Friday, June 14, 2013

Here's Why The "Taper" Won't Happen

The purveyors of this piece of media re-direct/distraction forgot to tell us that QE isn't intended to help the economy.  It's intended to keep the too big to fail banks - both domestic and foreign - solvent and to keep the Government outfitted with low-cost Treasury bond financing.

Skeptical?  Then spend some time reading this latest analyst I wrote and was published by Seeking Alpha:
Based on two key factors, not only will the Fed not taper, but it will be ultimately forced to up the ante on QE or risk a serious accident in the banking system and in the economy.
Here's the full article:  Tapering Risks Triggering A Stock Market Avalanche

Two more pieces of data reported today that further reinforce the argument I laid out in my article.  First, per the monthly TIC report, which details foreign cash flows in and out of our system, Treasury bond sales by foreign investors (mainly central banks and hedge funds) hit a record in April:  LINK  The Fed will actually have to print more money to replace that money or risk significantly higher rates.  And second, in another of a long string of disappointing economic reports, May's industrial production report came in flat vs. the expected up .2% and capacity utilization declined.  This further confirms that manufacturing and end-user demand is dropping.  This will give Bernanke further room to, minimally, keep QE where it is and, ultimately, justify taking it up a notch sometime this fall.

28 comments:

  1. another piece of the mfg production issue is that capacity utilization is down again-meaning 1) less overhead coverage and that results in lower profits. 2) capex already weak does not see the light at the end of the tunnel.

    ReplyDelete
  2. Michael JacksonFriday, 14 June, 2013

    I wish there were more articles out there like this! It gets to the heart-of-the-matter concerning QE and is so well written!

    In your reply to a comment made by "TheFounder", you said:

    "QE will lead to hyperinflation. But first before I try to go into an explanation of why, I would love for you to explain in detail how QE works, why it's considered "QE" instead of outright money printing, and then explain why the concept behind it will fail.

    I will probably write an article explaining all of that, which will include an explanation of how the money flows work inside the Fed/banking system and how those funds are made available to the real economy".

    I would like to see such an article if you ever get around to writing it as I'm sure your time is limited. I subscribed to seekingalpha so I can read all pages of your articles (you can only read the first page if you're not). You have great insights into the system, you know how it works, you thoroughly research and put links up, your writing style is very professional.

    I wanted to print this article up and pass it out but it would be a waste of ink & paper. The reaction is always one of complacency, i.e. that the US can always get itself out of a fix. But, even if it could, the fix would take FOREVER before it trickled down to the American Public. The rich and elites would be eating steak while the rest of us would be eating dirt from our backyard (that's the middle class; the poor would be worse off cause they wouldn't have a backyard).

    ReplyDelete
  3. HuaAn expects Chinese gold ETF to raise up to $489 million
    Jun 13, 2013

    http://www.reuters.com/article/2013/06/13/china-etf-huaan-idUSL3N0EP2KS20130613

    (Reuters) - HuaAn Asset Management expects to raise between 2 billion yuan and 3 billion ($326 million - $489 million) initially for its planned gold-backed exchange-traded fund (ETF), one of China's first gold ETFs, the fund's portfolio manager said.

    "We are still in the process of gauging the level of demand. The market potential is huge," Richard Xu told Reuters in an interview from Shanghai.

    "We think we could raise about 2 to 3 billion yuan initially," Xu said. "We have got positive responses from institutional investors due to the lack of access to the gold market on-shore in China."

    The launch comes after a sharp drop in the price of bullion earlier this year, which hit gold ETFs. Total global assets in gold exchange-traded products (ETPs) shrank to $96.2 billion in May, down 32 percent from $141.2 billion at the end of 2012, data from Blackrock showed earlier this month.

    Bullion hit a two-year low of $1,321.35 an ounce in mid-April and is down 17 percent for the year.

    But Xu said HuaAn, which started researching the launch of a gold ETF in China as far back as 2009, had received strong indications of interest from brokerages and hedge funds in China, after receiving approval for the launch from the China Securities Regulatory Commission (CSRC) over the weekend

    The CSRC also approved Guotai Asset Management Co to launch a gold ETF. Guotai is in talks with banks and securities houses to sell the ETF, an administrative officer at the marketing department of Guotai in Shanghai said.

    Demand for gold has been strong in China since the April sell-off, which has helped unleash years of pent-up demand at the No. 2 bullion consumer. China's gold imports from Hong Kong rose to an all-time high of 223.519 tonnes in March, though they fell in April due to a lack of supply.
    --------------------------


    "Official Indian gold imports have fallen heavily since the recent government measures against its imports. One would think that this would also crush the gold price, but at this time of the year, Indian gold investors are not in the market due to agricultural matters, so higher duties and restrictions on imports are less damaging to the gold price than they would be in the gold season in the third quarter onward. Reports are that smuggling of gold is rising quickly now and may well be sufficient to counter the restrictions. The premiums on the gold price in India will clarify this."

    http://news.goldseek.com/GoldForecaster/1371215902.php

    ReplyDelete
  4. Woman sues McDonald's franchisee for payroll debit

    She spent her days serving up Happy Meals, but when it came time to get paid, Natalie Gunshannon says a local McDonald's franchisee gave her an unhappy deal.

    The Shavertown McDonald's forces workers to be paid only one way: with a payroll debit card that burdens workers with hefty fees to obtain their hard-earned cash, according to a lawsuit filed Thursday on behalf of Ms. Gunshannon and other McDonald's workers.

    Ms. Gunshannon, 27, Dallas Twp., and an untold number of current and former employees had no option to receive a traditional paycheck or get paid by direct deposit, she and her attorneys said in the class-action against franchise owners Albert and Carol Mueller of Clarks Summit.

    Ms. Gunshannon, who worked at the Shavertown McDonald's for a month after being hired April 24, refused to activate the payroll card after reviewing the fee structure, quit the job and reached out to an attorney to see if the practice was legal.

    Attorney Michael J. Cefalo of West Pittston and his law firm then drafted a class-action lawsuit against the Muellers, who own 15 other McDonald's locations throughout Northeast Pennsylvania.

    Filed in Luzerne County Court, the suit accused the Muellers and their limited partnership of violating the Pennsylvania Wage Payment and Collection Act and unlawfully boosting profits with the payroll card "scheme."
    The J.P. Morgan Chase payroll card carries fees for nearly every type of transaction, according to the lawsuit, including a $1.50 charge for ATM withdrawals, $5 for over-the-counter cash withdrawals, $1 to check the balance, 75 cents per online bill payment and $10 per month if the card is left inactive for more than three months.

    http://thetimes-tribune.com/news/woman-sues-mcdonald-s-franchisee-for-payroll-debit-1.1505137


    can't get paid in silver and gold but a discounted payroll debit card from jpm is fine?????????

    ReplyDelete
    Replies
    1. Michael JacksonFriday, 14 June, 2013

      All the temp agencies are doing this here in Nevada. One even gave me 2 debit cards. One can mail you your paycheck from Dallas, TX so it can get lost in the mail. You can have direct deposit at some of them but not all. I rather opt out on direct desposit and choose the card cause there's fees (i.e. each background check/ drug test is $25) and I don't trust these places with my bank information. Welfare checks from the US Government are safer than these places.

      Delete
  5. th sludge is finally beginning to move
    NEW YORK (Reuters) - Banks seized more U.S. homes in May as a greater number of Americans found themselves entering the foreclosure process, suggesting lenders were drawing down the pipeline of distressed properties, a report from RealtyTrac showed on Thursday.
    Banks repossessed 38,946 homes, an increase of 11 percent from the previous month. The number of homes hit with default notices for the first time grew by 4 percent.http://finance.yahoo.com/news/banks-seized-more-u-homes-040929607.html;_ylt=A2KJ2UipV7lRXEsAtlzQtDMD

    ReplyDelete
  6. Uncovering corruption: Charmian Gooch at TEDGlobal 2013
    “Corruption is made possible by the actions of global facilitators.”

    Obiang, for example, did business with global banks in order to finance his expensive art, and, she says, he used shell companies to buy and maintain his mansion. And, says Gooch, Dan Etete awarded an oil block now worth more than 1 billion to a company he was the hidden owner of. “On the surface, the deal appeared straightforward. Subsidiaries of [oil companies] Shell and Eni paid the Nigerian government for the block. The Nigerian government transferred precisely the same amount, to the very dollar, to an account earmarked for a shell company whose hidden owner was Etete.” Global Witness found evidence that Shell and Eni had known that the funds would be transferred to that shell company, and, she says, “frankly, it’s hard to believe that they didn’t know who they would be dealing with there.”

    “The reality is that the engine of corruption is driven by our international banking system, the problem of anonymous shell companies, and the secrecy we afford to big oil, gas and mining operations.” she says. She also points to the failure of our politicians to tackle the problem systemically.
    Start with banks. No surprise that banks accept dirty money, but prioritize profits in destructive ways.
    Then there’s the problem of anonymous shell companies, which block knowledge of who is really behind business dealings. These have appeared in every case of corruption investigated – a 2011 World Bank study reviewed 200 cases of corruption and found more than 70% of the cases had used anonymous shell companies, including in the US and UK. “So it’s not just an offshore problem, it’s an onshore one too,” says Gooch.

    http://blog.ted.com/2013/06/14/uncovering-corruption-charmian-gooch-at-tedglobal-2013/

    ReplyDelete
  7. 'Inside Job' is the first film to provide a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse.

    http://www.youtube.com/watch?feature=player_embedded&v=q4egTybH-TE#!

    ReplyDelete
  8. Full-Length Movie "Inside Job Documentary 2011"

    http://www.youtube.com/watch?v=jaQsULpKNQc

    (sorry...earlier post was just a preview)

    ReplyDelete
  9. Dave, do you think this game plan is plausible? The Fed tapers by a symbolic amount and creates a great risk-off event. The money pulls from the stock market and then rotates into the treasury bonds, which will help finance the budget deficit?
    Another question: do you believe bullion banks may work on the side of precious metals bulls? Jim Sinclair alluded it. However, since bullion banks are mainly government agencies, I highly doubt the possibility of this scenario.

    ReplyDelete
    Replies
    1. If the Fed tapers, interest rates will go thru the roof quickly. The last of the smoldering embers of the housing market will be quickly doused and the economy falls into the abyss. The economy will anyway unless the Fed starts accelerating the printing presses. It's probably why the Government is starting a big war in the Middle East.

      I don't know what's coming next, but I can tell you it will be most unpleasant for all of us. Ultimately, it doesn't really matter what the Fed does. I was just laying out a case for why I don't think the Fed does taper.

      Delete
  10. The only tapering occurring in the Marriner Eccles builing is to be found by examining the turds in the toilets.

    ReplyDelete
    Replies
    1. That made me laugh pretty hard - thanks!

      Delete
  11. Dave
    You are one of the good ones and doing a great job making some of this known to those prepared to listen. Having blown a $hitload (on the miners) buying this story, which I still believe in (because I can see the facts in all you write)...the one thing I cant re-concile, and this is my one objection to the GOLD BULLS...If in Sept 2008 you had seen everything that was about to transpire you could have stayed in an SP index and been at least 50% better off than the miners index and maybe only 10% worse off that GOLD (on a total return basis)...ignorance is bliss!

    Keep up the great work
    CT

    ReplyDelete
    Replies
    1. The gold i bought in 2002 is up over 400%. How's that compare to the SPX since then? The HUI index was around 70 back then, up a little under 400% since then.

      Delete
  12. To be honest, I don't think it is not a good time to buy physical gold and silver. We can wait for more bargain prices. In retrospect, gold touched $1900+ in the summer of 2011 during the debt ceiling crisis. The strong performance probably made the Obama administration worry and ordered the Fed and bullion banks to cap gold. JP Morgan piggybacked on the order and proactively manipulated silver.
    We shall have another debt ceiling crisis in Sept. I bet Obama the dickhead will do some preemptive price suppression of gold. Obama is such an evil dipshit that I bet he would do it.

    ReplyDelete
  13. Do you want to make a difference in addressing these villains and thieves ? Be a part in helping to bring them out into the light for all to see and become familiar with their dastardly doings.

    Have you ever heard of the Pilgrims Society ?

    They would prefer that you did not !

    The more people who discover the dirty little secrets that this group of calculating evildoers are responsible for the better.

    Let's expose them for who that they are !

    http://silvermarketnewsonline.com/articles/ThePresidentAndPreciousMetals_Savoie022813.pdf

    ReplyDelete
  14. IT FINALLY COMES OUT: Elite Traders Are Getting Access To Data Before Everyone Else

    In the past few days people have finally started paying attention to a funny thing going on in the market.

    Time after time ahead of major news, there seems to be someone who knows something before it happens — there seem to be trades that hit too hard and fast before the news is actually made.

    This has been going on for a while, and people are finally starting to understand why.
    After some digging CNBC's Eamon Javers reported that the source of the early trading was Thomson Reuters. The company has a well-known deal with the University of Michigan, the source of the data, that allows Thomson Reuters to release that data 5 minutes before it's supposed to come out (9:55 am) to clients who pay for that privilege.

    But Thomson Reuters also provides a service called “ultra-low latency,” which allows premium customers to get numbers like Consumer Confidence and the Institute for Supply Management's manufacturing index number 2 seconds before it's released to the general public for $2,000 a month.

    Two seconds in high-frequency trading time is an eternity.




    Read more: http://www.businessinsider.com/latency-in-trading-2013-6#ixzz2WJDlLdnb

    Inside Bilderberg: Clues left in the Grove Hotel reveal another piece to their financial agenda

    As the dust had settled from Bilderberg’s global weekender held at The Grove Hotel in Watford, England, some members of the alternative media stayed on site continuing to dig for answers…

    Investigative journalists from the UK Column, American Free Press and Sovereign Independent accidentally wandered into a presentation suite at the Grove – only discover the remnants of a presentation by Thomson Reuters which Bilderberg organisers had neglected to take down after the event. It read “”unleashing the power of our unified platform on financial markets”.

    Of course this reminds us of a similar international cartel , or syndicate called LIBOR, where bankers successfully gamed global interest rates enabling them to reap easy billions at the expense of the lower classes. Money for nothing. They did so with impunity, all but laughing in public at any attempt to bring any of the gold collar criminals to book for financial fraud and racketeering.

    http://21stcenturywire.com/2013/06/14/inside-bilderberg-clues-left-in-the-grove-hotel-reveal-a-piece-of-their-financial-agenda/

    ReplyDelete
  15. The Real War on Reality
    But those revelations, captivating as they are, have been partial —they primarily focus on one government agency and on the surveillance end of intelligence work, purportedly done in the interest of national security. What has received less attention is the fact that most intelligence work today is not carried out by government agencies but by private intelligence firms and that much of that work involves another common aspect of intelligence work: deception. That is, it is involved not just with the concealment of reality, but with the manufacture of it.

    The realm of secrecy and deception among shadowy yet powerful forces may sound like the province of investigative reporters, thriller novelists and Hollywood moviemakers — and it is — but it is also a matter for philosophers. More accurately, understanding deception and and how it can be exposed has been a principle project of philosophy for the last 2500 years. And it is a place where the work of journalists, philosophers and other truth-seekers can meet.

    Important insight into the world these companies came from a 2010 hack by a group best known as LulzSec (at the time the group was called Internet Feds), which targeted the private intelligence firm HBGary Federal. That hack yielded 75,000 e-mails. It revealed, for example, that Bank of America approached the Department of Justice over concerns about information that WikiLeaks had about it. The Department of Justice in turn referred Bank of America to the lobbying firm Hunton and Willliams, which in turn connected the bank with a group of information security firms collectively known as Team Themis.

    Team Themis (a group that included HBGary and the private intelligence and security firms Palantir Technologies, Berico Technologies and Endgame Systems) was effectively brought in to find a way to undermine the credibility of WikiLeaks and the journalist Glenn Greenwald (who recently broke the story of Edward Snowden’s leak of the N.S.A.’s Prism program), because of Greenwald’s support for WikiLeaks. Specifically, the plan called for actions to “sabotage or discredit the opposing organization” including a plan to submit fake documents and then call out the error. As for Greenwald, it was argued that he would cave “if pushed” because he would “choose professional preservation over cause.” That evidently wasn’t the case.


    This may sound like nothing so much as a “Matrix”-like fantasy, but it is distinctly real, and resembles in some ways the employment of “Psyops” (psychological operations), which as most students of recent American history know, have been part of the nation’s military strategy for decades. The military’s “Unconventional Warfare Training Manual” defines Psyops as “planned operations to convey selected information and indicators to foreign audiences to influence their emotions, motives, objective reasoning, and ultimately the behavior of foreign governments, organizations, groups, and individuals.” In other words, it is sometimes more effective to deceive a population into a false reality than it is to impose its will with force or conventional weapons. Of course this could also apply to one’s own population if you chose to view it as an “enemy” whose “motives, reasoning, and behavior” needed to be controlled.

    Psyops need not be conducted by nation states; they can be undertaken by anyone with the capabilities and the incentive to conduct them, and in the case of private intelligence contractors, there are both incentives (billions of dollars in contracts) and capabilities.


    http://opinionator.blogs.nytimes.com/2013/06/14/the-real-war-on-reality/?ref=opinion

    ReplyDelete
  16. DK,

    The house my father bought in 1974 was sold for 20 times more...4 yrs ago...it's not relevant to the point I was humbly trying to make. Which is gold has not provided any real return over the last 5 years better than sp500 which is quite amazing given what has occured. I believe in it...but the guy watching cnbc is no worse off for following the drivel...it's like a paradox
    Cheers

    ReplyDelete
  17. Thanks for explaining the taper fairy tale, just as suspected, more total hogwash.

    That story embedded within your Seeking Alpha piece concerning withheld REO inventory goes to the heart of the matter, albeit a bit too truthily for AOL. Imagine if all that inventory was released into the market, along with all the housing from delusional hangers-on hoping to front run another bubble and bail out of their overpriced crap at or near par. I can't imagine that, even in some Stephen Hawking alternate reverse time universe. There's just not enough suckers. Ben must be contemplating faking his own death prior to Jackson Hole. Maybe he'll resurface incognito on some pre-school PBS kids morning show.

    ReplyDelete
  18. Dave,

    Thanks again.
    First I your article and know that the Fed Assasins and Potus are now in fear mode due to their attacks on you. The Fed cannot taper as you point out so eloquently in that article. Again, currently the MV is negative and the Fed is trying to maintain that for inflationary fears, and at the same time trying to combat deflation. They are now losing that race. I had signed up for the Fed free delivery of the Basens report and when it went sideways to slightly negative, I saw how much press coverage it got. It is again now PARABAOLIC!!!!!
    The FED is now purchasing 70% of Treasuries. When that goes to 100% due to the low yields we will have hit the proverbial wall. Only way out is to keep buying until they BAIL IN and steal $2.7Trillion in money market funds. At that point in time, the US becomes a Socialist/Tolatarian regime with no way out. Given this, capital controls and outright theft from American citizens begins. If they try to taper, the giveaways become impossible to fund. Yes, is it not the 1984 Orwellian State? It sure is!
    So sad, to see that Paulson, Bernanke, Geitner, Baldy Blanfein and Dickless Diamon have created the biggest screw up in history. I know now why they stopped printing the $500 bill. I advised my mom to get her money and NOW. She was told by one bank manager that they would have to get permission from up above. We settled for $10,000 and told the manager to get permission as we would return for more. When she called to get another $10,000 guess what. She could come get it in $20's and $50's as they did not have available $100's? What a crock of shit. Take care of yourself Dave, as I believe they will resort to more of this and start calling us criminals, you know, like Shithead Noriel Roubini just said that Gold Bugs are dangerous and have a political agenda? Wonder what spying on us through FACEBUTT, targeting IRS, and $YRIA are? Really Dave, take care. Get that AR in good shape you might need it. GOTS NOW!! The paid BS'rs are now going to start a larger war. War it is, GET OUT OF THE SYSTEM NOW is the battle cry.

    ReplyDelete
    Replies
    1. And if you need a hand with additional firepower I would be more than willing to help another Patriot out. This has gone way too far and I am ready to die for real freedom not this TOLATARIAN state we have now evolved into.

      Delete
  19. Report: 'Zombie' Funds Hold At Least $116 Billion

    Jun 14 2013 | 10:57am ET

    At least $116 billion remains tied up in more than 1,000 "zombie" private-equity funds, according to a new report.

    There are almost 1,200 zombie funds—those full of underperforming assets that have lived beyond their planned lifespan—according to Preqin, which looked at funds managed between 2001 and 2006 that did not see a follow-on fund raised. Such funds held shares in more than 1,700 companies and have returned less than 40% of the capital they paid in, compared to 99% for p.e. funds raised in 2003.

    And while the zombie funds aren't collecting performance fees, they are still collecting management fees.

    "No one is a winner when zombie funds are involved and represent a clear misalignment of interests between the fund manager and investor," Preqin's Ignatius Fogarty said. "GPs should be eager to realize investments and return capital to investors so that there is no reputational damage that adversely affects their ability to raise a follow-on fund."
    https://www.finalternatives.com/node/23930

    ReplyDelete
  20. Rigged-Benchmark Probes Proliferate From Singapore to UK
    The probe of Libor manipulation is proving to be the tip of the iceberg as inquiries into assets from derivatives to foreign exchange show that if there’s a chance to rig benchmark rates in world markets, someone is usually willing to try. Singapore’s monetary authority last week censured 20 banks for attempting to fix interest rate levels in the island state and ordered them to set aside as much as $9.6 billion. Britain’s markets regulator is looking into the $4.7 trillion-a-day currency market after Bloomberg News reported that traders have manipulated key rates for more than a decade, citing five dealers.

    Along with Libor, ISDAfix and energy market prices, Iosco flagged measures used in markets for overnight lending and repurchases, equities, bonds and alternative investments such as hedge funds.

    “It’s happened time and again: all of these markets have been influenced by major market-makers, which is a polite way of saying they’ve been rigged,” Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, said in a telephone interview.

    http://www.bloomberg.com/news/2013-06-16/rigged-benchmark-probes-proliferating-from-singapore-to-london.html

    ReplyDelete
  21. Gold is being supplied by western governments

    There has been considerable throughput of gold in western capital markets, with substantial buying from all round the world following the April price crash. The supply can only have come from two sources: the general public, or one or more governments. It really is that simple. Two months later the gold price has only partially recovered, so physical supplies have continued to be made available. Physical demand cannot have been entirely satisfied by ETF liquidations, confirming governments are involved. This article looks at the dynamics of the gold market around this event and the implications.

    http://www.goldmoney.com/gold-research/alasdair-macleod/gold-is-being-supplied-by-western-governments.html

    ReplyDelete
  22. Insane Bong & Pipe Ban signed by FL Gov Rick Scott. 2x = Felony!
    That’s right, starting July 1st smoking devices are now illegal in Florida. Anyone found in possession of a pipe two times (even if it has never been used) becomes a third degree felon. In Florida, this means you are permanently banned from voting. For a f####### pipe.
    http://peacersvp.wordpress.com/2013/06/16/insane-bong-pipe-ban-signed-by-fl-gov-rick-scott-2x-felony/

    ReplyDelete
  23. The Latest F*****ry from FINRA

    http://www.ritholtz.com/blog/2013/06/the-latest-fuckery-from-finra/

    ReplyDelete