Let’s lay the ground work, shall we?
We all know the markets have been going up due to QE, right? Furthermore, we all know the economy isn’t in the shithouse because of Bernanke, correct? The Fed provided liquidity for the economy and the markets. It’s your local fuckhead Congressman who spent your grandchildren’s money on hookers and military contracts. Understand something, Ben Bernanke is an American hero. He is the only one who had your back during the bleak moments of 2008.
But that was war time and this is peace. Ben is now vilified as a demon, BY YOUR CORRUPT Congressman, because he doesn’t want to take the blame. This is typical Washington bullshit. Your government does not work for you. You work for them.
Romney just said he would NOT reappoint Bernanke if elected. Moreover, he said QE2 did nothing and he does not support QE3. Got that?
Good.
Clearly, Romney doesn’t want stocks to trade up because he wants Obama out. This is the republican game plan. Be on guard for more of this horseshit, as the election draws near. Back in 2000, I remember Bush stoking the same fucking flames to derail Gore. It was not a pleasant trading environment, to say the least.
Frankly, I can’t stand this sort of political bullshit. I loathe politics and feel they’re all bastards, spawned from motherless whores, here on Earth to hurt the weak. Despite Obama’s abysmal “track record”, I will not be voting for anyone this election. I don’t have faith in the two party system and would prefer to see the capitol aflame by Americans wielding pitch forks–before I participate in this shame of a democracy again.
I bought 100,000 HDGE to hedge my longs.
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I completely agree with your opinion of politics. Sharpening my pitchfork.
Worth a listen
http://www.upworthy.com/a-tea-partier-decided-to-pick-a-fight-with-a-foreign-president-it-didnt-go-so-we
Agreed, though I’m not sure I would go as far as to call Bernanke a hero. The Fed did what it needed to do, and that necessarily introduced a gigantic moral hazard into the market.
People talk, but it could not have played out any differently.
I like your war/peace analogy as well… the economy is not great, but it most definitely is peace time. I would really like the Fed to say “We’re going to keep rates low for a good while, but balance sheet operations are out of the question indefinitely.”
Also – so happy to see some volatility, aren’t you?
But the Fed didn’t do what was expected. Ben went outside of the box and innovated to provide liquidity.
I seem to remember QE being pretty well telegraphed by the time it actually came around. I would say the Treasury was the one slinging random new acronyms at the market every day, TLGP, TALF, TARP and whatever else.
That said, the Treasury did some dastardly things during that time as well.
This is a decent resource, just need to keep in mind the author.
http://www.treasury.gov/resource-center/data-chart-center/Documents/20120413_FinancialCrisisResponse.pdf
Nevermind.
That treasury presentation is shit. Don’t read it. It’s a success story that never happened. I wish I could burn it.
It’s good for nothing beyond remembering the acronyms introduced back then, which is how I stumbled upon it in the first place.
Jesus. Actually, look through it. It’s hilarious. Check out the chart comparing the Credit Crisis to “the average of the last 5 advanced economy financial crises.”
Alright, I’m done.
“I don’t have faith in the two party system”
it’s probably better than the one party system I grew up in… 🙂
And where is that, Romania?
Do you look at NUGT or other gold plays as possible additional hedge plays?
NUGT is good. But I think gold is due lower short term.
You think this ISN’T a one party system?
If you define a party as a shared set of ideals. There’s hundreds of parties. The difference is that the primary goal of those elected is to fund their own reelection campaigns and to repay the favors of campaign interest and that “money is good” is the one shared belief that all politicians have. It is a corrupt system perhaps, but still one with two main parties.
Two main parties that share one head, trivial ideological differences aside. Put the abortion, gay marriage and welfare squabbles aside and you have one unified party that is united in corruption, warmongering and big spending.
qe will not stimulate jobs. PERIOD. just deepens debt, weakens the dollar , and puts a fause sence of economics. the market is the market, free market doesnt need qe at this time(imo)
The dollar is +12% over 12 mos and the markets are strong, supporting the tax base.
You cannot be serious in blaming the Fed for jobs!! WTF. That’s government’s fault.
it’s always about people. If you think you will triple your money next year, you will pay 100% interest. It is the difference between expectation & the nominal interest rate that counts. If you think you will not make a dime, you won’t even borrow at 1% interest.
The debt no doubt cripples us but that doesn’t mean that doing something just for the sake of doing something is worth it
QE is merely an asset swap. Treasuries from the private sector for reserves from the fed. It is not creating any new financial assets. Just swapping them out. If anything it reduces the debt the private sector holds.
I’m glad people some people (errr, aliens of a time-travelling magician variety) understand. Congress and the Senate should always be the front line to these issues, and should be the first ones to be held accountable. Congress and Senate make laws and pass budgets. Presidents only sign them into law. Who really controls the country?
I agree almost in whole with your article. Imagine going before congress and explaining to someone who got a C average in Poly Sci from a junior college in Kentucky how the economy works. Plus ObamneyCare is the albatross around his neck, dampening the goal of the stimulus which was to blunt the unemployment rate. He knows that small businesses will not hire under the specter of higher taxes based on employee count. But out of the ashes will rise the Phoenix.
Try explaining how the economy works to most Americans with advanced degrees? Do you honestly think they have a better grasp of economics?
Trust me – I’m in the biz and the vast majority of people I meet (many of them so-called -ahem- pillars of society) couldn’t tell you anything about bond spreads – hell, they can’t tell you squat about debt in general and they sure as hell don’t understand fractional lending.
I remember speaking with a guy a few months ago about watching action in the 10-year because he was considering refinancing. Had no clue why I would suggest watching the 10-year. He was an attorney
You’re a genius.
Americans participate Zerohedge-style? You guys are lucky… up here in Canada, politics might as well be The Price is Right…
Canada is going through social change that America did in the 90’s.
The market has still not gotten above dow 14,000 which is what it was before things really got bad. At the 9% per year pace it was running, it should be above 18k now.
Did he really save anything? things would have ran their course. It’s like when you are hydroplaning and you over-steer you may have fixed things on this cycle, but when things come in too hot the other way and you try to correct, you are at risk of whipping back even harder and crashing. The events of 2007-2009 were already set in stone to happen and the recovery after was as well. The only difference is we’ve had flash crashes, credit downgrade near collapses and this September/October/November we probably will also see some kind of a crash. The market has done nothing but become less table in this environment.
A better analogy then the car would be a plane but only to pilots. to sum up:
Pilot Induced Oscillations (PIO) are induced when control inputs are out of phase with the cycle. The pilot, seeing the airplane yaw and roll to the right applies left aileron to correct, not realizing that the airplane would have corrected on its own had he not made any input at all! Yes, the plane may continue to sway to and fro, but when the pilot introduces his inputs, the sway, the yaw and roll GROW LARGER. This can and has become so extreme that the aircraft breaks up in flight!
Knowing that cycles occur in flight, pilots are trained in PIO and modern airplanes have computers (yaw dampers) that make small and timely control inputs to prevent them from occurring in the first place. That’s why you almost never spill your coffee while flying on a modern airliner.
Our economy goes through several cycles of varying degree all the time. A properly designed economy would have natural forces that damper the oscillations to keep them from growing too large. Incorrectly applied inputs force the cycles to become much larger than they naturally would. Greenspan lowering rates to zero? Bailing out bad banks? STIMULUS? Governments think they are the pilots of the economy, but they merely introduce inputs, mostly the improper kind.
Witness the lost decade in Japan (now approaching two decades). Propping up failed banks was an input that did not allow misallocations to be cleansed.
Witch doctors used to do more harm than good but people couldn’t stand not at least trying something and trying to be cured. One day, I believe we will have the data and technology to really be able to see how everything the fed and the politicians did to try to correct things on average just made them more unbalanced and prone to greater cycle extremes in the future. But politicians only care about the next election, so they are happy to throw our grandchildren down a flight of stairs to cushion the grandpas fall… since afterall grandpa can vote, the kids can’t.
Excellent analogy.
Nicely put.
“The events of 2007-2009 were already set in stone to happen and the recovery after was as well.”
Really? You think the recovery was set in stone? It’s hard to nonchalantly give alternative scenarios when the alternative scenario did not occur. Here is another alternative scenerio: The government lets the banks fail to “cleanse the system”. The financial markets implode, causing a ripple effect throughout the global economy. Credit freezes solid. Demand plunges. Top that off with a consumer indebted up to their eyeballs in bad mortgages. The global economy sees a 20 year depression.
That scenario was just as likely in 2008, and had occurred before in the US’s history. But hey at least the US Economy would be “cleansed”. Nevermind the loss of jobs, erosion of skills, reduced living standards, loss of productivity and competitiveness.
EASY to nonchalantly give alternative scenerios. Crap
Anyway. I agree the banks need to be dealt with. One of the only good things from Dodd-Frank is the ability of regulators to break up TBTF banks. They should use that power.
“Nevermind the loss of jobs, erosion of skills, reduced living standards, loss of productivity and competitiveness”
But…..but…we have all those now!
I doubt they would have been much worse without the artificial insemination of the economy.
He saved your dumb ass. And the freakin’ world.
The fact that you don’t understand why is the truly sad part.
By any definition, I am incredibly liberal. I encourage every person I meet to vote against all incumbent congressional members, regardless of party affiliation. As soon as those dicks made political theatre out of the debt ceiling debate it was over.
We are an “against” political country, that’s out problem. You can’t get what you want by voting against someone– only by voting FOR someone and something, some vision.
And when you vote against every incumbent, the people you vote for, likely have their campaigns fincnaced by the same folks the incumbents did. And the new politicians continue to serve the same people as the old ones did. So where does that get you?
I know I annoy you, but I respect the work that you do immensely Fly. The funny thing about the republicans is that Bernanke is one. I agree with most of what you said. At some point, we (markets, USA, world) are going to have to experience pain to correct some long-term problems. Medicare & SS alone will eat one over 100% of US gov’t receipts. We cannot tax ourselves out of these problems. We need people strong enough to cut social programs so our children have a future. No one is addressing this except republicans & the tea party. We do need to raise taxes but only while cutting expenses at the same time.
yep. my point before was that the fed can not fix this. congress has to get there heads out of there ass.. it way past dem/repb time , now should be american time.
I completely agree. This will get fixed one way or another. Whether it’s short-term pain to stabilize our economy or a future collapse, it will be addressed. Greece is addressing this right now. 54.9% of workers under 24 are unemployed. People are starving.
jay is a genius.
Yes, my gawd if we still need Q# after this winter it won’t matter, we will be the United States of Argentina
The US does not have a funding problem. Why would it have a funding problem if it can print what it needs to spend? Raising taxes and cutting spending would only cause GREATER deficits. Precisely what is happening in Greece. They are experiencing a deflationary spiral. If Greece could print its own currency it would not be in the situation its in now.
Long Live the Great Benjamin Bernanke!
By the way, Romney is just using him as his sacrifical lamb… he will simply be replaced by another money printing madman. But the new guy will be Romney’s guy, so that money printing will be allowed under the new Tea Party regime. But the only difference is they are planning to replace Benjamin Franklin’s pic with Ronald Reagan’s pic. With the quote, “Do it for the Gipper” underneath.
The Clam should ram it up Mitten’s butt now that he knows where he stands and open the spigots … to help the economy of course (no biases).
UPDATE
$VXX’s next hurdle is $12.21, a limit at least a nickel under is one $trategy.
I’ve exited my position based on the E-Mini’s performance channel action hitting 1402-ish.
If I didn’t know better, a press on some $SPY calls would be ordered; but one of my final projects is nearing a critical final stage, so BRA’s reduced exposure at the moment.
Also possibly $D or $CHF oil positioning (Shout out credits to Razoredge).
All I know is this: I banked coin under Reagan, I banked coin under Bush, I banked lots of coin under Clinton, I banked lots of coin under W, and I banked even more coin under Obama.
Case closed, filled with lots and lots of coin. The whining pikers should go learn how to bank coin. Maybe spend a few coins on PPT and 12631?
75 more days to comment.
Selling your vote is illegal. Or else, I’d say it would be the best trade of 2012.
I think your political analysis is crap propaganda, but I do agree fully with this statement: “I can’t stand this sort of political bullshit. I loathe politics and feel they’re all bastards, spawned from motherless whores, here on Earth to hurt the weak. Despite Obama’s abysmal “track record”, I will not be voting for anyone this election. I don’t have faith in the two party system and would prefer to see the capitol aflame by Americans wielding pitch forks–before I participate in this shame of a democracy again.”
Mayor Bloomberg for President.