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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Phil's Favorites

The British election explained in five key phrases

 

The British election explained in five key phrases

Courtesy of Veronika Koller, Lancaster University

The UK government’s decision to hold its third general election since 2015 is a baffling one to many – including the weary voters who have to take part.

Tensions have been high as the country attempts to resolve the identity crisis first sparked by the Brexit vote in 2016. It’s a complicated moment for the nation and, at times like these, it can help to observe the big issues through the lens of language. The slogans and terms that get thrown around again and again during a campaign can often tell us a lot about the bigger picture. Here are five such slogans that can help explain what’s happening in the UK right now.

‘Get Br...

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Zero Hedge

China Quietly Ramps Up Oil Production In Iran

Courtesy of Simon Watkins via OilPrice.com

The supergiant Azadegan oil field, comprising major north and south sites, is as important to Iran’s overall strategic plan to survive the current sanctions environment and to prosper when they are lifted as the flagship South Pars supergiant gas field and the added-value products of its petrochemicals sector. Last week Iran’s Petroleum Engineering and Development Company (PEDEC) announced that five new development wells and an appraisal well are to be spudded in North Azadegan to maintain current production levels. OilPrice.com understands from various senior energy sources in Iran that this is only part of the picture, with much bigger plans having been agreed for rollout in the coming six months with the help of China and Russia.

...



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Digital Currencies

Three Men Arrested In NJ For Running Alleged $722 Million Crypto Ponzi Scheme

Courtesy of ZeroHedge View original post here.

Authored by Kollen Post via CoinTelegraph.com,

United States authorities in New Jersey have announced the arrest of three men who are accused of defrauding investors of over $722 million as part of alleged crypto ponzie scheme BitClub Network, per a Dec. 10 announcement from the Dep...



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Kimble Charting Solutions

Is Freeport McMoRan (FCX) Making A Run For the "Gold"?

Courtesy of Chris Kimble

Mining company Freeport McMoRan NYSE: FCX is enjoying the tailwind from a strong year for gold and silver prices. And although Copper prices are down, Copper has been turning up lately.

This has helped Freeport’s stock price recover in 2019 and has FCX testing a key breakout level.

Below is a “weekly” chart of Freeport McMoRan (FCX). The shaded channel outlined by each (1) highlights the longer-term downtrend that FCX has been stuck in.

But this could change on a dime, especially if FCX can breakout above (2). This area represents its re...



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Insider Scoop

Economic Data Scheduled For Wednesday

Courtesy of Benzinga

  • The MBA's index of mortgage application activity for the latest week is schedule for release at 7:00 a.m. ET.
  • The Consumer Price Index for November will be released at 8:30 a.m. ET.
  • The Census Bureau quarterly services survey report for the third quarter is schedule for release at 10:00 a.m. ET.
  • The Atlanta Fed's Business Inflation Expectations survey report for December will be released at 10:00 a.m. ET.
  • The Energy Information Administration’s weekly report on petroleum inventories in the U.S. is schedule for release at 10:30 a.m. ET.
  • The Federal Open Market Committee will announce its policy decision at 2:00 p.m. ET.
  • The U.S. Treasury budget report for November will be released at 2:00 p.m. ET.
  • ...


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Lee's Free Thinking

Chart Shows the Fed Ramping Up Not QE - Funding Almost All Treasury Issuance

 

Chart Shows the Fed Ramping Up Not QE – Funding Almost All Treasury Issuance

Courtesy of Lee Adler, Wall Street Examiner 

The Fed is ramping up “Not QE” .

The Fed bought $2.2 billion in notes today in its POMO, “not QE,” operations. Actually $2.15 billion because they sold back a whole $50 million. Must have been a little glitch in the force.

This brings the Fed’s total outright purchases of Treasuries to $170 billion since it started Not QE, on September 17.

It also did $107 billion in gross new repo loans to Primary Dealers to buy Tre...



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Chart School

Silver stock taking the sector higher

Courtesy of Read the Ticker

As the US economy begins to show late cycle characteristics like: GDP slowing, higher inflation, higher wage costs, CEO confidence slump. 

Previous Post: Gold Stocks Review

The big players in the market are looking for the next swing off good value lows. This means more money is finding it way into the gold and silver sector, and it is said gold and silver stocks actually lead the metal prices.

The cycle below shows prices are ready to move in the months ahead (older chart re posted).


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Members' Corner

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

 

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

By Matt Wilstein

Excerpt:

Sacha Baron Cohen accepted the International Leadership Award at the Anti-Defamation League’s Never is Now summit on anti-Semitism and hate Thursday. And the comedian and actor used his keynote speech to single out the one Jewish-American who he believes is doing the most to facilitate “hate and violence” in America: Facebook founder and CEO Mark Zuckerberg.

He began with a joke at the Trump administration’s expense. “Thank you, ADL, for this recognition and your work in fighting racism, hate and bigotry,” Baron Cohen said, according to his prepared...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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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