Home prices have jumped around the country, in some cities over 20% on an annual basis. “Recovery of the housing market,” is what this phenomenon is called. Everyone from President Obama on down has taken credit for it, particularly the Fed, whose handiwork this is. But there is a very ugly fly in this illusory ointment.
Federal Reserve
Fed: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage….
by Wolf Richter • • Comments Off on Fed: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage….
What rabble-rousers, economists (those banished from the mainstream media), and bloggers have hammered on for years, a study by the San Francisco Fed finally confesses: Quantitative Easing didn’t do a heck of a lot of good for the real economy. The timing of the study is impeccable: the nearing end of QE – and the market mayhem it might cause.
David Stockman: Hedge Funds, Haven Of Hit-And-Run Capital For The 1 Percent
by David Stockman • • Comments Off on David Stockman: Hedge Funds, Haven Of Hit-And-Run Capital For The 1 Percent
During the 14 years since the LTCM crisis, the Fed’s interest rate repression policies have resulted in an inflation-adjusted return on six-month CDs of exactly 0%, David Stockman writes. It revolutionized the saving and investment habits of the wealthiest households. Unlike hapless savers among the middle class, the rich had an escape route.
Trouble In Junk Bond Lala-Land
by Wolf Richter • • Comments Off on Trouble In Junk Bond Lala-Land
Private Equity firms have seen this coming for months. They’re positioning themselves for it. In April, Leon Black, CEO of Apollo Global Management, explained it this way to an incredulous world: “We’re selling everything that’s not nailed down.” Now they’re setting records – but someone will end up holding the bag.
David Stockman: Hedge Funds, Prime Brokers, And The Whirligig of Wall Street Finance
by David Stockman • • Comments Off on David Stockman: Hedge Funds, Prime Brokers, And The Whirligig of Wall Street Finance
In Last 12 Months: Fed SOMA Up 27%, Housing Prices Up 13.5%, Stock Market Up 22%, Jobs Up 1.7%
by Contributor • • Comments Off on In Last 12 Months: Fed SOMA Up 27%, Housing Prices Up 13.5%, Stock Market Up 22%, Jobs Up 1.7%
By Lee Adler, of The Wall Street Examiner: By now it’s clear to everybody, even the Fed, that QE does absolutely nothing to stimulate economic growth while fomenting bubbles in housing and stock prices. The Fed will disingenuously use steady job growth as an excuse to begin cutting back on QE soon. But its real reason lies elsewhere.
In Honor Of The Shivering Huddled Executives Of Bear Stearns
by Wolf Richter • • Comments Off on In Honor Of The Shivering Huddled Executives Of Bear Stearns
When Bear Stearns blew up in 2008, the New York Fed handed it to JP Morgan Chase – the beginning of a vast bailout corruption fest. Turns out, five years later, the execs who caused it to blow up have jobs on Wall Street that are more lucrative than ever. To honor these sordid details, Nick Stuart wrote a hilarious, cynical parody about the last days of Bear.
Wall Street Engineers Newest Frankenstein’s Monster For Housing
by Wolf Richter • • Comments Off on Wall Street Engineers Newest Frankenstein’s Monster For Housing
Wall Street engineering is back in the housing market. Its newest product is one heck of a contraption, a synthetic structured security of the type that helped blow up the financial system back in 2008. It’s like those triple-A rated mortgage-backed securities that became toxic waste in your “money-market-equivalent” bond fund – only worse.
The Jobs Curse At Amazon (And Obama Stepped Into It)
by Wolf Richter • • Comments Off on The Jobs Curse At Amazon (And Obama Stepped Into It)
Amazon’s promotion machine shifted into high gear to tout President Obama’s visit to one of its warehouses where he unveiled his “better bargain” for “middle class jobs.” The visit was artfully synced with Amazon’s announcement that it would create 7,000 jobs. Out of nothing. One of the ongoing lies in America’s jobs crisis – and Obama stepped right into it.
David Stockman: Hedge Funds And The Rule Of Rips And Wrecks
by David Stockman • • Comments Off on David Stockman: Hedge Funds And The Rule Of Rips And Wrecks
“At junctures of extreme financial stress, the high level of carry trade funding” that hedge funds use during bubbles “results in violent market reversals,” David Stockman writes. “Wholesale funding evaporates and involuntary asset sales cascade into a bidless abyss.” Hence the collapse of 2000–2003 (45%) and 2008–2009 (55%). Now they’re doing it again.