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.
Federal Reserve
Is The Inexplicable American Consumer Rebelling?
by Wolf Richter • • Comments Off on Is The Inexplicable American Consumer Rebelling?
The strongest and toughest creatures out there that no one has been able to subdue yet, the inexplicable American consumers, are digging in their heels though the entire power structure has been pushing them relentlessly to buy more and more with money they don’t have, and borrow against future income they might never make, just so that GDP can edge up for another desperate quarter. But it’s been tough.
Libor Perp Walks, but No Perp Walks for Rate Manipulation by Central Banks
by Wolf Richter • • 2 Comments
I’m shocked and appalled that the Libor fiasco could even occur in our modern, highly ethical, and transparent financial sector. Banks misreporting anything…. unheard of. Nevertheless, it occurred. Not just once, but from get-go. And everyone and his dog, even Treasury Secretary Timothy Geithner, back in 2008 when he was still President of the New York Fed, knew about it.
Two Down-Under Comedians Explain QE
by Wolf Richter • • Comments Off on Two Down-Under Comedians Explain QE
The Fine Wine Bubble Blows Up
by Wolf Richter • • Comments Off on 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
by Wolf Richter • • Comments Off on 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
by Wolf Richter • • Comments Off on 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
by Wolf Richter • • Comments Off on 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
by Wolf Richter • • Comments Off on 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”
by Wolf Richter • • Comments Off on “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.