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ANALYST: What We Are Seeing Is A Recalibration Of The Cost Of Money Joe Weisenthal May 27, 2013, 7:02 AM Part of the reason people are nervous about Japan is the potential for a disturbance caused by an increase in long-term government bond yields. The fear is that ultra-aggressive easing will create inflation, leading to an interest rise, creating havoc for banks who own so much government debt. And in the US, all the concern is about the so-called "Taper" the winddown of QE that may begin this year. In an email to clients, SocGen's Kit Juckes writes: What we...

U.S. Economy Drowning In A Liquidity Trap? Economics / US Economy May 26, 2013 - 06:33 PM GMT By: Frank Shostak Bruce Bartlett recently lamented in The New York Times that given the current state of economic affairs we need more Keynesian medicine to fix the US economy. According to Bartlett, the core insight of Keynesian economics is that there are very special economic circumstances in which the general rules of economics don’t apply and are in fact counterproductive. This happens when interest rates and inflation rates are so low that monetary policy becomes impotent; an increase in the money...

<p>UPDATE: The minutes from the Federal Reserve's April 30-May 1 FOMC meeting on monetary policy are out.</p> <p>The main headline: many on the Committee said more progress is needed before tapering back any bond purchases under the Fed's quantitative easing program.</p>

U.S. Economy Staring Into The Abyss! Only Gold Is Worth Buying Stock-Markets / Financial Markets 2013May 12, 2013 - 07:38 PM GMT By: Robert M Williams "Behind every great fortune there is a crime." - Honore de Balzac (1799-1850) A number of important figures are now talking about the possibility of increasing the US Federal Reserve’s quantitative easing given the “decline in inflation.” In March we heard comments from Fed Presidents Eric Rosengren and Narayana Kocherlakota calling for QE well into 2014 while Chicago Fed President Richard Evens thought the Fed needed to do more. Then in April the St....

According to the Wall Street Journal, The Fed is planning to dial back the incredible monetary stimulus. But it won’t go “cold turkey.” We can always rely on The Dallas Fed’s Richard Fisher for a pithy comment: “I don’t want to go from wild turkey to cold turkey,” Richard Fisher, president of the Federal Reserve Bank of Dallas, said in an interview Friday. “I think we ought to dial it back.” Mr. Fisher is part of a contingent of Fed hawks who are wary of the central bank’s easy-money policies. After all, Central Banks have lowered interest rates 511 times...

FED: WE MAY DO MORE Sam RoMay 1, 2013, 2:10 PMThe Federal Reserve has completed its Federal Open Market Committee meeting, and it has just published its statement. For now, the Fed is on hold with its month purchases of $85 billion worth of bonds in its efforts to keep interest rates low. However, one of line that was new this time around was this: The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition...

EL-ERIAN: It's Official — The World Needs To Worry About The Damage Caused By QE Mohamed El-ErianApril. 20, 2013, 10:05 AMIt is now official: "We will be mindful of unintended negative side effects stemming from extended periods of monetary easing." This is how the G-20, the most important country grouping today, put it in the communique they issued Friday night. But what exactly are they talking about? It all started with the difficulties that most advanced economies faced in generating adequate growth and employment after the 2008 global financial crisis. Rather than catalyze the political system into action, this "new...

The Federal Reserve released the minutes from its March meeting before the opening bell Wednesday morning, hours earlier than planned after the news was inadvertently sent to Capitol Hill staffers at some point Tuesday. The biggest news out of the release was the possibility that the central bank could start paring back its quantitative easing efforts by the summertime, and not necessarily because the economic recovery has firmed up. Minutes from the March 19-20 policy meeting reinforced comments from recent statements out of the Fed that extraordinary monetary policy will remain necessary until substantial improvement in the economy, but also...

BRUSSELS (AP) — European countries should ease off their austerity and adopt more growth-friendly policies, U.S. Treasury Secretary Jacob Lew said Monday as he kicked off a series of meetings with the region's top leaders. America's biggest trading partner and the world's largest economic bloc has entered the fourth year of its debt crisis, which has plunged many of the 27 EU governments into recession. The U.S. administration hopes Europe will relent in its focus on debt reduction, which has been hurting growth through spending cuts and tax increases. Lew, who became treasury secretary in February, started his first official...

As the months go by, it is becoming clear that the Federal Reserve's "QE3" program, which is supposed to be "doing something" about unemployment, is having the exact opposite effect. We can only wonder how long it will take Fed Chairman Ben Bernanke to realize this. Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS) was really, really, really bad. The reported 0.1 percentage point decline in the "headline" unemployment rate (from 7.7% to 7.6%) fooled no one. Total employment actually fell by 206,000. The only reason that the reported unemployment rate went down was because 496,000 Americans...

The decision of the government in Cyprus to simply take money out of people's bank accounts there sent shock waves around the world. People far removed from that small island nation had to wonder: “Can this happen here?” The economic repercussions of having people feel that their money is not safe in banks can be catastrophic. Banks are not just warehouses where money can be stored. They are crucial institutions for gathering individually modest amounts of money from millions of people and transferring that money to strangers whom those people would not directly trust... [snip] One of the big differences...

M&T Bank Corp.'s (MTB) Chief Executive Robert Wilmers railed against the "astronomical" pay of his fellow bank executives, calling on them to rein in their compensation while singling out the "Big Six" banking "oligopoly" for its outsized paychecks and serial regulatory lapses that continue to shade the public perception of banks. Mr. Wilmers, who has led M&T for 30 years, issued his stark criticisms in his annual shareholder letter, in which he also took aim at "unnecessarily complex" accounting and new banking rules that amount to "misguided regulatory chemotherapy." snip While the Big Six are not named in the letter,...

Charles Brady, senior editor of the FOX Business Network, has put together a remarkable chart that clearly shows the Federal Reserve’s monetary easing policies are not going into the U.S. economy, but instead into the stock market. The chart here compares the Dow Jones Industrial Average with the St. Louis Federal Reserve Bank’s adjusted monetary base. It shows the effect of Fed purchases of mortgage-backed and Treasury securities from Fed dealers, whereby the Federal Reserve buys $85 billion total every month from the big banks, hastening the growth in the Fed’s balance sheet to more than $3 trillion. The central...

The brilliant and colourful English Lit professor and occasional philosopher Marshall McLuhan presciently wrote, “Politics will eventually be replaced by imagery. The Politician will be only too happy to abdicate in favour of his image, because the image will be much more powerful than he could ever be.”McLuhan passed away in December of 1980, yet he seems to have had the capacity to perceive so many vacuous celebrity politicians which today fill our electoral landscape - empty vessels which float to re-election on electoral carpets of wishful thinking and ignorance. With an uninquisitive media abstaining from accurate reporting, the misinformed...

In an exchange with Bob Corker on Tuesday in which the Senator called Ben Bernanke an inflation dove, the Chairman of the Federal Reserve responded that "my inflation record is the best of any Federal Reserve chairman in the postwar period." For the readers who presume this article to be satire, the link here will prove otherwise. Bernanke, the walking, tripping, living definition of systemic risk now views himself as a top level inflation fighter in addition to being the world's foremost Great Depression expert, bank savior, and so many other things. And it's President Obama who has the huge...

The ‘End’ Of QE – Hype Or Tripe? Interest-Rates / Quantitative EasingFebruary 23, 2013 - 07:32 PM GMT By: Andy Sutton I am going to say right up front that there is going to be quite a bit of sarcasm in this essay. I say this simply because of the ludicrous nature of our marionette-esque talking heads in the mainstream financial press in this country. They are truly amazing, taking molehills and making mountains out of them and vice versa. In one segment telling us that there in fact will be no criminal charges against anyone involved in the HSBC...

We progress, marching forward leaving behind us a trail of yesterdays, filled with events large and small, assembling memories, but some of the more momentous occurrences rise to a superior level which we include in our collective “history.” In that wake of our advance some of those momentous waves swell further, rising to become events that only hindsight can identify as pivotal moments in that shared recollection. UTOPIA Such hindsight is not always 20/20.  We may be aware of the events as they unfold, but their significance and impact on our march forward is not always self evident and years...

We got a problem here folks, and it's going to lead to the next crash -- and sooner than you think. First, let's talk about the impact of QE on companies. The common mantra is that it makes it "easier" for firms to borrow money. The problem is that borrowing, in general, is a destructive act as you must pay back said borrowing with interest -- no matter how small. The bigger problem, however, is that long-established businesses have obligations that were all contracted with the expectation of lending other people money and earning a spread on it, such as...

Did The Fed Lie About QE 3 And 4? Stock-Markets / Quantitative EasingJan 05, 2013 - 08:24 AM By: Graham Summers It’s common belief that Bernanke and the Fed are printing $85 billion per month ($40 billion to buy Mortgage Backed Securities and $45 billion to buy Treasuries). After all, these are the policies that the Fed announced in September and December 2012, respectively. The only issue with this is that the Fed lied. Today, the Fed’s balance sheet is $1.3 billion smaller than it was at this time last year. Last week it was $19 billion smaller. The largest...

The Federal Reserve Has No Practical Option To End QE January 3, 2013, at 6:07 pm by Jim Sinclair in the category General Editorial | Print This Post Print This Post | Email This Post Email This Post Dear CIGAs, Such an announcement has been part of QE either from MSM or some Fed board member since it began. The implication of stopping QE is so dire to the economy that it is in a practical sense impossible. When gold was being sold by central banks during the 1970s market announcements were made constantly with the bias to depress metals....