The Fed and Mr. Krugman: The Price of Nuts

The pine nuts I like to sprinkle on my salads have become so precious the price jumped from an already outrageous $5.99 per 4 ounce container to $6.99 this past week. One person who is happy about this is the New York Times’ Paul Krugman, for instead of being like Europe, that is ‘clearly in the grip of a deflationary vortex,’ America only teeters on the edge of a general price plunge. ‘And there but for the grace of Bernanke go we,’ writes the voice of Grey Lady economics wisdom.
Google ‘grocery prices last 12 months’ and it’s post after post beginning with ‘Consumer prices rise’ or ‘Rising food prices bite.’ However, Krugman claims there is something called a ‘deflation caucus’ keeping the Fed from doing even more than quadrupling its balance sheet. Monetary policy is partisan politics and the right wingers ‘demand tight money even in a depressed, low-inflation economy?’
Krugman then uses a word coined by Stephen Colbert, truthiness, meaning something that sounds true that isn’t to describe ‘The Fed is printing money, printing money leads to inflation, and inflation is always a bad thing.’ He writes that this ‘is a triply untrue statement, but it feels true to a lot of people.’

This post was published at Mises Canada on Friday, September 5th, 2014.

For September/October We Suggest Watching Traders the CFTC Classes as Other Reportables in Silver Futures

HOUSTON – (Got Gold Report) — We end this partial update on silver futures with a suggestion as to who (which class of large reporting futures traders) to watch going forward.
First, as silver prices edged $0.20 or 1.2% lower (actually less of a move than might have been expected given huge U. S. dollar relative strength), from $19.35 to $19.15 (as of Tuesday, September 2), trend following Managed Money traders (large hedge funds, commodity pool operators, commodity trading advisors, etc., aka ‘The Funds’) piled on a whopping 7,396 short contracts in COMEX silver futures, from 28,228 to 35,624 gross shorts.
That’s the equivalent of 178 million ounces of silver.
As longtime GGR readers already know, we view large Managed Money gross short positions as ‘insurance shorts,’ the highest of high octane rally fuel (and probably the first shorts to be covered) once The Funds are convinced the downward price impulse has been exhausted.
Managed Money can be expected to aggressively cover these short bets leading to upward price pressure on the COMEX if history is any guide. (For evidence consider the sharp spikes in MM shorts on the chart just below. It is a lead pipe cinch that all of the Managed Money silver shorts will be covered (bought back) at some point. At issue is the price.)

This post was published at GotGoldReport on Saturday, September 06, 2014.

Gold And Silver – NWO = Deceit, Debt, & War. PMs A Casualty.

[Last week, we said, ‘Next week, we will cover a brief history, a track record of the Rothschild banking dynasty that has controlled all Western countries for a few centuries.’ See Elite’s NWO Losing Traction. Expect [More] War, at least as it pertains to the US.] If you want to know why your holdings of physical gold and silver have remained under suppression, it is because both are anathema to paper fiat currencies, and the ones who are in control, the moneychangers, will not tolerate competition against their fiat Ponzi monopoly scheme. Not until the elite bankers lose control of the fiat US ‘dollar’ can you expect to see dramatic price increases for gold and silver, irrespective of any and all fundamentals and more widely recognized efforts of manipulation.
How long will that take? No one knows, except a lot longer than most expect, as the time horizon continues to shorten. Months? Years? Unknown and unknowable.
The only way the elites can exist is through deceit, hiding behind the scenes but unquestionably in total control, with emphasis on the word ‘total.’ If anyone is of the limiting belief that the Rothschilds, moneychangers, bankers, New World Order [NWO] is some kind of conspiracy theory, either take the time and do some studied research on factual events and read several court cases, or simply stay the course for being fleeced and enslaved by unwitting assent.

This post was published at Edge Trader Plus on September 6, 2014.

Hipster neighborhoods and the flippers that love them: Eagle Rock housing and sprucing up small spaces for hefty price tags.

Rinse and repeat. That seems to be the mantra some flippers are adhering to in certain SoCal neighborhoods. Some zip codes seem to attract flippers like flies to a bright light. Eagle Rock is one of those markets. Nestled between Glendale andPasadena, Eagle Rock seems to be a siren call for hipsters. What I find interesting in these hipster hoods is that they try to pitch a frugal eco-friendly lifestyle yet carry a massive mortgage. Okay, you are growing tomatoes and radishes but now have amortgage on a $700,000 crap shack. Seems like cognitive dissonance especially when you are getting such a tiny living space. Hipsters seem to be buying it up but the market is now cooling off. Apparently living in a closet and having a tiny garden isn’t so appealing when you look at the underlying price tag.
Eagle Rock fun
I’ve gotten a few e-mails from those in the housing industry talking about how hot Eagle Rock has become. A sort of center of hipster wishes and aspirations. It is an odd pitch when you are telling your prospective buyers to enjoy more ‘earthly’ desires yet slap on a price tag as if they were buying an Italian Villa. Only in SoCal does it cost a lot to live as if you were broke.

This post was published at Doctor Housing Bubble on September 5, 2014.

Halliburton Got Away With Murder

This week, Halliburton, the contractor that worked on BP’s Deepwater Horizon oil rig, has just gotten away with murder! This rogue corporation has agreed to pay a mere $1.1 billion dollars to settle most of the lawsuits over its role in the Gulf of Mexico spill. The settlement is lower than the $1.3 billion dollars that the Houston company had set aside for the case.
Justice still has not been done as Halliburton, BP, Goldman Sachs and Transocean got away manslaughter and illegally profiteering from the misery that these four corporations perpetrated on an entire region of the United States.

This post was published at The Common Sense Show on September 6, 2014.

Gold Needs To Be Rising In All Currencies!

When one thinks of gold, it is usually always in terms of US$. Everyone has been conditioned to think that way. But if you live in Canada you most likely pay for your gold in Cdn$ not US$. For the most part one would make their gold purchase in the local currency. The above chart is not any particular local currency. Above is a gold index expressed in a basket of local currencies. This particular index does not weight the currencies. It is an equal weighted index of currencies of the top 20 countries by GDP. The chart is prepared by Nick Laird of Nick has also created a weighted index of the top 20 countries by GDP, however, at time of publication Nick was correcting some errors in the data.
The index is created the same as one would create the TSX Composite or the Dow Jones Industrials or for that matter the Gold Bugs Index (HUI). The index can be compared to gold in US$. Some differences do stand out.

This post was published at Gold-Eagle on September 5, 2014.

Housing Bubble 2 Hits Wall: Middle Class Priced out of Market

With home prices rising for three years in much of the country, and soaring at dizzying rates in a number of metro areas, the inevitable is happening: sales stalled. But prices have continued to rise, even as sales have deteriorated further. Something has to give. And it’s not going to be maxed-out American consumers. They’re not going to all suddenly inherit enough money to buy these mid-range homes that have moved beyond reach.
But something else is happening.
In the Las Vegas-Paradise metro area, one of the epicenters of the former housing bubble, and one of the epicenters of Housing Bubble 2, the ratio of homes sold to absentee buyers (mostly investors) as a percent of total sales in July plunged by a quarter year-over-year, according to DQNews, a division of CoreLogic. The ratio of homes sold to cash buyers plunged by a third. The ratio of homes flipped swooned. Total home sales have dropped year-over-year for the past 10 months; in July, they were down 11.8% to 4,260 units, the lowest for any July since crisis-year 2008.
And the median price? $190,000, up 9.6% year-over-year. The highest since November 2008. It has now booked 28 months in a row of year-over-year gains that reached up to 36.5%. Crazy! But July was the first month in two years with ‘only’ a single-digit gain.

This post was published at Wolf Street on September 6, 2014.

Hope and exact change…Tales from the New World Disorder

Things rarely end the way we think they will, usually a low-probability event occurs, something it seemed safe to ignore, or at least to discount, until suddenly it wasn’t. Once the stuff of novels, the unexpected is now the stuff of life. It’s what makes interesting times dangerous times. We’re seeing a replay of 2008 but at the next higher level, not unstable financial outfits, not even unstable markets, but unstable regions of the world. Where we had banks fail we’re having nations fail, at the near periphery for now but moving toward the core like Genghis Kahn at a gallop.
The nations of the world have become unstable, politically, militarily and economically. For one, the European Union and its Euro may dissolve for the oldest of reasons: a squabble over money. Like us, they can say debt is credit right up until the rent’s due, then they discover the insolvent can prop up the bankrupt only until somebody has to give something of value to get something of value. It’s then they understand how poor they’ve been all along, that they don’t actually have much that anybody else wants.
In the US flash crash of May 2010, bogus trading slipped the leash and a trillion dollars of notional market value vanished in minutes, and in the doing setting a new standard for downward volatility. They liked to call it “avoided transition”, a fancy way of saying no one trusted the other guy’s bookkeeping once the cosigner went missing. When bogus trades on bogus data can pump up the market for years, then slip utterly out of control in about the time of a commercial break, when the FAILURE IS NOW PERMITTED sign lit up but briefly, and it’s still long enough for the market to flash-crash, it suggests our black swan will be the truth, the simple truth. Said differently – reality.

This post was published at Silver Bear Cafe on September 6, 2014.

China Economy Unraveling: How Soon? How Fast?

The Sky Is Falling on Chinese Corporations … The four largest banks in China, the banks that have to officially show big profits and profit growth no matter what because they’re an integral part not only of the government but also of China’s miraculous debt-driven expansion, are showing officially tolerated signs of increasing stress. – WolfStreet Dominant Social Theme:
There are no market risks in the fall.
Free-Market Analysis: The “fall” is aptly named when it comes to Wall Street’s prospects over the next three months. These three months, and especially October, have been most cruel to market performances, especially during occurrences of asset bubbles. Such bubbles tend to get pricked in, say … October. Will it happen again?
As much as any publication, we’ve called the market’s performance over the past year by observing the behavior of the power elite and mechanisms put in place to prop up equity markets – most notably monetary stimulation.
But it’s autumn, now, and October could certainly see a market event.
The question is whether or not an “event” will effectively end the current market rise. Chances are even if markets go down fast and hard, certain sectors will remain viable and profitable over time. Cannabis, for instance, is expanding as an industry worldwide and it’s hard to see that trend dissipating.
However, it is certainly true that there are many ways that markets can unravel. And at these heights, it only takes a push to reduce market valuations. There are plenty of places the push can come from. One such, as we’ve long pointed out, would be the public unraveling of China’s increasingly problematic economic “miracle.”

This post was published at The Daily Bell on September 05, 2014.

SILVER SQUELCHERS PART 1: And Their Interesting Associates

(By Charles Savoie)
HSBC USA in recent years was listed on the roster of the Silver Users Association (circa 2006). HSBC, with over 8,000 offices, appears to remain at the ‘centre’ of silver price suppression.
Sir Ewen Cameron whose family traced back into the 13th century, joined the Caledonian Bank in 1859 and afterwards was with the Bank of Hindustan, China and Japan, after which he joined the Hong Kong & Shanghai Banking Corporation – Britain’s opium bank for China, and a major conduit for looting silver out of Chinese hands into the possession of the silver squelchers of The Pilgrims Society.
The Silver Squelchers ‘It is a burning shame in the eyes of all the world that the United States, the greatest producer of silver, will not protect her own precious metal product. It is a case without a parallel in the history of nations down through all the ages.’

This post was published at SRSrocco Report on September 5, 2014.

New bill: Congress engineering yet another financial crisis

September 5, 2014 Santiago, Chile
Say hello to the next financial crisis, brought to you courtesy of the dumbest new bill of the week: H. R. 5148: Access to Affordable Mortgages Act.
Ordinarily whenever an individual wants to borrow money for a mortgage, the bank conducts due diligence… both on the borrower as well as the property.
It’s in the banks’ interest (as well as the banks’ depositors) to ensure that the property is at least worth as much as the amount being borrowed. Duh.
Congress doesn’t agree. Apparently when banks conduct property appraisals, that seems to unfairly discriminate against some segment of the population trying to buy crap properties.

This post was published at Sovereign Man on September 5, 2014.

Another Smoking Gun of Market Rigging, but Warburton Saw It All Back in 2001

In his profound and prophetic essay 13 years ago, "The Debasement of World Currency: It is Inflation, But Not as We Know It" — the British economist Peter Warburton realized that central banks had abused their unlimited power of money creation and that this had impelled them into comprehensive commodity market rigging and price suppression to save the financial system they had perverted.
"What we see at present," Warburton wrote, "is a battle between the central banks and the collapse of the financial system fought on two fronts."
"On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur."

This post was published at GATA

The ECB: Desperately Seeking Economic Health in the Era of Free Money

The intent is to make credit easily available, on the assumption that with interest rates at near-zero, anyone can borrow and invest, thus boosting the economy.
But that doesn't mean just anybody can access that money. Banks and financial institutions and people so rich that lenders are sure they'll pay the money back can get their hands on it. In fact, the prospect of all that money pouring into the economy sent European and even global asset prices shooting higher on the expectation that all that easy credit would be competing for a limited number of assets.
For Mario Draghi, making money free (even freer?) seems like a move of desperation. He is terrified of deflation and almost frantic in his desire to restart investment in the European economy, which is still weak and tearing at the seams from the credit crunch of 2008.

This post was published at CBC News

Doug Noland: Do Whatever It Takes to Shock and Awe

Draghi beats "Wall Street" estimates.  Markets rejoice.
I’m not really that old. And I don’t have to think back all that many years to recall when “Fed watchers” would monitor every move of our central bank’s “open-market operations” in hope of discerning subtle changes in monetary policy. Things changed profoundly during the nineties, as a long tradition of conservative central banking principles gave way to “activist” monetary management.
Thursday provided yet another chapter in the fateful evolution of contemporary central banking. In what I’ll call “Do Whatever it Takes to Shock and Awe,” Mario Draghi straggled deeper into the uncharted territory of negative rates, while also announcing a plan to aggressively expand the European Central Bank’s (ECB) balance sheet (create “money”) through the purchase of asset-backed securities (ABS) and covered loans. European stocks and bonds surged on the surprise announcement, as the euro currency was taken out to the woodshed.

This post was published at Prudent Bear

Fed’s Kocherlakota: ‘This Nation Needs More Inflation’

A top Federal Reserve official said he believes U.S. interest rates are too high, and had no "good answer" when asked why the Fed is reducing its efforts to push borrowing costs down.
"Interest rates are not low enough," Minneapolis Federal Reserve President Narayana Kocherlakota said at a Town Hall meeting in Montana, citing subdued inflation and "unacceptably high" unemployment as evidence.
The fact that the Fed has not been able to achieve its twin objectives of maximum employment and 2-percent inflation suggests the need for lower rates, he said.

This post was published at Money News

Japan’s “Money Illusion” Will Fail, Goldman Warns

The Bank Of Japan (BOJ) says it is looking for consumer spending to stay on a recovery path, focusing on the relatively small increase in nominal wages rather than the steep slide in real wages. Goldman believes the BOJ’s view is founded on money illusion; and crucially, expect the positive effects to be clearly outweighed by the negative impact of lower real wages, and on a net basis see consumption falling. Simply put, once people wake up to the illusion of money, its impact will also fade.
Via Goldman Sachs’ Naohiko Baba,
Can the BOJ rely on ‘Money Illusion’? (Spoiler Alert – No!)
Nominal wages have finally edged into positive territory after more than 18 months of Abenomics. However, prices have spiked on cost-push inflation driven by yen depreciation since mid-2013and on the consumption tax hike in April 2014 (from 5% to 8%). As a result, real wages were still in negative territory (-1.4% yoy) even as of July, when the outcome of the successful spring wage negotiations should have been almost fully factored in.

This post was published at Zero Hedge on 09/05/2014.

The Housing Market Is In Big Trouble

I honestly can’t believe that more investors are not looking at unloading long positions in the homebuilders. Right now, by virtue of the fact that there’s a lack of good analytic ‘eyeballs’ slicing and dicing the industry numbers and the homebuilder financials, the homebuilder stocks are the most inefficiently overvalued sector of the stock market besides a few select tech stocks. I’ve been trading every part of the homebuilder capital structure since 1994 (bank debt, sub debt, pfd equity, common stock) and right now this is the easiest call I’ve seen in that period of time.
Here’s my latest assessment of the macro housing data, backed up by some evidence I’m correct that comes right out of Toll Brother’s earnings report two days ago, when TOL’s stock was hit for 5%: Housing Market Data Continues To Support The Bear View.

This post was published at Investment Research Dynamics on September 5, 2014.

QE3’s Ominous End Looms

The Federal Reserve’s third quantitative-easing campaign is on track to wind down in late October. At that point the Fed will likely stop printing new money to buy bonds, a sea-change shift with ominous implications for the stock markets. Their entire surreal levitation during QE3 mirrored the huge growth in the Fed’s balance sheet from QE3′s bond monetizations. When they cease, another major selloff is likely.
QE3′s impact on the global financial markets has been vast beyond belief. The Fed launched QE3 in September 2012, just before the important United States elections. This goosed the US stock markets in that critical final couple months ahead of the elections, right when they were on the verge of selling off dramatically. Odds are very high that the Fed’s brazen market manipulation gave the election to Obama.
In the 28 presidential elections since 1900 prior to that 2012 one, the stock markets rallied in September and October 16 times. The incumbent party won 15 of those elections! And during the 12 times when the stock markets fell in September and October, the incumbent party lost 10. The Fed choosing to launch a stock-market-boosting QE campaign in those pre-election months forced stock markets higher.
If the S&P 500 (SPX) had dropped as it was set to do in September and October 2012, Obama would’ve almost certainly been a one-term president. The Fed’s colossal market and political manipulation was no accident. Since QE2, Republican lawmakers had been highly critical of the Fed’s money printing to buy bonds. The low interest rates that spawned enabled Obama’s record debt-fueled spending binge.
Since the Fed faced serious challenges to its independence all the way up to its very existence from a Republican president and Congress, it massively intervened in the markets to sway an election. And QE3 just got worse from there. The Fed expanded it to include direct monetizations of US Treasuries a few months later in December 2012. That forced rates lower, farther fueling Obama’s epic deficit spending.
QE3 was far different from QE1 and QE2, which were finite from their births. QE3 was the Fed’s first open-endeddebt-monetization campaign, with no prescribed limits. This potentially unlimited scope of QE3 helped create an exceedingly unfortunate side effect in the stock markets. Since QE3 had no defined end, stock traders figured it would be around to backstop stock markets more or less indefinitely.
Led by uber-inflationist Ben Bernanke, the Fed’s dovish communications fanned this popular belief among traders. Over and over during QE3 the Fed implied that it was ready to act, in effect to increase the scale of QE3′s monthly money printing to buy bonds, if the stock markets slid. This incessant Fed jawboning left stock traders utterly fearless, as they figured the Fed would arrest any major stock-market selloff.
So every dip was quickly bought, leading to the stock markets soaring. The SPX blasted 29.6% higher in 2013, the only full year of QE3! And this flagship index is up 39.5% since QE3′s birth. And it wasn’t like the stock markets were low before the Fed hatched its QE3 scheme. As of the day before, the SPX had powered 112.3% higher over 42 months in a very large cyclical bull. Stock markets were already lofty.

This post was published at ZEAL LLC on September 5, 2014.

JPMorgan’s 16 Reasons Why The Fed Should Hike Rates (And 5 Excuses For Delaying)

Things are getting a bit hotter for the Federal Reserve regarding the tradeoff between growth and inflation, according to JPMorgan CIO Michael Cembalest. For the last few years, he notes, a zero rate policy was put on autopilot given excess labor and industrial capacity. Both are shrinking now, and when looking at a broad range of variables, some are clearly mid-cycle. If so, in a few months Fed governors will have to jump out of the 0% interest rate pot and remove some of the liquidity that it has infused into the US economy;

This post was published at Zero Hedge on 09/05/2014.