Financial topics

[vincecate]

Tonight I've noticed a lot of hand wringing on the financial sites over the realization that the Fed can't end QE or the US economy will collapse.

When enough people realize this is when hyperinflation will start. When the market perception becomes "the central bank is funding the government deficit spending with new money and this can not stop" then people will flee the bonds and eventually the currency.

[Higgenbotham]

Italian Prime Minister Enrico Letta’s government teetered on the verge of collapse after allies of former leader Silvio Berlusconi, led by Deputy Premier Angelino Alfano, said they planned to quit the cabinet.

The nation’s leaders stopped short of dissolving the five-month-old administration, invoking procedure and scheduling a meeting between Letta and President Giorgio Napolitano today for about 6 p.m. in Rome.

Berlusconi, a three-time ex-premier, precipitated the instability late yesterday by saying he had lost faith in the government and asking the five ministers from People of Liberty, or PDL, to step down. Minutes later, Alfano responded with a statement of his own saying the resignations were en route.

http://www.bloomberg.com/news/2013-09-2 ... k-out.html

Americans by a 2-to-1 ratio disagree with President Barack Obama’s contention that Congress should raise the U.S. debt limit without conditions.

Instead, 61 percent say that it’s “right to require spending cuts when the debt ceiling is raised even if it risks default,” because Congress lacks spending discipline, according to a Bloomberg National Poll conducted Sept. 20-23.

http://www.bloomberg.com/news/2013-09-2 ... -vote.html

The House voted 231-192 just after midnight today to stop many of the Affordable Care Act’s central provisions for one year and tie that to an extension of government funding through Dec. 15. Senate Democrats said they will reject the plan, and President Barack Obama said he would veto it.

http://www.bloomberg.com/news/2013-09-2 ... acare.html

The crisis is starting worldwide.

[Higgenbotham]

Who could have possibly been surprised that the fed did not reduce the QE? The day they started down this road was the point of no return. Once the patient is addicted.......

sy

Last Thursday, prior to the FOMC announcement, I was having an early lunch with Kyle Bass so he could get back to the office in time for the announcement. As we were finishing up, I was invited to come sit with another group of friends and traders who also happened to be in the same restaurant. Everyone was sure there would be some type of tapering. That message had been clearly communicated to the markets. When the announcement came, the telephones went off and everyone erupted with various forms of surprise. I fully admit to being speechless. I kept waiting for some kind of explanation, and none came. The more we talked about it and the more I thought about it later, the more convinced I became that this was one of the more ham-handed policy announcements from the Fed in a very long time. Why would you go to the trouble of getting the market all ready for the onset of tapering, build expectations, and then jerk out the rug? What in the wide, wide world of sports is going on?

I’ve been with Louis Gave and David Rosenberg this weekend here in Toronto. Everyone is searching for an answer on the FOMC's move.

http://www.financialsense.com/contribut ... tin-on-itz

I know your question is rhetorical, but it looks like even smart people aren't thinking. If Ben Bernanke said it was true, then it was automatically deemed to be true. That was the extent of their analysis. That's one ingredient for a panic. Like Mackay said in Extraordinary Popular Delusions and the Madness of Crowds, "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

[Higgenbotham]

Tonight I've noticed a lot of hand wringing on the financial sites over the realization that the Fed can't end QE or the US economy will collapse.

When enough people realize this is when hyperinflation will start. When the market perception becomes "the central bank is funding the government deficit spending with new money and this can not stop" then people will flee the bonds and eventually the currency.

All I can think is right around the corner is chaos like hasn't been seen since the fall of Rome. Which is an interesting way to put it because Italy's government may be falling this weekend...

I had posted this link last month.

In today’s Italy there are analogies with that summer two years ago. If we exclude the “bazooka” (only words at the moment, but nevertheless) launched by the ECB a year ago, namely the Outright Monetary Transactions (OMT), we run another daily risk: the collapse of the fragile alliance supporting Enrico Letta. A danger amplified by the possible outcomes of Silvio Berlusconi’s trials, who could be banned from all public offices, thus putting in motion a fatal whirlwind of events for the country. And it is paradoxical that Italy has to be again dependent on Berlusconi’s destiny. Someone could call it karma.

Italy was in line for something extreme in November 2011: namely, to stop issuing government bonds, to stay out of the bond market during the auctions at the end of that year, and to freeze the stock exchange. All this against the climbing Bund-BTP spread, which was growing continuously as a result of a practically unchallenged loss of international credibility. A decree prepared by Mario Monti’s government together with the Bank of Italy was about to do all that. The revelation, published on July 24 by the director of the Corriere della Sera [one of Italy’s major newspapers], Ferruccio De Bortoli, brings Italy back by two years, in that terrible 2011, which made the world realise how fragile a country can be.

A contingency plan. That was what the government prepared in autumn 2011, and successively updated and refined in the following months. Fortunately, one may say. But the fact that this happened two years ago does not mean that this kind of scenario may not happen again.

http://blogs.lse.ac.uk/eurocrisispress/ ... ith-today/

I would add to this: But the fact that this happened two years ago in Italy does not mean this kind of scenario may not happen in the United States in the near future.

[gerald]

Tonight I've noticed a lot of hand wringing on the financial sites over the realization that the Fed can't end QE or the US economy will collapse.

When enough people realize this is when hyperinflation will start. When the market perception becomes "the central bank is funding the government deficit spending with new money and this can not stop" then people will flee the bonds and eventually the currency.

All I can think is right around the corner is chaos like hasn't been seen since the fall of Rome. Which is an interesting way to put it because Italy's government may be falling this weekend...

I had posted this link last month.

In today’s Italy there are analogies with that summer two years ago. If we exclude the “bazooka” (only words at the moment, but nevertheless) launched by the ECB a year ago, namely the Outright Monetary Transactions (OMT), we run another daily risk: the collapse of the fragile alliance supporting Enrico Letta. A danger amplified by the possible outcomes of Silvio Berlusconi’s trials, who could be banned from all public offices, thus putting in motion a fatal whirlwind of events for the country. And it is paradoxical that Italy has to be again dependent on Berlusconi’s destiny. Someone could call it karma.

Italy was in line for something extreme in November 2011: namely, to stop issuing government bonds, to stay out of the bond market during the auctions at the end of that year, and to freeze the stock exchange. All this against the climbing Bund-BTP spread, which was growing continuously as a result of a practically unchallenged loss of international credibility. A decree prepared by Mario Monti’s government together with the Bank of Italy was about to do all that. The revelation, published on July 24 by the director of the Corriere della Sera [one of Italy’s major newspapers], Ferruccio De Bortoli, brings Italy back by two years, in that terrible 2011, which made the world realise how fragile a country can be.

A contingency plan. That was what the government prepared in autumn 2011, and successively updated and refined in the following months. Fortunately, one may say. But the fact that this happened two years ago does not mean that this kind of scenario may not happen again.

http://blogs.lse.ac.uk/eurocrisispress/ ... ith-today/

I would add to this: But the fact that this happened two years ago in Italy does not mean this kind of scenario may not happen in the United States in the near future.

A major causation for much of our problems is twofold, the hiding of the truth and wanting something for nothing. --- for example -- politicians -- Lets see how we can hide and shift the costs to others so that "the people" think they are getting something for nothing, and will support me, ---- of course we must not forget corruption, both political and moral ( they may be the same )

[Higgenbotham]

A major causation for much of our problems is twofold, the hiding of the truth and wanting something for nothing. --- for example -- politicians -- Lets see how we can hide and shift the costs to others so that "the people" think they are getting something for nothing, and will support me, ---- of course we must not forget corruption, both political and moral ( they may be the same )

That seems to equate in a complex society to people having an obsession with trying to figure out how to get a bigger piece of the pie for doing less while giving the other guy a smaller piece of the pie for doing more. It's gone to an extreme in the past 30 years or so and especially in the last 3. When it gets to this kind of extreme the incentives that have held the civilization together fall apart. Someone who produces the essentials of life has no incentive to do so if producing the essentials of life does not allow them to afford the essentials of life, while non-essential parasites like lawyers, lobbyists, and politicians steal their productive labor and live like royalty. In such a situation, once the producers of essentials become a minority they have to walk off the job in order to get justice and therefore the civilization is prone to collapse.

If something like QE is used to keep an economy going, then your civilization is finished because QE makes all of the above continuously worse.

[jcsok]

I expected a blow off top with the German elections, but it didn't happen; therefore I have been patiently waiting to short this relentless market. My next window will be in line with an anticipated Elliot wave 5 with a blow off when there is a debt ceiling compromise.

Of interest for those that don't read The Market Ticker by Karl Denninger, he has posted that he will no longer feed the pig; he intends to generate no economic activity to pay taxes. Somewhat of a John Galt move, although he won't be disappearing. As I have previously posted, I have slowed my business somewhat, and intend to do less economic activity, won't hire any new personnel, and intend to not purchase new equipment. Although I would like a new vehicle, I don't NEED one, therefore I won't pay excise taxes etc. My family turned off the TV cable; we really don't miss it much. Its Sunday, and I do have a curiousity of the football scores, like other sheeple. When I think about it, I realize that its not important.

I invite others to do the same.

[aedens]

We have been walking in the park instead of listening to media speak and if I do hear the tv it is the wife is checking local news.

[gerald]

A major causation for much of our problems is twofold, the hiding of the truth and wanting something for nothing. --- for example -- politicians -- Lets see how we can hide and shift the costs to others so that "the people" think they are getting something for nothing, and will support me, ---- of course we must not forget corruption, both political and moral ( they may be the same )

That seems to equate in a complex society to people having an obsession with trying to figure out how to get a bigger piece of the pie for doing less while giving the other guy a smaller piece of the pie for doing more. It's gone to an extreme in the past 30 years or so and especially in the last 3. When it gets to this kind of extreme the incentives that have held the civilization together fall apart. Someone who produces the essentials of life has no incentive to do so if producing the essentials of life does not allow them to afford the essentials of life, while non-essential parasites like lawyers, lobbyists, and politicians steal their productive labor and live like royalty. In such a situation, once the producers of essentials become a minority they have to walk off the job in order to get justice and therefore the civilization is prone to collapse.

If something like QE is used to keep an economy going, then your civilization is finished because QE makes all of the above continuously worse.

I think that is where we are ------------ it has happened before, ---- many times before ----

peace be with you , enjoy the show -------
cheers

[aedens]

people increasingly find ways to do less of what violates their self-interest, which entails cooperating less well with others. As Friedrich Hayek noted, “Any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about effective coordination of individual efforts.” http://mises.org/daily/6519/How-the-Sta ... ooperation