News Commentary

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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Greek Dilemma: A Product of the Dialectic

"Greek protesters rally against IMF and EU inspection. Anti-austerity demonstrators jeer, heckle and throw coins at auditors from bailout troika amid fears of more public sector cuts ... Only hours before, the Greek prime minister, Antonis Samaras, had resolutely declared that Greece was not at war with the international bodies keeping the debt-stricken country afloat. But in scenes not witnessed since the beginning of Greece's economic crisis, auditors from the European Union and International Monetary Fund came face-to-face with the full force of anti-austerity anger as protesters in Athens jeered, heckled and stopped them from leaving the finance ministry." 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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Bill Bonner: A Barbarous Fed…

"Barbaric people used force and violence to get what they wanted; civilized transactions are based on mutual consent and cooperation. We know that the economy of the Soviet Union, driven by brute force, was a disaster. How do you think the economy of the US – heavily persuaded by the padded force of the Yellen-led Fed – will fare? Is today’s Fed a modern, civilized institution? Or an archaic throw-back to the past? And what about the dollar itself? Is it a form of modern money… or a barbarous relic, depending on the police power of the state to give it value?" Continue reading →

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Bill Bonner: The Fed Was Right…

"Corporate earnings rose. But behind that story lurked another sordid tale. Since the March 2009 low, nearly two-thirds of the rise in operating earnings for S&P 500 companies has come from neither higher sales nor increased productivity. Instead, it has come from lower interest expenses on corporate debt. Corporate America is a debtor. It benefits from lower interest rates, while savers lose. Second, as the so-called “risk free” return on bonds falls, future earnings streams from stocks look more attractive on a relative basis. Third, by evaporating the yields off bonds, the Fed has forced investors to 'reach for yield' elsewhere. An obvious place to look is stocks." Continue reading →

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No Dorothy, US Capital Controls Haven’t Been Imposed

"It's true that the US government could impose capital controls almost instantly. All it would take would be a flick of President Obama's pen. The bigger question is 'why?' Governments have imposed capital or "foreign exchange" controls for more than 2,000 years, starting with the ancient Greeks. The reason has always been the same—to maintain the value of a declining currency. On the other hand, if a country's currency is going up in value, or at least stable, there's no reason to restrict the flow of capital across borders. So will the USA impose capital controls? I think it's extremely unlikely—at least in the next few years." Continue reading →

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Do QE Markets Validate A Buy And Hold Strategy?

"Classical measures of value have been destroyed. It is very difficult to find true price discovery or a reasonable degree of certainty about these markets except that they are artificial and fragile, susceptible to infection from myriad sources. Though equity trends strongly ascend, the ascent is not based on increasing revenues but liquidity that equals debt. In this context, if one 'buys the market' one is betting on continuing QE and an absence of crises that have lingering effects. While QE is likely to continue so long as policy-makers prefer to keep the markets climbing, geopolitical, fiscal or economic crises are nascent, ready to burst into flame." Continue reading →

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Salon: One World After All

"An article in Salon is entitled 'Elites' strange plot to take over the world.' It is basically an admission of the entire globalist enterprise over the past half-century or so. It clearly admits what we all know – that top Western elites have been in an open conspiracy to merge the world, at least the Western world, under one legislative, economic and military regime. What makes the article important? Well ... start with its writer, Matt Stoller, who 'has a background in financial journalism and was a fellow at the [technocratic/socialist] Roosevelt Institute and an editor of the financial site Naked Capitalism.'" Continue reading →

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Let Our Debt Scrub Our Brains

"A majority of Americans with 401(k)-type savings accounts are accumulating debt faster than they are setting aside money for retirement, further undermining the nation's troubled system for old-age saving, a new report has found. Three in five workers with defined contribution accounts are 'debt savers,' according to the report released Thursday, meaning their increasing mortgages, credit card balances and installment loans are outpacing the amount of money they are able to save for retirement." Continue reading →

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Bill Bonner: Alan Greenspan’s Shock Revelation

"We know from bitter experience that trying to force economies to do what you want is a thankless task. Markets are fundamentally based on free exchange, cooperation, trust and trade. Force them in one direction or another and you are just asking for trouble. As Alan Greenspan described this week, in an interview with John Stewart on 'The Daily Show,' people are a little 'screwy' from time to time. Which means they don’t necessarily go along with your central planning, no matter how good you think it is. But still economists insist that, if they are allowed to monkey around with it, they can make an economy better. This is occasionally true." Continue reading →

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