• Category Archives Government
  • Is the Fed Getting Cold Feet about the QE Unwind?

    Curious things are happening on its balance sheet. The last Fed meeting ended on September 20 with a momentous announcement, confirming what had been telegraphed for months: the QE unwind would begin October 1.
    The unwind would proceed at the pace announced at its June 14 meeting. It would shrink the Fed’s balance sheet – ‘balance sheet normalization’ it calls that – and undo what serial bouts of QE have done: gradually destroying some of the money that had been created out of nothing during QE.
    The pace of the shrinkage would be $10 billion a month for the first three months, and then it would accelerate every three months until it hits $50 billion a month at this time next year. That was the announcement.
    Reality Check Thursday afternoon, the Fed released its weekly balance sheet for the week ending October 18. We’re now two and half weeks and three weekly balance-sheet releases into the QE unwind period. How much has the Fed actually reduced its balances sheet?
    Total assets on Oct 4: $4.460 trillion Total assets on Oct 11: $4.459 trillion Total assets on Oct 18: $4.470 trillion You read correctly: Since October 4, the balance sheet gained $10 billion, all of it in the week ending October 18.

    This post was published at Wolf Street on Oct 20, 2017.

  • Gold, Yen Jump After Reports Yellen Returns To The White House (For Lunch With Gary Cohn)

    Update: Reuters reports a White House spokesperson confirms Yellen is at The White House for lunch with Gary Cohn – nothing out of the ordinary.
    Yellen odds fell back to 24% from 30%.
    * * *
    You know it’s a quiet day when…
    Gold is up, USDJPY down, TSY yields tumble after reports that Janet Yellen is back at The White House following her 30 minute meeting with President Trump yesterday…
    Bloomberg reports:

    This post was published at Zero Hedge on Oct 20, 2017.

  • “Advanced Monetary Surrealism” Summarized In 60 Slides For Gold Bulls

    For anyone who wasn’t included on the 1.5 million person distribution list for Incrementum AG’s latest 160-page annual tome on the gold sector, ‘In Gold We Trust’, the authors/portfolio managers, Ronni Stoeferle and Mark Valek, helpfully condensed the report into a chartbook containing “only” mere 60 charts. This can be viewed below, and as a courtesy for those short on time, here is our pick of the 14 best charts.
    Incrementum believes that the bull market in gold has resumed. The gold price will benefit from the Fed’s inability to normalize monetary policy. With so much debt, how can it.

    This post was published at Zero Hedge on Oct 19, 2017.

  • Left Opposes Lowing Taxes on Rich in France to Bring them Home

    An online petition from the left in France is demanding that Macrone tell the ‘truth’ about the tax rate the top 100 French will be taxed. They refuse to look at economics and insist that whatever wealth the rich have really belongs to them. Naturally, they have already gathered more than 10,000f French signatures demanding ‘truth’ from their government. They want to know the plans for a far-reaching abolition of the rich tax. It does not matter that so many have left France and will not return. That is always irrelevant to the left.

    This post was published at Armstrong Economics on Oct 20, 2017.

  • Bank Run Imminent: Catalan Separatists Urge Supporters To Pull Cash From ATMs On Friday Morning

    As tensions escalate in Spain, Catalan Separatists are potentially about to do some real damage and hit Madrid where it really hurts.
    In a tweeted message to their 270,000 followers, Assemblea Nacional urged supporters to pull cash from CaixaBank and Banco Sabadell branches between 8 am and 9am Friday to protest at their decision to shift their legal domiciles out of the region..
    #BREAKING Civil society groups in Catalonia call for mass withdrawal of money from ATMs tomorrow at 8am to pressure Spanish government
    — Catalan News (@catalannews) October 19, 2017

    This post was published at Zero Hedge on Oct 20, 2017.

  • Inflation and the Fall of the Roman Empire

    [This is a transcript of Professor Joseph Peden’s 50-minute lecture “Inflation and the Fall of the Roman Empire,” given at the Seminar on Money and Government in Houston, Texas, on October 27, 1984. The original audio recording is available as a free MP3 download.]
    Two centuries ago, in 1776, there were two books published in England, both of which are read avidly today. One of them was Adam Smith’s The Wealth of Nations and the other was Edward Gibbon’s Decline and Fall of the Roman Empire. Gibbon’s multivolume work is the tale of a state that survived for twelve centuries in the West and for another thousand years in the East, at Constantinople.
    Gibbon, in looking at this phenomenon, commented that the wonder was not that the Roman Empire had fallen, but rather that it had lasted so long. And scholars since Gibbon have devoted a great deal of energy to examining that problem: How was it that the Roman Empire lasted so long? And did it decline, or was it simply transformed into something else (that something else being the European civilization of which we are the heirs)?
    I’ve been asked to speak on the theme of Roman history, particularly the problem of inflation and its impact. My analysis is based on the premise that monetary policy cannot be studied, or understood, in isolation from the overall policies of the state.

    This post was published at Ludwig von Mises Institute on October 20, 2017.

  • How Many Hours Americans Need To Work To Pay Their Mortgage

    When it comes to the cost of living in cities, a general rule of thumb is that housing prices are much higher in the country’s economic and population hubs, especially in the cities along the coasts.
    As Visual Capitalist’s Jeff Desjardins notes, particularly in recent years, prices have been pushed sky-high in places like New York City or San Francisco through a combination of limited supply of new homes, increasing demand, shifting demographics, and government regulations.
    PUTTING IT INTO PERSPECTIVE Today’s visualization from HowMuch.net applies a common denominator to compare 97 of the biggest cities in the United States. Using a measure of median household income against the average mortgage payment in each city, we get a gauge of how many hours must be worked each month just to pay down the house.
    The visualization uses data from the U. S. Census for household income and Zillow for median home listing price, while calculating mortgage payments based on a standard 30-year term.

    This post was published at Zero Hedge on Oct 19, 2017.

  • Bernie To Americans: “Sure, You’ll All Pay More Taxes… But You’ll Get More Free Stuff”

    Vermont Sen. Bernie Sanders, the runner-up for the Democratic Party’s nomination for president in 2016, told an audience on CNN Wednesday night that Americans would be happy to pay more in federal income taxes if he could just explain to them it would mean they’ll get more ‘free’ government benefits, including health care, child care and college.
    As DailyCaller.com’s Derek Hunter details, in a televised debate against Texas Sen. Ted Cruz, Sanders told the audience the American people would support his economic vision if only he were able to explain it to them.
    ‘If we can explain to people, ‘Yeah, you’re going to be paying more in taxes. It’s going to be a progressive tax system,’’ Sanders told the crowd,

    This post was published at Zero Hedge on Oct 19, 2017.

  • Bank Run Imminent? Catalan Separatists Urge Supporters To Pull Cash From Bank

    As tension escalate in Spain, Catalan Separatists are potentially about to do some real damage and hit Spain where it really hurts.
    In a tweeted message to their 270,000 followers, Assemblea Nacional urged supporters to pull cash from CaixaBank and Banco Sabadell branches between 8 am and 9am Friday to protest at their decision to shift their legal domiciles out of the region…
    Dem , priorit riament de 8 a 9 h, ves a un dels 5 principals bancs i retira la quantitat que vulguis en efectiu. Sn els teus diners! pic.twitter.com/TqQUESFOZJ
    — Assemblea Nacional (@assemblea) October 19, 2017

    This post was published at Zero Hedge on Oct 19, 2017.

  • On a Knife’s Edge: 3 Reasons the Next Crash Could Be Worse than Black Monday

    Thirty years ago today, the US stock market had its worst single day in history.
    On Oct. 19, 1987, now known simply as ‘Black Monday,’ the Dow Jones Industrial Average lost 508 points. That represented 22.6% of its value.
    Over the last couple of year, stocks have enjoyed a meteoric rise. The Dow closed above 23,000 for the first time this week. But in recent months, bankers and investors around the world have expressed started expressing concern about the rapidly inflating stock market bubble and its future impact on the world economy. Just last month, Tiger Management co-founder Julian Robertson unequivocally called the US stock market a bubble and blamed it on the Fed’s interventionist monetary policy.
    At some point, the soaring market will fall back to earth, and MarketWatch columnist Howard Gold says the next crash may prove worse than Black Monday.
    As Gold points out, in the aftermath of the 1987 crash, the recession didn’t officially kick off until 1990. That was nearly three years after Black Monday. As a result, a lot of people dismiss the 1987 crash as a mere blip on the radar. But Gold cites a book by Diana B. Henriques to make the case that Black Monday was more than just one bad day. Henriques argues it was a painful bear market that lasted three months and included a nearly 35% drop in the Dow Jones.

    This post was published at Schiffgold on OCTOBER 19, 2017.

  • Gold Price Rallies as China Fears ‘Minsky Moment’

    Gold price losses of 2.0% for the week so far were cut to 1.2% lunchtime Thursday in London, as world equities fell from new record highs and government bond yields rose against a backdrop of fresh geopolitical tensions from Spain to India and China.
    After Wall Street set new all-time highs last night, gold priced against the rising US Dollar touched $1288 per ounce as Western stock markets marked the 30th anniversary of October 1987’s Black Monday – the sharpest ever 1-day fall in equities – by falling some 0.7% on average.
    Commodities slipped and major government bond prices rose, nudging longer-term interest rates lower.
    The weakest UK retail sales data in 4 years meantime saw the Pound retreat to a 1-week low on the foreign exchange market, helping the UK gold price in Pounds per ounce to halve this week’s earlier 1.5% loss to trade at 976.
    “From being the most hated developed market currency earlier this year,” says a Hedge Fund Watch from French investment bank Societe Generale, “Sterling is now back in favour” with speculators.

    This post was published at FinancialSense on 10/19/2017.

  • How China’s Skewed Sex Ratio Is Making President Xi’s Job a Whole Lot Harder

    David Skidmore, Drake University
    As odd as it sounds, China’s economic policy is being held hostage by its heavily skewed sex ratio.
    China’s excess of young, unmarriageable males poses an acute dilemma for President Xi Jinping and other leaders as they set the country’s path for the next five years during the 19th Chinese Communist Party Congress, which opened on Oct. 18.
    After years of heavy spending and investment to boost growth and employment, China is at risk of economic stagnation if it doesn’t restructure the economy. Yet there is peril that doing so will lead to dangerous levels of unrest among the millions of unmarried men – known as ‘bare branches’ – who will be laid off from shuttered unneeded steel, coal and auto factories.
    So far Xi has tempered reform and kept the money taps open in order to avoid political instability. As the costs of domestic economic imbalances rise and international pressures to cut excess industrial capacity grow, Xi will have to decide what to do about the bare branches strewn in his way. And that won’t be an easy task, as my research on the intersection of economics and politics suggests.
    China’s Spending Spree
    This dilemma has been building for almost a decade since Chinese leaders responded to the 2008 global financial crisis by channeling massive investments into infrastructure and heavy industry to sustain economic growth and prevent political unrest.

    This post was published at FinancialSense on 10/19/2017.

  • Preening Politicians & Europe’s Lost Testicles

    Authored by Robert Gore via Straight Line Logic blog,
    Disarmed and docile Europeans pose no meaningful threat to their governments’ depredations.
    All sorts of reasons have been advanced for declining birthrates. SLL spotlights Europe as an advanced case and offers a hypothesis: its testicles have gone missing.
    What does it do to a continent when a country 3,000 miles and an ocean away strikes the decisive blows in two of its cataclysmic wars? What does it do to that continent when that distant power assumes control over much of its defense? At a primal level, the very essence of manhood is the ability to defend one’s self and loved ones. Perhaps ceding responsibility for doing so is not emasculation, but it made Europe the little brother who must rely on big brother to fight his battles.
    Naturally, big brother calls the tune. During the Cold War, that meant accepting one’s place under the US defense umbrella and toeing the US line on the Soviet Union. Only French President Charles de Gaulle challenged US domination, and that was more show than substance. With a nuclear arsenal and geographic proximity, the Soviet Union posed an existential threat to Europe, even more than it did to the US. If the Soviet Union had invaded during the de Gaulle era, France would have quickly rejoined a US-led alliance.

    This post was published at Zero Hedge on Oct 19, 2017.

  • GDP Is Bogus: Here’s Why

    Here’s a chart of our fabulous always-higher GDP, adjusted for another bogus metric, official inflation.
    The theme this week is The Rot Within. The rot eating away at our society and economy is typically papered over with bogus statistics that “prove” everything’s getting better every day in every way. The prime “proof” of rising prosperity is the Gross Domestic Product (GDP), which never fails to loft higher, with the rare excepts being Spots of Bother (recessions) that never last more than a quarter or two. Longtime correspondent Dave P. of Market Daily Briefing recently summarized the key flaw in GDP: GDP doesn’t reflect changes in the balance sheet, i.e. debt. So if we borrow money to pay people to dig holes and then fill them with the excavated dirt, GDP rises to general applause. The debt we took on to fund the make-work isn’t accounted for at all. Here’s Dave’s explanation: Once I learned about accounting, I figured out why the GDP metric wasn’t sufficient. What is missing? The balance sheet. Hurricanes are a direct hit to your nation’s balance sheet. The national income statement goes up because of increased spending to replace lost assets, but the “equity” part of the national balance sheet ends up taking a hit in direct proportion to the damage that occurred. Even if you rebuild everything just the way it was, your assets remain the same, while your liabilities have increased.

    This post was published at Charles Hugh Smith on WEDNESDAY, OCTOBER 18, 2017.

  • Meet New Zealand’s New Prime Minister As Kiwi Tumbles

    Labour leader, Jacinda Ardern, will be New Zealand’s next Prime Minister after winning the support of the New Zealand First Party to form a coalition government. Labour with NZ First and the Greens will have 63 of the 120 parliamentary seats versus the National Party with 56. At 37, Ardern joins a global wave (France, Austria) of young politicians being appointed to key leadership roles, and will be the country’s youngest Prime Minister and the third woman to hold the post. New Zealand’s Labour Party had not been in power for nine years, after three terms in power for the National Party.
    Twenty-six days after the election, the leader of New Zealand First, Winston Peters, announced his party was backing Labour live in an eagerly -awaited television announcement.

    This post was published at Zero Hedge on Oct 19, 2017.

  • Yield Curve Inverts, Yuan Slides As China GDP Growth Slows

    Despite all the talk of deleveraging, China did anything but according to its most recent data but the lagged impact of the tumbling credit impulse is starting to show up in the broader macro data. Despite the National Congress being under way (and recent credit spikes and positive PBOC hints) GDP growth limped lower to the expected +6.8% YoY, and fixed asset investment growth was the weakest in over 17 years…
    Ahead of tonight’s data dump, China macro data had been disappointing notably, having tumbled for over a month to its weakest since August 2016…

    This post was published at Zero Hedge on Oct 18, 2017.