Eventually, everything matters.
Whether it's a hurricane ravaging Houston, Miami, or Puerto Rico, Toys 'R Us going chapter 11, or JP Morgan Chase CEO Jamie Dimon bashing cryptocurrencies in general and Bitcoin in the specific, all actions have consequences. It's the butterfly flapping its wings in Africa resulting in the subtropical windstorm, pure physics, action, reaction, cause and effect.
Thus it is consequential that the Fed's announcement in June indicating that it would begin to sell off it's hefty bag of assets - confirmed just yesterday - beginning in October (a scant ten days from now) should have some noticeable effect.
Market reaction to the announcement three months ago was muted. It was more serious yesterday and took on a gloomy tone today as all of the major indices retreated from all-time highs, the hardest hit being the speculative NASDAQ index, though one could posit that the knee-jerk nature of the selling today was nothing more than casual.
Suppose it is more than that.
Wouldn't the biggest players in the investing universe be monitoring market movements closely, making incremental moves, buying insurance? Of course. None of them want to tip their hand, but, they are concerned that the Federal Reserve has lost control of the monetary side of the equation. After all, ZIRP (zero interest rate policy) didn't work, nor did quantitative easing (QE). With all of their bullets spent, the Fed has nonchalantly called the financial crisis over and done and signaled to the market that they are going to raise interest rates, sell off the assets they've been hoarding for some six, seven, or eight years and the economy of the United States - and the world - will suddenly and magically be wonderful again.
As Dana Carvey playing the "Church Lady" might say, "how convenient!"
The Fed is at a loss and has been for eight or nine years running (some may say longer), because they cannot control distant event, geological occurrences, sunrises, or the whims of people with money. They are what Ayn Rand and Rollo May might have called witch doctors whose power is derived from people's belief in their so-called powers.
When the Fed begins selling their cache of securities (mostly treasury bonds and mortgage-backed securities) expect some degree of howling from various quarters, notably those who have been calling the central bank's attempts to control global markets a scam, sham, or film-flam from the start.
Especially when it comes to the mortgage-backed securities (MBS) there will be great gnashing of teeth, especially deep inside the bowels of the Eccles Building, where it cannot be heard, as Fed governors (a number of them already jumping ship) bemoan their dissatisfaction over the task at hand.
They are about to become scorned, and with good reason. They've mismanaged other people's money (practically everybody's) to their own profit. Bernie Madoff would look like a saint compared to the crimes the people at the Fed have committed. Those crimes continue, and they will be manifest in the "great unwind."
As the case may be, all of these high priests and witch doctors of finance will claim they didn't see the carnage coming, but come it will. There's a place for people who use deceit and obfuscation to achieve their ends, and it's certainly not in heaven.
Keep a close eye on three things: the price of silver, the price of corn and wheat, and the performance of the major stock indices. If suspicions play out, all three (or two of three, with the only gainer being silver) will decline for months before there's true confirmation that, in the long scheme of things, the Fed officials, from Greenspan to Bernanke to Yellen, knew exactly what they were doing but did it anyway.
Today's position: Fetal.
At the Close, Thursday, September 21, 2017:
Dow: 22,359.23, -53.36 (-0.24%)
NASDAQ: 6,422.69, -33.35 (-0.52%)
S&P 500: 2,500.60, -7.64 (-0.30%)
NYSE Composite: 12,133.62, -13.88 (-0.11%)
Showing posts with label Bernie Madoff. Show all posts
Showing posts with label Bernie Madoff. Show all posts
Thursday, September 21, 2017
Monday, June 29, 2009
Stocks Gain to Open Week; Madoff Gets 150 Years
The most significant news story of the day was the sentencing of serial Ponzi-schemer Bernard Madoff by US District Court judge Denny Chin, who figuratively "threw the book" at the convicted swindler, issuing the maximum sentence of 150 years in prison to the 71-year-old. Madoff will spend the rest of his life behind bars for masterminding the largest securities fraud in history.
Perhaps one of just a few bright lights from the unwinding of the US economy, Madoff may never had been discovered if not for the horrific losses taken by the market in the fall of 2008. It was amid crashing stocks that Madoff first admitted his guilt as he could no longer maintain that his investments were making profits.
Ads Madoff heads out of the spotlight and behind bars, it's worth noting that various frauds, scams and scandals come to light during serious market declines. If Madoff proves to be the worst of them, all well and good, but there was surely more than the solitary machinations of a singular evil genius at work within the latest market crash. The bodies are all now safely buried in the books of Citigroup, Goldman Sachs, JP Morgan, Bank of America, Wells Fargo and Morgan Stanley. The real crimes have been neatly swept under the rug by Treasury Secretary Geithner and Fed Chairman Barnanke.
The words "toxic assets" have been swiftly dispatched from the standard economics news lexicon; those have all been absorbed by the Federal Reserve for future disposal. Accounting rules have been changed to accommodate the bankers, as usual. The same kinds of things happened before and during the Great Depression. Incompetence and lack of foresight in allowing a speculative bubble to get out of hand were the causes then, as now, and there will likely be more scandal, finger-pointing, accusations, firings and eventually, prosecutions of those who undermined the core of our economy.
The economy has suffered severe damage, stocks are overpriced in an unsustainable trading range, but the word on the street is that the bad times are already behind us. We can almost hear Roosevelt's campaigners singing "Happy Days Are Here Again."
We so wish it were so, but evidence points in the opposite direction. While our maladies may not ever approach those of the Great Depression, by some standards they already are. True unemployment figures point to 18-20% currently, but what never gets reported and is at the root of our problem, is the black market or "underground" economy, which the government stopped trying to measure back in the 1970s. From pot dealing to off-the-books labor, this illicit economy grows daily, eroding the tax base along with our confidence in government institutions.
So broad, vast and rapacious are federal and state taxes that companies and individuals are nearly coerced into cheating if only to ensure their own survival. The costs of taxation on business are so odious today that there's actually a disincentive to entrepreneurism. Nobody wants a partner that takes but never contributes. Still, people make money without paying taxes, and that's what - besides the incredible amount in aid to states - is really keeping the economy from going bust. There's a lot of money around, and nobody's starving or freezing yet. Let's hope it stays that way.
Dow 8,529.38, +90.99 (1.08%)
NASDAQ 1,844.06, +5.84 (0.32%)
S&P 500 927.23, +8.33 (0.91%)
NYSE Composite 5,962.50, +55.54 (0.94%)
As market participants apparently had cash on hand and nothing better to do with it, they bid up stocks early in the day and traded sideways after 10:00 in the AM. As well as the final numbers look, the internals were conforming but far from encouraging. Advancing issues beat back decliners by a modest margin, 3540-2858. New highs surpassed new lows, 88-52, but volume was the most tepid in some time, somewhat expected in this shortened holiday week.
NYSE Volume 1,065,345,000
NASDAQ Volume 2,021,623,000
Oil shot up $2.33, to $71.49, as Nigerian rebels attacked an offshore oil rig and China announced it would add to its strategic reserves. Gold finished the day down 30 cents, at $940.70. Silver dropped 18 cents, to end the day at $13.98.
Again, there was little in the way of corporate or economic news. It looks like another slow trading week ahead.
Perhaps one of just a few bright lights from the unwinding of the US economy, Madoff may never had been discovered if not for the horrific losses taken by the market in the fall of 2008. It was amid crashing stocks that Madoff first admitted his guilt as he could no longer maintain that his investments were making profits.
Ads Madoff heads out of the spotlight and behind bars, it's worth noting that various frauds, scams and scandals come to light during serious market declines. If Madoff proves to be the worst of them, all well and good, but there was surely more than the solitary machinations of a singular evil genius at work within the latest market crash. The bodies are all now safely buried in the books of Citigroup, Goldman Sachs, JP Morgan, Bank of America, Wells Fargo and Morgan Stanley. The real crimes have been neatly swept under the rug by Treasury Secretary Geithner and Fed Chairman Barnanke.
The words "toxic assets" have been swiftly dispatched from the standard economics news lexicon; those have all been absorbed by the Federal Reserve for future disposal. Accounting rules have been changed to accommodate the bankers, as usual. The same kinds of things happened before and during the Great Depression. Incompetence and lack of foresight in allowing a speculative bubble to get out of hand were the causes then, as now, and there will likely be more scandal, finger-pointing, accusations, firings and eventually, prosecutions of those who undermined the core of our economy.
The economy has suffered severe damage, stocks are overpriced in an unsustainable trading range, but the word on the street is that the bad times are already behind us. We can almost hear Roosevelt's campaigners singing "Happy Days Are Here Again."
We so wish it were so, but evidence points in the opposite direction. While our maladies may not ever approach those of the Great Depression, by some standards they already are. True unemployment figures point to 18-20% currently, but what never gets reported and is at the root of our problem, is the black market or "underground" economy, which the government stopped trying to measure back in the 1970s. From pot dealing to off-the-books labor, this illicit economy grows daily, eroding the tax base along with our confidence in government institutions.
So broad, vast and rapacious are federal and state taxes that companies and individuals are nearly coerced into cheating if only to ensure their own survival. The costs of taxation on business are so odious today that there's actually a disincentive to entrepreneurism. Nobody wants a partner that takes but never contributes. Still, people make money without paying taxes, and that's what - besides the incredible amount in aid to states - is really keeping the economy from going bust. There's a lot of money around, and nobody's starving or freezing yet. Let's hope it stays that way.
Dow 8,529.38, +90.99 (1.08%)
NASDAQ 1,844.06, +5.84 (0.32%)
S&P 500 927.23, +8.33 (0.91%)
NYSE Composite 5,962.50, +55.54 (0.94%)
As market participants apparently had cash on hand and nothing better to do with it, they bid up stocks early in the day and traded sideways after 10:00 in the AM. As well as the final numbers look, the internals were conforming but far from encouraging. Advancing issues beat back decliners by a modest margin, 3540-2858. New highs surpassed new lows, 88-52, but volume was the most tepid in some time, somewhat expected in this shortened holiday week.
NYSE Volume 1,065,345,000
NASDAQ Volume 2,021,623,000
Oil shot up $2.33, to $71.49, as Nigerian rebels attacked an offshore oil rig and China announced it would add to its strategic reserves. Gold finished the day down 30 cents, at $940.70. Silver dropped 18 cents, to end the day at $13.98.
Again, there was little in the way of corporate or economic news. It looks like another slow trading week ahead.
Subscribe to:
Posts (Atom)
Posts
