Photographic Proof of Obama's Lack of Transparency

That’s an official, Obama-administration-approved picture, one
of an endless stream of photos released via the official White
House feed. Increasingly, sanctioned photos of Obama are all the
public is seeing because the guy who pledged the most transparent
administration ever is maintaining unprecedented control over
independent snapshots of his activities.

Andrew Malcolm, a former press flack for First Lady Laura Bush
now writing for Investor’s Business Daily, notes that Obama even
banned photographers accompanying him on his flight to South Africa
for Nelson Mandela’s funeral from taking pictures of the president
with George W. Bush (widely circulated photos of the pair onboard
Air Force One were offical photos). Yet, says
Malcolm
, social media sites allow for a steady drip, drip, drip
of supposedly behind-the-scenes images that promise access but
really only “allow Obama to claim a kind of public
transparency, giving individuals sanitized access to hidden moments
with what are, in effect, mere photo news releases.”

Malcolm is following up on a complaint voiced by the AP’s
director of photography, Santiago Lyon, who argued in the New
York Times,

The official photographs the White House hands out are but
visual news releases. Taken by government employees (mostly former
photojournalists), they are well composed, compelling and even
intimate glimpses of presidential life. They also show the
president in the best possible light, as you’d expect from an
administration highly conscious of the power of the image at a time
of instant sharing of photos and videos.

By no stretch of the imagination are these images journalism.
Rather, they propagate an idealized portrayal of events on
Pennsylvania Avenue.


More here.

One can argue whether such actions constitute “Orwellian image
control,” as Lyon believes, but there’s no question that Team
Obama’s maniac attempts to keep control of the narrative is
unsettling.
And generally ineffective, if recent polls are any indication.

Indeed, energy spent trying to keep tabs on who has access to take
pictures of or write about the president drains resources away from
actually addressing problems and policy screwups. Insularity tends
to create defensiveness, which makes it all the more difficult to
deal with, say, disastrous rollouts of healthcare.gov.

Speaking of transparency, take 50 seconds to watch this 2010
Reason TV gem about the “Real World: DC,” which covers what happens
when when Congress stops being polite…and starts secret, detailed
negotiations on a sweeping, transformative health care reform
bill…

from Hit & Run http://reason.com/blog/2013/12/17/photographic-proof-of-obamas-lack-of-tra
via IFTTT

Cronyism Strikes Again: Ex-Microsoftee Married To Democrat Congresswoman Set To Take Over Obamacare Exchange

Having done a bang up job on the Healthcare.gov rollout (after retaining virtually every private sector company with relevant skills to fix the 500 million-lines-of-code monster), Jeff Zients, as we reported previously, is set to become director of the National Economic Council (perhaps he will next roll out a database where America’s unemployed sign up). But what is more notable is that his replacement in leading the overhaul of the Obamacare exchanges is a former executive from Microsoft. Kurt DelBene, whose wife just happens to be Democratic Congresswoman Suzan DelBene. What could possibly go wrong as cronyism brings Blue Cross together with the Blue Screen of Death?

 

 

Via Xconomy,

Kurt DelBene, previously president of the company’s Office division, is “retiring” from Microsoft. He’s only 52, so this is more about an up-or-out decision.

Office, which is still the dominant work software suite for most businesses of any scale, is a big revenue generator for Microsoft. It’s also been undergoing a major transition to become “Office 365,” the final stroke in the long-term move from the old boxed software days to software-as-a-service, sold in subscriptions to consumers and business customers alike.

DelBene managed the release of the cloud-based Office 365, but his former domain is now being stuffed into the company’s new “applications and services group.” That group will be led by Qi Lu, previously the head of Microsoft’s not-terribly-successful search and online services business.

and his wife, Congresswoman Susan DelBene,

DelBene, a Democrat who spent some $2.8 million of her own money on last year’s campaign, returns to Washington, DC, this week with immigration high on the agenda in the House of Representatives. But so far there’s little sign that the Republican-controlled chamber plans a comprehensive approach to match the bill passed by the Senate last month.

Her position on the House Judiciary Committee <http://judiciary.house.gov/> gives her a front-row seat for the immigration debate, as well as several other reform efforts important to technology businesses, including electronic privacy and sales tax collections by online retailers (hello, Amazon).


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/K1CqIWnss2c/story01.htm Tyler Durden

When Walter Williams Worked for the Carter Administration

A while back I
mentioned
that John McClaughry, a contributing
editor
here at Reason, has been serializing his
memoirs at the Front Porch Republic site. The most recent

installment
, which covers the Ford and Carter years, continues
the theme of the federal government’s inability to seriously
grapple with the idea of devolving power.

One interesting tidbit involves the National Commission on
Neighborhoods, a Carter-era body where McClaughry served as a token
Republican. The commission was run by Robert Kuttner, later to
become famous as a liberal pundit, and the bulk of its
recommendations, McClaughry writes, amounted to “a massive new
national effort to spend money and issue mandates.” But its report
did include one interesting chapter, he adds: “the one on Legal,
Fiscal and Administrative Obstacles.”

We've secretly replaced their regular economist with Walter Williams.That was because the
corresponding committee was effectively run by me and Bob O’Brien,
aided by our consultant Dr. Walter Williams, libertarian economist
and author (1982) of The State Against Blacks. I don’t
believe that Kuttner was aware of Walt’s libertarian leanings,
but quickly approved his hiring because he wanted more black
faces.

Although some statist notions crept in, the major thesis of this
chapter was that neighborhood people were too often handcuffed in
building civil society by obsolete or malicious laws and
regulations that defeated their efforts. Building on my earlier
work for [Office of Minority Business Enterprise], we advocated
rapid and efficient legal recycling of tax-foreclosed properties
into new ownership; a report on home owner’s equity insurance; a
study of carried interest and compulsory unitization of derelict
urban neighborhoods, built on the principles of Texas petroleum
law; transparent land and title information systems; model uniform
conveyancing statues; continuation of five year amortization of
rehab expenditures; tax shelter partnerships and corporate tax
credits for support of neighborhood corporations; various property
tax reforms; privatization of building code enforcement; and
(seriously watered down) joint labor union-neighborhood
organization efforts “to resolve problems arising from the
prevailing wage and work rule provisions of the Davis-Bacon
Act.”

You can read the rest of the article
here
. The cast of characters includes both Ron Paul and Dick
Cheney.

from Hit & Run http://reason.com/blog/2013/12/17/when-walter-williams-worked-for-the-cart
via IFTTT

Weekly Sentiment Report: Bearish Signs Sited

Introduction

We are beginning to see signs of a market top. Most likely, this is an intermediate term top, and I don’t think it represents THE top. A pull back or consolidation period has begun. Buyers are lurking.

Our equity model, which is built around the “dumb money” indicator (see figure 2 below) remains bullish, and will likely remain so for another 2 weeks or more. This current trade has gone on for 14 weeks now when we became bullish during a period of extreme investor bearishness, and it is our expectation that this trade should last on average 15 weeks. The best, most accelerated gains typically occur in the beginning of the trade. Just when investors typically get the all clear, the trend will flatten out. This is the phase we are in now. Our plan is to become sellers of equities when investor sentiment unwinds, but we are not at that point, and I doubt we will be there until 2014 as the calendar is on the bulls’ side.

Specifically, this week is the last FOMC meeting of the year, and as we explained in “It’s Not In Their DNA”, the Federal Reserve doesn’t have the will to tank the markets especially before the Christmas holiday. It’s possible, but I just don’t see it happening. Taper talk is just that –it’s talk and not action. Even if the equity markets do sell off, the slow Christmas holiday and expectations for the New Year should find willing buyers at lower prices. This will be the opportunity to “put that money to work” as “money is on the sidelines ready to come into this market” or some stupid dogmatic, bullshit like that.

Get more independent analysis and proprietary research, sign up with Tactical-Beta.  It’s 100% FREE!!

From a technical perspective, many issues (see this week’s Video of the Week) have lost their mojo. In particular, many issues are beginning to show a clustering of negative divergence bars, which has been a reliable sign across multiple asset classes of slowing upside momentum and of a market that should go sideways at best or lower. The $VIX is moving higher and has broken above resistance levels at 14.64. The indicator used to capture this dynamic (see figure 6 below) has rolled over implying lower prices. I discussed the implications of this HERE. These are all bearish signs.

In summary, there are bullish signs and bearish signs. The end of the year shenanigans is bullish. The bearish signs are telling us that we are closer to the end of the rally then the beginning. Our equity model remains bullish, but it is clearly getting late in the game.

As a reminder, we have moved our stop loss up to SP500 1706.92. 

The Sentimeter

Figure 1 is our composite sentiment indicator. This is the data behind the “Sentimeter”. This is our most comprehensive equity market sentiment indicator, and it is constructed from 10 different variables that assess investor sentiment and behavior. It utilizes opinion data (i.e., Investors Intelligence) as well as asset data and money flows (i.e., Rydex and insider buying). The indicator goes back to 2004. (Editor’s note: Subscribers to the TacticalBeta Gold Service have this data available for download.) This composite sentiment indicator moved to its most extreme position 10 weeks ago, and prior extremes since the 2009 are noted with the pink vertical bars. The March, 2010, February, 2011, and February, 2012 signals were spot on — warning of a market top. The November, 2010 and December, 2012 signals were failures in the sense that prices continued significantly higher. The current reading is neutral but heading towards bearish (as in too many bullish investors).

Figure 1. The Sentimeter

fig1.12.13.13

 

tag

 

Dumb Money/ Smart Money

 The “Dumb Money” indicator (see figure 2) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. The indicator shows that investors are extremely bullish.

Figure 2. The “Dumb Money”

fig2.12.13.13

Figure 3 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: “Market-wide sentiment has moderated, moving from a Strong Sell Bias to a Sell Bias, as transactional volume has declined. The drop in non-10b5-1 selling is, in part, attributable to companies beginning to close quarterly trading windows. The drop in 10b5-1 selling, especially new plans, is likely the result of stocks having traded in a fairly tight range over the past few weeks. The Healthcare and Materials sectors continue to show Strong Sell Biases, but sentiment has moderated elsewhere, most dramatically in Technology, Financials and Energy. With three weeks left in the quarter, transactional volume should continue to decline as more companies close trading windows. Assuming we’ve already seen peak transactional volume for the quarter, selling in Q4’13 was elevated but not historically so, and considering the strong market backdrop (indices at all-time or multi-year highs) the volume of selling was not unexpected. “

Figure 3. InsiderScore “Entire Market” value/ weekly

fig3.12.13.13

 

tag

Get more independent analysis and proprietary research, sign up with Tactical-Beta.  It’s 100% FREE!!

Content aggregators wanting our free research for their websites can contact us editor a
t tactical-beta dot com.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PAaPa0td-WE/story01.htm thetechnicaltake

Guest Post: What If There’s A Recession In 2014?

Submitted by Gonzalo Lira via Gonzalo Lira blog,

If policymakers were gunfighters, they’d be out of bullets: They have run out of effective policy tools to improve the economy.

So the question is simple: If there is a recession in 2014, and policymakers are out of bullets, how will it play out across the American economy?

Recently, Deutsche Bank’s Jim Reid very astutely pointed out that the current “expansion” of the U.S. economy is on its fifth year—the seventh longest in history.

We are due for a recession.

Now, before facing up to a possible 2014 recession, let’s ask ourselves: What happened during the last recession?

No one can quite agree as to the specific causes of the 2007–09 recession—and fighting that particular fight isn’t the point of this essay. But we can all more or less agree that global overindebtedness caused a mini-Minsky Moment, whereby borrowers could no longer borrow enough to keep from defaulting on their previous loans. Hence September 2008. Hence the collective global “Ahhh!!!!” moment that we all recall with such sweet and fond nostalgia.

To stave off what looked like financial and economic Armageddon, the Treasury Department first under Henry Paulson and then under Timothy Geithner, and the Federal Reserve under Ben Bernanke, basically threw money into the economy: The Treasury’s Troubled Asset Relief Program (TARP) originally authorized $700 billion to buy up toxic assets, while the Fed created the Maiden Lane vehicles, lowered interest rates to zero (zero interest-rate policy, ZIRP), and simultaneously created money by way of the various iterations of Quantitative Easing (QE).

Combined, these Treasury and Fed programs prevented the bankruptcies of the so-called “systemically important” (a.k.a., “Too Big To Fail”) banks, and provided the U.S. Federal government with the cash to carry out the 2009 stimulus program. After all, had it not been for the Fed’s purchases of Treasury bonds by way of QE, the yields on the government’s bonds would have risen so high that the stimulus program could not have been financed, let alone the +$1 trillion deficits of 2009, 2010, 2011 and 2012.

But screw the deficit—the Treasury and Fed measures saved everybody’s bacon. Equities crashed? Houses underwater? 401(k)’s in the toilet? Thanks to TARP, ZIRP and QE, they rebounded.

Rather than take the hit, work out the bad loans, and organically regrow the economy, the Treasury and Fed measures were essentially morphine—or heroin—to dull the pain of the Global Financial Crisis: They made us feel great, but the disease is still there.

Overindebtedness. Bad debts piled on top of bad debts.

Now because of the Treasury’s and especially the Fed’s morphine/heroin drip, starting in Q3 of 2009, the American economy’s gross domestic product has been expanding, which economists hail as the end of the 2007–09 recession, and the beginning of the current “expansion”.

(Re. the “expansion”: Nevermind that unemployment was scrapping 10% as late as Q3 of 2011, and that as of Q4 of 2013, we are still at 7% U-3 unemployment—and this U-3 figure ignores the long-term unemployed, who have simply given up, reducing the employment participation rate to historic lows, thereby skewing the real unemployment figure something awful.)

So here we are in Q4 of 2013, staring down the barrel of 2014, suspecting—fearing—that we might have a recession staring right back at us.

Question: What could the Federal government and the Federal Reserve realistically do, to avert a recession in 2014? Or if not avert it, at least ameliorate its effects?

Oh boy . . .

Insofar as the Federal government is concerned, realistically, nothing. In 2008, facing what appeared to be the end of the financial world, Congress was snookered into agreeing to the Bush Administration’s $700 billion TARP bailout. Then in 2009, the incoming Obama Administration had two winds at its back—the Global Financial Crisis, which required the incoming administration to do something, anything; and the fact that Obama was the new prez, who’d won decisively with his deceptive talk of “hope”. Thus the $787 billion stimulus package.

Combined, the Bush TARP and the Obama stimulus were some $1.5 trillion mainlined into the American economy.

Today, five years after his inauguration, and after the Government shutdown and the botched Obamacare launch, Obummer just doesn’t have the pull. More to the point, the Democratic caucus does not trust him. So Democrats on the Hill will not stick their necks out for an Obama stimulus program. So the O-Administration’s economic brain trust might come up with all sorts of plans to preëmptively stop a 2014 recession—but they don’t have the votes to make these plans happen.

As to a repeat of the Henry “Give-us-all-your-money-or-the-banks-will-die!” Paulson scare tactics—they won’t work today, not after the nasty taste left by the one in 2008.

So macro-economically speaking, Barack Obama is walking around with an empty peashooter: He can’t even wave the threat of using it without seeming foolish.

Turning now to the Federal Reserve: They might be packing a big ol’ .45 Magnum, but they are most definitely out of bullets. They can’t lower interest rates any further than they have—what are they going to do, start charging people who deposit money in banks? This is the problem with hitting the lower bound: You can’t go any lower than ZIRP. At best, the Fed could expand QE even further, and buy up even more Treasury debt. But then any impact from more QE will be marginal, assuming it has any effect at all.

So if the Federal government and the Federal Reserve are essentially out of bullets, what’s going to happen to us law-abiding citizens when the Big Bad Recession comes rolling into town?

First off, no one can seriously or responsibly doubt that a recession will not come. Even if the American economy by some miracle manages to sneak through 2014 with positive numbers, a downturn will hit in 2015 anyway. Don’t believe me? Check out this chart:
 

Click to enlarge.

I have grounded, non-orthodox reasons to think that a recession will hit in 2014, reasons which I will expand upon during my live presentation next Thursday (see here). But even if you don’t buy my heterodox reasons, the orthodox business cycle would confirm that a recession is on its way.

So to weather it, you’d have to know what’s going to happen.

A basic outline is pretty clear:

Stocks will take the brunt of the beating, once recession-fever hits—after all, equities are floating on nothing but QE, and everybody knows it.

Bonds won’t do so well either, at least not corporate issuance. Treasury bonds will continue trending with flat yields, if only because the Federal Reserve will probably signal that it will continue (or even expand) QE. Treasury bonds will also continue high because of a simple safe-haven play . . . but there won’t be the sense of today’s Treasuries being the rock-solid Treasuries of yore: There will be more volatility in the T-bond markets. A greater willingness to exit Treasuries at a moment’s notice, especially if there are hints of inflation.

Real estate? Forget it—it’ll be another popping bubble, with the same damage as the last one.

The only store of value will be commodities. Not just precious metals, but all commodities: Industrials, agros, and fossil fuels. It will simply make more sense for the investment community to rotate out of iffy stocks and dodgy bonds, and rotate into physical commodities. Why? Because there is too much liquidity.

If there is such a rotation from equities and bonds into commodities, then the prices of food and transportation will rise—precipitously.

Thus we will have inflation, possibly severe inflation. But the Fed will be loathe to rein in inflation via interest rate hikes.

You know the saying about owning a hammer, and everything looking like a nail? The Fed cannot conceive of any way in which to help the economy that does not involve keeping interest rates low. The Fed under Bernanke (and Greenspan previously, who was guilty of the same sin) does not understand that it is not the job of the Fed to maintain full employment, stable prices, and a solvent banking sector. The Fed’s only mission is to ensure the stability of the fiat currency. Full employment? That’s the Federal government’s problem. Banking sector solvency? That’s not the government’s problem, that’s the free market’s problem.

But the Fed, blinded, thinks that it has to support the banking sector and try to do something about employment. Thus it has lowered interest rates to laughable/insane levels. And it cannot raise them because of its own bias: “You don’t raise interest rates during a recession” is practically a Zen koan with the Fed economists.

If commodities start to rise, as a market reaction to falling stock prices and a need to find an investment safe-haven, then inflation will rear its ugly head and hurt the American economy very, very badly. But the Fed—repeating exactly the same error that brought us stagflation—will not raise interest rates to quell it. The Fed will be too frightened of smothering the economy during a recession to raise rates and defend the currency.

Thus the Fed will stand pat with ZIRP and QE, come a recession in 2014.

In other words, the government will not be able to save the economy. This is the single point I’m trying to make here: If you think for a second that the Federal government and the Federal Reserve will step in once again and save everyone’s bacon (like the last time), then you have not been paying attention to what I’ve been saying—or been paying attention to how truly helpless the Obama Administration and the Fed really are.

The Federal government and the Federal Reserve are out of bullets.

Which means we are on our own come a recession. And we’ll be paying not only for the recession of 2014, but also for the recession of 2007-09, which was deferred, but not worked out.

In other words, a recession in 2014 just might well be The Big One.

Oh boy . . .

Okay, that’s my thinking—here’s my pitch: This coming Thursday, at 8pm EST, I’m going to give a live presentation that’s going to look into all these issues in a lot more detail—really start us thinking seriously about what to do, if and when a recession hits the American economy. The title of this web seminar? Simple:
 

What A Recession in 2014 Will Look Like

Click on the link—and in case you missed it, here it is again. In this live presentation, I will expand on this brief essay, and will take audience questions, too.

If you’re not sure if I’m an idiot or not, check out my appearance on Max Keiser last year and see for yourself:

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/M0bq14_ewHo/story01.htm Tyler Durden

Guest Post: What If There's A Recession In 2014?

Submitted by Gonzalo Lira via Gonzalo Lira blog,

If policymakers were gunfighters, they’d be out of bullets: They have run out of effective policy tools to improve the economy.

So the question is simple: If there is a recession in 2014, and policymakers are out of bullets, how will it play out across the American economy?

Recently, Deutsche Bank’s Jim Reid very astutely pointed out that the current “expansion” of the U.S. economy is on its fifth year—the seventh longest in history.

We are due for a recession.

Now, before facing up to a possible 2014 recession, let’s ask ourselves: What happened during the last recession?

No one can quite agree as to the specific causes of the 2007–09 recession—and fighting that particular fight isn’t the point of this essay. But we can all more or less agree that global overindebtedness caused a mini-Minsky Moment, whereby borrowers could no longer borrow enough to keep from defaulting on their previous loans. Hence September 2008. Hence the collective global “Ahhh!!!!” moment that we all recall with such sweet and fond nostalgia.

To stave off what looked like financial and economic Armageddon, the Treasury Department first under Henry Paulson and then under Timothy Geithner, and the Federal Reserve under Ben Bernanke, basically threw money into the economy: The Treasury’s Troubled Asset Relief Program (TARP) originally authorized $700 billion to buy up toxic assets, while the Fed created the Maiden Lane vehicles, lowered interest rates to zero (zero interest-rate policy, ZIRP), and simultaneously created money by way of the various iterations of Quantitative Easing (QE).

Combined, these Treasury and Fed programs prevented the bankruptcies of the so-called “systemically important” (a.k.a., “Too Big To Fail”) banks, and provided the U.S. Federal government with the cash to carry out the 2009 stimulus program. After all, had it not been for the Fed’s purchases of Treasury bonds by way of QE, the yields on the government’s bonds would have risen so high that the stimulus program could not have been financed, let alone the +$1 trillion deficits of 2009, 2010, 2011 and 2012.

But screw the deficit—the Treasury and Fed measures saved everybody’s bacon. Equities crashed? Houses underwater? 401(k)’s in the toilet? Thanks to TARP, ZIRP and QE, they rebounded.

Rather than take the hit, work out the bad loans, and organically regrow the economy, the Treasury and Fed measures were essentially morphine—or heroin—to dull the pain of the Global Financial Crisis: They made us feel great, but the disease is still there.

Overindebtedness. Bad debts piled on top of bad debts.

Now because of the Treasury’s and especially the Fed’s morphine/heroin drip, starting in Q3 of 2009, the American economy’s gross domestic product has been expanding, which economists hail as the end of the 2007–09 recession, and the beginning of the current “expansion”.

(Re. the “expansion”: Nevermind that unemployment was scrapping 10% as late as Q3 of 2011, and that as of Q4 of 2013, we are still at 7% U-3 unemployment—and this U-3 figure ignores the long-term unemployed, who have simply given up, reducing the employment participation rate to historic lows, thereby skewing the real unemployment figure something awful.)

So here we are in Q4 of 2013, staring down the barrel of 2014, suspecting—fearing—that we might have a recession staring right back at us.

Question: What could the Federal government and the Federal Reserve realistically do, to avert a recession in 2014? Or if not avert it, at least ameliorate its effects?

Oh boy . . .

Insofar as the Federal government is concerned, realistically, nothing. In 2008, facing what appeared to be the end of the financial world, Congress was snookered into agreeing to the Bush Administration’s $700 billion TARP bailout. Then in 2009, the incoming Obama Administration had two winds at its back—the Global Financial Crisis, which required the incoming administration to do something, anything; and the fact that Obama was the new prez, who’d won decisively with his deceptive talk of “hope”. Thus the $787 billion stimulus package.

Combined, the Bush TARP and the Obama stimulus were some $1.5 trillion mainlined into the American economy.

Today, five years after his inauguration, and after the Government shutdown and the botched Obamacare launch, Obummer just doesn’t have the pull. More to the point, the Democratic caucus does not trust him. So Democrats on the Hill will not stick their necks out for an Obama stimulus program. So the O-Administration’s economic brain trust might come up with all sorts of plans to preëmptively stop a 2014 recession—but they don’t have the votes to make these plans happen.

As to a repeat of the Henry “Give-us-all-your-money-or-the-banks-will-die!” Paulson scare tactics—they won’t work today, not after the nasty taste left by the one in 2008.

So macro-economically speaking, Barack Obama is walking around with an empty peashooter: He can’t even wave the threat of using it without seeming foolish.

Turning now to the Federal Reserve: They might be packing a big ol’ .45 Magnum, but they are most definitely out of bullets. They can’t lower interest rates any further than they have—what are they going to do, start charging people who deposit money in banks? This is the problem with hitting the lower bound: You can’t go any lower than ZIRP. At best, the Fed could expand QE even further, and buy up even more Treasury debt. But then any impact from more QE will be marginal, assuming it has any effect at all.

So if the Federal government and the Federal Reserve are essentially out of bullets, what’s going to happen to us law-abiding citizens when the Big Bad Recession comes rolling into town?

First off, no one can seriously or responsibly doubt that a recession will not come. Even if the American economy by some miracle manages to sneak through 2014 with positive numbers, a downturn will hit in 2015 anyway. Don’t believe me? Check out this chart:
 

Click to enlarge.

I have grounded, non-orthodox reasons to think that a recession will hit in 2014, reasons which I will expand upon during my live presentation next Thursday (see here). But even if you don’t buy my heterodox reasons, the orthodox business cycle would confirm that a recession is on its way.

So to weather it, you’d have to know what’s going to happen.

A basic outline is pretty clear:

Stocks will take the brunt of the beating, once recession-fever
hits—after all, equities are floating on nothing but QE, and everybody knows it.

Bonds won’t do so well either, at least not corporate issuance. Treasury bonds will continue trending with flat yields, if only because the Federal Reserve will probably signal that it will continue (or even expand) QE. Treasury bonds will also continue high because of a simple safe-haven play . . . but there won’t be the sense of today’s Treasuries being the rock-solid Treasuries of yore: There will be more volatility in the T-bond markets. A greater willingness to exit Treasuries at a moment’s notice, especially if there are hints of inflation.

Real estate? Forget it—it’ll be another popping bubble, with the same damage as the last one.

The only store of value will be commodities. Not just precious metals, but all commodities: Industrials, agros, and fossil fuels. It will simply make more sense for the investment community to rotate out of iffy stocks and dodgy bonds, and rotate into physical commodities. Why? Because there is too much liquidity.

If there is such a rotation from equities and bonds into commodities, then the prices of food and transportation will rise—precipitously.

Thus we will have inflation, possibly severe inflation. But the Fed will be loathe to rein in inflation via interest rate hikes.

You know the saying about owning a hammer, and everything looking like a nail? The Fed cannot conceive of any way in which to help the economy that does not involve keeping interest rates low. The Fed under Bernanke (and Greenspan previously, who was guilty of the same sin) does not understand that it is not the job of the Fed to maintain full employment, stable prices, and a solvent banking sector. The Fed’s only mission is to ensure the stability of the fiat currency. Full employment? That’s the Federal government’s problem. Banking sector solvency? That’s not the government’s problem, that’s the free market’s problem.

But the Fed, blinded, thinks that it has to support the banking sector and try to do something about employment. Thus it has lowered interest rates to laughable/insane levels. And it cannot raise them because of its own bias: “You don’t raise interest rates during a recession” is practically a Zen koan with the Fed economists.

If commodities start to rise, as a market reaction to falling stock prices and a need to find an investment safe-haven, then inflation will rear its ugly head and hurt the American economy very, very badly. But the Fed—repeating exactly the same error that brought us stagflation—will not raise interest rates to quell it. The Fed will be too frightened of smothering the economy during a recession to raise rates and defend the currency.

Thus the Fed will stand pat with ZIRP and QE, come a recession in 2014.

In other words, the government will not be able to save the economy. This is the single point I’m trying to make here: If you think for a second that the Federal government and the Federal Reserve will step in once again and save everyone’s bacon (like the last time), then you have not been paying attention to what I’ve been saying—or been paying attention to how truly helpless the Obama Administration and the Fed really are.

The Federal government and the Federal Reserve are out of bullets.

Which means we are on our own come a recession. And we’ll be paying not only for the recession of 2014, but also for the recession of 2007-09, which was deferred, but not worked out.

In other words, a recession in 2014 just might well be The Big One.

Oh boy . . .

Okay, that’s my thinking—here’s my pitch: This coming Thursday, at 8pm EST, I’m going to give a live presentation that’s going to look into all these issues in a lot more detail—really start us thinking seriously about what to do, if and when a recession hits the American economy. The title of this web seminar? Simple:
 

What A Recession in 2014 Will Look Like

Click on the link—and in case you missed it, here it is again. In this live presentation, I will expand on this brief essay, and will take audience questions, too.

If you’re not sure if I’m an idiot or not, check out my appearance on Max Keiser last year and see for yourself:

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/M0bq14_ewHo/story01.htm Tyler Durden

Stocks Slumping & VIX Jumping On JPY-Carry Unwind

USD strength, precious metal weakness, long-bond selling, and stocks tanking – all on the back of the ultimate driver of exuberance, the JPY-carry trade’s leverage. With VIX pressing higher (over 16.5%) and credit spreads widening further, it seems hedges (or simply reducing exposure) into tomorrow’s FOMC is the order of the day…

JPY carry unwinds driving the ship…

 

As VIX is well bid into tomorrow…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/B-ldNJ0DQH0/story01.htm Tyler Durden

Stocks Slumping & VIX Jumping On JPY-Carry Unwind

USD strength, precious metal weakness, long-bond selling, and stocks tanking – all on the back of the ultimate driver of exuberance, the JPY-carry trade’s leverage. With VIX pressing higher (over 16.5%) and credit spreads widening further, it seems hedges (or simply reducing exposure) into tomorrow’s FOMC is the order of the day…

JPY carry unwinds driving the ship…

 

As VIX is well bid into tomorrow…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/B-ldNJ0DQH0/story01.htm Tyler Durden

The US Budget “Deal” Summarized (In One Cartoon)

Context is key…

A greater-than $1 trillion (spending) budget heralded as a triumph on the basis that they raised $20 billion in additional revenue (oh and spent an additional $63 billion in anti-sequester outflows).

h/t Investors via The Burning Platform blog

And how the deal got done… Mother Jones explains… why military spending is the glue holding the budget deal together…

The House just passed the Ryan-Murray budget deal, signaling an unexpected end to the cycle of budget crises and fiscal hostage-taking. A few weeks ago, such an agreement seemed distant. Sequestration had few friends on the Hill, but the parties could not agree on how to ditch the automatic budget cuts to defense and domestic spending. Republicans had proposed increasing defense spending while taking more money from Obamacare and other social programs, while Democrats said they’d scale back the defense cuts in exchange for additional tax revenue. Those ideas were nonstarters: Following the government shutdown in October, Senate Majority Leader Harry Reid (D-Nevada) called the idea of trading Social Security cuts for bigger defense budgets “stupid.”

 

Which explains why Rep. Paul Ryan and Sen. Patty Murray’s deal craftily dodged taxes and entitlements while focusing on the one thing most Republicans and Democrats could agree upon: saving the Pentagon budget. Ryan’s budget committee previously declared the sequester “devastating to America’s defense capabilities.” Murray had warned of layoffs for defense workers in her state of Washington as well as cuts to combat training if sequestration stayed in place.

The chart above shows why military spending is the glue holding the budget deal together. It also shows how any remaining opposition to the bill in the Senate may bring together even stranger bedfellows than Ryan and Murray: progressive dove Bernie Sanders (I-Vt.) and sequestration fan Sen. Rand Paul (R-Ky.).


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZW1P8e4oTHc/story01.htm Tyler Durden

The US Budget "Deal" Summarized (In One Cartoon)

Context is key…

A greater-than $1 trillion (spending) budget heralded as a triumph on the basis that they raised $20 billion in additional revenue (oh and spent an additional $63 billion in anti-sequester outflows).

h/t Investors via The Burning Platform blog

And how the deal got done… Mother Jones explains… why military spending is the glue holding the budget deal together…

The House just passed the Ryan-Murray budget deal, signaling an unexpected end to the cycle of budget crises and fiscal hostage-taking. A few weeks ago, such an agreement seemed distant. Sequestration had few friends on the Hill, but the parties could not agree on how to ditch the automatic budget cuts to defense and domestic spending. Republicans had proposed increasing defense spending while taking more money from Obamacare and other social programs, while Democrats said they’d scale back the defense cuts in exchange for additional tax revenue. Those ideas were nonstarters: Following the government shutdown in October, Senate Majority Leader Harry Reid (D-Nevada) called the idea of trading Social Security cuts for bigger defense budgets “stupid.”

 

Which explains why Rep. Paul Ryan and Sen. Patty Murray’s deal craftily dodged taxes and entitlements while focusing on the one thing most Republicans and Democrats could agree upon: saving the Pentagon budget. Ryan’s budget committee previously declared the sequester “devastating to America’s defense capabilities.” Murray had warned of layoffs for defense workers in her state of Washington as well as cuts to combat training if sequestration stayed in place.

The chart above shows why military spending is the glue holding the budget deal together. It also shows how any remaining opposition to the bill in the Senate may bring together even stranger bedfellows than Ryan and Murray: progressive dove Bernie Sanders (I-Vt.) and sequestration fan Sen. Rand Paul (R-Ky.).


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZW1P8e4oTHc/story01.htm Tyler Durden