Posts Tagged ‘balance sheet’

Bernanke Lies: The Fed IS Printing Money

Courtesy of Jr. Deputy Accountant who confirms that which we may suspect, semantics aside, "Bernanke Lies: The Fed IS Printing Money." – Ilene 

In March of 2009 when Ben Bernanke first appeared on 60 Minutes, he was bold enough to admit that the Fed was effectively printing money. Those balls are long gone (maybe they got caught in the printing press) and he’s back to lying through his beard in the hopes that we’re all too stupid to notice. 

Lies like this:

"One myth that’s out there is that what we’re doing is printing money. We’re not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way. What we’re doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re gonna do."

Oh yeah? Is that your final answer?

I beg to differ, Mr Chairman. Please consult the Fed’s latest balance sheet for more details:

Perhaps ole JDA is losing it and has lost the ability to add zeroes correctly but if I’m reading that right, our friends at the Fed printed $3,738,000,000 in a week and has printed $55,134,000,000 in new money since December 2, 2009.

I remind dear reader that footnote 16 which follows "Currency in circulation" disclaims that number as "estimated". So it could be more, it could be less. Knowing those lying rat b*st**ds at the Fed, that number is way undershot but hey, what do I know?

Is that right? Maybe we should go back a few more balance sheets just to make sure. Let’s see how much they’ve been printing, shall we?

November 18th, 2010: $2,575,000,000
November 12, 2010: $6,209,000,000 (wow, busy week for Zimbabwe Ben!)
November 4, 2010: $3,385,000,000
Oh look! Finally! A week with fewer dollars! Good for them!
October 28, 2010: -$378,000,000

If that’s not printing money, I don’t know what is. Go, Zimbabwe Ben, go!!

 


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DEFLATION!!

DEFLATION!!

Deflated globe

Courtesy of The Pragmatic Capitalist 

By Comstock Partners:

Wow!  We see the word “Deflation” everywhere; we see it in every financial publication and hear it every time we turn on financial TV.  We see that the pundits who were bearish because of runaway inflation have just recently included deflation as well as inflation to be the problem.   We were talking and warning about the ramifications of deflation as far back as the late 1990s.  That was when we authored the “Cycle of Deflation” (see 1st chart).  Whenever we used the word deflation back then, and through 2001, Microsoft Word did not recognize the word and then spell check would constantly try to get us to replace this unusual word with inflation or some other word that started with “de…. .”

comstock41 DEFLATION!!

You may wonder why we would bring up the fact that we were so early in deflationary warnings which are really only just now becoming recognized as a threat.  At that time, we believed that the deflation about which we were warning during the biggest financial mania of all times would have taken place when the bear market started in 2000 and the recession hit in 2001.  However, the Fed decided to make sure deflation did not take place by lowering fed funds from 6 ¼ % to 1% and, then kept it there for a year.  Remember, 2002 was when Bernanke gave the helicopter speech where he implied that he would do whatever it took to control deflation-”even drop money out of helicopters.”  Well, what they did was exacerbate a housing bubble that was already in force and started a second financial mania with stocks following the housing market into the stratosphere.

We wish Greenspan and Bernanke would have let the tremendous overleveraging (even at that time) unwind with the recession and, even though it would have been very painful, let the public repair their balance sheets as they either paid off or defaulted on their debt.  At that time, the total debt (public and private) was a very high 280% of GDP vs. 260% of GDP at the worst of the Great Depression.  Clearly, the unwinding of the debt back then would have been very painful had the Fed not intervened, but now the debt problem is much larger.  Now that the debt has just about doubled they have to deal with a much bigger…
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Bernanke Wants To Shrink Fed Balance Sheet To $1 Trillion Or Less

Courtesy of Tyler Durden

Disclosure from Bernanke in cross by Ron Paul. We are now at $2.3 trillion. The withdrawal of excess $1.3 trillion in reserves will kill the pursuit of risky assets.


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SEC, Fed Alerted By Merrill of Lehman Balance Sheet Games in March 2008

SEC, Fed Alerted By Merrill of Lehman Balance Sheet Games in March 2008

By Yves Smith at Naked Capitalism

At least 35 villagers die in Kazakhstan flood

So which theory is it: stunning bureaucratic incompetence, wishful thinking and denial (a better gloss on theory #1) or a cover up? Or a combination of the above?

No matter which theory or theories you subscribe to, the continuing revelations of how the SEC and perhaps more important, the New York Fed conducted themselves in the months before Lehman’s collapse paint an increasingly damning picture.

The Valukas report shows both regulators were monitoring Lehman on a day-to-day basis shortly after Bear’s failure. They recognized that it has a massive hole in its balance sheet, yet took an inertial course of action. They pressured a clearly in denial Fuld to raise capital (and Andrew Ross Sorkin’s accounts of those efforts make it clear they were likely to fail) and did not take steps towards any other remedy until the firm was on the brink of collapse (the effort to force a private sector bailout as part of a good bank/bad bank resolution).

One of the possible excuses for the failure to do more was that the officialdom did not recognize how badly impaired Lehman was until too late in the game to do much more than flail about. But that argument is undercut by a story in tonight’s Financial Times…  [Read more by Yves here.>>] 

From the Financial Times:

Former Merrill Lynch officials said they contacted regulators about the way Lehman measured its liquidity position for competitive reasons. The Merrill officials said they were coming under pressure from their trading partners and investors, who feared that Merrill was less liquid then Lehman…

In the account given by the Merrill officials, the SEC, the lead regulator, and the New York Federal Reserve were given warnings about Lehman’s balance sheet calculations as far back as March 2008.

Former and current Fed officials say even in the competitive world of Wall Street, it is un­usual for rival bankers to relay such concerns to the Fed.

The former Merrill officials said they contacted the regulators after Lehman released an estimate of its liquidity position in the first quarter of 2008. Lehman touted its results to its counterparties and its investors as proof that it was sounder than some of its rivals,


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In Defense Of Secrecy; Three Prong Attack On The Fed; Selective Myopia

Here’s another terrific article by Mish.  If you’ve wondered like I have about the 45B the Fed apparently made last year, towards the end, Mish questions that figure. Op-Toons has a suggestion to improve the accuracy of reported numbers (keep reading). – Ilene

In Defense Of Secrecy; Three Prong Attack On The Fed; Selective Myopia

Courtesy of Mish 

The Fed is pulling out all stops to defend its secrets, including publishing self-serving mathematical gibberish. Please consider the St. Louis Fed article on the Social Cost of Transparency.

Unless you are an academic wonk, you will be stymied by pages that look like this …

There are 24 pages of such nonsense with titles like

  • 2.2 Private Information and Full Commitment
  • 2.3 Private Information and Limited Commitment
  • 3.2.1 Decision Making in the Day
  • 3.2.2 Decision Making at Night
  • 3.2.4 A No-News Economy

Just for good measure here is the page describing 3.2.4 A No-News Economy

The article culminates with …

For an asset economy then, the prescription of “full transparency” is not generally warranted.

Approaching the problem under the premise that fuller transparency is always desirable may not be the right place to start.

Hiding Behind Empirical Formulas

The problem is Bernanke places his complete faith in such gibberish, so much so that he has lost all sense of real world action by real people. The result is that in spite of his PhD, he could not see a housing bubble that was obvious to anyone using a single ounce of common sense.

Moreover, had Bernanke simply opened his eyes instead of relying on a poor interpretation of an already fatally flawed Taylor Rule, the credit/housing bubble would not have gotten as big as it did, and we might not be discussing the above ridiculous mathematical formulas that supposedly show us the Fed needs to be secretive.

For more on Bernanke’s love affair with the Taylor Rule (even though Taylor Disputes Bernanke on its usage), please see Taylor, NY Times, Dean Baker Call Out Bernanke.

Appeals Court To Hear Bloomberg’s Freedom of Information Suit

Bloomberg has been in a battle with the Fed for two years over the Fed’s “unprecedented and highly controversial use” of public money. In August it "won" the lawsuit but the Fed has appealed.

Please consider


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WHY ISN’T THIS ON THE COVER OF EVERY NEWSPAPER?

WHY ISN’T THIS ON THE COVER OF EVERY NEWSPAPER?

not headline news FASB vs. financial industryCourtesy of The Pragmatic Capitalist

Okay, I can see how this story might not be a headliner, but we’ve heard practically nothing in the mainstream media about the upcoming battle between FASB and the financial industry with regards to accounting changes.  According to Bloomberg FASB is expected to expand the use of fair value accounting after the drastic changes that took place in Q1 – the same changes that have helped so many of the banks in the near-term.  FASB knows they made a mistake and got pressured by politicians and the Treasury to change the rules in the middle of the game.  Well, now they’re considering changing them back (kind of).  The rule change would have sweeping effects on the banks and as regular readers know, I believe would have an enormously positive impact on the long-term well being of the country.  Bloomberg reports:

The scope of the FASB’s initiative, which has received almost no attention in the press, is massive. All financial assets would have to be recorded at fair value on the balance sheet each quarter, under the board’s tentative plan.

This would mean an end to asset classifications such as held for investment, held to maturity and held for sale, along with their differing balance-sheet treatments. Most loans, for example, probably would be presented on the balance sheet at cost, with a line item below showing accumulated change in fair value, and then a net fair-value figure below that. For lenders, rule changes could mean faster recognition of loan losses, resulting in lower earnings and book values.

The board said financial instruments on the liabilities side of the balance sheet also would have to be recorded at fair-market values, though there could be exceptions for a company’s own debt or a bank’s customer deposits…

Differing Treatment

While balance sheets might be simplified, income statements would acquire new complexities. Some gains and losses would count in net income. These would include changes in the values of all equity securities and almost all derivatives. Interest payments, dividends and credit losses would go in net, too, as would realized gains and losses. So would fluctuations in all debt instruments with derivatives embedded in their structures…

Imagining the Impact

Think how the saga at CIT Group Inc. might have unfolded if loans already


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Zero Hedge

Going Down With The Ship: After Raging At Moody's For Downgrade To Deep Junk, Masa Son Pledges 40% Of SoftBank Stake To Lenders

Courtesy of ZeroHedge View original post here.

Last October, in the aftermath of the WeWork and Uber fiasco, we asked if SoftBank, that chronic seed (and not so seed) investor in cash-incinerating zerocorns startups would be "The Bubble Era's "Short Of The Century." Subsequent events have only made our query more pressing: with the global economy frozen, with social distancing and self-quarantine now a mandatory part of life...



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Phil's Favorites

Stimulus package will remain half-baked unless local governments get more of the dough

 

Stimulus package will remain half-baked unless local governments get more of the dough

People still need baked goods even during a lockdown. Frederic Brown/AFP via Getty Images

Courtesy of Stephanie Leiser, University of Michigan

Lawmakers are pinning their hopes on a US$2 trillion package to prop up the U.S. economy and provide relief to individuals and business ravaged by the coronavirus. ...



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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

Take a quick watch of this video because it shows you ...



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Kimble Charting Solutions

Broadest Of All Stock Indices Testing Critical Support, Says Joe Friday!

Courtesy of Chris Kimble

One of the broadest indices in the states remains in a long-term bullish trend, where a critical support test is in play.

The chart looks at the Wilshire 5000 on a monthly basis over the past 35-years.

The index has spent the majority of the past three decades inside of rising channel (1). It hit the top of this multi-decade channel to start off the year, where it created a monthly bearish reversal pattern.

Weakness the past 2-months has the index testing rising support and the December 2018 lows at (2).

Joe...



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Insider Scoop

Why SmileDirectClub's Stock Is Trading Higher Today

Courtesy of Benzinga

SmileDirectClub (NASDAQ: SDC) shares were trading higher on Friday, after the company announced it's now producing medical-grade face shields for health care workers amidst the coronavirus (COVID-19) pandemic.

SmileDirectClub says it has capacity to print up to 7,500 face shields per day and is accepting orders from healthcare org...



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Biotech/COVID-19

Coronavirus treatments and vaccines - research on 3 types of antivirals and 10 different vaccines is being fast-tracked

 

Coronavirus treatments and vaccines – research on 3 types of antivirals and 10 different vaccines is being fast-tracked

Scientific research on the novel coronavirus has progressed at unprecedented speed. Mongkolchon Akesin / Shutterstock

Courtesy of Ignacio López-Goñi, Universidad de Navarra

Just three months after China first notified the World Health Organization about a deadly new coronavirus, studies of numerous antiviral t...



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Chart School

Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

Just has we have birthdays, so does the market, regular cycles of time and price. The market news of the cycle turn may change each time, but the time is regular. Markets are not a random walk.


Success comes from strategy and the execution of a plan.















Changes in the world is the source of all market moves, to catch an...

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Digital Currencies

Bitcoin Tested As A Safe Haven After Biggest Stock Crash Since 2009

Courtesy of ZeroHedge View original post here.

Authored by Horus Hughes via CoinTelegraph.com,

Gold and Bitcoin react to global panic

Amid all of yesterday's chaos in bond, commodity, and stock markets, with the yield on the 10-year US Treasury note dropping below 0.5% for the first time in history - a strong indicator that investors are desperately looking for safe harbors - two supposed safe-havens in 'alternative currencies' behaved qui...



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Members' Corner

Bloody Mob Sh*t: An Interview with Lincoln's Bible

 

Bloody Mob Sh*t: An Interview with Lincoln's Bible

We talk Trump, Mogilevich, Epstein, Giuliani, Fred Trump, Roy Cohn, and more.

Courtesy of Greg Olear at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

(Originally published on Feb. 21, 20.)

...

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ValueWalk

Entrepreneurial activity and business ownership on the rise

By Jacob Wolinsky. Originally published at ValueWalk.

Indicating strong health of entrepreneurship, both entrepreneurial activity and established business ownership in the United States have trended upwards over the past 19 years, according to the 2019/2020 Global Entrepreneurship Monitor Global Report, released March 3rd in Miami at the GEM Annual Meeting.

Q4 2019 hedge fund letters, conferences and more

The Benefit Of Entrepreneurial Activity ...

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Promotions

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TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.