Fleetwood Mac - Tell Me Sweet Little Lies
The problem was simply a matter of gross, coordinated misrepresentation (a fancy way of saying “lying, on a large scale – and with the cooperation of regulators“)
The PTB (Powers That Be) keep telling us these lies, for our own good, of course. Isn't it time we were told the truth?
Just as the 2003-07 bear market rally was built on a shaky foundation of unsustainable credit and house price appreciation, the current bear market rally has been built on even shakier ground of surreal public sector intervention. This may well have “saved the system” or “prevented a depression” back in the opening months of 2009, as many like to believe. However, the reality (and even former Communist regimes figured this out a few decades ago) is that there is no such thing as a free lunch. - David Rosenberg
Instead we get continuing patronization from our leaders. Which IMO is a fanciful way of justifying lies and deceit.
Does Bernanke and the Fed remind anyone else of some modern day, economic equivalent of Colonel Jessup from "A Few Good Men"?
You Can't Handle The Truth
Remember this scene which provides the "fly on the wall" perspective to the climactic final courthouse scene?
A Few Good Men: The Santiago Meeting
As evidence this week, we have the released FOMC minutes from 2005. Many times in the past, I have said I would like to have been a "fly on the wall" during these pre-tumultuous times to have a feel for what theses guys were thinking as the financial system was beginning to show cracks.
Now we know. They were cracking jokes. Great job, fellas.
Jokes about housing....pre-crash
"–I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled “Flip That House.” [Laughter] As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas, and access to a bank, you too could tap into the great real estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]~David Stockton, Dec. 13, 2005, economist and Fed comedian.
Jokes about spending and deficits...
“Tell me, Sam, is there really any difference between Republicans and Democrats when it comes to spending?” And Cohen said, “I want to think about it, do some research, and give you a serious answer.” He called back the next morning and said, “Yes, George, there is. Democrats enjoy it more.” [Laughter] “But otherwise there doesn’t appear to be any difference.”~Fisher.
Jokes about the declining value of the dollar...inflation....theft from savers.
“Absent a dollar depreciation that’s now probably on the order of 8, 9, or 10 percent, the deficit is going to steadily worsen. If the dollar were to start depreciating, that would slow the rate of deterioration. If the dollar depreciation that we put into the forecast were to get as high as 8 or 9 percent, that might plateau the deficit”.~Johnson
“One thing we can be sure of is that the value of the dollar will be worth 100 cents.” [Laughter]~Greenspan
Jokes about globalization...which robbed OUR economy of jobs.
“Everyone I’ve talked to continues to try to figure out ways to exploit globalization. Each of them, from the IT [information technology] guys to the big box retailers to the specialty chemical firms to the service firms, wants to have offshore supply. One of the CEOs said, “We have a long way to go in exploiting China.” We’ve heard that forever. And one of my favorites was the comment, “China, India, and Indonesia can make Italian ceramics better than Italians can now or could 200 years ago.” [Laughter]
Seems like collectively, Messrs. Greenspan, Bernanke -- and the aforementioned clowns and comedians who advise them -- should be rounded up, held and quartered in exactly the same fashion as Colonel Jessup was at the end of the movie.
The parallels between the meeting between Colonel Jessup and his underlings and Greenspan / Bernanke -- and the other FOMC clowns -- is too close for me.
To be drawn and quartered would be too good for some of these a#%-hats. They'll just change the narrative, change / obscure the facts and point fingers elsewhere. Problem is, the facts and the evidence of their behavior will get in the way.
My dad used to say, "Don't let the facts get in the way of a good story" whenever we tried to B.S. our way out of trouble of our own doing. I have a feeling these clowns are the children in the room today.
Time for good people to stand up and be the parents. These finger-pointing little children ("It's not my fault, he did it") have been in charge long enough.
"In our age there is no such thing as ‘keeping out of politics’. All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred, and schizophrenia." -- George Orwell
“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.” -- From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan
“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.” -- Ludwig von Mises – Austrian Economist (1881- 1973)
Click on picture to make the fools dance:
Sorry fellas, I'm still trying to reconcile how we went from anticipating "exit strategy" from QE -- a strategy we didn't want to do in the first place -- to QEII.
Not sure how all this money -- Bernanke literally "making it rain" on Wall Street through POMO, to simulate a "Wealth Effect", helps anyone on Main Street when they are seeing:
1) food / fuel prices rise (and yes we do buy food and fuel [Laughter])
2) jobs being shed left and right (not saved or created [Laughter])
3) home prices (the original "wealth effect" [Laughter, no ROTFLAO]) melting like a snowman in Florida
In light of this mad dash to create inflation (to avoid deflation) minus wages keeping pace with said inflation (and they never do, haven't since 1970 or so [Laughter]
How did we pivot from "helping folks on Main Street and fighting greed on Wall Street" (Mr. Obama and Mr. Biden, what happened to fighting for Main Street? [Laughter]) to helping Wall Street again at the expense of Main Street. [Laughter]
I'm not sure how artificially inflating the stock market (through POMO) to create this artifical wealth effect helps anybody but the top 10% of income earners and wealth owners.
Main Street sees their 401K values (up [Laughter]) but not as much as their home values have gone down. [Laughter, no ROTFLAO]
Main Street doesn't feel your "Illusory Prosperity" (look it up, hint Mises), or what you call "wealth-effect" [Laughter], when house prices are plummeting, wages are decreasing or vanishing, and prices for things they actually buy (even though you don't count them in CPI [Laughter]) are increasing.
"Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth and market conditions. It causes production to pursue paths which it would not follow unless the economy were to acquire an increase in material goods. As a result, the upswing lacks a solid base. It is not real prosperity. It is illusory prosperity. It did not develop from an increase in economic wealth [i.e. the accumulation of savings made available for productive investment]. Rather, it arose because credit expansion created an illusion of such an increase. Sooner or later, it must become apparent that this economic situation is built on sand -- Ludwig von Mises
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