Thursday's close and $23.11 at this week's close. That's a 86.8% gain in 4 days and 77.4% gain for the week. Yes, it was a great week for silver bears to be greedy.
Silver Sell Off Hitting Historic Levels [View article]
About the original article... I don't think spot silver has closed yet today. But SLV has dropped by 27.56% since it's close last Friday. That would put this 4-day decline at #5 on author's list (yes, yes, I know SLV vs. spot silver isn't a completely fair comparison).
Silver Sell Off Hitting Historic Levels [View article]
Looking at that table.... The surprising thing is not the historic plunge in silver this week, but rather the fact that there were several even steeper drops in the past. I think it brings into perspective just how crazy 1980 was.
Some Questions for Bernanke's Critics [View article]
While naturally low rates are certainly not as bad as artificially low rates, this is not to say to say that naturally low rates don't have some nasty consequences. Low rates, artificial or not, bail out people who like to spend to infinity with no regard for the consequences, while punishing those who deserve it least. In a world without corruption, I'd even recommend governments intentionally undertax their citizens so as to run a (moderate) deficit and thus boost interest rates.
Look, this isn't just about economics; it's about the difference between justice and injustice, between right and wrong. Interest rates are the voice of the of the truly little guys against the truly powerful...
- of the taxpaying renter making $15K/year against the "poor, poor" homeowners on the next block who make $250K/year and get to write off every penny - of the retiree living off his life savings, against the endless greed of a government that never satisfied by it's existing income, always seeks to borrow more and then free-ride off inflation - of the people who seek the rightful fruits of 20 years of hard work and living within their means, against those who want the same reward for 20 minutes of lying on a mortgage application.
When Ben Bernanke, the leader of America's central bank, deliberately and publicly tries to drive rates as low as possible, it isn't just an economic failure. Far more importantly, it's a moral failure.
Some Questions for Bernanke's Critics [View article]
Indeed, it is theoretically possible to have naturally low interest rates, and in such a case, asset bubbles would be less likely to form (because of lack of leveraging) and less painful when they burst (because of the savings). But that is not the case with developed economies today, especially America. Here we have interest rates that are artificially being held down by the central bank, despite debt levels at post-WW2 highs and improved but still pathetic saving rates from the public.
Fed Open Market Committee: Eyes were on inflation, but no surprises here: Longer-term inflation expectations are "stable," underlying measures are "subdued." Commodities pricing effects still "transitory"; near-zero rates maintained and will be for "extended period"; QE2 to end on schedule in June; unanimous vote. [View news story]
I see... Well, this was the most probable outcome. Maybe they'll follow the script from last time: Let QE expire as scheduled, raise false hopes of rate increases, then crush them with a fresh round of QE. I doubt it will be identical though, that would make them too predictable... Maybe this time, they'll bring the fist down much harder when they announce QE 3.
If, as some people fear, there is a budget and debt ceiling stalemate that leads to a government shutdown, panic selling of Treasuries and a new financial crisis, the happiest man on earth will be Ben Bernanke. All he'll have to do then is sit around and do nothing for a month or two while the financial world burns and the Dow plunges several thousand points, and then go to a cowed and compliant Congress asking for "temporary" emergency powers to deal the crisis. He could then unleash a devastating new round of super-QE that results in the Fed controlling 50%+ of the Treasury market... Now I think this scenario is far more likely to not happen then happen; many dominoes that even the Fed can't control would have to fall in just the right way. But it's something I'm keeping in mind as Bernanke's plan A+.
Some Questions for Bernanke's Critics [View article]
Well this may apply to some of Bernanke's critics, but certainly not all of them. I for instance don't claim that the Fed's easy money policies are the only reason for commodity inflation. When I hear flame wars get started along the lines of...
A: "Soaring gas prices are caused by the Fed's dollar debasement." B: "No you idiot! It's because of growing demand from China." C: "Morons! It's caused by the craziness going on in the Middle East." --- Flame, flame, flame ---
... I shake my head. Of course, effects can have multiple causes; I have no problem with that, and it's unfortunate that some people do. But what I do claim is this: Easy money from the Fed is a major reason for rising commodity prices, and the existence of other major reasons doesn't detract from that.
As to the dollar foreign exchange rate issue, it's actually not something I comment on much. It's not one of my main reasons for opposing Bernanke.
On that last point about a permanent underclass... I'd argue that the Fed's policies actually contribute to that. Low interest rates reward laziness, incompetence and outright fraud while punishing hardworking, responsible people who live within their means. Low rates encourage businesses to leverage themselves into myopic, poorly thought out decisions, while discouraging them from building the capital needed for long-term growth and stability, and reducing the hiring that comes from that. Finally, low rates cut off income to savings accounts, a financial product that (unlike stocks, bonds or commodities) is held by 75%+ of the population. Even using the official CPI, which I'd argue vastly understates inflation, Americans are losing more than $200 billion/year due to negative real rates on savings accounts, CDs and money markets; and that's before taxes. I hold Bernanke responsible for making it harder for people to build the solid foundation of savings needed to pull themselves out of said underclass.
And one more thing: The Fed's actions since 2008 have helped push another underclass even deeper into the ground. I'm talking about a group that is far larger than the 9% of the working-age population that shows up in the official unemployment reports, and yet hardly ever shows up in the media's human interest stories. I'm talking about a group that despite often being taxed to the brink of poverty or beyond, is openly and blatantly treated by the government as its lowest priority. I'm talking about long-term renters. In its first round of QE, the Fed printed $1.25 trillion to buy mortgage-backed securities. Both rounds of QE were explicitly intended in part to keep mortgage rates low and housing prices up. Bernanke himself has repeatedly and publicly admitted that housing inflation is one of his main goals. By propping up housing prices, the Fed has prevented rent prices from dropping as much as they otherwise would have, robbing renters of a rare opportunity to lift themselves off the ground that Washington seems to so enjoy pounding them into.
Also, for the record, I fully support abortion rights. Their disrespect and paternalism towards women, as well as their sometimes medieval attitudes towards science, are major reasons I'm generally reluctant to vote for Republicans, even if their occasional opposition to Bernanke perks my ears.
Is Battling Deflation the New 'New Thing' Again? [View article]
Oh Fate, why must you make it so easy for the Dark Lord?
Housing Double-Dip Surprises Economists Again [View article]
Turning to trading, Stan Druckenmiller says it's "complete nonsense" to believe low Treasury yields reflect a market copacetic with the state of government finances. "The market isn't saying anything about the future. It's saying there's a phony buyer (the Fed's QE) of $19 billion of Treasurys a week." Druckenmiller is long Treasurys.
[View news story]
–adjective Slang .
fine; completely satisfactory; OK.
Heh, learn something new every day.
Housing Double-Dip Surprises Economists Again [View article]
Housing Double-Dip Surprises Economists Again [View article]
What do you mean by that?
Silver Sell Off Hitting Historic Levels [View article]
Silver Sell Off Hitting Historic Levels [View article]
Silver Sell Off Hitting Historic Levels [View article]
Silver Sell Off Hitting Historic Levels [View article]
Silver Enters Bear Market [View article]
@punkandy26 Actually, I'd say silver took the elevator up and the window down.
Silver Sell Off Hitting Historic Levels [View article]
Some Questions for Bernanke's Critics [View article]
Look, this isn't just about economics; it's about the difference between justice and injustice, between right and wrong. Interest rates are the voice of the of the truly little guys against the truly powerful...
- of the taxpaying renter making $15K/year against the "poor, poor" homeowners on the next block who make $250K/year and get to write off every penny
- of the retiree living off his life savings, against the endless greed of a government that never satisfied by it's existing income, always seeks to borrow more and then free-ride off inflation
- of the people who seek the rightful fruits of 20 years of hard work and living within their means, against those who want the same reward for 20 minutes of lying on a mortgage application.
When Ben Bernanke, the leader of America's central bank, deliberately and publicly tries to drive rates as low as possible, it isn't just an economic failure. Far more importantly, it's a moral failure.
Some Questions for Bernanke's Critics [View article]
Fed Open Market Committee: Eyes were on inflation, but no surprises here: Longer-term inflation expectations are "stable," underlying measures are "subdued." Commodities pricing effects still "transitory"; near-zero rates maintained and will be for "extended period"; QE2 to end on schedule in June; unanimous vote. [View news story]
If, as some people fear, there is a budget and debt ceiling stalemate that leads to a government shutdown, panic selling of Treasuries and a new financial crisis, the happiest man on earth will be Ben Bernanke. All he'll have to do then is sit around and do nothing for a month or two while the financial world burns and the Dow plunges several thousand points, and then go to a cowed and compliant Congress asking for "temporary" emergency powers to deal the crisis. He could then unleash a devastating new round of super-QE that results in the Fed controlling 50%+ of the Treasury market... Now I think this scenario is far more likely to not happen then happen; many dominoes that even the Fed can't control would have to fall in just the right way. But it's something I'm keeping in mind as Bernanke's plan A+.
Some Questions for Bernanke's Critics [View article]
A: "Soaring gas prices are caused by the Fed's dollar debasement."
B: "No you idiot! It's because of growing demand from China."
C: "Morons! It's caused by the craziness going on in the Middle East."
--- Flame, flame, flame ---
... I shake my head. Of course, effects can have multiple causes; I have no problem with that, and it's unfortunate that some people do. But what I do claim is this: Easy money from the Fed is a major reason for rising commodity prices, and the existence of other major reasons doesn't detract from that.
As to the dollar foreign exchange rate issue, it's actually not something I comment on much. It's not one of my main reasons for opposing Bernanke.
On that last point about a permanent underclass... I'd argue that the Fed's policies actually contribute to that. Low interest rates reward laziness, incompetence and outright fraud while punishing hardworking, responsible people who live within their means. Low rates encourage businesses to leverage themselves into myopic, poorly thought out decisions, while discouraging them from building the capital needed for long-term growth and stability, and reducing the hiring that comes from that. Finally, low rates cut off income to savings accounts, a financial product that (unlike stocks, bonds or commodities) is held by 75%+ of the population. Even using the official CPI, which I'd argue vastly understates inflation, Americans are losing more than $200 billion/year due to negative real rates on savings accounts, CDs and money markets; and that's before taxes. I hold Bernanke responsible for making it harder for people to build the solid foundation of savings needed to pull themselves out of said underclass.
And one more thing: The Fed's actions since 2008 have helped push another underclass even deeper into the ground. I'm talking about a group that is far larger than the 9% of the working-age population that shows up in the official unemployment reports, and yet hardly ever shows up in the media's human interest stories. I'm talking about a group that despite often being taxed to the brink of poverty or beyond, is openly and blatantly treated by the government as its lowest priority. I'm talking about long-term renters. In its first round of QE, the Fed printed $1.25 trillion to buy mortgage-backed securities. Both rounds of QE were explicitly intended in part to keep mortgage rates low and housing prices up. Bernanke himself has repeatedly and publicly admitted that housing inflation is one of his main goals. By propping up housing prices, the Fed has prevented rent prices from dropping as much as they otherwise would have, robbing renters of a rare opportunity to lift themselves off the ground that Washington seems to so enjoy pounding them into.
Also, for the record, I fully support abortion rights. Their disrespect and paternalism towards women, as well as their sometimes medieval attitudes towards science, are major reasons I'm generally reluctant to vote for Republicans, even if their occasional opposition to Bernanke perks my ears.