Shanky‘s right about the little YouTube site ICN. Informed Citizen News (ICN) is worth watching:
Of course regular readers of this blog and others are informed. But if those who don’t spend so much time with us want to get up to speed quick, ICN could help. You can subscribe to ICN’s channel on YouTube by clicking here.
There’s a great review of Ron Paul’s book and his efforts to audit the FED at the Ludwig von Mises site. Worth the read…
Dr. Paul’s fight for freedom has not been confined to the issue of sound money. He has also led the struggle against interventionist and imperialist foreign policy. But the fight for liberty is seamless, and he shows that an aggressive foreign policy depends on government control of the money supply:
It is no coincidence that the century of total war coincided with the century of central banking. When governments had to fund their own wars without a paper money machine to rely upon, they economized on resources. They found diplomatic solutions to prevent war, and after they started a war they ended it as soon as possible. (p. 63)
The book contains an abundance of other arguments against our current monetary system, e.g., that it violates the Constitution. Readers will discover Thomas Paine’s poor opinion of paper money, and even how monetary debasement helped bring the Byzantine Empire to ruin. Those who have absorbed the book’s message will come to a clear conclusion: End the Fed.
(ht Zero Hedge and Washington’s Blog) In an interview with Wall St. Cheat Sheet‘s Damien Hoffman, Congressman Alan Grayson offers such stunning information as:
Just a few weeks ago, while Chairman Bernanke was testifying to Congress, we examined the Fed balance sheet and P&L statement only to find what looked like the Fed handing over half a trillion dollars to foreigners. This was very surprising! When I asked Chairman Bernanke if this was true, he said, “Yes.” When I asked him who got the money, he said, “Fourteen foreign Central Banks.” And when I asked to who did they give the money, he said, “I don’t know.” “I don’t know” is not good enough when you’re talking about $500 billion. That’s $1700 for every man, woman, and child in this country…In the case of another $230 billion, it has been tracked as a secret bailout to Citicorp in the US. The fact is the Federal Reserve continuously puts all of us on the hook for decisions they make to play favorites with private interests to the tune of trillions of dollars…
HR 1207 passage is now guaranteed in the House because there are plenty of co-sponsors. But, there are only 25 senators co-sponsoring the senate’s version (Bernie Sander’s bill) of the Audit the FED bill. If they are not on the list, please ask your senators why they are not supporting the bill. Remember… if your senator responds something like: “It’s important to maintain Federal Reserve Independence…” Tell them, the FED must answer to SOMEBODY. Congress authorized the FED- Congress should do its job and oversee the FED – and not let the banks do it for them. These crooks need to go to jail…
In keeping with our recent focus on the possibility that junk bonds may be signaling a decline in stocks, we present Daneric’s chart showing the possibility of an exhaustion gap in junk bonds:
Click here to see enlarged chart.
“if they happen during a bull move, some bullish euphoria overcomes trades, and buyers cannot get enough of that stock. The prices gap up with huge volume; then, there is great profit taking and the demand for the stock totally dries up.”
Is that what we are seeing in junk bonds right now?
The U.S. economy will emerge from recession by growing more than 2 percent in the current and fourth quarters on a dramatic reversal in inventories, but growth next year will be tepid, a UCLA Anderson Forecast said on Wednesday…”The structural problem facing the economy is that you have wealth-impaired consumers that need to repair balance sheets and many need to repair balance sheets because they are facing retirement or education costs for children with less than they thought they had,” said David Shulman, a senior economist at the UCLA Anderson Forecast group.
So…looks like the economic forecasters – who never get it right except when they can follow an existing trend – are looking for the “new normal” to be about 2% rather than the 1 to 2% (average, say…1.5%) called for by the PIMCO guys and yet, far less than the 3 to 3.5% of the last few years. Let’s see, what has to change from last quarter? In rough figures, without government stimulus spending, we would have printed a -6% annualized growth rate for 2nd quarter. So, now the remaining government stimulus spending along with the inventory swing is supposed to kick us into the 2% growth level for the next 2 quarters. Inventory building in anticipation of a yet-to-come consumer spending rebound and continuing government spending. The government has no inclination to stop spending but will that spending result in a healthy consumer? A consumer who can eventually take the place of the government spending? You be the judge – but it’s certainly not a slam dunk for the consumer to bounce back the way it’s being anticipated.
This is wild! It’s what’s driving the Baltic Dry Index to test the old lows. From Daily Mail, (ht TPC):
They are a powerful and tangible representation of the hurricanes that have been wrought by the global economic crisis; an iron curtain drawn along the coastline of the southern edge of Malaysia’s rural Johor state, 50 miles east of Singapore harbour…It is so far off the beaten track that nobody ever really comes close, which is why these ships are here. The world’s ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world’s economies.
Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia’s leading ship brokers, says, if the world is really pulling itself out of recession, then all these idle ships should be back on the move. ‘This is the time of year when everyone is doing all the Christmas stu ff,’ he points out…A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you’ve got something like 12 per cent of the world’s container ships doing nothing.’
Mish has a post about the correlation of corporate bonds – specifically high yield corporates – with the stock market. The idea is that market participants are bidding up the prices of both risky bonds and risky stocks, even in the face of a scary rise in the junk-corporate default rate:
Inquiring minds have been asking “With Junk bonds defaults so miserable, why is the stock market rallying?” … The corporate debt market is still in control, but we now have a warning sign from treasuries yields about the strength of the so-called recovery. This rally is extremely long in the tooth, but the fact still remains: as long as corporate bonds hold up, huge equity selloffs are unlikely.
Over the last.. call it 6 months… the trend toward risk has been in full force. But a closer examination of charts suggests there is now a divergence: High yield bond prices have turned down since late July, while stocks have continued on their upward climb. To show what we mean, we sketched in an “eyeballed” trend line for each market on the charts supplied by Mish below.
Zero Hedge points out the strong correlation between Federal Reserve bank reserve creation and the rise in the stock market. Their chart is just the latest in a long series of evidence:
The relation is just too strong to lead to any other conclusion…the Federal Reserve (with the cooperation of its owners) has orchestrated the rise in the stock market since March to pad the income statements of the banks, with the side benefit of building a false confidence in the consumer.
From the Huffington Post (ht Naked Capitalism) :
The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed’s thrall, the economists missed it, too.
The FED’s dominance of the economic research field also explains how the FED was able to get so many economists to sign a petition that urged continued “independence of the FED”. We’ve said it before: If the FED is independent from Congressional oversight, then we are just trusting that a “benevolent” FED will oversee itself. What/who made the employees of the Federal Reserve so good, so trustworthy? How did only they, of all the regulators in the world, escape the evil temptation to cater to its own special interests – that thoroughly besets the rest of the world? It’s a neat trick – but we just don’t buy it…
Gary shilling offers some reasons why he thinks the economy will not just “snap back”.
