Money For Nothing

Bill Bonner: Is QE Broken?

"Forget about tapering off. Instead, think of tapering on. How about this as a possibility? With no more ginned-up earnings from ultra-low interest expenses… no boost to top-line revenues from rising consumer spending… and no pricing power – corporate America’s earnings begin to fall. QE or no QE, stock prices fall. The Fed panics. It will be confronted with dropping asset prices and disinflationary (possibly deflationary) consumer prices. It will have to find a way to modify QE so that it does put dollars directly into the economy. Second, this new push – if it comes – may well send stocks soaring again. There’s nothing like free money to make investors happy. Third, the entire project is doomed." Continue reading →

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Where’s the Crisis That Requires Crisis-Era Monetary Policy?

"There simply isn’t one, no matter how much the Federal Reserve apologists try to justify the most aggressive quantitative easing since the 2008 crash. Look at initial jobless claims. Look at job creation. Look at GDP growth, or confidence, or anything else. None of these economic indicators are near or at the depths seen in 2007-2008 when the economy and credit markets were crashing. Then there’s the ISM manufacturing index, a benchmark survey of economic activity that has been conducted since 1948. This is no minor report, it’s right up there with the monthly jobs survey in terms of importance. And the story it’s telling is very important as far as I’m concerned." Continue reading →

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ECB cuts rates to new low of 0.25%, euro sinks

"The European Central Bank (ECB) cuts its main interest rate to 0.25 percent from 0.50 percent on Thursday, sending the euro sharply lower. The announcement - unexpected by many - was followed by a press conference with ECB President Mario Draghi, who insisted the rate cut was in line with previous forward guidance." Continue reading →

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Lonely Jeremiahs

"Like last time, it’s only now — after the first cracks in the market have begun to show themselves — that other prominent experts are joining his camp. Eight years ago, the epicenter of the bust was the American home market. Now, it’s every bond market on the planet. And ultimately, bonds are more vital and pivotal in the global economy than homes. Why? Because a global bond-price collapse automatically comes with a global interest-rate surge; and sharply higher interest rates directly impact every consumer, every corporation or every government that borrows money. How prominent are the voices now joining Larson’s once-lonely chorus? Judge for yourself." Continue reading →

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Bill Bonner: Apocalypse Later!

"Corporations can’t continue to borrow so much money at such low rates. But everyone is perfectly happy to postpone that apocalypse too. Stock market investors are no dopes either. They know this Fed-driven bull market must come to an end sometime. By many different measures – P/Es… swollen margin accounts… enterprise-value-to-revenue ratios… investor sentiment – the stock market is already in the danger zone. What will happen? Either the Fed will begin to taper – probably causing a crash. Or investors will get tired of investing real money in a phony trend. Either way, when the apocalypse comes… it will be later." Continue reading →

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IMF Happy Talk Cannot Obscure Japan’s Reality

"Printing a lot of money is really helping the Japanese economy, according to the International Monetary Fund. In fact, according to the IMF, there's plenty of room to do more if need be. This is part of a larger trend we've been observing of late. Whether it is Janet Yellen in the US or Mark Carney in England or the ECB or the BOJ itself, aggressive money printing is becoming a signature calling card. So what is all this money printing accomplishing? Well ... from our point of view, it's nothing more or less than a promotional exercise. It's clear to us. We couldn't figure it out at first but now we can. They're printing because there's nothing else to do." Continue reading →

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Carney Gets Ready to Blow Up the World

"This article is truly scary. Like a bullet across the bow, or the crack of a whip, it announces with certainty that the world's top bankers intend to blanket the world with faux currency. Carney was said by his central banking peers to be the 'best' central banker of his generation and his recent choice to head the Bank of England was therefore preordained. In fact, we figured that was a bit like being the 'best' used car salesman. But we were wrong. It's worse, much worse. What this article in the Financial Times tells us is that Carney was brought in not just to glad-hand the media and put a sympathetic face on this bloody and miserable facility, but his real brief is to use its powers to the utmost." Continue reading →

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In Fed and Out, Many Now Think Inflation Helps

"Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment. Economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. The school board in Anchorage, Alaska, for example, is counting on inflation to keep a lid on teachers’ wages. Retailers including Costco and Walmart are hoping for higher inflation to increase profits. The federal government expects inflation to ease the burden of its debts. Yet by one measure, inflation rose at an annual pace of 1.2 percent in August." Continue reading →

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Finally, the End of Keynesianism

"Are you a Keynesian? So many seem to be. Do you really believe that a properly functioning, mathematically literate approach to high finance can salvage what's left of the financial systems of the US, the West, the entire world? Top central bankers apparently don't. Just look at this article excerpt. They've retreated from the idea of tapering until 2014 and Peter Schiff was probably correct that they won't really taper at all because they can't. That should put an end to Keynesianism, though probably it won't. The technocratic meme of money control is the most cherished of all dominant social themes." Continue reading →

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