Archives for May 2013

The Most Stinging Indictment Of Wall Street Bankers We’ve Read In A While

This Reuters Editorial Is The Most Stinging Indictment Of Wall Street Bankers We've Read In A While

Banker bashing as it was in 2008 and and 2009 has largely passed. Politicians don't refer to financiers as "fat cat banker," journalists aren't depicting banks as giant sea predators, and no one is marching in the streets.

There has, however, still been a quiet debate about the rich — who they are and where they believe they fit in global society. Take Reuters editor Chrystia Freeland's book, "Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else." It's an examination of where the loyalties of the planet's often-transient wealthy lie, and how they construct their world view to make sense of their fortunes amidst the inequities they see around them.

In a recent editorial, Reuters editor Edward Hadas got more specific about the group of wealthy people he examines. His meditation is specific to the world view of bankers, whom he calls "aristocrats."

He says their rewards are excessive for the work they do and the value it adds to society (very little). Consider that while the average pay of a JP Morgan employee is $192,000, it is the top third of employees (making around $485,000 compared to the bottom two thirds', say, $45,000), that skews it in that direction.

But being overpaid isn't Hadas' most damning gripe. To him, this is a sociological issue about identity that goes beyond dollars and sense. Bankers, he says "have persuaded broader society that they are modern day aristocrats… They go along with an unthinking sense of entitlement and a mix of self-righteousness and self-centredness, with just a hint of condescending tolerance for limited criticism."

Think about it as a form of nobless oblige. Hadas is arguing that, armed with the mysteries of our complex financial system, bankers feel like the masters of something lesser mortals cannot begin to understand. For that important understanding, they believe they should be rewarded handsomely.

From Reuters:

Ask an articulate trader about the social value of playing the yield curve to the detriment of clients, and the response will have the same unthinking certainty as a French count asked about the justice of the corvee. The trader dismisses radical critics as well-intentioned but ignorant about the importance of high (and highly paid) finance…

Living largely with other members of their caste, they rarely have doubts. To them, more finance is always better than less and higher margins always better than lower. They welcome the development of more complicated financial products they don't worry much about the effect of these products on the rest of the economy.

This has become a part of our social system and it won't change, Hadas argues, because the powers-that-be need Wall Street's money — politicians need campaign funding, regulators want to flip through the revolving door, and even "borrowers are often grateful for their expensive loans."

The solution for this is a revolution that would break the Wall Street money-making machine. It could come from a slowdown in China, Hadas suggests. Without money "the current system could fall apart, and its leaders might finally learn something like humility," he writes.

Apparently our last financial crisis was not enough.

In an America where the narrative about who we are stresses egalitarianism and a disgust for anything that smacks of classism, the idea that there are those who thoughtlessly propagate a systemic advantage is often a difficult argument to hear. When it is presented it is often met with immediate denial — this is the United States. This is a meritocracy, and want to think we are fair.

But we are more than what we think we are.

To read the full Hadas piece, head to Reuters>

Picture credit: starmanseries

Economic Storm Clouds Ahead

What is unsustainable, can't go on. 

None of this gloominess today has anything to do with the stock market. (Don't be fooled by the false economic recoveryConsumer Metrics Institute: “Is it 2007 once again?".) There's economic reality and there's money from the Fed – only one is having a substantial effect on the stock market. 

Economic Storm Clouds Ahead

Courtesy of Robert Reich

Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush. “Just look at the bull market! Look at home prices! Look at consumer confidence!”


I can understand the jubilation in the narrow sense that we’ve been down so long everything looks up. Plus, professional economists tend to cheerlead because they believe that if consumers and businesses think the future will be great, they’ll buy and invest more – leading to a self-fulfilling prophesy.

But prophesies can’t be self-fulfilling if they’re based on wishful thinking.

The reality is we’re still in the doldrums, and the most recent data gives cause for serious worry.

Almost all the forward movement in the economy is now coming from consumers —  whose spending is 70 percent of economic activity. But wages are still going nowhere, which means consumer spending will slow because consumers just don’t have the money to spend. 

On Thursday the Commerce Department reported that consumer spending rose 3.4 percent in the first quarter of this year. But the personal savings rate dropped to 2.3 percent — from 5.3 percent in the last quarter of 2012. That’s the lowest level of savings since before the Great Recession. You don’t have to be an economic forecaster, or an astrologer, to see this can’t go on.

Yes, home prices are rising. The problem is, they’re beginning to rise above their long-run historical average. (Before the housing crash they were were way, way above the long-run average.) So watch your wallets. We’ve been here before: The Fed is keeping interest rates artificially low, allowing consumers to get low home-equity loans and to borrow against the rising values of their homes. Needless to say, this trend, too, is unsustainable.

What about the stock market? It’s time we stopped assuming that a rising stock market leads to widespread prosperity. Over 90 percent of the value of the stock market — including 401(k)s and IRAs — is held by the wealthiest 10 percent of the population.

Moreover, the main reason stock prices have risen is corporate profits have soared. But that’s largely because corporations have slashed their payrolls and keep them low. Which brings us full circle, back to the fundamental fact that wages that are going nowhere for most people.

Not even fat corporate profits are sustainable if American consumers don’t have enough money in their pockets. Exports can’t make up for the shortfall, given the rotten shape Europe is in and the slowdown in Asia.

So don’t expect those profits to continue. In fact, the new Commerce Department report shows that corporate profits shrank in the first quarter, reversing some of the gains in the second half of 2012.

And, by the way, the full effect of the cuts in government spending hasn’t even been felt yet. The sequester is going to be a large fiscal drag starting next month.  

Look, I don’t want to rain on the parade. But any self-respecting weather forecaster would warn you to zipper up and take an umbrella. Don’t be swayed by all the sunny talk. There are too many storm clouds ahead. 

(Photo from Tom Patterson)

You Are About to Become Obsolete; Perhaps You Already Are (But You Don’t Realize It Yet)

Courtesy of Mish.

A friend of mine sent a thought provoking link to a book-in-progress called Robots Will Steal Your Job But That’s OK.

The author, Federico Pistono, periodically writes a new chapter and I just signed up for updates.

The introduction caught my eye.


You are about to become obsolete. You think you are special, unique, and that whatever it is that you are doing is impossible to replace. You are wrong. As we speak, millions of algorithms created by computer scientists are frantically running on servers all over the world, with one sole purpose: do whatever humans can do, but better. These algorithms are intelligent computer programs, permeating the substrate of our society. They make financial decisions, they predict the weather, they predict which countries will wage war next. Soon, there will be little left for us to do: machines will take over.

Does that sound like some futuristic fantasy? Perhaps. This argument is proposed by a growing yet still fringe community of thinkers, scientists, and academics, who see the advancement of technology as a disruptive force, which will soon transform our entire socioeconomic system forever. According to them, the displacement of labour by machines and computer intelligence will increase dramatically over the next few decades. Such changes will be so drastic and quick that the market will not be able to abide in creating new opportunities for workers who have lost their jobs, making unemployment not just part of a cycle, but structural in nature and chronically irreversible. It will be the end of work as we know it.

Most economists discard such arguments. Many of them don’t even address the issue in the first place. And those who do address this issue claim that the market always finds a way. As machines replace old jobs, new jobs are created. Thanks to the ingenuity of the human mind and the need for growth, markets always find a way, especially in the ever-connected and globalised mass market we live in today.

In this book I will try to avoid picking either side based on belief, gut feeling, or hunch. Rather, I will attempt to engage in informed logical reasoning, based on the evidence we have so far.

The book is divided into three parts. First, we will explore the topic of technological unemployment and its impact on work and society – I chose to focus on the US economy, but the same argument applies to most the industrialised world. In the second part we will look into the nature of work itself and the relationship between work and happiness. The last part is a bold attempt to provide some practical suggestions on how to deal with the issues presented in the first two parts. Doing a thorough examination of each section would require a monumental effort, possibly resulting in thousands of pages, far exceeding the purpose of this book. My intention is not to write a complete academic report, but rather to initiate a discussion about what I think will soon be one of the biggest challenges that we have to face as a society and as individuals. Too often we treat various issues as separate subjects, not realising the interconnected nature of our reality. This mistake has made us weak and vulnerable. Over the last 70 years, we have set the stage of our own demise. We have become increasingly discontent, the quality of our relationships have diminished, and we have lost track of what really matters. Today, as the comedian Louis CK has noted: “Everything is amazing, and nobody is happy!” It is time to take a step back and think about where we are going.

Let us begin the journey. …

Part I is on Automation and Unemployment, and consists of five chapters. Parts II and III are not yet posted. Inquiring minds may wish to follow the journey.

What If?

In the following short 4-minute video Federico Pistono asks “What if the jobs cannot come back? What if it is intrinsically impossible for the jobs to come back? What if unemployment is structural?“…

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Don’t be fooled by the false economic recovery

No reason to put any weight on consumer confidence numbers. A fake recovery can look like a recovery until it doesn't…

Don't be fooled by the false economic recovery 

By Heidi Moore,

After five years of unemployment, government deficits and financial struggle, every American wants to call it a recovery and call it a day. That's why some optimistic economic data this week seem to have messianic importance, in the ever-optimistic belief that higher consumer confidence and rising home prices will deliver us from economic evil.

But if evil has one power, it is the power of illusion, to mask reality. And, in this case, that is also the power of the positive economic data.

Take the consumer confidence numbers, which are measured every month by the Conference Board and act as one of the more foolish hinges on which to hang our hopes. Consumer confidence in May jumped to 76.2, on a scale of 100. In the popular interpretation, that indicates that consumers believe the economy is improving.

It's also an object lesson in the silliness of believing in the validity of consumer confidence. As history shows, countries and people have long been confident when they had no reason to be.

For instance, the consumer confidence numbers themselves are not as confident as they seem. As Michael Santoli at Yahoo Finance points out, the average consumer confidence number during a recession is about 79, and even with our recent boost, we're still lagging below that low bar.

There is more evidence that Americans lack psychic economic ability. The May data shows the highest measure of consumer confidence since February 2008. That was a time in which a housing crash was already well underway, and only a month before before Bear Stearns collapsed and confirmed that the country was in a financial crisis. At least six months before that, in August 2007, three major hedge funds invested in subprime real estate had to be bailed out by the French bank BNP Paribas, and the Federal Reserve and other central banks started pumping $300bn into the global banking system. Any collective confidence back in February 2008 was foolish and unwitting of the crisis that had already started in the higher rungs of finance.

Similarly, the idea of a strengthening recovery is out of step with some bubblicious activity, including the dubious and sudden rise in housing prices…

Keep reading: Don't be fooled by the false economic recovery | Heidi Moore | Comment is free |

The Student Loan Delinquency Rate In The United States Has Hit A Brand New Record High

College Graduation - Photo by Mando vzl37 million Americans currently have outstanding student loans, and the delinquency rate on those student loans has now reached a level never seen before.  According to a new report that was just released by the U.S. Department of Education, 11 percent of all student loans are at least 90 days delinquent. That is a brand new record high, and it is almost double the rate of a decade ago. 

Total student loan debt exceeds a trillion dollars, and it is now the second largest category of consumer debt after home mortgages.  The student loan debt bubble has been growing particularly rapidly in recent years.  According to the Federal Reserve, the total amount of student loan debt has risen by 275 percent since 2003.  That is staggering.  Millions of young college graduates are entering the "real world" only to discover that they are already financially crippled for decades to come by oppressive student loan debt burdens.  Large numbers of young people are even putting off buying homes or getting married simply because of student loan debt.

So why is this happening?  Well, a big part of the problem is that the cost of college tuition has gotten wildly out of control.  Since 1978, the cost of college tuition has risen even more rapidly then the cost of medical care has.  Tuition costs at public universities have risen by 27 percent over the past five years, and there appears to be no end in sight.

We keep encouraging our young people to take out all of the loans that are necessary to pay for college, because a college education is supposedly the "key" to their futures.

But is that really the case?

Sadly, the reality of the matter is that millions of young Americans are graduating from college only to discover that the jobs that they were promised simply do not exist.

In fact, at this point about half of all college graduates are working jobs that do not even require a college degree.

This is leading to mass disillusionment with the system.  One survey found that 70% of all college graduates wish that they had spent more time preparing for the “real world” while they were still in college.

And because so many of them cannot get decent jobs, more college graduates then ever are finding that they cannot pay back the huge student loans that they were encouraged to sign up for.  The following is from a recent Bloomberg article.

Eleven percent of student loans were seriously delinquent — at least 90 days past due — in the third quarter of 2012, compared with 6 percent in the first quarter of 2003, according to the report by the U.S.Education Department.  Almost 30 percent of 20- to 24-year-olds aren’t employed or in school, the study found.

Everyone agrees that we are now dealing with an unprecedented student loan debt bubble, but none of our leaders seem to have any solutions.

The two charts posted below come from a recent Zero Hedge article, and they are very illuminating.  The first chart shows how the amount of student loan debt owned by the federal government has absolutely exploded in recent years, and the second chart shows how the percentage of student loan debt that is at least 90 days delinquent has risen to a brand new record high…

Delinquent Student Loans - Zero Hedge Chart

How is the economy ever going to recover if an increasingly large percentage of our young college graduates are financially crippled by student loan debt?

And things are about to get even worse.

If Congress takes no action, the interest rate on federal student loans is going to double to 6.8 percent on July 1st.  That rate increase would affect more than 7 million students.

And debt burdens just continue to increase in size.  In fact, according toone recent study, "70 per cent of the class of 2013 is graduating with college-related debt – averaging $35,200 – including federal, state and private loans, as well as debt owed to family and accumulated through credit cards."

This is one reason why there is so much poverty among young adults in America today.  As I mentioned in a previous article, families that have a head of household that is under the age of 30 have a poverty rateof 37 percent.  For much more on the student loan debt bubble and how it is crippling an entire generation of Americans, please see my recent article entitled "29 Shocking Facts That Prove That College Education In America Is A Giant Money Making Scam".

And of course delinquency rates remain very high on other forms of debt as well.  For example, delinquency rates on home mortgages have typically been around 2 to 3 percent historically.  But as you can see from the chart below, the delinquency rate on single-family residential mortgages is currently close to 10 percent…

Delinquency Rate On Single-Family Residential Mortgages

So are we really having an "economic recovery"?

Of course not.

Things are good for those that have lots of money in the stock market (for now), but for the vast majority of Americans things continue to get worse.

And we continue to forget the lessons that we should have learned from the financial crisis of 2008.  Right now, we are seeing a resurgence of cash out financing.  But this time, people are leveraging their inflated stock portfolios instead of their home equity.  The following is from a CNN report

The recent run-up in the market, financial advisers say, has led to a resurgence of the type of loan not seen since the end of the housing boom — cash out financing. But this time, though, people aren't tapping their inflated house for money. These days stock portfolios appear to be the well of choice.

Financial planners say in recent months clients have taken out so-called margin loans to buy real estate, fund small business acquisitions, or to provide gap financing before a traditional loan could be secured from a bank.

"No one wants to be out of the market for 90 days," says Mark Brown, a financial planner for Brown Tedstron in Denver. "People just don't want to sell right now."

We are a nation that is absolutely addicted to debt.  We know that it is wrong, but we just can't help ourselves.

We are like the 900 pound man that recently died.  He knew that he was eating himself to death, but he just couldn't stop.

In the end, we are going to pay a great price for our gluttony.  Everyone in the world can see that we are killing the greatest economy that ever existed, but we simply do not have the self-discipline to do anything about it.


South Korea Is Latest To Suspend US Wheat Imports In Aftermath Of Monsanto Rogue Wheat Discovery

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The global Monsanto genetically modified wheat scandal is getting worse.

As a reminder, recently news broke out that a rogue genetically modified strain of wheat developed by Monsanto, had been found in an Oregon field late last month. But while modified food has long been a diet staple, this particular breed was the first discovery of an unapproved strain, and what made things worse is the lack of any information how the rogue grain had escape from a field trial a decade ago. As Reuters reports, "even after weeks of investigation, experts are baffled as to how the seed survived for years after Monsanto had ceased all field tests of the product. It was found in a field growing a different type of wheat than Monsanto's strain, far from areas used for field tests, according to an Oregon State University wheat researcher who tested the strain."

The USDA was quick to deny any suggestion of public danger:

The USDA said the GM wheat found in Oregon posed no threat to human health, and also said there was no evidence that the grain had entered the commercial supply chain.

But the discovery threatens to stoke consumer outcry over the possible risk of cross-contaminating natural products with genetically altered foods, and may embolden critics who say U.S. regulation of GMO products is lax.

This is compounded by the still fresh memory of the glaring and repeated lies by the Japanese government in regards to the Fukushima explosion, making some wonder just how far the government is willing to go to cover up potential threats if the alternative is widespread panic.

It is all the more alarming because the wheat strain was thought to have been eliminated after test trials ended in 2005, as Monsanto abandoned efforts to secure regulatory approval due to worldwide opposition. While there have been more than 20 majors violations of U.S. regulations on handling or co-mingling biotechnology crops, none have ever involved wheat before.

Ironically, it was that master hypocrite Japan, which is now feeding its population rice grown in the Fukushima evacuation zone, that was first to halt US grain shipments,

[M]ajor buyer Japan canceled plans to buy U.S. wheat while the Europe Union said it would step up testing.

Some analysts feared a potentially damaging blow to the $8 billion wheat export business, recalling the more than yearlong disruption to corn sales following a similar discovery in 2000.

"Unless there's a quick resolution, this is not going to be good for the export market," said Art Liming, grain futures specialist with Citigroup.

And as the global concern about just what consumers are putting into their mouths spreads, South Korean millers were the latest to just announce a suspension of US wheat imports:

South Korean millers suspended imports of U.S. wheat on Friday and some Asian countries stepped up inspections after the discovery of an unapproved strain of genetically modified wheat in the United States, but stopped short of imposing import bans.

South Korea – which last year sourced roughly half of its total wheat imports of 5 million metric tons from the U.S. – has also raised quarantine measures on U.S. feed wheat, while Thailand put ports on alert.

As more countries follow South Korea's example, Asia may suddenly find itself with a major wheat shortage:

Asia imports more than 40 million metric tons of wheat annually, almost a third of the global trade of 140-150 million metric tons. The bulk of the region's supplies come from the U.S., the world's biggest exporter, and Australia, the No. 2 supplier.

But Australia will struggle to soak up extra demand as its supplies tighten in the wake of unsustainably brisk exports and growing demand from domestic livestock farmers.

"The bulk of grain suppliers (in Australia) are cancelling shipping slots and selling grain to domestic feed mills and feedlots," said Stefan Meyer, a manager for cash markets at brokerage INTL FCStone in Sydney.

Japan is not rushing to find alternative sources of wheat, however, with the county's flour milling industry body saying they have sufficient stocks for the short term.

"We haven't thought about alternatives to the grade or proposed candidates to the farm ministry (at this stage)," said Masaaki Kadota, executive director of the Flour Millers Association of Japan.

Perhaps just as well: what better way to avoid even more soaring food import costs than due to an embargo on foreign grain imports. It is unclear if the proposed alternative will be five-eyed fish caught off the Fukushima coast.

Another country even more reliant on the US for wheat is the Philippines:

An industry official in the Philippines, which buys about 4 million metric tons of wheat a year and relies mainly on U.S. supplies, said the country could turn to Canada if it decides not to import from the U.S.

Hopefully Monsanto's GMed strain didn't mysteriously cross the Canada border as well. Which it very well may have: as of now the source of the spread of the rogue wheat is completely unknown:

Bob Zemetra, the Oregon State researcher, said a local farmer contacted the university in late April after noticing that some wheat plants survived an application of herbicide that was being used to kill off unwanted plants in the fallow field.

Most plants died, but a few wheat plants unexpectedly emerged after the spraying. Researchers determined the wheat is a strain of Roundup-Ready tested by Monsanto in Oregon fields from 1999 to 2001.

GM crops tolerate certain pesticides, allowing farmers to improve weed control and increase yields.

Zemetra said Monsanto had been field-testing spring wheat, while the "volunteer" plants discovered in the eastern Oregon field were winter wheat. The two varieties pollinate at different times, making it unlikely for the GMO traits to have been carried into the field by wind.

"That's why it's a mystery," he said.

Farmers, wondering whether their wheat could unknowingly be genetically modified, have flooded farm bureaus with questions. They should not spray crops with Roundup to check whether they will survive, said Mike Flowers, extension cereals specialist for Oregon State University.

The final word is not surprising: keep calm and keep eating.

"The recommendation right now is to not panic," he said. "We really need to let the investigators do their jobs and get more information before people panic. We don't know if it's widespread. Right now, we know it's in one field."

There's that… And let's not forget the government is always there to help you.

But while the potential dangers are clear for all, one wonder: in a world in which millions of people eat the mystery meat contained in McNuggets, not to mention KFC, each and every day, isn't it a little too hypocritical to be worried about the genetic make up of a loaf of bread?

Bad Weather in France to Blame For …

Courtesy of Mish.

Courtesy of my friend Bran who spotted these weather related anomalies in France. Via Google translate, it appears that French economists blame the weather for …

  • Delayed maturation of fruits and vegetables
  • Disrupted cows
  • Public work productivity declines
  • Increased electrical consumption
  • Construction degradation
  • 5 to 10% drop in tourist reservations
  • Decline in bridge traffic in May between 10% and 30%
  • 30% drop in custom restaurants due to closed outside terraces


Mike “Mish” Shedlock

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Behold the Trading Avalanche Unleashed by the Chicago PMI Headline

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As most know, the whopping beat of a Chicago PMI print that was made public at 9:45 am was first released to subscribers – read HFT trading firms – some three minutes earlier.

Remember: Chicago is located about a 100 miles from Milwaukee, whose PMI today crashed from 48.43 to 40.67 – what a difference a "legitimate" city makes.

As an aside, putting the number in other regional Fed and PMI context, here it is via John Lohman:

What most may not know is just how massive the pent up deluge of trades was behind this number. Courtesy of Nanex we know. Because during just 1 second of time at 9:42:00, the following trade counts were recorded:

  •     550,000 SPY shares
  •     10,000 June 2013 eMini futures contracts
  •     1,400 Nasdaq 100 futures contracts
  •     800 Dow Jones futures contracts
  •     350 Russell 2000 futures contracts
  •     125 S&P 400 Midcap futures contracts
  •     300 Crude Oil futures contracts
  •     900 Dollar Index futures contracts
  •     800 Gold futures contracts
  •     10,000 10yr T-Note futures contracts
  •     2,500 5yr T-Note futures contracts
  •     3,500 T-Bond futures contracts
  •     5,000 Eurodollar futures contracts
  •     750 Japanese Yen futures contracts
  •     600 Euro futures contracts

Yes: it's a headline driven market with the only variable whether or not a number is > or < than "expected."

Which is the same as the trading response when the April retail spending data hit two weeks ago, and which was just revised from a massive beat to a miss. Alas, algos aren't programmed to sell on disappointing data revisions: only to buy on beats (and in the New Normal – buy on misses).

Visually all of the above via Nanex:

June 2013 eMini Futures Depth of Book

No science behind blood-type diets

In case you didn't know already, fad "Blood Type Diets" never made any sense or had any scientific support.

Excerpt from No science behind blood-type diets:

But no peer-reviewed research has indicated that eating foods supposedly compatible with one's blood type will improve health or induce weight loss more than a general diet plan.

Medical professionals already knew this, according to the study's senior author, Dr. Philippe Vandekerckhove at the Belgian Red Cross-Flanders in Mechelen.

"However, the general populace have access to blood type diets, regardless of medical guidance, and cannot be expected to be able to determine whether or not the health claims are, in fact, ‘evidence-based'," Vandekerckhove told Reuters Health.

Blood type is determined by proteins on the surface of red blood cells and antibodies in the blood. The most familiar grouping, known as ABO blood types, refers to whether a person's cells carry the proteins known as A or B, or both of them, or neither of the two – which is designated blood type O…

"Eat Right 4 Your Type" by Peter D'Adamo has more than 7 million copies in print, and outlines a theory about which foods are best for people with the various ABO blood types to eat and which to avoid…

Full article: No science behind blood-type diets – Yahoo! News Canada.

Consumer Metrics Institute: “Is it 2007 once again?”

Courtesy of John Rubino.

The Consumer Metrics Institute is out with commentary on the latest GDP revision. Here’s an excerpt: 

As we noted last month, on the surface a 2.38% annualized growth rate at nearly full four years into a recovery is good news — and a growth rate that many other global economies would currently be pleased to be reporting. And looking at the details provides us with some reasons for optimism:
– Consumer spending was sustained in spite of tax increases,

– Fixed investments continued to grow (although at a slower pace than in the prior quarter),

– Exports were still growing (slightly) after the prior quarter’s of contraction.

But one overriding issue in the data continues to suggest a reason for caution:

– Real per capita disposable incomes took a major hit, and it would appear that consumers had to dip into savings to sustain spending levels in the face of the January increase in FICA taxes. The astonishing annualized contraction of real per capita disposable income bears repeating: -9.03% — a full percent and a half worse than the -7.52% contraction rate recorded in the first quarter of 2009 (the worst quarterly contraction recorded during the official duration of the “Great Recession”).

The contraction in real per capita disposable income caused the savings rate to plunge to 2.3%. This is the lowest savings rate since the 3rd quarter of 2007. Which begs the question: is it 2007 once again and consumers are leveraging up once more in joyous optimism (as the equity markets seem to assume)? Or, are households dipping into savings (and defacto leveraging up) out of necessity to offset the “new” FICA rate increase of 2% (by reducing their savings rate by -2.4% relative to 4Q-2012)?

Our view is that the household savings rate is a short term shock absorber for household budgets that can require a quarter or more to adjust to the realities of new taxes or falling incomes. Ultimately, however, households adjust to the new realities by tightening their spending. In this case we would be shocked if spending does not soften during the balance on 2013.

Some thoughts
The key word in the above analysis is “leverage.” With per capita income falling, the only way the economy can grow is if we save less and borrow more. This is clearly happening. But with the savings rate down and taxes and interest rates up, as CMI says, “we would be shocked if spending does not soften during the balance on 2013.”

Talk about mixed messages. Stocks are at record levels and housing is booming, which implies a 2007-style bubble. But incomes are falling at a near-double-digit rate which implies a fairly serious slowdown. So which will it be: blow-off asset bubble or a double-dip recession?

Who knows? But note how extreme both scenarios have become. Stocks in general and home prices in many markets are literally back to 2007 bubble levels. The savings rate is as low as it was in 2007 and total debt is rising again, as mortgages and business loans more than offset a smaller federal deficit. So sustained growth from here would mean an even bigger asset bubble than the one that nearly destroyed the global financial system, while a return to recession would mean plunging stock and home prices.

This might be a good time to forget about direction and just bet on volatility.

Visit John’s Dollar Collapse blog here >

When a Great Company is NOT a Good Stock

When a Great Company is NOT a Good Stock

Don’t get confused: a good company may not translate into a good stock. A good company trading at an extended price is not a great stock – watch valuation, buy bargains.

Video by Paul Price

When a Great Company is NOT a Good Stock (video)

Screen Shot 2013-05-30 at 3.05.37 PM

Stocks can be priced too high or too low, it’s safer to buy those trading lower than their inherent value….

See also: Recognize Market Insanity

Being Bernanke – The Game

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Think it's easy printing green? Believe you could do a better job than our illustrious bubble-blower-in-chief? The WSJ has created 'The Federator' in what we assume is a qualifying process for a Federal Reserve career. On an otherwise quiet day in equity and bond markets, the 'Defender-esque' game enables rates to be lowered (through the bearded-one's jetpack) or raised and a helicopter money-drop is added with the goals of maintaining the 2% inflation rate while keeping unemployment low… Fail and you will witness a WSJ headline exclaiming the error of your ways.

"Armed at first with a jetpack of prospective rate cuts, a bearded central banker takes off in a quest to keep the growth rate up, the unemployment lines short, and prices stable.

True to the U.S. experience during the financial crisis, unemployment jumps quickly at the outset and the economy tanks, requiring hefty rate cuts.

Once rates reach zero, as they are bound to do, the jet pack transforms into a helicopter that starts dumping money on the economy below. It’s quantitative easing time!"

WSJ's explanation of the game:


Click image to 'play'…

Buy and Sell… or Trade?

Buy and Sell… or Trade?

By Paul Price

This video was made in late 2011, but is still relevant. Example stock is Aqua America Inc. (WTR), currently trading at $31.60. It’s P/E now is about 21.5. 


Simmering Feud Between France and Germany Erupts Into Verbal Warfare; France Tells Brussels to Shove It

Courtesy of Mish.

The simmering feud between France and Germany erupted into a heated political exchange following Pressure on Hollande to take bold action to revive the French economy, calling for new pension and labour market reforms.

The commission’s list of recommendations for Paris, which it expects to be delivered in return for allowing France two extra years to meet its budget deficit targets, covered all the hard issues the socialist government faces: cutting public spending; restoring badly diminished competitiveness, opening up restricted markets, reforming the tax regime and loosening tight labour market regulations.

France Tells Brussels to Shove It

The exchange got quite interesting when Merkel Allies Bashed Hollande Over Needed Reforms

Leading members of Angela Merkel’s ruling Christian Democratic Union in Germany have fiercely criticised François Hollande, accusing the French president of “shaking the foundations of the European Union”, only hours before the two leaders met in Paris in a bid to repair their troubled relations.

Deep German concern about the French government’s resistance to economic reform and hostility to EU pressure emerged after Mr Hollande said it was not for the European Commission “to dictate” reforms to Paris.

“There is no need for European recommendations; what’s needed is obvious. It’s not for the commission to dictate what we have to do,” Mr Hollande said in response to the commission, whose call was part of its annual assessment of budget plans for all 27 EU members.

The French president’s “vehement criticism of the European Commission’s reform proposals . . . contradicts the spirit and letter of European agreements and treaties”, said Andreas Schockenhoff, a deputy chairman and foreign policy spokesman of the CDU in the German parliament. “Someone who talks like that is shaking the foundations of the EU.”

Norbert Barthle, budget spokesman of the CDU in the Bundestag, said the two-year extension granted to Paris in meeting the 3 per cent deficit target was more than Germany had expected.

“France won’t be able to bank on such indulgence again,” he added, saying that Mr Hollande had misunderstood the nature of European co-operation if he thought he could accept the benefit proposed by the commission but reject the conditions attached.

Reflections on the Obvious

Somehow it is OK for France to stipulate conditions on Greece, on Ireland, on Cyprus, on Portugal, and on Spain but not be told what to do itself.

Yes it is “obvious” what to do….

Continue Here

Trickle Down Works: UBS Joins Federal Reserve In Hiking Banker Salaries By 9%

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

A week ago we reported that despite making 50% less money for the Treasury in the first quarter, the hedge fund formerly known as the Federal Reserve was generous enough to hike the salaries of its employees by a (true inflation indexed?) 11.7%. It appears the workers of the Fed's Markets Group are not the only ones who can barely make ends meet: next up – investment banks, and specifically UBS, which as Bloomberg just reported has hiked the salaries of its bankers by 9%.

And since banks always do compensation decisions in tandem, expect every other bank to hike wages appropriately to avoid "disgruntlement."

The good news – trickle down works.

The bad news – it is only working for those for whom trickle down has always worked (courtesy of the Cantillon Effect and the fact that Wall Street has owned the nation since the advent of the Fed), and for those who have zero urgent need of that marginal dollar increase.

But maybe, some time during QEternity^infinity, the same trickling will finally spill over into the broader economy and the much desired wage inflation will finally reach Main Street.

We wouldn't hold our breath.

Shuanghui Agrees to Buy Smithfield for $4.7 Billion

Shuanghui Agrees to Buy Smithfield for $4.7 Billion 


Demand for pork in China reflects its booming economy and rising middle class. But that rapidly growing appetite has strained its food production systems, leading to breakdowns and a number of food safety scandals.

Now China’s biggest pork producer, seeking plentiful supplies and technical expertise, has agreed to buy Smithfield Foods, the 87-year-old Virginia-based meat giant with brands like Armour and Farmland, for $4.7 billion in cash.

If completed, the deal that was announced on Wednesday would be the biggest takeover of an American company by a Chinese concern. But it must first overcome skepticism in Washington — and a potentially close examination process by United States regulators. Both Smithfield and its suitor, Shuanghui International, said that they will submit the deal for review by the Committee on Foreign Investment in the United States, or Cfius, a panel of government agencies tasked with clearing deals for national security.


Keep reading: Shuanghui Agrees to Buy Smithfield for $4.7 Billion –

The Misleading Media & the Market

The Misleading Media & the Market

By Dr. Paul Price


Screen Shot 2013-05-30 at 11.37.39 AM

The Media can Mislead You – Dr. Paul Price

Jay Sekulow, Suing the IRS for Freedom Loving Tea Party, Says He Helped Write the USA Patriot Act

Courtesy of Pam Martens.

Jay Sekulow, Champion of Freedom and the Tea Party, Says He Helped Write the USA Patriot Act

Jay Sekulow is all about freedom and liberty – for some.

He’s not a fan of a woman’s right to the control of her own body. He’s been a major litigator on behalf of abortion protesters’ rights.

He’s a big proponent of religious freedom — for some. His nonprofit filed a lawsuit to stop the ground zero mosque.

In the last two weeks, he’s been on a whirlwind of television interviews railing against the oppression of the IRS stalling the rights of his clients to get their organizations registered as tax-exempt nonprofits – some of which were political organizations with clearly no right to get registered. His clients are Tea Party groups, whose mottos invariably include the words liberty and freedom.

And now it turns out, this is the same man who helped John Ashcroft write the USA Patriot Act, despised by right and left alike as a malignancy on liberty and freedom.

Continue Here

Volcker Sends Warning Shot to Fed, Wall St, and DC Recommended

Courtesy of Larry Doyle.

In what can only be described as a Sense on Cents Instant Classic, perhaps the most highly respected chair in the history of the Federal Reserve, that being Paul Volcker, delivered a tremendous address yesterday at the Economic Club of New York.

For anybody who cares about the well being of our markets, our economy, and our nation, I strongly recommend you take a mere ten minutes to fully read and absorb the wisdom of Volcker’s words.

What are some of the highlights?

Volcker targets the Fed in stating:

There is something else beyond the necessary mechanics and timely action that is at stake. The credibility of the Federal Reserve, its commitment to maintain price stability and its ability to stand up against pressing and partisan political pressures is critical.

Independence can’t just be a slogan. In the last analysis, independence rests on perceptions of high competence, of unquestioned integrity, of broad competence, of non-conflicted judgment and the will to act.

That’s what I’m talking about!!

Volcker maintains that the Fed’s primary focus must be on price stability and the defense of our currency and not be charged or asked to do too much. Little doubt he sends this warning shot given the ineptitude of those on the fiscal side of the equation to get their/our house in order.

He launches another volley in addressing the captured regulatory cesspool in which we are drowning. He asserts:

The simple fact is the United States doesn’t need six financial regulatory agencies. It is a recipe for indecision, neglect, and  stalemate, adding up to ineffectiveness. The time has come for change.

As things stand today, I am told that can’t happen and won’t happen. However powerful the arguments for action, the vested interest — within the agencies, in the Congress and outside — are just too strong.

I ask you, can we let that view stand unchallenged?

He saves his best for last . . .

The erosion of confidence and trust in the financial world, in the financial authorities that oversee it, and in Government generally is palpable. That can’t be healthy for markets generally or for the regulatory community. It surely can’t be healthy for the world’s greatest democracy, now challenged in its role of political and economic leadership.

What is Volcker doing in an attempt to clean up the cesspool that defines the Wall Street – Washington incest? He has launched The Volcker Alliance. I will add that link to the Watchdogs in the right hand sidebar here at Sense on Cents.

While the names of Larry Summers and Janet Yellen are bandied about as the next head of the Federal Reserve, we need to embrace the work and wisdom of Paul Volcker if we care to save our nation.

Please take the few minutes to read and then share his delivery, Central Banking at a Crossroad.

Volcker speech

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

EU Requires Spain to Raise Vat

Courtesy of Mish.

The last thing a country in recession should do is raise taxes. Well, Spain is in a depression, not a recession yet the EU requires Spain to raise the VAT and lower pension benefits within a year.

One year. That is the time that the government has to undertake major reforms. The European Commission has published today the document with recommendations to the European Council on the National Reform Plan. Includes advice on pensions, taxes, government spending, administrative reform, etc.. There is virtually nothing that Brussels (and the governments of EU members) does not create the need to change, accelerate or deepen.

On Wednesday Brussels gave Spain more time to reach a budget deficit of 3%, but warns that to achieve this, it is still necessary to continue with the fiscal effort.

Brussels calls for “a systematic review of the tax system by March 2014.” Normally, these words have meant raising taxes on consumption (VAT or special) to relax the pressure on other that penalize wealth creation, such as income tax or social contributions. But in the current document there are only requests to raise taxes.

The above snip did not do full justice to the idiocy of the latest Brussels demands. The only thing I support is pension reform.

Tax hikes will do nothing but cause another plunge in revenues and another rise in unemployment.

Mike “Mish” Shedlock

Continue Here

Let’s All Go Medieval

    That voice! All a'quiver with the dread of self-knowledge that it is confabulating a story, much like the "money" that his Open Market Committee spins out of the increasingly carbonized air. His words fill the vacuum of the collectively blank American mind, where hopes and dreams spin like debris in an Oklahoma twister, only to fall incoherently on a landscape of man-made ruins. If Federal Reserve chairman Ben Bernanke were hooked up to a polygraph machine when he made a public statement — such as last Wednesday's testimony before congress — I bet the output graph would look something like a seismic record of the 9.0 Fukushima megathrust, all fretful spikes and dips. 

     When historians of the future ponder our fate around their campfires, they will marvel that this society invited such a temporizing little nerd to act as its Oracle-in-Chief… that he made periodic visits to sit before the poobahs of the land, and issued prophesies that nobody could really understand — and that the fate of the people in this land hung on his muttered ambiguities. Let's face it: people need oracles when they don't know what the fuck is going on.

     What's going on is as follows: America's central bank is trying to compensate for a floundering economy that will never return to its prior state. The economy is floundering because its scale and mode of operation are no longer consistent with what reality offers in the way of available resources at the right price, especially oil. So, rather than change the scale and mode of operations in this economy — that is, do things differently — we try to keep doing things the same by flushing more "money" into the system, as though it were a captive beast receiving nutriment. 

     One problem with that is that the "money" is no longer money. That is, it's not really an effective store of value, or pricing reference. It remains for the moment a medium of exchange, but the persons exchanging it grow suspicious of what this "money" purports to represent. Does it stand for promises of future repayment? Hmmmm. Those promises are looking sketchy lately, especially since this is an economy that does not generate enough new real wealth to make the interest payments, let alone manage to pay back the principal. Is it a claim on future work? Some are afraid that the future work deliverable will be less than they expect. Whatever else it is, does it find respect in other societies where different money is used?

     These questions are making a lot of people nervous these days. Of course, a time will come when all matters concerning this particular incarnation of money will be seen as strictly ceremonial. Ben Bernanke, we will understand, was not stating facts before congress but rather singing a song, or rather chanting in a low, repetitive, tedious way in the primal manner of a frightened person trying to comfort himself with reassuring sound — that is, prayer. You'd be surprised how well that goes over in a place like congress, which is stuffed with prayerful characters, people who exist in a religious delirium. These are not the people who are nervous, by the way. The nervous tend to be more secular, and inhabit the margins of life where unconventional thinking thrives weedlike at a remove from all the mental toxicity at the center.

     These nervous ones are looking ever more closely these days at the distant nation of Japan, where an interesting scenario is playing out: the last days of a giant industrial-technocratic economy. The story there is actually pretty simple if you peel away the quasi-metaphysical bullshit it comes wrapped in these days from astrologasters like John Mauldin and Paul Krugman, viz. Japan has no fossil fuel resources. Zip. You can't run their kind of economy without the stuff. And they can't. Japan is crapping out, as they say in Las Vegas. Tilt! Game over. As this happens, Japan issues a lot of distracting financial noise that involves evermore "creation" of their own "money," and the knock-on effects of that, but it's all just noise. Japan's only good choice is to go medieval, that is, to give up on the rather hopeless 150-year-long project of being an industrial-technocratic modern super-state, and go back to being an island of a beautiful artistic hand-made culture. I call that "going medieval," though you could quibble as to whether that's the best word for it, since I'm not talking about cathedrals or crusades.

     One of Japan's other choices is to "go mad-dog," something they actually tried back in the mid-20th century. It didn't work out too well then. The Japanese leadership is making noises about "re-arming," and a nice state of conflict is already simmering between them and their age old rivals-victims next door in China, a country that has lately enjoyed the upper hand in the industrial-techno racket (though it will be faced with the same choices as Japan not too many years hence). Do the Japanese start another world war on their side of the planet? Let's hope not. Let's hope they lay down their robotics and their nuclear reactors gently and go back to making netsuke. Just give it up and do things differently — after all, that's what all the human beings on the planet have to do now.

     For what it's worth, Japan's stock market has tanked a hearty 14 percent in the past five days, if that means anything, and I'm not sure it does considering the aforesaid "noise," but there you have it. Our own stock markets are mercifully closed this holiday, having given American worriers an extra day of anxious reflection on the state of things out there. My own opinion is that we're all going medieval sooner rather than later and the big remaining question is how much of a mess we'll make on the journey to it.

     Also, personally, I don't like these manufactured holidays when the landscape is cluttered with morons enjoying motorsports. I'll be working today, and grateful when it blows over.

Picture credit: Jesse's Cafe Americain

Average I.Q. in Congress Expected to Rise in 2015




WASHINGTON (The Borowitz Report)—The average I.Q. of a member of the House of Representatives is expected to rise sharply in 2015, experts said today.

The experts, who indicated that they were “cautiously optimistic” about the development, said that the gains were most likely to be made in the Midwest…

Continue: Average I.Q. in Congress Expected to Rise in 2015 : The New Yorker.

Sean Corrigan: “Abenomics Is Riddled With Inconsistencies”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Abenomics is riddled with inconsistencies. He wants the world's biggest bond market to sit still while he tells them they are going to lose money year-after-year (if his inflation goals are met). He wants to spark a renaissance by lowering the JPY and creating inflation but he doesn't want real wages to drop. Of course, the CNBC anchor's ironic perspective that the 80% domestic bond holdings of JGBs will 'patriotically sit back and take the loss' is in jest but it suggests something has to give in the nation so troubled. In fact, as Diapason's Sean Corrigan notes, that is not what has been happening, "every time the BoJ is in, the institutional investors are very happy to dump their holdings to them."

On the bright side, another CNBC apparatchik offers, this institutional selling will lead to buying other more productive assets to which Corrigan slams "great, so we have yet another mispriced set of capital in the world, that'll help won't it!" The discussion, summarized perfectly in this brief clip, extends from the rate rise implications on bank capital to the effect on the deficit, and from the circular failure of the competitive devaluation argument.

Well worth a few minutes:

Pater Tenebrarum, from his Acting-Man blog, adds further:

As Corrigan notes, one doesn't have to necessarily predict a catastrophic outcome, and such an outcome seems unlikely in the near term anyway. However, that does not alter the fact that the policy evidently attempts to achieve things that are inherently contradictory. As Corrigan says at one point: 'How any of this helps, nobody knows'.

Indeed, nobody knows, but Krugman likes the policy reportedly. Also, the assorted magic wand wavers at the G-7, G-20, the IMF and other political/bureaucratic outposts widely regarded as significant and/or important all have given their placet and endorsed this inflationist nonsense sotto voce.

Japan's GDP Data – or How to Become Richer by Becoming Poorer

As an addendum to the above, in a recent Diapason report, Corrigan inter alia tackles the 'good news' of 3.5% GDP growth that was recently reported by Japan and widely hailed as 'proof' that Abenomics is 'working' already.

As he points out, a significant worsening in Japan's terms of trade due to the declining yen (import prices went up by 6.9% or 30.8% annualized, while export prices increased only by 4.3% or 18.2% annualized in the quarter), led to a significant statistical improvement in 'real' GDP, as the larger deflator for import prices left a greater residual to be added to real GDP.

As a consequence, Japan's statistics minions concluded that real net exports were better by 31.7% on the quarter, or a stunning 238.7% annualized, instead of worse, as they were in nominal terms, thanks to the gain in 'real' exports of 3.8% or 16.1% annualized and the lesser increase in 'real' imports of 1%/4.06%. (note: annualized numbers are not simply multiplied by 4, but show the compounded gain if the quarter-on-quarter increases were to continue at the same percentage rates). Incidentally, as Corrigan points out, this exercise also pushed down the overall deflator, which is tantamount to a signal to Kuroda-san to inflate even more! Regarding the  ultimate effect on the GDP report Corrigan remarks:

“To sum up, despite an appreciably worse monetary balance tinkling through the nation's cash registers, real net exports gave an overall boost to Q1's increment of real GDP of that of Q4 of no less than 50.4%!

This, then, was not so much the magic of easy money at work for good, but for ill. It was a classic screw-up in the calculation process which served to render an anyway highly schematic and invariably distorted GDP datum into even more of a fairground hall-of-mirrors freak than usual. Because the so-called 'terms of trade' – i.e., the volume of imports able to be gained in exchange for a given volume of exports – moved to Japan's disadvantage, its people were just shown to have become richer by dint of becoming poorer.”

As we have discussed previously, this is precisely how one could sum up the mercantilist fallacy underlying the so-called 'currency wars'. One does not become magically richer if the exchange value of one's currency declines. The opposite is the case; one needs to produce and export more goods than before to obtain an amount of goods from abroad that is equivalent to the previously imported amount. Whatever monetary gain the export industries can point to in domestic currency terms is but fleeting – it exists only for as long as it takes for domestic prices and wages to adjust to the new situation.

In short, the end result of a decline in the currency's exchange value is not that one becomes richer, but that one becomes poorer. It is a case of 'what you see is what you get', i.e., it couldn't be more obvious. Only those who believe that a nation's welfare depends on its trade balance would argue otherwise, but to this it must be repeated that national borders have no economic significance. 'Nations' don't trade with each other, individuals do. Every single trade is to the mutual advantage of the parties engaging in it, otherwise it would not take place. Whether such trading individuals reside in different nations is utterly irrelevant.

The only thing that can possibly be said to be 'bad' about e.g. the trade deficit of the US with Japan is the fact that it has been egged on by credit expansion causing overconsumption in the US and Japan's mercantilist currency policy impelling its central bank to monetize oodles of US debt in a kind of gigantic vendor financing scheme (the same can be said about China). It is a good bet that if everybody were using sound money and eschewing credit expansion via fractional reserve banking, international trade imbalances would be far smaller and correcting more frequently. However, this should not detract from the basic fact that all voluntary trade is beneficial as such. It is merely a comment on the current monetary system, not a belaboring of the alleged evils of trade deficits. Those are merely a figment of mercantilist imaginations.


Volcker On Bernanke’s Grand Monetary Experiment: “Good Luck In That”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

A week ago, in a very comic interlude, the hawkish head of the only G-7 country to have experienced hyperinflation in the recent past – Bundesbank's Jens Weidmann – had some sobering words of encouragement for his Japanese colleague Kuroda: "I wish them luck in their experiments."

Now, another former central bank head, the most famous one of the 1980s, and the man thanks to whom America did not implode in a depressionary puff of runaway inflation, Greenspan's predecessor Paul Volcker, has taken the podium and made a mockery of the entire fallback premise on which Bernanke's house of manipulated, centrally-planned cards is built: his assumption that no matter how much deferred inflation is injected, that Bernanke needs just "15 minutes" to take it away. Better yet, and as Japan has recently seen: the fact that central bank credibility is slowly but surely starting to slip away – first visible in rapid rises in bond yields, then in a surge in bond volatility, and finally: an all out inflationary conflagration.

Quote Volcker:

The Federal Reserve, any central bank, should not be asked to do too much to undertake responsibilities that it cannot responsibly meet with its appropriately limited powers,” Volcker said. He said a central bank’s basic responsibility is for a “stable currency.”

“Credibility is an enormous asset,” Volcker said. “Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment.”

“The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives,” according to Volcker. “Up today, maybe a little more tomorrow and then pulled back on command. Good luck in that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.

Hopefully Volcker can be cryogenically frozen because when the Chairsatan eventually – and it is only a matter of time – loses control and all hell breaks lose, none of the muppets in the Marriner Eccles building, no click-baiting Nobel-winning trolling Op-Ed writer with socialist delusions of grandure, will have any idea what to do, and it will be someone like Paul who will be needed to unleash his magic once more. Sadly, we have the sinking suspiction that not even thawed out of carbonite, will Volcker have any success when faced with the Frankenstein monster that the MIT central-banking braintrust have managed to unleash.