Federal Reserve

The Miraculous Decoupling Of Reality, For Now

CEOs believe the next six months are going to be tough; and they’re reacting to it by slashing capital expenditures and jobs. These ugly trends “reflect global demand flattening out, particularly in Europe and China,” said Boeing CEO Jim McNerney. The numbers are evoking the dark days of 2009 and double-digit unemployment. It’s been a steep and bumpy slide.

“Forceful And Timely Action” To Nowhere

“Japan’s experience is a sobering real-world reminder of why forceful and timely action is appropriate,” said the Fed’s Eric Rosengren in his desperation to rationalize QE3. It would be a flood of money, not the “muted” response from Japan to two decades of stagnation. “Appropriate fiscal policies”—even larger deficits—should be used to battle Japanese-style stagnation. Alas, no developed country has done that for longer and to a greater extent than … Japan. And no developed country is in deeper trouble.

QE, Zimbabwe, And The Surreptitious 30% Haircut Every Decade

Dizzying QE gobbledygook is upon us once again. It would restart its big 480-volt money printer, in addition to the desktop machine it had been using recently, the Fed said, in order “to help ensure that inflation, over time, is at the rate most consistent with its dual mandate,” namely “maximum employment and price stability.” Thus, more inflation magically creates more jobs, and “price stability” requires more inflation in order to become more … stable maybe?

The Pauperization Of America

It’s been an unrelenting process. Survey after survey has shown that wages haven’t kept up with inflation since the wage peak in 2000. Families earned less at the end of the decade than at the beginning, a phenomenon not seen since World War II—the process of hollowing out the middle class. But now there is a new phenomenon: the unmentionable class, the class that doesn’t exist in America, is ballooning.

Calamity Economy Strikes Again, But Hope Is Back In Vogue

Hope was once again in vogue Thursday night in President Obama’s acceptance speech, after having gone the way of the green shoots. Hope has been swirling around the financial markets as well. The Fed keeps dangling QE3 out in front of them. And ECB President Mario Draghi injected a mega-dose of it with his bond-buying promise. It goosed the markets even more and powered them to multi-year highs. Then came the jobs report.

Monsters With Ominous Acronyms: From A Nation of Investors To A Nation of Fed Watchers

People are holding their breath. Fed Chairman Ben Bernanke is to speak in Jackson Hole. There isn’t a soul in the markets that can shrug off even a single syllable. If his answer isn’t a clear yes, TV economists will parse his speech down to the last iota and look for commas that they haven’t seen before. Headlines stir the excitement. My blood pressure is up, my nails are bitten down to the quick, I haven’t slept in days. I’m ready. Oh dear Ben, I’m praying, let us have more QE.

Central Banks, The Veil Of Secrecy, A Hotbed of Corruption, And Now Another One Got Ensnared

Central banks are designed to be “independent,” and they shroud themselves in secrecy. But they have formidable and, when it comes to money, “unlimited” powers that they harness for the benefit of their clientele, banks. And hiding behind their veil of secrecy are shenanigans that rarely seep to the surface, but when they do, they just get worse and worse. The latest is a sordid bribery and kickback scandal at the Reserve Bank of Australia that appeared to be neatly contained to two subsidiaries, until now.

All Heck Breaks Loose on CNBC, TARP Gets Sanctified, Bank Bailouts Get Whitewashed, And The Fed Escapes Scot-Free

It must have been a nightmare for Neil Barofsky, former Inspector General overseeing TARP during the financial crisis. He was on CNBC this morning to hawk his new book, when all heck broke loose. An argument about TARP, the most despised law in the US … how it prevented the collapse of Wall Street or something. But they failed to mention that by the time TARP was handing out money, it had already become irrelevant. A much greater power had taken control.

Ron Paul’s Legacy: A Complete Audit Of The Secretive Banking Cartel?

They only bubble up rarely, these scandals at the Federal Reserve System, but when they do, they’re doozies, involving huge amounts of money, massive conflicts of interest, all-out manipulation, collusion, favoritism, dizzying cronyism…. Over the 100 years the Fed has existed, it has done an excellent job in one of its other functions, maintaining the dollar, which has lost only 96% of its value—instead of 100%. Yet, it just doesn’t want to be audited.

The Con Game Of Writing Up Assets: It’s Not Just The “London Whale”

Normally we see the gory details only after a firm collapses, like Enron or Lehman, when vultures tear open its guts to fight over shriveled assets that had appeared fat and healthy on paper, and some of them had been written up repeatedly to create—which our accounting system encourages us to do—paper income. Other outfits get bailed out. JPMorgan among them. Yet, they still hollow out their balance sheets. And JPMorgan’s soon-to-be $7 billion trading loss shows how.