Federal Reserve

The Fine Wine Bubble Blows Up

I love wine, but I’m leaning towards Californian wines; they’re awesome and grow in my extended neighborhood. More precisely, I love drinking wine, not keeping it locked up in a refrigerated vault, and certainly not investing in it. Hence, I have little sympathy for those who were buying high-dollar French wines for the purpose of investing in them, instead of drinking them, and I certainly don’t feel sorry for them in their plight. But a plight it is.

Piling Up: The Detritus of Failed Stimulus Policies

“Ugly” doesn’t even describe it. I’m not talking about today’s ISM index of US Manufacturing, which was quite ugly, dropping to the worst level since 2009; and whose all-important New Orders index was beyond ugly. And I’m not talking about today’s Global Manufacturing PMI, which was truly ugly, seeing its lowest level since June 2009. These are volatile indices that might turn around on a dime, though that appears to be wishful thinking.

The Worldwide QE Quagmire

Certain central bankers are coming out of the closet admitting that their favorite shenanigans—ultralow interest rates and printing money with utter abandon—can’t solve the very problems they were designed to solve, which has been obvious for a long time. What they’re not yet admitting massively, though some are starting to hand out hints, is just how much havoc these policies are wreaking.

The Big Lie

Since the lousy jobs report, there has been a veritable orgy of Fed Speak with juicy morsels and contradictions, interspersed with leaks and rumors, that climaxed today with Chairman Ben Bernanke’s words of wisdom. It whipped markets into a frenzy, drove the Dow up 500 points, knocked yields to historic lows, and caused gold, the safe-haven, to bounce up and down like a rubber ball. And everyone was eagerly waiting for the big lie. 

Squeezing The Fed From Both Sides

The ugly jobs report gave Mitt Romney what he’d been waiting for: a huge boost. He’s out making hay, calling it “devastating news for American workers and families.” An army of Republican talking heads swarmed over the land and pummeled President Obama with the jobs report. And just as Republicans see victory edge closer, shrill voices are calling for the Fed to launch the next round of quantitative easing. Collision alert!

“Confiscate, Secretly and Unobserved”

When inflation isn’t particularly hot, it’s praised as something desirable…. Alas: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily.” John Maynard Keynes.

Ron Paul Slugs At The Fed One More Time

Before retiring from Congress, Rep. Ron Paul, Chairman of the House Financial Services Subcommittee on Domestic Monetary Policy and Technology, slugs at the Fed one more time: Tuesday, his committee weighs six bills to reform or abolish the Fed which “continues to reward Wall Street banks while destroying the dollar’s purchasing power and driving up the cost of living for average Americans,” he said.

Gold Confiscation, Inflation, And Virtuous Central Bankers

When the world’s major central bankers get together, as they did at the Fed conference in Washington this weekend, ironies abound. Off to the side, Turkey had just floated a plan to get its people to turn in their physical gold in exchange for “certificates,” a first if still voluntary step in what may become a process of gold confiscation. In the background: the Fed, which had promised to keep interest rates at record lows through 2014, come hell or high water, after having purchased $2.3 trillion in bonds. In the foreground: the money printers of Japan and Europe.

The Astounding Fuel Price Conundrum

Republicans are trying to tar President Obama with gas prices that are creeping up on $4 a gallon and are shooting for an all-time high. The strategy is working. Obama’s approval rating on handling gas prices has plunged. In San Francisco, gas is already $4.50. Yet across the Bay are five oil refineries that together are the largest exporters of petroleum products in the nation.