The Fed wants to see what happens if it moves to negative interest rates

It wants to see via a “stress test” of banks. But even with the Fed raising a quarter point recently, so called liftoff, the general trend globally is in the opposite direction. Japan just moved to negative rates. There are smatterings of negative rates to be found throughout Europe. Canada is playing with the idea of negative rates.

Read More

George Soros Sees Crisis in Global Markets That Echoes 2008

I’m not a big fan of Mr. Soros generally but he is a guy one should pay attention to on international financial matters. It’s no small thing when he says we might be looking at another 2008-like crisis. Though Soros has made big mistakes in the past.

Regardless of what Mr. Soros says, from looking at the headlines the man made storm, the central bank created storm, appears to be picking up steam. Today should be an interesting one in the markets for sure.

Read More

The Big Short, the Fed, and the Market

If you want to know what happened in 2008, I mean really want to know, read this excellent (and short) book.

I haven’t seen the movie yet but I might over the weekend. One of the reasons I haven’t seen it yet is because I have heard that it pounds on the same old (false) reasons for the 2008 Crash, that being that somehow the market “failed.” That “greed” was the culprit, etc. etc. It’s what most people believe.

Read More

A Free Market in Interest Rates

Gold is real power in the hands of people. This is the main reason central banks, Marx, Lenin, Keynes and many other “planners” throughout history have hated it. The “barbarous relic.” A tool of the petty bourgeoisie. Kind of like guns in the hands of the citizenry, gold has served as a check on the excesses of those in power. Gold flows have historically impacted rates of interest. Those who would prefer to set rates of interest themselves however, find gold very inconvenient.

Read More

A Furious Ralph Nader Calls Out The Fed As “Tribune To Plutocratic, Crony Capitalism”; Janet Yellen Responds

We have a few really liberal (the American “modern” kind) favorites and Ralph Nader is one of them.

We like him not because he agrees with us on everything, he certainly doesn’t, but he has a moral compass. He has a deeply developed sense of right and wrong. This is something too many in the political world both on the Left and Right simply do not have.

Read More

The Fed is never going to raise rates (?), Economy facing headwinds from overseas, Job participation rate 38 year low

As we’ve said China is driving things economically right now. The Federal Reserve doesn’t want to say it. It wants everyone to think that though our boat is leaking it is unlikely to leak as much as the rest of the the world’s economic “boats.” And right now that may be true. But we are still taking on water. The Great Economic Experiment post 2008 is failing, as many of the more market oriented have long predicted, and now the American central bank has very few options.

Read More

Telegraph: US interest rate rise could trigger global debt crisis

Between a rock and a hard place.

Could? Well, I suppose so. In the same sense that taking drugs away from an addict is likely to trigger a “drugs crisis.”

If you don’t know, the entire financial world is on tenterhooks right now waiting for the latest declaration from the Federal Reserve, or as David Stockman puts it, the financial politburo. Will they raise rates or won’t they? Look to the skies. Stare into the crystal ball. What will the masters of the universe do?

Read More

2008 Was a Crisis… It Was Not THE Crisis

Think of 2008 as a primer. A very difficult and disruptive primer. Nothing’s “fixed.” Markets never really cleared.

Additionally, as is explained below, the now 0% interest rates are almost locked there as the cost of serving US debt by the US government would explode upward with increased (and very likely closer to real market level) rates. That’s a sticky place to be to say the least.

But people will continue blissfully along, until they can’t.

Read More

China cuts rates, stock futures predict 400-500 point positive open in USA

The Chinese have just cut rates and reduced the reserve requirements for banks. Now US stock futures are indicating a strong open to the upside. See, everything is fine. At least if you work for a high frequency trading firm.

Wall Street broadly is hoping, praying, that the central bank mojo will work again. We’ll see.

Read More