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BREAKING BAD (DEBT) – EPISODE TWO
BREAKING BAD (DEBT) – EPISODE TWO
‘If you’re committed enough, you can make any story work. I once told a woman I was Kevin Costner, and it worked because I believed it’ – Saul Goodman – Breaking Bad
“As calamitous as the sub-prime blowup seems, it is only the beginning. The credit bubble spawned abuses throughout the system. Sub-prime lending just happened to be the most egregious of the lot, and thus the first to have the cockroaches scurrying out in plain view. The housing market will collapse. New-home construction will collapse. Consumer pocketbooks will be pinched. The consumer spending binge will be over. The U.S. economy will enter a recession.” – Eric Sprott – 2007
In Part One of this article I provided the background of how our current debt saturated economy got to this point of ludicrousness. The “crazy” bloggers, prophets of doom, and analysts who could do basic math were warning of an impending financial crisis in 2006 and 2007, which would be caused by the issuance of hundreds of billions in subprime slime by the Too Big To Trust Wall Street shysters. Subprime mortgages, auto loans, and credit card lines provided the kindling for the 2008 conflagration.
Under normal circumstances we wouldn’t have seen such irrational, reckless, greedy behavior from Wall Street for another generation. But, Wall Street didn’t have to accept the consequences of their actions. They were bailed out and further enriched by their puppets at the Federal Reserve, the lackey politicians they installed in Washington D.C., and on the backs of honest, hard-working, tax paying Americans. The lesson they learned was they could continue to take excessive, reckless, unregulated risks without concern for losses, downside, or consequences.
…click on the above link to read the rest of the article…
JANET YELLEN IS A COWARD
JANET YELLEN IS A COWARD
Headline:
Yellen Is Loathe To Change Easy Money Policy
With her diminutive stature, dutch-boy haircut and puffy facial features Janet Yellen certainly does not look like a leader…more like a Brooklyn grandmother eager to tell you her special recipe for
chocolate chip cookies. In this case, unfortunately, her appearance does not deceive.
You might ask What Are The Traits of a Leader? Naturally, there are many but one trait, I can assure you, that does not define a leader = COWARDICE…and that dubious characteristic seems to describe Yellen’s recent tenure at The Federal Reserve.
It is a strong statement. I am aware. But, sadly, it is an assertion that is not too difficult to support.
Definition of Coward:
a person who lacks courage in facing danger, difficulty, opposition, pain, etc.
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First of all, Yellen has demonstrated no thought leadership at The Fed. She is simply “preaching the same gospel” as her nerdy predecessor Ben Bernanke. I suppose that since her “hero” [her words] decided that debt monetization and interest rate suppression were a sound strategy for the economy then she might as well continue with the same approach…despite its limitations. This copycat approach seems to suit her well and, of course, that is unfortunate. Her lack of rational action, with respect to interest rate policy, reminds me of those that just do not have the courage to think for themselves…always wanting to piggyback on other people’s ideas rather than to devise thoughts of their own. Anyway it seems change is not in Yellen’s DNA [as it would require original thought] while she is forcefully fighting a logical change of course on interest rate policy. Maybe because any type of change is painful [see definition of coward above] even if the change itself is relatively minor [as in a 25-75 basis point increase in interest rates]?
…click on the above link to read the rest of the article…
Deflation Is Winning: Brian Pretty – PeakProsperity.com | Peak Prosperity
Deflation Is Winning: Brian Pretty – PeakProsperity.com | Peak Prosperity.
Remember in the early part of the last decade, long before he was appointed the Chairman of the Federal Reserve, Ben Bernanke penned an article that caught widespread public attention entitled, “Deflation: It Can’t Happen Here” ?
Bernanke was referring to the deflationary pressures Japan had been dealing with for more than a decade. In the article, Bernanke laid out a game plan for how the Fed would respond if the US ever faced deflationary pressures. His miracle antidote for battling deflation? Printing money. Lots of it.
Little did anyone know at the time that this game plan would become the Fed’s exact response to the credit market crisis and deflationary impulse that erupted in 2008 and 2009.
Moreover, this game plan of printing money was ultimately adopted by every major world central bank in the wake of the meaningful downturn of that period. We continue to live through this grand and unprecedented global experiment.
Huffing & Puffing
Fast forward six years to the present. Since early 2009, central banks globally have printed more than $13 trillion. In addition, governments across the planet have increased their borrowings at historic proportions (the US just crossed $18T – another new high!), all in an effort to stimulate economies and avoid deflationary pressures. Total US Federal debt has more than doubled in five years, an increase of $9.5 trillion and counting. The objective? Generate inflation.
…click on the above link to read the rest of the article…
Quantitative Easing is like “treating cancer with Aspirin”
Quantitative Easing is like “treating cancer with Aspirin”.
Shortly before leaving the Fed this year, Ben Bernanke rather pompously declared that Quantitative Easing “works in practice, but it doesn’t work in theory.”
There is, of course, no counter-factual.
We’ll never know what might have happened if the world’s central banks had not thrown trillions of dollars at the banking system, and instead let the free market work its magic on an overleveraged financial system.
But to suggest credibly that QE has worked, we first have to agree on a definition of what “work” means, and on what problem QE was meant to solve.
If the objective of QE was to drive down longer term interest rates, given that short term rates were already at zero, then we would have to concede that in this somewhat narrow context, QE has “worked”.
…click on the above link to read the rest of the article…
