For the record, the Jackson Hole meeting actually takes place in the lodge at Grand Teton National Park. Again, the Ben Bernanke of QE fame WILL NOT OFFER UP ANOTHER ROUND OF QE AT THE JACKSON HOLE SYMPOSIUM. To do so would let the scallywags that OCCUPY WASHINGTON TO FINISH ANOTHER YEAR IN OFFICE WITH A GOLD MEDAL FOR IRRESPONSIBILITY. Chairman Bernanke, the WALL STREET MACHINE is hoping that you provide another dose of LIQUIDITY. Do not perform as OLD FAITHFUL and deliver. Force the hand of ELECTED OFFICIALS to actually make a serious attempt to deal with their constitutionally prescribed responsibility, FISCAL POLICY.
Archive for August, 2012
Just as I wrote in the headline, qthere is a story in the UK TELEGRAPH that the Chinese plan to put forward a 800 billion POUND stimulus program of major projects in the provinces. At this time, the TELEGRAPH is the only outlet with the story and has otherwise not been confirmed. IF THE STORY IS TRUE AND THE AMOUNT IS CORRECT THEN THE EFFECT SHOULD PUT UPWARD PRESSURE ON ALL RISK ASSETS AS THIS STIMULUS WILL BE CELEBRATED WORLDWIDE. THE INDUSTRIAL METALS, WHICH HAVE LAGGED THE RECENT RISK ON PROFILE, SHOULD GET A HUGE BOOST SO I WOULD ADVISE WATCHING COPPER AS AN INDICATOR OF THE VERACITY OF THE CHINESE STIMULUS STORY. Again, IF the story has any veracity all asset classes except DEBT should receive a BID Sunday night.
OKAY, so the FOMC minutes were released and all the pundits who never trade were kibbitzing about the THIRD coming of QE. Upon several reviews of the MINUTES, I AM OF A FAR DIFFERENT OPINION. AND, UNLIKE THE PUNDITS OF THE GREAT WASTELAND, MY MONEY TALKS WHILE THEIR BULLSHIT WALKS. Yes, it is indeed frustrating to hear opinions morph into facts. As I reread the FOMC MINUTES I fail to see the certainty of a FED ACTION AT THE NEXT FOMC MEETING AND I OPINE THAT BERNANKE WILL NOT OFFER ANY GREAT INSIGHTS AT THE JACKSON HOLE SYMPOSIUM. AGAIN, ANY FED ACTION WOULD BE A REWARD TO THE CONGRESSIONAL DERELICTS WHO CONTINUALLY FAIL TO DO THEIR DUTY AND CONSTRUCT A RATIONAL FISCAL POLICY.
Before NOTES FROM UNDERGROUND continues on, let’s take a break to see where we’ve been. Here are two posts from early August:
August 8: Draghi … Could’ve, Would’ve, Should’ve
This seems to be the question of the day as the markets awoke to the RUMORS of the ECB CAPPING RATES. As I wrote last night, the rumors were running wild about the ECB using different strategies to put a ceiling on short-term debt (90 days to 3 years for Spain and Italy). No genuine plan was offered just several possibilities as it seemed that President DRAGHI was floating trial balloons about ECB intervention via an unlimited ECB/ESM buying of “misaligned” sovereign debt. The EUROPEAN SOVEREIGN DEBT MARKETS responded to the weekend stories by initially rallying the ITALIAN DEBT FUTURES AND SELLING GERMAN BUNDS IN A MAJOR RELIEF RALLY.
There are several stories making the rounds this weekend that the ECB is planning to announce that it will CAP interest rates on Spanish and Italian DEBT. It seems that the ECB is floating an idea to see how the market responds to the idea of aggressive action by the ECB. Some are even calling it “THE BIG BAZOOKA.”
It seems that the ECB president has for the moment prevailed in a similar way as his MIT cohort Ben Bernanke has been “successful” with his famed Portfolio Balance Channel. Remember, it was Jackson Hole speech of August 2010 in which Chairman Bernanke laid out his view about the importance of the PBC, which was previously referred to by Alan Greenspan as the “wealth effect.” President Draghi has steepened the Spanish and Italian curves by threatening to purchase short-term debt and thus driving the Spanish and Italian 2-YEAR NOTE YIELDS more than 300 basis points lower.
The travails of the financial markets continue even as the EURO ELITE believe that their holiday time is sacrosanct. Greece is in the headlines as financial pundits with time to fill conjecture about how long it is before the lifeline to the Greeks is cut and its economy and society set adrift outside the “safe” harbor of the EUROZONE.
Notes From Underground: Irony of Ironies … In the Land of Fiscal Austerity and Budget Cutting Circumcision is OutlawedAugust 13, 2012
The news is so slow that some ridiculous headlines just creep in, but I wonder what the Greeks think. If the fiscal sheriffs from the TROIKA only took the tip it wouldn’t have been so bad but the German creditors took the entire reproductive assemblage. Ok, enough. New word out of Germany is that a Berlin-based think tank has filed a new case against the legality of the ESM but is asking the Federal Constitutional Court to allow the EUROPEAN COURT of JUSTICE (ECJ) to hear the case and decide if the stability mechanism is legal under EU law. The Eurosceptic group EUROPOLIS is asking for European to determine the legal status of any European bailout program.
When the Greeks under Papandreou suggested a referendum on the GREEK AUSTERITY plan, the Greek PM was met with great consternation by the ruling elites in Brussels. A giant don’t-you-dare-call-a-referendum greeted PM Papandreou and basically forced his abdication. I warned then that the idea of a referendum on any issue of economic austerity was anathema to the EUROCRATS for the denizens of Brussels were/are fearful of testing the “PUBLIC WILL.” Every time a referendum was held it resulted in a decision opposite of the elite’s will: Another referendum was called until the “correct” result was realized. (It was usually preceded by warnings that all financial and budgetary agreements would be rendered null and void.)