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Former Fed Advisor Asks “Has The Fed Bankrupted The Nation”
Former Fed Advisor Asks “Has The Fed Bankrupted The Nation”
Which one does not belong? Logic dictates that Volcker should have been odd man out. After all, there is no legendary “Volcker Put.”
The towering monetarist made no bones about never being bound by the financial markets. The same can certainly not be said of his three successors. And yet, history contrarily suggests it is to Volcker above all others that the financial markets will forever be beholden.
Many of you will be familiar with Michael Lewis’ memoir, Liar’s Poker. Yours truly first read the book in a Wall Street training program much like the one Lewis survived to describe in his autobiographical work. The take-away then, in late 1996, was that Gordon Gekko was right — greed was good.
Recently, a second reading of Liar’s Poker, following nearly a decade inside the Federal Reserve, delivered a much different message than did that first youthful reading and was nothing short of an epiphany: Paul Volcker, albeit certainly inadvertently, created the bond market.
On Saturday, October 6, 1979. Volcker held a press conference and announced that interest rates would no longer be fixed and that further the Fed would begin to target the money supply in order to curb inflation and “speculative excesses in financial, foreign exchange and commodity markets.”
Alas, this new regime was not meant to be. In trying to introduce an alternative to interest rate targeting, the Fed replaced one guessing game with another. Predicting the demand for reserves and then buying or selling securities based on that demand proved to be just as dicey as a similar exercise to target a given level of interest rates had been.
…click on the above link to read the rest of the article…
China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge
China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge
Here is a brief sample of some of the measures the Chinese government and the PBOC have unleashed in just the past ten days to prop up the crashing market include:
- a ban on major shareholders, corporate executives, directors from selling stock for 6 months
- freezing more than half (1400 at last count per Bloomberg) of the listed companies from trading,
- blocking fund redemptions, forcing companies to invest in the market,
- halting IPOs,
- reducing equity transaction fees,
- providing daily bailouts to the margin lending authority,
- reducing margin requirements,
- boosting buybacks
- endless propaganda by Beijing Bob.
The measures are summarized below.
But it wasn’t until last night’s first official threat to “malicious” (short) sellers that they face charges (i.e., arrest), as Xinhua reported yesterday:
[Ministry of Public Security in conjunction with the recent Commission investigation of malicious short stock and stock index clues ] correspondent was informed on the 9th morning , Vice Minister of Public Security Meng Qingfeng led to the Commission , in conjunction with the recent Commission investigation of malicious short stock and stock index clues show regulatory authorities to the operation of heavy combat illegal activities.
… that the wall of Chinese intervention finally worked. For now.
And since this is all about one thing, the stock, market, it is worth noting that the Shanghai Composite Index had dropped as much as 3.8% to a 4 month low before the news that the cops were going to arrest anyone who used a wrong discount rate in their DCF, when everything suddenly took off, and the SHCOMP closed a “Dramamine required” 5.8% higher, the biggest daily increase since March 2009!
“As China beefs up its efforts to rescue the market, with even the public security ministry involved, market sentiment is recovering slightly from a panicky stage earlier,” Shenyin Wanguo analyst Qian Qimin says by phone
…click on the above link to read the rest of the article…
The Moment When The San Francisco Fed Finally Figures Out What “Debt” Is
The Moment When The San Francisco Fed Finally Figures Out What “Debt” Is
The San Fran Fed, in addition to being the lair that hatched the current Fed chairmanwoman, is best know for spending millions in taxpayer funds to “contemplate” such profound topics as:
- “Is It Still Worth Going To College?”
- “How Important Are Hedge Funds In A Crisis“
- “Is Structural Unemployment Is On The Rise (Says It Isn’t)”
- “Are Tumbling Existing Home Sales Due To “Rising Rates“
- “Is A Recessionary Relapse Is A Significant Possibility Sometime In The Next Two Years“
- “Easy Credit Leads To Increase In Household Borrowing“
And let’s not forget “San Fran Fed Spends More Money To Justify Colossal Failure At Anticipating Consequences Of Its Actions.”
So today, in the latest example of misappropriation of millions in taxpayer “R&D” funds by a Federal Reserve bank, has released a note titled, mysteriously enough, “Mortgaging the Future?” unleashes the following shocker: “Leverage is risky.”
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This coming from the institution that monetized $3 trillion in US debt, and whose balance sheet will never be unwound without a global market crash so profound it would likely lead to a global war?
Why yes. That’s right.
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So for all those curious to learn just how stupid the Fed is, and desperate for laughter in these centrally-planned times, here are several excerpts of deep intellectual work from what according to many is the most important regional Fed in the US (now that everyone is aware Goldman Sachs is in charge of the NY Fed and is scrambling to limit the vampire squid’s domination over the world’s most levered hedge fund in the world):
…click on the above link to read the rest of the article…
