Central Banks: When We Succeed, We Fail

Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability. Central banks around the world share a few simple goals: 1. Defeat deflation by sparking inflation–in the cost of goods and services, not wages.
2. Weaken the currency to boost exports and counter beggar thy neighbor devaluations by other exporting nations and trading blocs.
3. Boost the value of stocks to keep pension plans afloat and project a politically powerful message of “growth” and “prosperity.”
What no central bank dares say is what happens should they manage to boost inflation, devalue their currency and continue pushing assets higher: when we succeed, we fail. Consider the consequences of juicing inflation: every click up in inflation further reduces the purchasing power of wages, which do not keep up with inflation in a world of labor surplus.
When central banks succeed in jacking up inflation, they will fail the households and enterprises whose income is stagnating or declining:Were European Central Bank head Mario Draghi honest, here is what he would say:

This post was published at Charles Hugh Smith on NOVEMBER 23, 2014.

American CEOs Sum Up The Economic Outlook: “Softness, Stagnant, Cautious, Challenging”

Since May, CEO confidence among America’s largest companies had stagnated – even as stocks did what they do and rise, rise, rise. That changed when Bullard (now explained as “misunderstood” by the market) set fire to stocks with his QE4 hints and Plunge Protection Team rescue. However, the last 2 weeks have seen a noticable collapse once again in CEO confidence, according to Bloomberg’s Orange Book index, even as stocks reach new higher all-time-er highs. As Bloomberg’s Rich Yamarone notes, recent earnings calls highlight the headwinds companies face: Executives cite ‘softness in consumer spending,’ a ‘challenging’ climate, ‘fairly stagnant economy,’ and ‘cautious’ optimism. Currency valuations are front and center.
Quite a drop from the kneejerk exuberane after Bullard…

This post was published at Zero Hedge on 11/23/2014.

Dudley Do Wrong Rejects Being a ‘Cop’ and Embraces ‘Foaming the Runways’

This is a syndicated repost courtesy of New Economic Perspectives. To view original, click here.
San Fransisco, CA: November 22, 2014
William Dudley, the President of the NY Fed, is not a stupid man. He is, however, wholly unfit to be a regulator. He has now admitted that publicly. It is time for him to return to Goldman Sachs so that he can be replaced by someone expressly chosen to be a vigorous regulator who will embrace the most critical function of a financial regulator – to be the tough ‘regulatory cop on the beat.’
The story of Dudley’s ineptness has been mirrored by the New York Times’inept coverage of the failures of one of the reporter Peter Eavis’ favorite sons on Wall Street. Eavis is a Brit with a B. A. in international history and politics. He has also been a pastor. He co-authored the epically incoherent column on the NY Fed’s most recent scandal, the leaking of confidential information by a NY Fed employee to a former NY Fed employee who had joined Goldman Sachs. I criticized that column in my November 20, 2014article and provided some of the key missing facts and analytics.
Eavis has now written what purports to be a news story, but often reads like an editorial, about the November 21 Senate hearing on a series of recent NY Fed failures. Eavis introduces his piece with this snide slam at Senator Elizabeth Warren.
‘William C. Dudley, the president of the New York Fed, defended the agency, but Senator Elizabeth Warren, Democrat of Massachusetts, at one point told him, ‘You need to fix it, Mr. Dudley, or we need to get someone who will.’
The president of the New York Fed is not chosen by Congress. And much of the stern questioning could be seen as the sort of grandstanding that plays well with those who want to limit Wall Street’s power or were harmed in the financial crisis of 2008. Even so, it will be hard for the Fed to ignore the anger directed at Mr. Dudley. The New York Fed is the public’s first line of defense against Wall Street’s excesses and abuses, and the discontent in Congress could build if more evidence emerges that suggests the New York Fed is not tough enough with the large banks it oversees.’

The mendacity of these two paragraphs is a joy to dissect. First, one of the most serious problems is the fact that the ‘president of the New York Fed is not chosen by Congress’ – or, more precisely, by the President with the ‘advice and consent’ of the Senate. As long as our anti-regulators are chosen by industry they are supposed to regulate they will be anti-regulators and they will fail to regulate effectively. My prior column explained this obvious conflict of interest, the fact that the identical conflict used to institutionalized into the Federal Home Loan Bank system, that Congress decided in 1989 (by enacting FIRREA) to eliminate the conflict by ensuring that regulation was done only by federal employees and stripping all governmental functions from the FHLBs, and that this was done with the support of the regulatory leaders of the FHLB of San Francisco because we agreed with the need to remove the conflict of interest even though the prior system was strongly in our self-interest. Dudley is a whole lot wealthier than we were and the fact that he continues to advocate for maximizing his self-interest by maintaining such an obvious conflict of interest, despite a record of abject regulatory failure at the regional Fed banks, demonstrates one reason he is unfit to be a regulator.

This post was published at Wall Street Examiner on November 23, 2014.

JIM ROGERS on the U.S. DOLLAR COLLAPSE – Russia, China & World Moving Away From USD

JIM ROGERS on the U. S. DOLLAR COLLAPSE – Russia, China & World Moving Away From USD
Financial analyst Jim Willie sensationally claims that Germany is preparing to ditch the unipolar system backed by NATO and the U. S. in favor of joining the BRICS nations, and that this is why the NSA was caught spying on Angela Merkel and other German leaders.
In an interview with USA Watchdog’s Greg Hunter, Willie, a statistical analyst who holds a PhD in statistics, asserted that the real reason behind the recent NSA surveillance scandal targeting Germany was centered around the United States’ fear that Europe’s financial powerhouse is looking to escape from an inevitable dollar collapse.
‘I think they are looking for details on assisting Russia on dumping the dollar. I think they are looking for details for a secret movement for Germany to get away from the dollar and join the BRICS (Brazil, Russia, India, China and South Africa.) This is exactly what I think they are going to do,’ said Willie.
Earlier this month, the BRICS nations (Brazil, Russia, India, China and South Africa), announced the creation of a new $100 billion dollar anti-dollar alternative IMF bank to be based in Shanghai and chaired by Moscow. The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.

This post was published at Investment WatchBlog on November 23rd, 2014.

The Velocity of Dirty Money: What the Grubby 100-Peso Notes Say About Inflation in Argentina

By Bianca Fernet, stilettos-on-the-ground American economist in Buenos Aires, antidote to economists who act like economics is too complicated to understand and who spout off buzzwords that make you feel inadequate. Her website The Bubble covers pop and econ topics in Argentina.
You know that feeling when you touch a crisp Argentine peso note?
In fact, you’ve probably noticed that your peso bills are quite the opposite. Generally pretty tattered, often taped together, and sometimes all around limp and damp. While I lack adequate resources to do a full comparative study on the quality of Argentine peso paper via other papers in the world, the weary state of our peso notes is likely more due to inflation. Inflation in Argentina has been around for literally the better part of the century. In fact, a recent post even discussed if Argentines don’t really react to the phenomenon anymore.
Although inflation is not new here, it still receives a great deal of attention on the political front. The government maintains a frozen price list for a basket of consumer goods, and the statistics agency INDEC claims one can eat on ARS $10 pesos per day. The Bubble’s own Sam Pothecary recently tested the claim and he’s still around (I think?), so at least we know that to be true to some extent.

This post was published at Wolf Street on November 23, 2014.

Riots Erupt Against ECB in Germany

In an important demonstration against the euro and the ECB’s policy that took place on Saturday in Frankfurt serious riots have erupted showing the civil unrest is spreading right on target now in Germany. Protesters had overcome the fences for the new ECB headquarters, but were pushed back by the police. The new building will cost taxpayers more than one billion euros and will be significantly more expensive than planned.

This post was published at Armstrong Economics on November 23, 2014.

PETER SCHIFF: Gold Will Take A Rocketship Higher

The following video was published by SGTreport.com on Nov 23, 2014
“You have the choice between owning fiat currency and owning real gold. And I think right now the only thing that’s keeping gold from going ballistic is the false belief that the FED is the lone holdout in this race to the bottom, that the FED is out of the QE business and is going to be raising rates, and when people find out that is wrong and when they find out that we’re going to do more QE than Japan and Europe combined, they’ll realize they’ve jumped out of the frying pan and into the fire.” – Peter Schiff

China To The Dollar: ‘Tick Tock, Tick Tock…’

China’s ICBC to set up offshore yuan center in Los Angeles: ‘Beijing wants to promote its currency to more international investors and eventually turn the ‘redback’ into a global reserve currency, while at the same time expanding its already considerable political and economic clout.’ – Article Link
It’s not ‘IF’ the dollar collapses, it’s ‘WHEN.’ Just a matter of time…

This post was published at Investment Research Dynamics on November 23, 2014.

Another Banker Found Dead Under Strange Circumstances

Over the past several years there has been a long string of deaths in the financial community. Top executives and advisers in the banking industry have been dying off in droves, and often under very peculiar circumstances. This year alone has seen 16 banker deaths, with most of them ruled as suicides. Now we can chalk that number up to 17, with the death of Shawn Miller of Citigroup. Miller was found dead in his apartment with his wrists and throat slashed, and the case is now being investigated as a suicide. He was apparently a well known advocate for responsible business practices.
Police believe Miller killed himself, Detective Martin Speechley, an NYPD spokesman, told Bloomberg News Wednesday. However, the official cause of death will remain a mystery until the autopsy report is concluded. Miller ‘was highly regarded at Citi and across the financial services industry as a leader and tireless advocate for environmental and sustainable business practices,’ top managers at Citigroup wrote in a letter to staff in his department, Bloomberg reported.
‘He will be greatly missed by all who knew him,’ the letter said.
Miller had a strong background in advocating corporate social responsibility throughout his career, first at the World Bank and then at Citigroup.

This post was published at The Daily Sheeple on November 23rd, 2014.

There Goes The Shopping Spree: Nor’easter May Hit East Coast For Thanksgiving

Forget Black Friday and Q4 GDP… it appears, from the most recent forecasts that from Wednesday on this week, the eastern US faces a ‘White Five-Day’ as Accuweather reports “an increasing likelihood for a swath of heavy snow stretching from eastern Pennsylvania through New York’s Hudson Valley and across much of New England before all is said and done.” Furthermore, as WaPo notes, Wednesday’s possible storm has a chance to develop into a legitimate Nor’easter (though current models offer 3 scenarios).
As Accuweather reports,
East Coast travelers are being put on alert that the potential exists for a winter storm to unfold on Wednesday, the busiest travel day of the year. The culprit for any headaches or nightmares for travelers trying to reach their Thanksgiving Day destinations will be a storm system set to ride up or parallel the East Coast at midweek.

This post was published at Zero Hedge on 11/23/2014.

Investor Sentiment in the Balance

As several market technicians have pointed out recently, price oscillators and sentiment indicators for the U. S. stock market point to an excessively ‘overbought’ condition, both technically and psychologically. To take just one instance of how overstretched the market has become, take a look at the following chart which shows the SPX in relation to its 200-day moving average. The 200-day MA is widely followed by small investors and big money managers alike.
While most participants prefer seeing the SPX trading above the 200-day MA, whenever the S&P has gotten over-extended from the trend line it has set up a period of (temporary) underperformance. The last such instance of an overstretched SPX occurred in the weeks leading up to the autumn decline.

Another important indicator which highlights the current sentiment profile of individual investors is the American Association of Individual Investors (AAII) bull/bear survey. The AAII bull/bear ratio last week reached its most pronounced level of investor optimism in years with 60 percent of respondents bullish versus only 19 percent bearish on the stock market’s interim prospects. With so many bulls and so few bears the question that begs to be asked is: ‘What will happen when the buyers finally stop buying and there is no new buying power to boost the major averages?’
It’s easy to see that investors are almost uniformly bullish with hardly any bears to be found, and that’s a condition that normally doesn’t long persist without a market pullback. Whether the next market ‘correction’ takes the form of a short, sharp decline or a lateral consolidation (i.e. trading range) is open for debate, though. Internal momentum is still running strong, though, which should prevent a sell-off of the magnitude we saw in late September/early October. Instead, the market’s next correction phase could be surprisingly shallow or perhaps even take the form of an internal correction where a few high-profile stocks get shot down while the major averages remain buoyant.

This post was published at FinancialSense on 11/21/2014.

Grandmaster Putin’s Golden Trap

Very few people understand what Putin is doing at the moment. And almost no one understands what he will do in the future.
No matter how strange it may seem, but right now, Putin is selling Russian oil and gas only for physical gold.
Putin is not shouting about it all over the world. And of course, he still accepts US dollars as an intermediate means of payment. But he immediately exchanges all these dollars obtained from the sale of oil and gas for physical gold!
To understand this, it is enough to look at the dynamics of growth of gold reserves of Russia and to compare this data with foreign exchange earnings of the RF coming from the sale of oil and gas over the same period.

Moreover, in the third quarter the purchases by Russia of physical gold are at an all-time high, record levels. In the third quarter of this year, Russia had purchased an incredible amount of gold in the amount of 55 tons. It’s more than all the central banks of all countries of the world combined (according to official data)!
In total, the central banks of all countries of the world have purchased 93 tons of the precious metal in the third quarter of 2014. It was the 15th consecutive quarter of net purchases of gold by Central banks. Of the 93 tonnes of gold purchases by central banks around the world during this period, the staggering volume of purchases – of 55 tons – belongs to Russia.

This post was published at Gold-Eagle on November 23, 2014.

Global Economies Will Dictate Rate Hike Timing

The Federal Reserve spent this year winding down its $85 billion a month QE stimulus program. With that task completed, the hot topic of analysts, and concern of markets, is how soon the Fed will take the next step in moving back toward normal monetary policies. That is, when will it begin raising interest rates from the current near-zero levels back toward normal?
The Fed says only that ‘It likely will be appropriate to maintain the 0 to 0.25% target range for a considerable time following the end of the QE asset purchase program.’ In its statement after its last FOMC meeting, it added that, ‘If progress toward our employment and inflation objectives take place more quickly than is currently expected, the rate increases could begin sooner than currently anticipated. Conversely, if progress proves slower than expected, then rate increases are likely to occur later than currently anticipated.’
That has analysts closely watching employment and inflation reports, including factory orders and industrial production that might provide clues for the employment picture.
[Hear: Michael Shedlock: Why Hyperinflationists (and Deflationists) Got It Wrong] I suggest that global economies and the markets of America’s largest trading partners are much more important areas to watch. The undercurrents in those areas are more likely to dictate when the Fed will have enough confidence in the U. S. economy to begin raising rates.
So far this year global undercurrents have been undertows, potentially beginning to tug at the anemic U. S. economy.

This post was published at FinancialSense on 11/21/2014.

23/11/2014: Half of Irish Growth Miracle is Accounting Trickery?

Those who read this blog, follow me on twitter or heard me speak recently at the conferences covering Irish economy would know that I have consistently estimated about 1/2 of Irish H1 2014 growth figures to be attributable to something strange that is happening between the official trade statistics we get for goods exports and the national accounts estimate of same exports. The gap is massive and is running now at roughly 7 times the historical average gap.

This post was published at True Economics on Sunday, November 23, 2014.

The Worst Case If The Oil Slump Continues: “A Profit Recession”

With hopes high, at least among corner offices of the majors, that this week’s OPEC meeting will somehow manage to slow down the biggest plunge in crude prices since Lehman, it will take much more than mere talk and hollow promises to offset the recent cartel-busting actions of Saudi Arabia. So in a worst case scenario where supply remains unchanged even as global energy demand continues to decline sharply due to the ongoing global slowdown…

… what is the worst case scenario that could happen – aside from the mass energy HY defaults discussed previously – should the price of a barrel of oil continue to correlate the change in 2014 global GDP estimated? Here are some thoughts from Deutsche Bank.

This post was published at Zero Hedge on 11/23/2014.

Most of the World Panics – Is the US Next?

It’s been quite a month.
In late October Japan, despite a year of fairly aggressive quantitative easing, dropped back into recession and concluded that even easier money was the cure for its ills. It announced a debt monetization plan of almost science-fictional proportions in which the amount of new yen to be created, as a percentage of GDP, will be equivalent to $3 trillion a year in the US. SeeReactions to BoJ’s Kuroda’s Stunning, Doubled-Down QE ‘Experiment’
Then the European Central Bank, after years of operating in Germanic tight-money mode, finally accepted that a shrinking money supply was pushing the weaker eurozone countries into depression. On November 21 it threw caution to the wind and began buying up (by the sound of it) pretty much every stray piece of paper that’s blowing in the Continental wind. See Mario Draghi Says E. C. B. Will ‘Do What We Must’ to Stoke Inflation
Most recently China, whose massive purchases of raw materials became the engine of the post-2008 recovery, discovered that much of the debt incurred to build those entire new cities is about as likely to be paid back as a typical subprime mortgage circa 2007. So it announced a surprise interest rate cut and a promise to do much more if necessary. See China’s surprise rate cut shows how freaked out the government is by the slowdown and Fear Of ‘Surge In Debt Defaults, Business Failures And Job Losses’ Means Many More Chinese Rate Cuts

This post was published at DollarCollapse on November 23, 2014.

ISIS Coin: ‘Islamic State’ Steal Gaddafi’s Plan to Mint a Gold Dinar

21st Century Wire says…
ISIS maniacs are eying plans to mint their own ‘ISIS dinar’, but these will not be virtual cryptocurrency like Bitcoin or LiteCoin, they want to make a symbolic challenge to ‘American infidels’ by coining their new money in gold silver and copper.
In a statement issued from the ISIS press office, this move will deliver a blow to ‘the tyrant’s financial system’, and will include seven coins – two gold, three silver and two copper.
The new Islamic State coins will also be, ‘purely dedicated to God’, and according to its creators – designed to liberate Muslims (those who survive the purge anyway) from the ‘global economic system that is based on satanic usury’.

Cryptocoins News explains the monetary and symbolic roots of the Islamic Dinar:
‘The gold dinar is an early Islamic coin that corresponds to and is derived from the denarius auri of the Byzantine era. The gold dinar was in use during a caliphate that was known as the Umayyad. The Umayyad caliphate lasted close to a century. The coin was minted to a carefully controlled standard of 4.25 grams.’
Critics point out that ISIS/ISIL would require access to the huge quantities of gold and silver to keep their new mint going. They would also require a secure location for minting and distributing their new money, which does not appear to be the case presently (depending on how desperate the CIA are to roll out the new currency, the New York Federal Reserve Bank might be an option).

This post was published at 21st Century Wire on NOVEMBER 22, 2014 BY.