by ilene - September 19th, 2014 3:27 pm
Courtesy of Mish.
A Fiscal Times, Yahoo Finance article by by John Grgurich claims that Instead of QE, Fed Could Have Given $56,000 to Every Household in America .
Grgurich formulated his article after reading “an intriguing piece just published in Foreign Affairs, Brown University political economist Mark Blyth and London-based hedge fund manager Eric Lonergan argue the Fed could have done better by pursuing a far different type of grand policy experiment.“
The “intriguing piece” is Print Less but Transfer More, Why Central Banks Should Give Money Directly to the People.
- First, the Fed cannot give away money, it can only make money available for lending.
- Second, the idea that the Fed should give away money is ludicrous, even it the Fed could.
- Third, Grgurich is in severe need of math lessons as to what actually transpired.
According to the census department the number of US households is 115,226,802.
Base Money Supply has gone up from $848 billion at the start of 2008 to $4.150 Trillion today. That is an increase of roughly $3.3 trillion.
An increase in money supply of $3.3 trillion is not the same thing as a gift of $3.3 trillion. At most, banks made 0.25% interest (free money) on excess reserves parked at the Fed.
The actual amount of excess reserves is $2.7 trillion.
0.25% of $2.7 trillion is $6.75 billion. That is the amount the Fed effectively gives banks, per year. Spread among 115,226,802 households the gift would be $58.58 per year (less actually because excess reserves grew over time they did not suddenly hit $2.7 trillion).
Mike “Mish” Shedlock
by ilene - September 19th, 2014 11:25 am
Courtesy of The Automatic Earth.
Christopher Helin Star auto on steep grade, San Francisco 1922
The quote of the day today must be this one from Belgian EU Trade Commissioner Karel De Gucht in the aftermath of the Scottish rejection of independence: “A Europe driven by self-determination of peoples … is ungovernable … ”
I don’t think he understands the implications of what he says, and I’m quite sure he completely misses out on the mastodont sized problem he – quite accurately despite himself- describes.
Which is something along the lines of ‘Europeans should stop wanting to make their own decisions, because that makes it hard for us in Brussels to make those decisions for them’.
There are precious few voices in Brussels who view the EU project with a critical eye. Except for Nigel Farage and perhaps one or two others, they’re all convinced that the EU is an entity that does good, in the same way that people who work for the IMF, the World Bank and NATO – just to name a few – do.
And democratic values and proceedings can be pesky little nuisances in these ‘greater power for the greater good’ visions of society. After all, it was newly elected EU head Jean-Claude Juncker himself who stated a few years back that “When it becomes serious, you have to lie.” That, too, like De Gucht’s comment above, is a way to pervert democracy.
The people working at the EU, and most politicians in European capitals and elsewhere in the world, don’t understand the spirit of their time. Moreover, they don’t think they need to, because they’re convinced they can mold that spirit as they see fit.
The overriding idea is that there can be no question that centralized power is beneficial, and the more of it there is, the better it gets. And it’s admittedly true that more power will flow to Brussels as time goes by, i’s a process built into the entire very structure. But that doesn’t make it a good thing.
To date, there are no major parties in Europe where eurosceptics are elected to major positions; the system is quite foolproof when it comes to that. The rise of Beppe Grillo’s M5S, France’s Front National, and UKIP in Britain, are still no more than…
by ilene - September 19th, 2014 10:33 am
Courtesy of Mish.
The title of this article, “Surprising” MH17 Crash Update, is accurate only in the sense the average sheep believes the average mainstream media report.
Since that is the majority, the title is accurate. Mish readers, however, may find this report not surprising.
Reader Marina from Toronto explains via email ….
My name is Marina. I am a long-time fan of your blog and a friend of Nicole Foss at Automatic Earth.
I am also a volunteer translator for The Vineyard Saker website. Our team has just translated a very important report on the MH17 crash released by the Russian Union of Engineers.
We have included several prominent journalists and other persons in the distribution of this important document.
Union of Engineers Report
Please open your minds and download the Translated Report on MH17.
Forget about the origin and give the report a read. It may open your eyes.
Looking for another opinion? If so, please consider the Automatic Earth Commentary on MH17….
Caterpillar Posts Record 21 Consecutive Months Of Declining Global Retail Sales, Worse Than Financial Crisis
by ilene - September 19th, 2014 10:08 am
Submitted by Tyler Durden.
Once upon a time, when such things as industrial production, machinery sales and construction, trade and commercial interactions mattered, today's Caterpillar retail sales, which painted a grusome picture for global manufacturing and industrial production, may have gotten more than a casual comment on page… well, nowehere really.
However, since everyone is hypnotized by a "recovery" on the back of "smart-beta" aka $10 trillion in liquidity injections by central banks, and a global "service" economy in which all tha matters is shuffling every greater numbers of pieces of paper from point A to point B and collecting commissions while clicking on FaceBook ads, it obviously doesn't matter to anyone that according to CAT the mini industrial recovery in the US has plateaued and after retail sales rose 14% Y/Y two months ago, dropped to 11% in July and to 8% most recently (blue bar on chart below), and coupled with a double digit collapse in Asia, EAME and Latin America sales (by -24%, -17% and -29% respectively), the industrial bellwether has now seen a mindblowing 21 consecutive months of declining Y/Y global retail sales.
Putting this number in context, the 21 consecutive months of declining sales is now 2 months worse than the previos record: 19 consecutive months of declines posted starting with the collapse of Lehman.
With fake recoveries like these, who needs all too real global recessions?
by ilene - September 19th, 2014 9:41 am
While none of these people, many of whom are unemployed and paid by others to stay in line for days, will spend the $3,600 someone in China just paid for a "gold" iPhone, they will gladly pay hundreds of dollars out of pocket, or in many cases simply lease with zero money down, the latest and greatest aspirational gadget to show they are cooler than they actually are.
Case in point: in front of the main Apple store on 58th and Fifth some 4700 people are unaware you could have ordered the iPhone online and have it delivered today…
Crowd at 5th Ave Apple Store w less than 45 min to go. One Apple estimate has 4700 ppl lined up at area stores. pic.twitter.com/4cdv9o9g1l
— Ed Baig (@edbaig) September 19, 2014
Iphone line from my office. Lots of cheering pic.twitter.com/5Pg2eFzaTI
— Peter Heise (@HeisePete) September 19, 2014
Apple Store UWS line goes 3 blocks and wraps around another. One Apple employee said there were around "1000" people. pic.twitter.com/UK0kByzllX
— Eli Blumenthal (@eliblumenthal) September 19, 2014
My rough estimate: about 125 people now waiting in line at Upper West Side Apple Store for iPhone & growing. pic.twitter.com/qhA2ij40hE
— Ed Baig (@edbaig) September 18, 2014
— USA TODAY (@USATODAY) September 19, 2014
In meatpacking – the line is 4 blocks long:
The line for the iPhone 6 in NYC's Meatpacking District. 4 blocks long. pic.twitter.com/Zug9E5jykb
— Meredith Frost (@MeredithFrost) September 19, 2014
For some, it is a matter of outsmarting your significant other. From USA Today:
Chris Johnson, 53, who waited in line at the Apple Store on Manhattan's Upper West Side, the goal was to get
by ilene - September 19th, 2014 9:05 am
This chart by William Banzai7 argues in favor of waiting to buy BABA until the HFT churn zone. PaTieNCe. (Let's revisit this one a few years from now.)
Originally posted at Zero Hedge.
by ilene - September 18th, 2014 7:46 pm
Courtesy of Golem XIV
The present global financial ‘crisis’ began in 2007-8. It is not nearly over. And that simple fact is a problem. Not because of the life-choking misery it inflicts on the lives of millions who had no part in its creation, but because the chances of another crisis beginning before this one ends, is increasing. What ‘tools’ – those famous tools the central bankers are always telling us they have – will our dear leaders use to tackle a new crisis when all those tools are already being used to little or no positive effect on this one?
I think it is worth remembering how many financial crises we have had since the economy became globally interconnected and since we began the deregulation of finance and the roll back of all Great Depression safeguards under Reagan and Clinton. It’s also worth noticing that the causes and pattern of the various crises have an unpleasant ring of familiarity about them – as in – the bank lobbyists making sure nothing gets learned and nothing gets changed.
In the 80′s there were four financial crises: The Latin American crisis caused by those countries borrowing and the global banks agreeing to lend them far too much (too much lending to people who couldn’t afford it – check), the American Savings and Loan (S&L) crisis when American S&L’s made too many bad, long-term and leveraged loans relying on rolling over and over short-term loans to fund it all (reliance on short-term liquidity to cover massive loan books of dodgy loans – check) , and the 1987 Stock market crash when the system of global debt had its first major modern global paroxysm (systemic contagion – check) . And before the dust had even settled from that we had the Junk Bond collapse ( Too much junk – check. $400 billion in junk bonds were issued in 2013 alone). In the 90s there were two more crises (if one ignores the Mexican currency devaluation): The Asia currency crisis (a replay of the Latin Crisis with the same global banks doing the same lending to different corrupt or stupid leaders who agreed to loans on behalf of people who couldn’t afford to pay back – ie nothing learned at all - check) and the Dot Com…
by ilene - September 18th, 2014 5:59 pm
With a market capitalization of $168 billion after its pricing at $68/share, the upper end of the range which makes this the largest US IPO in history and would be the largest in the world if the greenshoe is exercised, Alibaba, while not a member of the S&P 500 (at least not immediately), will have a market cap that is larger than the following index members:
In fact, at that market cap (which will surely rise after its break for trading tomorrow), there are only 22 companies in the entire S&P 500 who will be larger than Alibaba, among which the usual mega suspects, AAPL, XOM, GOOG, MSFT, BRK, but also JPM, Facebook, Pfizer, Verizon and Bank of America.
However, assuming BABA rises by 10% tomorrow, it will surpass such tech titans as Intel, and Oracle, now ex Larry Ellison, on its first day of trading.
Sustainble? We shall see.
by ilene - September 18th, 2014 4:34 pm
Courtesy of David Stockman
Thanks to the money printing mania of the world’s central bankers, the Wall Street casino has gone global. Accordingly, mindless speculation and momentum chasing have reached new absurdities, as exemplified by the red hot roster of international high flyers below.
The financial data for the top name on the list, Twitter, is all that is required to remind us that once again markets are trading in the nosebleed section of history, rivaling even the madness of March 2000. Currently, Twitter (TWTR) is valued at $31 billion.That’s 18X revenue, but the catch is that the revenue in question is it’s lifetime bookings over the 18 quarters since Q1 2010.
When it comes to profits, the numbers are not nearly so promising! For the LTM period ending in June, TWTR booked $974 million of revenue and $1.7 billion of operating expense. That why “NM” shows up in its LTM ratio of enterprise value to EBITDA. It turns out that its EBITDA was -$704 million. In fact, its R&D expense alone was 83% of revenues.
That’s not the real fantasy, however. The sell-side hockey sticks indicate that TWTR’s forward multiple is only 86.6X projected EBITDA. Let’s see. At its current total enterprise value, this implies it will generate $350 million of positive EBITDA in the next 12 months—or a $1 billion favorable swing from the LTM number.
Just say its going to take some doing—not to say a miracle. During Q2 EBITDA was -$104 million compared to -$13 million in the year ago June quarter. So TWTR’s cash profit numbers are marching to the rear at a furious pace, but never mind. It’s EBITDA will soar skyward any moment now, making it 86.6X forward multiple completely rational….. Right.
Needless to say, this kind of speculative lunacy would never occur on the free market under a regime of honest price discovery. Yes, markets would discount at hefty multiples the future value of unusually promising and innovative enterprises with demonstrated capacity to convert revenues into profits.
Thus, a 5% free cash flow yield might make sense for an especially solid and promising new enterprise. In that event, a $31 billion market cap would require EBITDA less CapEx in the range of $1.6 billion. Alas, it is…
by ilene - September 18th, 2014 4:08 pm
(I want to look like him when I'm 70 years old.)
Submitted by Tyler Durden.
Unlike Steve Jobs, who almost literally passed away engrossed by his lifetime legacy, his work, that "other" billionaire, Oracle's Larry Ellison, 70 years young, has decided to step aside and focus on the more enjoyable things in life, such as buying Hawaiian islands.
In his departure, he will be appointed to the title of Executive Chairman, and is replaced by Mark Hurd and Safra Catz as joint CEOs of the company.
Just out from the company:
The Oracle Board of Directors today announced that it has elected Larry Ellison to the position of Executive Chairman of Oracle's Board and appointed him the company's Chief Technology Officer. Jeff Henley, who has served as Oracle's Chairman for the last 10 years, was appointed Oracle's Vice Chairman of the Board.
The Oracle Board also promoted both Safra Catz and Mark Hurd to the position of CEO, Oracle Corporation. All manufacturing, finance, and legal functions will continue to report to Oracle CEO, Safra Catz. All sales, service and vertical industry global business units will continue to report to Oracle CEO, Mark Hurd. All software and hardware engineering functions will continue to report to Oracle Chairman and CTO, Larry Ellison.
"Safra and Mark will now report to the Oracle Board rather than to me," said Larry Ellison. "All the other reporting relationships will remain unchanged. The three of us have been working well together for the last several years, and we plan to continue working together for the foreseeable future. Keeping this management team in place has always been a top priority of mine."
"Larry has made it very clear that he wants to keep working full time and focus his energy on product engineering, technology development and strategy," said the Oracle Board's Presiding Director, Dr. Michael Boskin. "Safra and Mark are exceptional executives who have repeatedly demonstrated their ability to lead, manage and grow the company. The Directors are thrilled that the best senior executive team in the industry will continue to move the company forward into a bright future."
But don't cry for Larry: since he owns about 25% of the company, now that Oracle just announced another $13 billion buyback authorization, Larry will get just over $3 billion of that in the coming several quarters.