Raleigh
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Diogenes – thank you for that very good article. I’ll have a better look at it tomorrow (out all day) and try to digest what it’s saying.
“…technical finance is well above my pay grade.” I know the feeling. Drowning in mumbo jumbo, acronyms. I swear they’re making this stuff up as they go along. Thank you.
Ilargi – “And sweet Jesus: “such deals accounted for one third of China’s money supply growth in 2013.”(!) See, now you have me wondering if the government wasn’t simply in on it too. Which might point to a pretty ordinary fight for money and power between Beijing and the shadow banks, something I’ve often said must be going on behind the scene given the size of the shadows.”
Copper, aluminum, iron ore, steel. And what about gold? I remember everybody saying China was buying all the gold. Hmmm, could it just be they were doing the same thing with gold?
What do you mean, Ilargi, when you say “now you have me wondering if the government wasn’t simply in on it too”? Do you mean members of government might have been profiting from this themselves, and that’s why they want to stop the shadow banks? Could you please explain. Thanks.
What schemes! Like having your own printing presses. No wonder they’re able to buy up expensive houses all over the world.
That article by Matt Stoller on Geithner, the “con-artist” is quite the piece too. Great read!
“Geithner is at heart a grifter, a petty con artist with the right manners and breeding to lie at the top echelons of American finance at a moment when the government and financial services industry needed someone to be the face of their multi-trillion dollar three card monte. He’s going to make his money, now that he’s done living his life of fantastic power after his upbringing of remarkable mysterious privilege. After reading this book and documenting lie after lie after lie, I’m convinced that there’s more here than just a self-serving corrupt official.”
Yes and yes.
Excellent writing, Ilargi.
This is an great article on Putin, written by an American woman who’s spent many years in Russia. Gives you a different perspective from the U.S. media spin.
Diogenes – yes, they will be screaming for the government to help them. And you’re right, knowledge does take “time” to accumulate. Before the crisis, before the rise in prices, about all I knew was how to stay out of debt and the concept of supply/demand. I was probably less trusting than most people about their government, but I had NO IDEA – none – that they were as much in bed with bankers/corporations as they are. That has come as somewhat of a shock.
Plus, the language of economics is like law, made so the average person can’t understand what the hell is going on (purposely so) without really wrapping his mind around it, and that is something most people don’t have the time to do. I mean, so much has gone down, so much fraud and corruption (which continues) – where do most people start? If you don’t really understand what’s happened, you’re a sicking duck for a politician to say, “Well, it was just one of those things, people got too greedy. It’ll all work out. But I’ve got your vote the next time, right? End of story.”
No system should ever be as hard to understand as this one is. If it gets too hard to understand, it should be ended and brought back down to a simpler system. Chaotic systems only serve the foxes.
Something’s happening here, what it is ain’t exactly clear, there’s a man with QE over there…”
And right behind Door No. 1,000,000 will be Draghi again, but this time buying asset-backed securities. And then it will be China’s turn. She’ll QE (after she removes her mountains – good God, what a bunch of idiots) and do the same thing.
Neil Young was in Buffalo Springfield. Neil, where are you? We need you again. Paul Simon too. Who will tell the story so that the masses will understand?
Ilargi – “Mario Draghi and Janet Yellen and Washington and Brussels are not trying to make this world a better or happier place for us, but for their banker friends.” Mario Draghi, an ex-Goldmanite, and the rest of the central bankers/bankers/politicians/multi-national corporations don’t care about us. They’re not coming to save us; no one is. They will do what they want, and that’s what they’ve been doing. It’s all about maintaining their power.
Shades of “1984” where 1-2% of the population made all policy and laws, told the lies, manipulated statistics, rewrote history, spewed propaganda, and basically kept the rest of the populace in the dark. If you stepped out of line, you were simply eliminated.
“The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power.”
I don’t know if it’s total ignorance on the part of the rest of us or, as you say, optimism bias. From the posters I read, it’s: “Screw you. Low interest rates are benefiting me, so I don’t care what they do.” Or, “I’ve been living in my house and not paying my mortgage for five years, so I’m not going to say anything.” Or, “My stock portfolio/house price is going up, so I’m right behind the Fed.” Or many are getting welfare, subsidized housing, free medical, free cellphones. What’s not to like? Of course, they don’t realize that they’ll be coming for them soon.
I agree that there are others who are truly suffering, but I don’t think Yellow (en) is losing any sleep over that. They are psychopathic in their thinking and, if you know about psychopaths — well, good luck with that. They will drag (Draghi – ha!) everyone down with them.
Interesting four-minute Chinese news video (with English subtitles): “The Party and Developers Gang up to Build a Ponzi Scheme”.
Developers are issuing bonds now, and then using that money to pay off earlier debts, but some of them are getting into trouble and taking off, leaving investors with nothing. And the Chinese government continues to aide and abet them. Hey, investors, you’ll probably find these guys in London, San Francisco, Vancouver, New York, pushing up local prices with your money.
And then there’s Iraq:
“Prior to the 2003 invasion and occupation of Iraq, US and other western oil companies were all but completely shut out of Iraq’s oil market…Exxon, BP, Shell; they’re all here. They all have their contracts in hand, and they’re all drilling their brains out thanks to the American servicemen and women who gave their lives for some trumped up baloney about WMD.
“Dr Abdulhay Yahya Zalloum, an international oil consultant and economist …(said) he believes western oil companies have successfully acquired the lions’ share of Iraq’s oil, “but they gave a little piece of the cake for China and some of the other countries and companies to keep them silent”. (Aljazeera)
How do you like that? These guys operate just like the Mafia. The Bossman pays off China with a few million barrels, and China keeps its mouth shut. Nice. Everyone gets “their cut” so they don’t go blabbing to the media about the ripoff that’s taking place in broad daylight. The stench of corruption is overpowering.”
Time prevents me from reading the article right now, but can’t wait to dive into it. You are such a capable woman, Nicole, and an inspiration to my daughter and I. Thank you.
With our current practices, the water might not disappear, but the usable land will. Our bodies seek homeostasis (so does the environment), but when we muck around too much, we end up with clogged arteries, inflammation, and sickness.
I agree that these things could be changed, but that they won’t be, not until things turn critical. Too much money in short-term gain, and the people in control like it that way.
Keep smiling, Nicole.
Over at Mish’s site, he said: “Long-term, hikes are longer off than most realize. Also, the Fed will never sell anything. Assets will be held to term.” So many differing opinions, so much collusion between central banks, so much money floating around. It’s dizzying.
Another poster said: “It’s a magic money machine! The Fed will never sell anything; they’ll keep buying at whatever pace they choose from here on in. Sure, this is money creation – inherently inflationary – but it will continue to be so dribblingly slow the dull-witted consumer, investor and markets will never detect the price inflation resulting from it…
Keeps the big, leveraged banks, governments and other players happy, though, doesn’t it!? A buyer of last resort for their junk.”
When this goes down, it will be painful. But as Morris Berman said, “You don’t get history for free.”
Diogenes – very well said! I think your post illustrates perfectly the criminality taking place. “…enshrined free market price discovery and severe penalties for anybody trying to circumvent that indispensable underpinning to all commerce.” Bingo, put it right in the Constitution, with severe penalty clauses (no piddly fines) – huge jail time.
Ilargi – great post! “Free and properly restructured markets, having gone through needed defaults to clean the herd of disease, markets cleared of zombies, are the only thing that’s actually good for you. Unless you have a big mortgage. Well, that’s just too bad, you should have paid attention.” I can’t even begin to add up the amount of people I’ve read who vehemently disagree with that statement. They’re screaming with joy that their assets and 401K’s are up, and the only thing that would make them happier is a good old-fashioned debt jubilee. Karl Denninger pointed out that when things are rigged, one side ends up winning the lottery while the other side (the side that would have won in a free market) loses. Did I ever get shot down when I posted his article. People don’t want to hear that, and they don’t realize that if they got rid of the chain around their neck (debt), prices would come down considerably, enabling them to buy again at a much lower price.
Everything is turned upside down, and people are in for a rude awakening. I wish nobody had to lose.
“China is stockpiling oil for its strategic petroleum reserve at a record pace, intervening on a scale large enough to send a powerful pulse through the world crude market. […] “It’s very similar to what they have been doing with copper. Whenever it drops below $7,000 (a tonne), they see it as a buying opportunity. They do the same with agricultural commodities,” he said. China is putting a floor of sorts underneath the global oil market…”
Could they be using this oil as collateral, just like they did with copper, gold and whatever else they were using? And they do the same with agricultural commodities? With China and the major banks stockpiling and hoarding commodities, using them for collateral, no wonder we’re paying such high prices for everything.
Ilargi – good writing. It’s a sad state of affairs in Europe, but throw a dart at a map, and it’s pretty much sad everywhere else too. It seems unelected tribunals are running things now, courts set up above our courts (as will happen with the Trans-Pacific Partnership and the Transatlantic Free Trade Agreement). If they can’t get their way with the peoples’ consent, they just go above them. Throw out a law here, make a new one there, wrap it all up in propaganda and – presto – everybody’s happy and united.
It is truly scary what was done in Italy and Greece. I always felt secure that we had laws that would never be violated, and yet here we are getting rid of elected leaders in the so-called civilized world. They truly are upping their game and, as you said, no one is talking about it. “1984” just sort of creeps up on you, doesn’t it?
Back in the old days these leaders would have died in an unfortunate airplane accident. What I find truly frightening is their brazenness. Right out in the open. Look at the speed with which they took Gaddafi out, with hardly an objection from anyone.
There’s a bad moon on the rise.
Mark Carney, ex-Goldman boy, ex-Governor of the Bank of Canada, now Governor of the Bank of England, soon to be Governor of the Bank of the Universe. He’s doing the same thing in England as he did in Canada: holding rates down artificially, laying the candy out on the table, and then chastising the children when they run for it. Yeah, he goes through all manner of monetary contortions, yet refuses to do the one thing that would stop the party in its tracks – raise interest rates.
He won’t do it because he’s afraid the party would end. He’s putting the warning out there just to cover his ass, but he’s been a major factor in keeping the party going. A destructive little parasite who has merely jumped from the Maple tree to the Royal Oak.
Ken Rogoff: “It would be a very good investment of German taxpayers’ money to write down debt in the periphery countries. There are a lot of ways to do it. You can be very opaque about it. The taxpayers don’t ever need to know it happened.”
I like the “don’t ever need to know it happened” bit. Yeah, more opacity and nontransparency ought to do it (sarc)! Who raises a mind like that? I guess his parents must have had 10 feet of dirt under their carpet.
I like the saying, “Conditions must be favorable.” Before man even thinks about limiting growth, seriously curtailing usage of available energy, conditions must be favorable. IOW, he’s going to need a knock on the side of the head before that happens, a significant wake-up call, enormous pain to get his head out of the sand. I don’t think he moves until this happens, whatever it is (a huge surge in prices, another nuclear meltdown, whatever). He won’t see until he HAS TO, until he is forced to.
Newton’s First Law of Motion: Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it.
And this force must be far greater than the force we are exerting to keep things the same. It must “overwhelm from without and undermine from within.” This is necessary for long-term change, in order to have an epiphany. If the force is not great enough, we revert back.
Only when he is dropped to his knees will conditions be favorable for a change of mind.
Michael Hudson’s take on Ukraine, U.S., Russia, China – long article, but a great read about the history.
https://www.nakedcapitalism.com/2014/05/new-cold-war-ukraine-gambit.html#comment-2136539
Geithner can’t explain Lehman because he’s a lying piece of crap. So is Paulson and Bernanke. Everyone knew what was going on.
“The financial system was collapsing and it had been collapsing for a full year. Everyone who followed the markets knew it. Hell, the Fed had already opened its Discount Window and the Term Auction Facility (TAF) in 2007 to prop up the ailing banks–something they’d never done before– so they certainly knew the system was cratering. […]
By September 2008, Bernanke and Paulson knew the game was over. The crisis had been raging for more than a year and the nation’s biggest banks were broke. (Bernanke even admitted as much in testimony before the Financial Crisis Inquiry Commission in 2011 when he said “only one ….out of maybe the 13 of the most important financial institutions in the United States…was not at serious risk of failure within a period of a week or two.” He knew the banks were busted, and so did Paulson.) Their only chance to save their buddies was a Hail Mary pass in the form of Lehman Brothers. In other words, they had to create a “Financial 9-11″, a big enough crisis to blackmail congress into $700 no-strings-attached bailout called the TARP. And it worked too. They pushed Lehman to its death, scared the bejesus out of congress, and walked away with 700 billion smackers for their shifty gangster friends on Wall Street. Chalk up one for Hank and Bennie.
The only good thing to emerge from the Fed’s transcripts is that it proves that the people who’ve been saying all along that Lehman was deliberately snuffed-out in order to swindle money out of congress were right.”
And from Karl Denninger re Bernanke draining liquidity:
If subprime loans are returning, and they’re guaranteed by the government with insurance (like Canada), removing almost all risk from banks, what’s to stop another housing bubble? Could it be that even with all of this help, prices are still way too high? Perhaps they could hold a daily housing lottery (sarc) next.
Really, they are getting desperate now. Banks should be required to hold mortgages on their books so that they get serious about who they’re handing money out to. Free markets? Dead in the water.
khiori – good questions. You’re not crazy; you’re just ahead of everyone else in seeing the moral decay. Probably more intelligent, more questioning.
“…we prefer this propaganda illusion to the harsh reality.
Why? Because half of us are getting a direct check, benefit or payment from the state. Over 61 million people get a check from Social Security, over 50 million draw Medicare benefits, another 50 million get Medicaid benefits, 47 million receive SNAP food stamp benefits, 22 million people work directly for the state on all levels, millions more work for government contractors that are effectively proxies of the state, millions more receive Federally funded extended unemployment, retirement checks, Section 8 housing benefits, and so on.
Orwell underestimated the power of complicity. Once a citizen receives a direct payment from the state, the state has purchased their complicity, for no matter how much that citizen may complain privately about the state, he or she will never risk the payment/benefit by resisting the state in a politically meaningful way. […]
We don’t hate Big Brother; we don’t care about Big Brother or the fear-mongering or the rewriting of history or any of the rest of it, as long as the state’s money flows to our individual account. Our complaints are as hollow as the state’s financial “facts.”
https://www.oftwominds.com/blogaug13/1984-improved8-13.html
And the wealthy aren’t going to complain because they made the game, rigged it in their favor and are making out like bandits. Bread and circuses, and lots of propaganda. If food and oil prices rise very much more, though, we may start to hear some noise from ordinary folk. It seems every time I go to the store now, someone mentions how high the food prices are.
I actually think that people would care more if they knew more, but the media is bought too, and they’re just not getting the information they need. That Frontline piece a few days ago on the NSA was brilliant (second part next week). If there were more programs like that, people would begin putting two and two together, but they’d have to be good in order to pry them away from their iphones.
As Jim Quinn said, people are held in check pretty tightly: “Technology is used by the state as a means of control, surveillance, censorship, and bilking the populace of their wealth. And if you don’t like it, the IRS, DHS, FBI, CIA, BLM, HHS, or some other three letter government agency will harass, arrest, fine, or kill you for not ‘cooperating’.”
I think the people who visit financial blogs are a diverse lot: some have lost and they’re angry, some just want to know what’s happening so they can benefit, others are worried about their country and the loss of its laws, some for their children. But to awaken the masses, something significant will have to happen. When they lose, when they feel some pain, look out! It’s going to come, and the elite know this too, otherwise they wouldn’t be gearing up for it like they are.
“As NSA General Counsel Stewart Baker has said, ‘metadata absolutely tells you everything about somebody’s life. If you have enough metadata, you don’t really need content.’ […] General Michael Hayden, former director of the NSA and the CIA, called Baker’s comment ‘absolutely correct,’ and raised him one, asserting, ‘We kill people based on metadata.’”
I hope people wake up soon. This is scary stuff, truly 1984-ish.
John Oliver’s humorous segment on climate change:
Just watched the first episode of The United States of Secrets, a two-part documentary about the NSA revelations done by Frontline (2 hours). Very well done! Watch it if you can. Here’s just the first eight minutes. It starts out with Snowden, but then goes back to when they first started “The Program” of recording phone calls, emails, etc., and all of the people who objected (and there were quite a few).
https://www.theguardian.com/media/2014/may/13/glenn-greenwald-pbs-frontline-nsa
Variable – the rich are chasing yield. They’re not buying collectibles for safety; it’s for price appreciation. They’re hoping another rich fellow with more money than brains will buy whatever they’re selling. It’s just another bubble that will crash like the rest of them.
“Modern art is valued in terms of modern money,” he wrote. The Fed’s low-interest-rate policies have driven the wealthy increasingly to collectibles of all kinds, including art, cars and jewels. “Miniature interest rates have reduced the opportunity cost of investing in any kind of nonyielding asset.”
And while Koons and Basquiat are hot now, they might end up like the English portraits of the early 19th century, whose frenzied boom was followed by a spectacular bust. Prices never recovered.”
https://www.cnbc.com/id/101023959
“After 2008’s worldwide crisis, investors flocked to alternative investments. Fine art, gold, and fine wine collections were targeted for their growth potential. But, for varying reasons, those markets have corrected and can no longer be relied on to provide triple digit returns.
While other assets have peaked then declined, collectible classic cars have outperformed. A bubble occurs primarily when people are speculating. And that speculation often involves overextended credit. Add to that, many investors fall victim to hype, euphoria and “irrational exuberance” as it was once called.”
One author said that “art is the next gold”, another bubble with upside appreciation at the present time. They just keep moving from one bubble to the next. Real estate at the high end is only rising in pockets (the east coast with the bonuses, wage hikes and dividends), especially around Washington, D.C.
If this all collapses, whose going to hold the asset prices up? This is nothing but cheap money, easy credit and leverage supplied and encouraged by the Fed and the government.
That’s what my common sense tells me is happening, but who’s to know?
Referring to Russia, John Boehner said, “You go after their banks.” Tell that to Eric Holder. As if there weren’t a few banks that should have been gone after right in his own back yard.
That lady in the video (Ron Paul’s post) who walked up to the politician and threw down his mike – priceless.
“History is almost always written by the winners, and world maps are mostly drawn with the blood of the losers.” Good article on how people are fighting for their own countries: Catalonia, Scotland, Kurdistan, Palestine, etc.
“Local government of manageable size for democratic rule could be the antidote against various kinds of imperialism, including that imposed by globalists. A return to smaller government is a natural reaction against the disempowerment, loss of specificity, and vertigo caused by a global empire that thrives on consumption and greed.”
https://newsjunkiepost.com/2014/05/05/reset-of-imperialist-borders-a-reaction-against-globalization/
Ilargi – great article yesterday: “We’re Not Doing Very Well, Are We?” After reading it, I found myself “reflecting” all day. You are right, it is something very few do enough of, if at all. You can end up in a whole great big pile of trouble when you don’t reflect, and you’re right about us “justifying” our actions, that we lie to ourselves. Yes, we do, all the time. Justifying makes everything so much easier, so we think, but it is short-lived and comes back to bite us eventually.
Sprocketsanjay – I liked your grandmother story too; such wisdom. I also understand what you said about not knowing what the future holds, that we could get hit by a meteor or something. I agree it’s good to be optimistic, but isn’t that kind of an “oh well” and shrug shoulder-type attitude? What if nothing cataclysmic does happen from the outside and we continue on as we are? Shouldn’t we at least try to correct what’s wrong?
I was on another blog and the fellow said not to worry about running out of resources because we’ll just then have to mine the other planets. Aaaaaah! He was of the mind that technology and a sort of magic will materialize to get us out of where we are. I’d rather not bank on that.
rapier – “Tax withholding’s are still strong. Up in the 7% YOY range as I recall Lee Adler reporting. ” Is that just for wage withholding taxes, or does that figure include withholding tax on dividends and interest or payments to foreign persons? The top 20% no doubt are seeing huge increases in dividends and wage withholding as they make most of the money and own most of the stocks.
Maybe you could clarify.
Diogenes – “So I’m wondering if anybody would like to comment on the plans that some members of the top one percent and some political movers-and-shakers are being accused of, plans that are alleged to be aimed at drastic global population reduction.”
If they weren’t vaccinating them and feeding them, they would have died a long time ago. And when they don’t die of starvation, nature steps in and throws out droughts, floods, AIDS, and all sorts of other horrible diseases. And if that doesn’t get them, war steps in. It’s a terrible situation in most of the world.
But look at India. No, they don’t want any curtailment on their right to have children. I guess they’d rather have five and see them starve or, better still, sell some of their daughters into prostitution in the cities (sarc), or set them on fire when their dowries don’t come up to par. Same with most of Asia and Africa.
It makes me furious to think of these poor children suffering because some church dictates that parents musn’t use birth control, or some government wants more consumers, so does nothing about the increasing population, or their own parents believe restricting the amount of children they have is somehow limiting their rights.
Planned parenthood? I say bring it on, and the sooner the better. I don’t think the 1% means to kill anyone, but to merely raise awareness and get governments involved, which hopefully will eventually reduce the population.
Disease follows crowded conditions, and it’s only a plane ride away.
I don’t think they’ve ever been “The People,” but it did look and sound good. Who are they? They are sociopaths.
Been reading The Great Gatsby, set during the Roaring Twenties: speculation, corruption, greed, consumerism. Very similar to today.
“…sales of homes that cost over $1 million rose 7.8%, while those under $250,000 fell 12%.”
Expensive homes are selling well in the northeast. I read an article stating that it was the bonuses that were received recently that really had an impact, wealthy or well-to-do moving up.
rapier – I don’t think Wynn was providing wisdom, just some truth. It’s not very often we hear the truth from one of the elite. How many others have come out to say they were just raking in the money, that the current policies were making them rich beyond their wildest dreams, that never before has it been so easy to make a killing.
Wynn is just telling the truth about his “wynndfall”. I guess he’s made enough. Perhaps he’s starting to feel guilty, even ashamed. Maybe his conscience is getting to him, or maybe he’s wondering where all this is going to lead.
Where’s Buffett, Blankfein, Paulson, Geithner, Congress, the Chamber of Commerce? Why aren’t they putting a stop to or speaking out about the greatest heist of all time? Perhaps they still don’t have enough. Imagine them coming out and saying, “Stop this! I can’t handle any more money, I’m floating in it.” No, they don’t dare do that; people might notice. Best to make the common folk believe that they’re doing this for them.
Last post. This doctor gives a good Ted Talk on addiction: addiction to drugs, gambling, shopping, work, internet, and at one point he covers addiction to wealth and power. Other than saying Napolean wanted power because he was short (apparently he actually wasn’t for his day), it’s a good talk. He says people are looking for all of the above to fill up the emptiness inside.
“The people in power are very often some of the emptiest people in the world, and they’re not going to change things for us.” IOW, they won’t change by themselves (not unless they have an epiphany, but they’re quite rare). The power will have to be taken away from them.
https://dotsub.com/view/b938740a-3111-405a-905f-099b4b05078c
“There’s no sign of that, obviously, in Britain. In fact, it sort of like exemplifies where the entire world has gone formidably off track: a government that hands over its citizens capital to investors, which temporarily lifts asset markets, combined with a red carpet for foreign investors who owe their money to other governments’ handing over their own citizens capital, and who drive up local property prices beyond the ceiling…”
Yep, and the houses or buildings sit empty, just a place to park their ill-gotten cash. It’s disgusting and it makes me furious.
Great writing, Ilargi! Thank you.
“America looks good on the surface…” Personal saving as a percentage of disposable personal income was 3.8 percent in March, compared with 4.2 percent in February, and “savings” is defined as including debt payments. But America is all about surface, isn’t it, keeping up appearances. What a complete mess that even the massive propaganda machine is having a hard time painting over.
I think you’re right about China, about a fight going on. Which side will be strung up?
Ukraine’s President can’t rely on enforcers in the East:
“On Thursday, it looked like violence might be avoided when coup-President Oleksandr Turchynov said that he had lost control of the situation. In an exasperated message to the media, Turchnov said, “It is hard to accept but it’s the truth, but the majority of law enforcers in the east are incapable of performing their duties.”
Turchynov was referring to the fact that Ukrainian troops have refused to attack their own countrymen. The mutiny has reportedly spread from elite airborne units to local police who sympathize with the protestors. The only group that’s willing to carry out Washington’s proxy war is the Right Sector neo-Nazis who helped topple the Yanukovych government.”
Economically, environmentally, morally – pick an “ally” – the whole world is on the edge of a precipice. I’m almost at a loss for words. I watched some videos today from 1994 by Sir James Goldsmith re GATT. A very successful businessman, he saw what was coming.
He describes how the economy should serve society, not society serve the economy. It’s a good listen, how jobs were and would be offshored. There are six parts, all extremely good. He was right. At least watch the first two videos, if you haven’t already seen them.
The annoying political lady comes in in Part 2, but leaves at the 3:00 mark in Part 4.Professor – Karl Denninger said QE will be stopped:
“The Fed is not tapering because “the economy is improving.”
It is tapering because it has to or the asset base of these firms, which is all tied up in income-producing assets with a duration match against their liabilities, is increasingly toxic and will destroy these firms if it is not halted.
These firms are far more-important to ordinary Americans and thus consumption than even the banks. They’re insurance companies of various sorts (whether declared as insurance companies or not) — including pension funds and similar.
All the hand-waving is stupid; as I pointed out a long time ago this is a matter of arithmetic and there is nothing The Fed can do to “mitigate” this sort of damage other than stop doing QE.”
Pardon my ignorance, but are you saying the insurance companies and pensions are getting their juice from Obamacare? What do you think about what Karl is saying? One commenter on his site said, “Pension and insurance funds can rent seek from their customers, contributors and taxpayers. This includes higher premiums, higher pension contributions, denied or deferred claims and bull**** legislation that artificially raises premiums.”
Another said, “In the red corner we have the banking sector and really all of Wall Street.
In the blue corner is the insurance sector and pension funds. The higher QE number, and inversely lower interest rate number, greatly favors the red corner. The referee in control of the QE and interest rate is the “Federal Reserve” who is (not so) privately on the side of the red team.”Could Karl be right?
Speaking of Paul Simon, he does have some good advice for economies, for peoples’ lives:
You got to learn how to fall
Before you learn to fly
And mama, mama it ain’t no lie
Before you learn to fly
Learn how to fallYou got to drift in the breeze
Before you set your sails
It’s an occupation where the wind prevails
Before you set your sails
Drift in the breezeThe learning comes from the falling, and we all try to avoid that (me included).
