Saturday, October 19, 2013


My point being is each time this has occurred, it has ended horribly with the bubble bursting. First in 2000, then 2007, and each phase was magnitudes worse with its aftermath. Gov't debt has grown from $7T to $17T this deacde.
They can raise the debt ceiling and act as if K2 summit has been reached, this is as hollow a victory as one could get. NO issues were resolved, only put off again! No solutions offered, no comprimises to be found or offered. We are again at the crossroads of bigger gov't and a loss of freedoms, higher taxation, OR smaller gov't ( or at least one that won't add another layer) and a resolve to keep more money in your hands, so YOU can decide where to spend, not the gov't.

NAME ME ONE THING once the gov;t gains control that is better off then before they intervened?
It will cost more, it will get f'd up!
How many gov't employees does it take to change a light bulb....

"However, when an economy is excessively over-indebted and disinflationary factors force central banks to cut overnight interest rates to as close to zero as possible, central bank policy is powerless to further move inflation or growth metrics. The periods between 1927 and 1939 in the U.S. (and elsewhere), and from 1989 to the present in Japan, are clear examples of the impotence of central bank policy actions during periods of over-indebtedness.

Four considerations suggest the Fed will continue to be unsuccessful in engineering increasing growth and higher inflation with their continuation of the current program of Large Scale Asset Purchases (LSAP):

  • First, the Fed's forecasts have consistently been too optimistic, which indicates that their knowledge of how LSAP operates is flawed. LSAP obviously is not working in the way they had hoped, and they are unable to make needed course corrections.
  • Second, debt levels in the U.S. are so excessive that monetary policy's traditional transmission mechanism is broken.
  • Third, recent scholarly studies, all employing different rigorous analytical methods, indicate LSAP is ineffective.
  • Fourth, the velocity of money has slumped, and that trend will continue—which deprives the Fed of the ability to have a measurable influence on aggregate economic activity and is an alternative way of confirming the validity of the aforementioned academic studies."

"The QE-enhanced 2013 version of “how crazy do things get?” is outshining even the 1999 speculative melee. "

Friday, October 18, 2013



The crowded risky asset trade Titanic is near fully loaded, when it hits the iceberg! and it will, you know it will. I DO NOT know when as the game continues it would seem to NO end. ADJ Money base has already grown by $1 T this yr alone....these are all historical records!

IMHO, valuations are far beyond the fundamentals, and other things like Int rates are DRAMATICALLY lower and away from their mean.....manipulation by the FED is at historical levels and is the MAIN driver of asset prices.....all this while our economy is running aground and cannot even produce a 2% GDP.....
Things will eventually SNAP my friends, no one knows at what point, when........we have a critically maladjusted economy, cannot function without MASSIVE FED interference and is addicted to FED QE, now at $85B a month. ANY normalization of longer term rates would cripple the US ability to pay the interest on the debt.
Obama says in a recent BS speech " I have cut the deficit by more than any time in the last 50 years"
IS this true? Only if you realize under him it grew to $1.5T and is now back to $750B.....still higher than at anytime while Bush was President, and the 2 faced chided him over this debt pile up.
Now with "affordable care act" we have grown the gov't intrusion and size to new bounds. We have an over bloated system as it know it takes 2 Federal employess to do the job of one private sector....we keep paying and paying......
Cheap money allows this game to continue, the day of reckoning pushed farther back. But at some point the rubber band is going to break.
Money put in a safe place returns you NOTHING, forcing the FLOW into one space, the stock market looks good now....but history tells me its just another bubble. Just another in a series of boom/busts we have seen before....
WHEN the music stops, that will be one don't want to be holding these same moon shooting risky assets.....they are NOT moving of their own accord, IMHO


Thursday, October 17, 2013


That is what you will read in the headlines. All that was accomplished was another kick the can down the road moment, and the markets are exuberant by a rise in the "debt ceiling"? Growth going forward predicted to be sub 2% as we have added another major gov't intrusion and the cost is enormous.

The Fed continues to POUR $85B a month into the system and most of that ends up in risk assets putting a seemingly permanent back stop to stock prices. There has been little in the normal base building or corrections that take some steam and froth out of the markets allowing them to remain healthy and continue in a long term bull trend......on  their own accord.

have we since the Greenspan era just become an economy built on bubbles and bursts of these? Pouring even more FED fuel as mop up, preferred action for them just so we can reflate and blow even greater bubbles.

LOW LOW long term rates have allowed the US Gov't the ability to continue to fund its long term debts as they grow upwards of $17 TRILLION, about $55,000 per American, but about $135,000 if you only count those with jobs!

If it were you or me, at some point the bank would not allow us to continue borrowing. How does the US Gov't pay back this debt? Never will, but they have to do, is be able to pay the interest on that accumulating debt.

So as the masses and the govt cronies back slap themselves for another kick down the road.....that path may lead to eventual tax increases that won't be called that, they will be called "closing of loopholes".
And cutting of Gov't spending? both these actions would take away from the US economy.

An even SLIGHT rise in borrowing costs could be devastating to this country, considering that for as far as anyone can see, we will continue to add to the national deficit. EVERY $ of interest paid is non productive waste.

ObamaCare has come at a most unfortunate time in history, added another HUGE layer of gov't, and has changed the landscape of our freedoms....I don't know if there is any turning back. Also the gulf between the very wealthy and poor has never been wider, all this under the most Liberal Dem president???

Mere mention of FED tapering had sent stock markets into a downward spiral......if that doesn't tell you what is propping up stock prices, I don't know what will.

As they go ever upward ignoring any warnings or corrections, the gulf between value and cost widens to dangerous levels. After almost 5 years of intervention we cannot stand on our own 2 feet? And cannot maintain an even 3% GDP.

When a BEAR MKT finally takes hold, I do not know what the catalyst will be, but I'm pretty sure of how much pain is down that road near where the can was kicked again.


Tuesday, October 15, 2013



Doug Noland

"Our great nation’s brilliant Founding Fathers clearly appreciated the perils of unsound money. They understood the dangers of excessive power and the necessity for checks and balances. They would have never anticipated an American central bank printing money without restraint. There was a major flaw in the structure of the Federal Reserve System – and for central bank structures generally. I just don’t think anyone ever anticipated that central bankers might someday resort to creating Trillions of “money” as they do today – on a whim or academic theory. The Federal Reserve needs some basic concrete rules. It’s insanity to allow a small group of unelected officials the discretion to pump $85bn – or more! - of purchasing power into the markets every month. It’s undemocratic, highly risky and this has gone on for much too long. If there was one issue worth closing down the government and risking default, this would be it."


Who would have thought that by just RAISING the debt limit without ANY progress in correcting the issuing of the debt nor the imbalances could exude hope and confidence?