Home » Posts tagged 'contracorner' (Page 5)

Tag Archives: contracorner

The reputations of Ben and Janet are going to be eviscerated in 2016. That’s because the US economy will slide into recession in defiance of every claim they have made for their snake oil monetary policies. The plain fact is, massive falsification of financial markets via their “wealth effects” doctrine did not levitate main street prosperity at all; it just fueled another giant speculative mania in the Wall Street casino.

The prospect that the leaders of our monetary politburo are about to be tarred and feathered by economic reality might be satisfying enough if it led to the repudiation of Keynesian central planning and a thorough housecleaning at the Fed. Unfortunately, it will also mean that tens of millions of retail investors and 401k holders will be taken to the slaughterhouse for the third time this century.

And this time the Fed is out of dry powder, meaning retail investors will never recover as they did after 2002 and 2009. Moreover, the overwhelming share of main street losses will be the among baby-boom demographic——sixty and seventy something’s who will be down for the count.

As Jim Quinn so graphically put it an the adjacent piece,

Investors are lazing around the waterhole like unsuspecting gazelles. This herd will be running for their lives in the near future, as danger is lurking.

With each passing day the evidence mounts, and this morning’s trade data was a doozy. During November exports shrank by 2% and are now down 12% from the peak, and at the lowest level since March 2010.

Yes, you can count on the Keynesian paint-by-the-numbers crowd to insist that exports don’t matter that much. Goods exports are just 8% of GDP and total exports including services are 12%.

So what is 12% when Janet is busy at the Fed’s dashboard, tweaking the dials and thereby goosing the labor market back to the pink of full employment health?

…click on the above link to read the rest of the article…

Christmas 2015—–Why There Is No Peace On Earth

December 25, 2015

Christmas 2015—–Why There Is No Peace On Earth

After the Berlin Wall fell in November 1989 and the death of the Soviet Union was confirmed two years later when Boris Yeltsin courageously stood down the red army tanks in front of Moscow’s White House, a dark era in human history came to an end.

The world had descended into what had been a 77-year global war, incepting with the mobilization of the armies of old Europe in August 1914. If you want to count bodies, 150 million were killed by all the depredations which germinated in the Great War, its foolish aftermath at Versailles, and the march of history into the world war and cold war which followed inexorably thereupon.

To wit, upwards of 8% of the human race was wiped-out during that span. The toll encompassed the madness of trench warfare during 1914-1918; the murderous regimes of Soviet and Nazi totalitarianism that rose from the ashes of the Great War and Versailles; and then the carnage of WWII and all the lesser (unnecessary) wars and invasions of the Cold War including Korea and Vietnam.

I have elaborated more fully on this proposition in “The Epochal Consequences Of Woodrow Wilson’s War“, but the seminal point cannot be gainsaid. The end of the cold war meant world peace was finally at hand, yet 25 years later there is still no peace because Imperial Washington confounds it.

In fact, the War Party entrenched in the nation’s capital is dedicated to economic interests and ideological perversions that guarantee perpetual war; they ensure endless waste on armaments and the inestimable death and human suffering that stems from 21st century high tech warfare and the terrorist blowback it inherently generates among those upon which the War Party inflicts its violent hegemony.

…click on the above link to read the rest of the article…

The Keynesian Recovery Meme Is About To Get Mugged, Part 2

December 23, 2015

The Keynesian Recovery Meme Is About To Get Mugged, Part 2

Our point yesterday was that the Fed and its Wall Street fellow travelers are about to get mugged by the oncoming battering rams of global deflation and domestic recession.

When the bust comes, these foolish Keynesian proponents of everything is awesome will be caught like deer in the headlights. That’s because they view the world through a forecasting model that is an obsolete relic—one which essentially assumes a closed US economy and that balance sheets don’t matter.

By contrast, we think balance sheets and the unfolding collapse of the global credit bubble matter above all else. Accordingly, what lies ahead is not history repeating itself in some timeless Keynesian economic cycle, but the last twenty years of madcap central bank money printing repudiating itself.

Ironically, the gravamen of the indictment against the “all is awesome” case is that this time is different——radically, irreversibly and dangerously so. High powered central bank credit has exploded from $2 trillion to $21 trillion since the mid-1990’s, and that has turned the global economy inside out.

Under any kind of sane and sound monetary regime, and based on any semblance of prior history and doctrine, the combined balance sheets of the world’s central banks would total perhaps $5 trillion at present (5% annual growth since 1994). The massive expansion beyond that is what has fueled the mother of all financial and economic bubbles.

Owing to this giant monetary aberration, the roughly $50 trillion rise of global GDP during that period was not driven by the mobilization of honest capital, profitable investment and production-based gains in income and wealth. It was fueled, instead, by the greatest credit explosion ever imagined——$185 trillion over the course of two decades.

…click on the above link to read the rest of the article…

Sell The Bonds, Sell The Stocks, Sell The House —–Dread The Fed!

December 18, 2015

Sell The Bonds, Sell The Stocks, Sell The House —–Dread The Fed!

There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen’s press conference. She did not say one word about the real world; it was all about the hypothecated world embedded in the Fed’s tinker toy model of the US economy.

Yes, tinker toys are what kids used to play with back in the 1950s and 1960s, and that’s when Janet acquired her school-girl model of the nation’s economy.

But since that model is so frightfully primitive, mechanical, incomplete, stylized and obsolete, it tells almost nothing of relevance about where the markets and economy now stand; or what forces are driving them; or where they are headed in the period just ahead.

In fact, Yellen’s tinker toy model is so deficient as to confirm that she and her posse are essentially flying blind. That alone should give investors pause—-especially because Yellen confessed explicitly that “monetary policy is an exercise in forecasting”.

Accordingly, her answers were riddled with ritualistic reminders about all the dashboards, incoming data and economic system telemetry that the Fed is vigilantly monitoring. But all that minding of everybody else’s business is not a virtue—-its proof that Yellen is the ultimate Keynesian catechumen.

This stupendously naïve old school marm still believes the received Keynesian scriptures as penned by the 1960s-era apostles James(Tobin), John (Galbraith), Paul (Samuelson) and Walter (Heller).

But c’mon.Those ancient texts have no relevance to the debt-saturated, state-dominated, hideously over-capacitated global economy of 2015. They just convey a stupid little paint-by-the-numbers simulacrum of what a purportedly closed domestic economy looked like even back then.

That is, before Richard Nixon had finally destroyed Bretton Woods and turned over the Fed’s printing presses to power aggrandizing PhDs; and before Mr. Deng had thrown out Mao’s little red book in favor of a central bank based credit Ponzi.

…click on the above link to read the rest of the article…

Today Will Be a Watershed Moment for Financial Markets

December 16, 2015

Today Will Be a Watershed Moment for Financial Markets

I believe the world is at the greatest financial market inflection point since 1929. One that calls for a basic truism:

You can make a profit in a rising market if you are long. And you can profit in falling market if you are short.

The $64 million question is: How can you know the market’s direction?

There are all kinds of financial advisors, market seers, chart readers and fancy investment formulas. Each purports to answer that question. But all of these assume some kind of steady state world in which the future unfolds in a grand cycle based on past history.

“Just get some good pattern recognition software” a financial TV advertisement might tell you, and “you’re all set to make a killing.”

I don’t believe that for a second. We are in uncharted waters after nearly 20 years of madcap money printing by the Fed and other central banks.

Everything has been wildly inflated — stocks, bonds, real estate — and also the entire real economy as measured by global GDP. That includes trade volumes, capital spending, commodity prices, energy and mining capacity, manufacturing investment, bulk carriers and containerships. Also, warehouse and distribution facilities, brick and mortar retail space and much, much more.

But before we get to some of the facts about this great financial deformation, let me get right to the investment thesis. The world’s central banks are finally out of dry powder. They no longer have the means to inflate the global credit and financial bubble.

That’s why I’m calling today’s FOMC meeting the most crucial inflection point since 1929.

We have reached the apogee of history’s greatest credit inflation. Now we’re hurtling into a prolonged worldwide deflation. You can already see this deflation in the plunge of oil, iron ore, copper and other commodity prices.

…click on the above link to read the rest of the article…

A Full Trunk Of Combustible Junk——The Wages Of ZIRP

December 16, 2015

A Full Trunk Of Combustible Junk——The Wages Of ZIRP

Shuffling uncomfortably with paint brushes in hand in the tight monetary corner into which they have painted themselves, our monetary suzerains are about to demonstrate the folly of their seven-year stint of “extraordinary” policy accommodation.

Even as ZIRP and QE have failed to rejuvenate the main street economy, they did trigger a far-reaching scramble for yield that has now left the casino bobby-trapped with FEDS (financially explosive devices). The current rumblings in the junkyard are just the warning signs of the explosions sure to follow.

These little nasties are not the product of free financial markets and honest price discovery; they are the deformed off-spring of relentless financial repression and the systematic falsification of prices in the money and capital markets.

As shown below, the volume of outstanding high yield debt has reached record levels; and more importantly, it has climbed in a relentless progression over the Fed’s serial bubble cycles.

On the eve of the dotcom collapse, there was about $375 billion of high yield bonds and bank loans outstanding—-a figure which was not in the slightest set back by the dotcom crash and recession which followed.

In fact, by the time Greenspan had slashed money market rates from 6.5% on Christmas eve 2000 to 1.0% by the end of 2003, the amount of high yield debt outstanding had doubled to $700 billion; and it eventually grew another half trillion dollars as the housing/credit bubble inflated, reaching $1.2 trillion by 2007.

During the Great Recession the level of outstandings plateaued during, but there was no purge of the rot or liquidation on a net basis of the excesses that had been generated during the Greenspan housing/credit boom.

Instead, it was rolled over in a vast refi operation triggered by ZIRP and the Fed’s massive suppression of bond yields via QE. Specifically, leveraged bank loan balances were paid down by about 10% between the 2007 peak and 2010 to about $500 billion.

…click on the above link to read the rest of the article…

December 16, 2015—–When The End Of The Bubble Begins

December 12, 2015

December 16, 2015—–When The End Of The Bubble Begins

They are going to layer their post-meeting statement with a steaming pile of if, ands & buts. It will exude an abundance of caution and a dearth of clarity.

Having judged that a 25 bps pinprick is warranted, the FOMC will then plant itself firmly in front of the great flickering dashboard in the Eccles Building. There it will repose to a regimen of “watchful waiting”, scouring the entrails of the “incoming data” to divine its next move.

Perhaps the waiting won’t be so watchful as all that, however. What is actually coming down the pike is something that may put the reader, at least those who have already been invited to join AARP, more in mind of that once a year hour-long special broadcast by Saturday morning TV back in the days of yesteryear; it explained how the Lone Ranger got his mask.

Memory fails, but either 12 or 19 Texas Rangers rode high in the saddle into a box canyon, confident they knew what was around the bend. Soon there was a lot of gunfire and then there was just one, and that was only because Tonto’s pony needed to stop for a drink.

Yellen and her posse better pray for a monetary Tonto because they are riding headlong into an ambush in the canyons of Wall Street. To wit, they cannot possibly raise money market interest rates—-even by 75 bps—-without massively draining liquidity from the casino.

Don’t they know what happened to the $3.5 trillion of central bank credit they have digitally printed since September 2008? Do they really think that fully $2.8 trillion of it just recycled right back to the New York Fed as excess bank reserves?

That is, no harm, no foul and no inflation? The monetary equivalent of a tree falling in an empty forest?

…click on the above link to read the rest of the article…

The Russia/Turkey Clash———Some Relevant History

November 27, 2015

The Russia/Turkey Clash———Some Relevant History

Turn to page 214 in the book “War-making for Dummies.” You will find: “plan air operations right on your neighbor’s border, zig in and zag out, make rude gestures at enemy pilots, and shoot them down if you can.”

On Tuesday this week, the inevitable air clash occurred on the Syrian-Turkish border west of Aleppo. From what we know so far, two Russian SU-24 bombers that had been pounding anti-Damascus forces on the border briefly intruded on Turkish airspace for all of 17 seconds.

Turkish F-16 fighters, clearly pre-positioned in the area, pounced on the Russians and downed one Sukhoi with an air-to-air missiles. One of the Russian pilots was killed – probably by pro-Turkish Syrian tribesmen while parachuting to earth. A Russian Marine was killed when the helicopter in which he was flying to recuse the downed airman was hit by a US-supplied TOW anti-tank missile.

Turkey claimed it had warned the Russian warplane 10 times’ before shooting. How the Turks could pre-position its F-16’s and issue ten warnings within 17 seconds was not explained. Russia’s president Vladimir Putin furiously accused the Turks of murder and supporting ISIS extremists.

The US-led NATO alliance rushed to back up member Turkey, which moved forces to its long border with Syria. Putin ordered lethal, long-ranged S-400 anti-aircraft missiles to Syria and missile cruiser “Moskva” to station off Syria’s Mediterranean coast. Both systems can cover large parts of western Syria, including areas routinely intruded upon by US, French, British and Israeli aircraft.

In short, a perfect witch’s stew for the beginning of a real war between Russia and the West that has been simmering in Syria and Ukraine. US forces are now operating in both nations within spitting distance of Russian troops.

The location of this Russo-Turkish clash was very interesting, though unnoted by western media. It occurred along the southern end of a small, narrow salient of Turkish territory jutting into Syria.

…click on the above link to read the rest of the article…

Wall Street Remains Clueless—–Even As The Brown Stuff Heads Straight Into The Fan

November 25, 2015

Wall Street Remains Clueless—–Even As The Brown Stuff Heads Straight Into The Fan

The Dow should have been down 500 points Tuesday. And that’s to say nothing of the fact that the market’s current lofty valuation makes no sense in the first place.

The fact is, the brown stuff is now heading straight for the fan.

Didn’t the odds of a major geo-political calamity just take a huge turn for the worse in the airspace over the Syria-Turkey border?

At the same time, wasn’t today’s GDP update just one more reminder that the global economy is sinking into a deflationary contraction? And that our so-called domestic recovery cycle is getting very long in the tooth and is essentially running on the fumes of inventory accumulation?

Yet the Wall Street gamblers and robo-traders seem to think that pricing this global accident waiting to happen at 22X reported S&P 500 earnings is no big deal. And that comes on top of the fact that the long-running corporate earnings expansion cycle is over, as attested to by both the GDP report and the Q3 SEC filings.

At $94 per share S&P reported earnings came in 11% below last year’s $106 per share and that was before the most recent headwinds became evident.

To wit, Syria is rapidly taking on the complexion of the Balkans in June 1914. The resulting backwash of Islamic State terrorism and millions of refugees streaming deep into the interior of Europe threatens to elicit a political and economic lockdown and a potential Thermidorian Reaction.

The rise of rightwing nationalism, in fact, would end the European Union as we know it.

And this is occurring even as Asian exports to Europe plunge, dragging Japan into its 5th recession in seven years and China ever closer to a thumping hard landing.

So the market at 22X amounts to a bubble floating toward a pin.

…click on the above link to read the rest of the article…

The $4.6 Trillion Leveraged Loan Market—–Next Crisis In The Making

November 22, 2015

The $4.6 Trillion Leveraged Loan Market—–Next Crisis In The Making

Financial crises take about a decade to be born. Having lived through four of them, I see the raw materials for a fifth one — flowing from the collapse of so-called leveraged loans — debt piled on top of companies with weak credit ratings.

Before examining the latest news on leveraged loans, let’s take a quick tour down the memory lane of financial crises I’ve lived through.

My first one was in 1982 — that’s when banks lent too much money to oil and gas developers in Oklahoma and Texas as well as local real estate developers.

At the suggestion of McKinsey, money-center banks like Chemical Bank thought it would be a great idea to buy a piece of those loans. It’s all described nicely in a wonderful book — Belly Up.

Too bad the price of oil and gas tumbled, leaving lenders in the lurch and causing a spike in bank failures that gave me the chance to spend a balmy summer in Washington helping the FDIC develop a system to manage the liquidationof those failed banks.

By 1989, it was time for another banking crisis — this one was pinned to too much lending to commercial real estate developers in New England and junk-bond-backed loans for what used to be known as leveraged buyouts.

The government shut down Bank of New England and was threatening my employer, Bank of Boston, with the same. I worked on a government-mandated strategic plan intended to save the bank from a similar fate.

Next up— the dot-com bust — which introduced me to the idea that not all bubbles are bad if you can get in when they’re forming and exit before they burst. I invested in six dot-coms and had a mixed record — the three winners offset the three wipe outs.

…click on the above link to read the rest of the article…

Blowback—–The Washington War Party’s Folly Comes Home To Roost

November 17, 2015

Blowback—–The Washington War Party’s Folly Comes Home To Roost

Exactly 26 years ago last week, peace was breaking out in a manner that the world had not experienced since June 1914. The Berlin Wall—-the symbol of a century of state tyranny, grotesque mass warfare and the nuclear sword of Damocles hanging over the planet—-had come tumbling down on November 9, 1989.

It was only a matter of time before the economically decrepit Soviet regime would be no more, and that the world’s vast arsenal of weapons and nuclear bombs could be dismantled.

Indeed, shortly thereafter according to Gorbachev, President George H.W. Bush and Secretary Baker promised that NATO would not be expanded by “as much as a thumb’s width further to the East” in return for acquiescing to the reunification of Germany.

So with its “mission accomplished” there was no logical reason why NATO should not have been disbanded in parallel with the Warsaw Pact’s demise, and for an obvious and overpowering reason: On November 9, 1989 there were no material military threats to US security anywhere on the planet outside of the suddenly vanishing front line of the Cold War.

As it turned out, however, there was a virulent threat to peace still lurking on the Potomac. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch.

So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world.

In a word, the real threat to peace circa 1990 was that Pax Americana would not go away quietly in the night.

…click on the above link to read the rest of the article…

The Bubble Finance Cycle——What Our Keynesian School Marm Doesn’t Get

November 13, 2015

The Bubble Finance Cycle——What Our Keynesian School Marm Doesn’t Get

The world of Bubble Finance economies created by the Fed and other central banks is fundamentally different than that prevailing under the “Lite Touch” monetary policies which preceded the Greenspan era.

Those essentially reactive and minimally invasive central bank intrusions into the money and capital markets prevailed from the time of the Fed’s 1951 liberation from the US Treasury by the great William McChesney Martin through September 1985. That’s when the US Treasury/White House once again seized control of the Fed’s printing presses and ordered Volcker to trash the dollar via the Plaza Accord. In due course, the White House trashed him, too.

The problem today is that the PhDs running the Fed have an economic model which is a relic of the Lite Touch era. It is not only utterly irrelevant in today’s casino driven system, but is actually tantamount to a blindfold. It causes them to look at a dashboard full of lagging indicators, while ignoring the explosive leading indicators starring them in the face.

The clueless inhabitants of the Eccles Building do not recognize that they have created a world in which Wall Street supersedes main street; and in which the monetary inflation that eventually brings the business cycle to a halt is soaring financial asset prices, not wage rates and new car prices.

During the Light Touch era recessions were triggered by sharp monetary tightening that caused interest rates to surge. This soon garroted business and household borrowing because credit became too expensive. And this interruption in the credit expansion cycle, in turn, caused spending on business fixed assets and household durables to tumble (e.g. auto and appliances), setting in motion a cascade of recessionary adjustments.

But always and everywhere the pre-recession inflection point was marked by a so-called wage and price spiral resulting from an overheated main street economy. Yellen’s Keynesian professors in the 1960s called this “excess demand”, and they should have known.

…click on the above link to read the rest of the article…

Professor Bernanke’s Bogus Contra-factual, Part 2: Why The Friedman/Bernanke Thesis About The Great Depression Was Dead Wrong

October 29, 2015

Professor Bernanke’s Bogus Contra-factual, Part 2: Why The Friedman/Bernanke Thesis About The Great Depression Was Dead Wrong

In explaining to the FT’s Martin Wolf why he bailed out the Wall Street gamblers at Goldman Sachs and Morgan Stanley while crushing millions of ordinary American savers and retirees, Bernanke typically repaired to his go to argument. It had nothing to do with the mild excesses of inventories and labor that had built up in the main street economy owing to the Greenspan housing and credit boom, as explained in Part 1.

That’s because Bernanke was not aiming to ameliorate the mild economic liquidation that ensued after the Lehman event; and which, as previously demonstrated, would have runs its course and self-corrected without any help from the Fed in any event.

No, Ben S. Bernanke will be someday remembered as the world’s most destructive battleship admiral. Not only was he fighting the last war, but his whole multi-trillion money printing campaign after September 15, 2008 was aimed at avoiding an historical Fed mistake that had never even happened!

As Bernanke explained it:

I should have done more (to mitigate anti-Fed sentiments). But I was very much engaged in trying to put out the fire. So I don’t know what to say. It was kind of predictable. The Federal Reserved failed in the 1930s. I think we did much better than in the 1930s.

The claim that the Fed resorted to “extraordinary policies” of ZIRP and QE because it was fighting a recurrence of Great Depression 2.0 is completely, profoundly, unequivocally and destructively wrong.

It is the giant fig leaf that obscures what really happened during and after the crisis. Namely, that the main street economy recovered on its own, and that the flood of money generated by Bernanke never left the canyons of Wall Street, thereby causing the destruction of honest price discovery in the financial markets once and for all.

So doing, the Fed and other central banks have turned financial markets into dangerous, unstable casinos. In the name of precluding the contra-factual——that is, Great Depression 2.0—-they have generated the mother of all financial bubbles.

…click on the above link to read the rest of the article…

Embracing The Dark Side: A Short History Of The Pathological Neocon Quest For Empire

October 28, 2015

Embracing The Dark Side: A Short History Of The Pathological Neocon Quest For Empire

When Bill Kristol watches Star Wars movies, he roots for the Galactic Empire. The leading neocon recently caused a social media disturbance in the Force when he tweeted this predilection for the Dark Side following the debut of the final trailer for Star Wars: The Force Awakens.

Kristol sees the Empire as basically a galaxy-wide extrapolation of what he has long wanted the US to have over the Earth: what he has termed “benevolent global hegemony.”

Kristol, founder and editor of neocon flagship magazine The Weekly Standard,responded to scandalized critics by linking to a 2002 essay from the Standard’s blog that justifies even the worst of Darth Vader’s atrocities. In “The Case for the Empire,” Jonathan V. Last made a Kristolian argument that you can’t make a “benevolent hegemony” omelet without breaking a few eggs.

And what if those broken eggs are civilians, like Luke Skywalker’s uncle and aunt who were gunned down by Imperial Stormtroopers in their home on the Middle Eastern-looking arid planet of Tatooine (filmed on location in Tunisia)? Well, as Last sincerely argued, Uncle Owen and Aunt Beru hid Luke and harbored the fugitive droids R2D2 and C3P0; so they were “traitors” who were aiding the rebellion and deserved to be field-executed.

A year after Kristol published Last’s essay, large numbers of civilians were killed by American Imperial Stormtroopers in their actual Middle Eastern arid homeland of Iraq, thanks largely in part to the direct influence of neocons like Kristol and Last.

That war was similarly justified in part by the false allegation that Iraq ruler Saddam Hussein was harboring and aiding terrorist enemies of the empire like Abu Musab al-Zarqawi. The civilian-slaughtering siege of Fallujah, one of the most brutal episodes of the war, was also specifically justified by the false allegation that the town was harboring Zarqawi.

…click on the above link to read the rest of the article…

Professor Bernanke’s Bogus Contra-factual, Part 1: The Myth Of Great Depression 2.0

October 27, 2015

Professor Bernanke’s Bogus Contra-factual, Part 1: The Myth Of Great Depression 2.0

It took no “courage” whatsoever to inflate the Fed’s balance sheet from $900 billion to $2.3 trillion during just 17 weeks in September-December 2008. What it actually took was an epochal con job by a naïve Keynesian academic whose single idea about economics was primitive, self-serving, borrowed and wrong.

The claim that the Great Depression was caused by the Fed’s failure to go on a bond buying spree in 1930-1933 was Milton Friedman’s monumental error. Professor Bernanke’s scholarship amounted to little more than xeroxing Friedman’s flawed work, and then shouting loudly in the Eccles Building boardroom at the time of the Lehman bankruptcy that Great Depression 2.0 was lurking just around the corner.

That was just plain hysterical malarkey. But at the time, it served the interests of the Wall Street/Washington Corridor perfectly.

As Wall Street’s decade long spree of leveraged speculation was being liquidated in September 2008, Goldman Sachs, Morgan Stanley and their posse of hedge fund speculators desperately needed rescue from their own reckless gambles——especially their funding of giant balance sheets swollen by long-dated, illiquid, risky assets with cheap hot funds in the wholesale money market. So what better excuse to override every principle of free market economics, financial discipline and public policy fairness than stopping a reenactment of the 1930s—–putative soup-lines and all?

At the same time, beltway politicians and fiscal authorities were tickled pink. They would be able to unleash a monumental $800 billion potpourri of K-street pork and tax and entitlement giveaways to “fight” the recession, knowing that Bernanke & Co would finance it with an eruption of public debt monetization that was theretofore unimaginable.

In short, no public official has ever committed an economic folly greater than the horrific misdeed of Ben S. Bernanke when he provided the Great Depression 2.0 cover story for the lunatic outbreak of central bank money printing shown below. It destroyed the last vestige of Wall Street discipline in a financialized economy that had already been bloated and deformed by two decades of Greenspan era Bubble Finance.

…click on the above link to read the rest of the article…

Tag Archives: contracorner

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Post navigation

Latest Posts