They Give Awards For That?!

Submitted by Simon Black of Sovereign Man blog,

The “Ig Nobel Prize” is parody of the Noble Prize that is awarded every year for the most trivial scientific achievement. (‘ig’ is short for ‘ignoble’)

For example, the 2007 recipient for the ‘Ig Nobel Peace Prize’ went to the United States Air Force Wright Lab in Ohio, for proposing the development of a ‘gay bomb’ that could be dropped in hostile territory and make enemy troops sexually attracted to each other. Make love, not war?

(This actually happened. The proposal was part of a $7.5 million funding request in 1994 to develop non-lethal weapons, including one that would create “severe and lasting halitosis”, and “could be used on mixtures of enemy personnel and civilians.” Your tax dollars at work.)

So when I opened my email yesterday and saw the subject line: “Central Bank Governor of the Year”, I immediately presumed it was a similar satire. It wasn’t.

It’s bad enough that our modern society considers the hoodoo of economics to be “science”.

And that we award our most esteemed prizes for intellectual achievement to its master practitioners like Paul Krugman who tell us how bountiful our national wealth could be if we would only conjure more paper currency out of thin air.

These ‘scientists’ have managed to convince the entire world that it’s a good idea to award a tiny banking elite with supreme, totalitarian control over the money supply.

Frankly this idea is even dumber than the Air Force’s. And perhaps the framework of modern central banking will one day receive its own ‘Ig Nobel Prize’.

But for now, it’s taken very seriously. So seriously, in fact, that the Financial Times’ “Banker” intelligence service recently announced the aforementioned ‘Central Bank Governor of the Year’.

Guess who won?

Nope, not Ben Bernanke. You see, while Mr. Bernanke has spent the last several years aggressively expanding the balance sheet of the US Federal Reserve, he has been handily out-printed by some of his peers.

No, this dubious honor goes to Haruhiko Kuroda of the Bank of Japan (BOJ).

Mr. Kuroda’s claim to fame is pushing to double the BOJ’s monetary base within just two years, and joining Japanese Prime Minister Shinzo Abe to create more inflation.

He’s off to a hell of a start.

Since assuming office in March 2013, Mr. Kuroda has printed enough money to inflate his balance sheet by 35.5% in just 9-months. And the Japanese yen has plummeted along with it.

Despite obliterating his currency, the FT absurdly claims that Mr. Kuroda has “restored credibility to the Bank of Japan and inspired confidence in Japan’s economy.”

Bear in mind, the Japanese government is already in position where the NET government debt is over 140% of GDP.

And they’re spending a full 25% of its tax revenue just to make INTEREST PAYMENTS… at a time when interest rates are effectively ZERO.

If interest rates rise to just 1%, the Japanese government will go bankrupt. Yet this is exactly the direction that Mr. Kuroda is going.

His goal is to create inflation of at least 2%. But if inflation is 2%, who in his right mind would loan money to the government at 0.3%? You’d be losing money.

Interest rates will HAVE to rise. Investors will demand it. So Mr. Kuroda’s path will either bankrupt the Japanese government… or he will create a currency crisis by devaluing his currency to nothing.

It’s extraordinary how dire the situation is. Yet Mr. Kuroda is now considered by the grand wizards of the financial system to be the BEST IN THE WORLD. Incredible.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/88hP7ebCCBI/story01.htm Tyler Durden

95% Of Total Consumer Credit Lent In Past 12 Months Is For Student And Car Loans

Another month, another disappointment for all those who hope the consumer will finally “charge it.” In November, consumer credit was expected to grow by $14.25 billion, instead it rose by $12.318 billion. However, it was once again the components that were key, because while $11.9 billion or the vast majority of November’s credit growth was in the form of car and student loans (i.e., non-revolving), a tiny $458 million was for revolving, or credit card, purchases.

That’s the demand side. On the supply side, no surprises here, the bulk of credit creation continues to come from the Federal Government whose contribution can be seen on the chart below courtesy of @Not_Jim_Cramer. In fact, if one excludes the contribution of the Federal government and compares how the current “expansion” matches to the last 11, well… instead of describing it see for yourselves:

Finally, putting it all into perspective, of the total $178 billion in consumer credit expansion in the past 12 months, a tiny $9 billion, or just 5% of total, was to fund credit card purchases. The rest went – you guessed it – into purchases of cars and paying for tuition, for which GM and strateospheric college tuitions are most grateful. And that is the New Normal economy in a nutshell.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/E-yuR0NC3js/story01.htm Tyler Durden

Meet the MQ-4C Triton – A New Navy Drone with the Wingspan of a Boeing 757

Spying on humanity’s every electronic move is clearly not good enough for the U.S. government. It is also necessary to be able to surveil the species’ every move from 50,000 feet in the sky. You know, because of the terrorists and all.

The past couple of years have seen many frightening new advances from the U.S. military. From “Atlas” the 6 Foot Tall Humanoid Robot, to “ARGUS” The World’s Highest Resolution Video Surveillance Platform, to domestic drone use, the Department of Defense is hard at work making sure that you can never engage in a private act again without the fear of a hellfire missile landing on your head.

Now here’s the latest…a Northrop Grumman drone with the wingspan of a 757.

From Wired:

A new drone with the mammoth wingspan of a Boeing 757 is set to give the U.S. Navy some serious surveillance power.

Northrop Grumman and the Navy say they’ve just completed the ninth flight trial of the Triton unmanned aircraft system (UAS), an improvement upon its predecessor in the Air Force, the Global Hawk.

With its 130-foot wingspan, Triton will provide high-altitude, real-time intelligence, surveillance and reconnaissance (ISR) from a sensor suite that supplies a 360-degree view at a radius of over 2,000 nautical miles, allowing monitoring from higher and farther away than any of its competitors.

Thus far, Triton has completed flights up to 9.4 hours at altitudes of 50,000 feet at the company’s manufacturing facility in Palmdale, California. According to Northrop Grumman, Triton could support missions up to 24 hours.

Now here’s this sucker in the wild.

Sleep tight serfs.

Full article here.

In Liberty,
Mike

Like this post?
Donate bitcoins: 1LefuVV2eCnW9VKjJGJzgZWa9vHg7Rc3r1

 Follow me on Twitter.

Meet the MQ-4C Triton – A New Navy Drone with the Wingspan of a Boeing 757 originally appeared on A Lightning War for Liberty on January 8, 2014.

continue reading

from A Lightning War for Liberty http://libertyblitzkrieg.com/2014/01/08/meet-the-mq-4c-triton-a-new-navy-drone-with-the-wingspan-of-a-boeing-757/
via IFTTT

USD, Bonds, And Bullion Down Post Fed Minutes

Broadly speaking, markets shrugged at the Fed minutes but as te last 30 minutes evolved, the relative hawkishness (though remember tapering is not tightening) QE message – and fears over excessive risk-taking – have sparked weakness in several asset classes (except stocks for now)…

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/F9c0dGDHXxg/story01.htm Tyler Durden

The Fed Is Concerned About Small Cap Forward Multiples And Covenant Lite Loans?

While everyone is focused on any additional clues about the taper and the pace of Flow reduction, perhaps this is the key standout section in today’s minutes, one that focuses directly on the bubble the Fed’s policies have blown.

Participants also reviewed indicators of financial vulnerabilities that could pose risks to financial stability and the broader economy. These indicators generally suggested that such risks were moderate, in part because of the reduction in leverage and maturity transformation that has occurred in the financial sector since the onset of the financial crisis. In their discussion of potential risks, several participants commented on the rise in forward price-to-earnings ratios for some smallcap stocks, the increased level of equity repurchases, or the rise in margin credit. One pointed to the increase in issuance of leveraged loans this year and the apparent decline in the average quality of such loans. A couple of participants offered views on the role of financial stability in monetary policy decision-making more broadly. One proposed that the Committee analyze more explicitly the potential consequences of specific risks to the financial system for its dual-mandate objectives and take account of the possible effects of monetary policy on such risks in its assessment of appropriate policy. Another suggested that the importance of financial stability considerations in the Committee’s deliberations would likely increase over time as progress is made toward the Committee’s objectives, and that such considerations should be incorporated into forward guidance for the federal funds rate and asset purchases.

In other words, the Fed realizes the “importance” of its role in preserving financial stability in the future, specifically one the bubble bursts? Don’t worry though, yesterday none other than SF Fed president John Williams said stocks are undervalued.


    



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

Fed Minutes Reveal “Waning Benefits Of QE”, Mentions Risk Of “Capital Losses”

As one might have expected the tension during the most recent FOMC meeting was palpable in the minutes as opposing dovish and hawkish less dovish views on the costs and benefits (and non-comprehension of the machinations) of QE were evident.

  • *FED OFFICIALS SAW WANING BENEFITS FROM MONTHLY BOND PURCHASES
  • *MANY FOMC MEMBERS FAVORED QE TAPERING IN `MEASURED STEPS’
  • *MOST FOMC PARTICIPANTS WERE MORE CONFIDENT IN JOB MARKET GAINS
  • *FOMC PARTICIPANTS `MOST CONCERNED’ ABOUT QE RISKS TO STABILITY

The likely path of tapering seems clear (and mention of extending the reverse repo facility is notable) but how forward guidance will be implemented remains the hottest topics and Eurodollar prices suggest the latter even more so than the former.

Pre-FOMC Minutes: S&P Futs 1832.0, Gold $1225.5, 10Y 2.995%, EURUSD 1.3570, USDJPY 104.95

Here are the key sections:

The staff presented a short briefing summarizing a survey that was conducted over the intermeeting period regarding participants’ views of the marginal costs and marginal  efficacy of asset purchases. Most participants judged the marginal costs of asset purchases as unlikely to be sufficient, relative to their marginal benefits, to justify ending the purchases now or relatively soon; a few participants identified some possible costs as being more substantial, indicating that the costs could justify ending purchases now or relatively soon even if the Committee’s macroeconomic goals for the purchase program had not yet been achieved. Participants were most concerned about the marginal cost of additional asset purchases arising from risks to financial stability, pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk-taking in the financial sector. It was noted that the risks to financial stability could be somewhat larger in the case of asset purchases than in the case of interest rate policy because purchases work in part by affecting term premiums and policymakers have less experience with term premium effects than with more conventional interest rate policy. Participants also expressed some concern that additional asset purchases increase the likelihood that the Federal Reserve might at some point suffer capital losses.

Shouldn’t the Fed never, ever mention the possiblity of capital losses as it immediately becomes a self-fulfilling prophecy? It continues:

… it was pointed out that the Federal Reserve’s asset purchases would almost certainly provide significant net income to the Treasury over the life of the program, especially when the effects of the program on the broader economy were taken into account, and that potential reputational risks to the Federal Reserve arising from any future capital losses could be mitigated by communicating that point to the public.

So, as long as the public knows that the Fed’s DV01 of $3 bilion can and will lead to massive balance sheet losses, all will be well?

The punchline:

Regarding the marginal efficacy of the purchase program, most participants viewed the program as continuing to support accommodative financial conditions, with a number of them pointing to the importance of purchases in serving to enhance the credibility of the Committee’s forward guidance about the target federal funds rate. A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue, although some noted the difficulty inherent in making such an assessment. A couple of participants thought that the marginal efficacy of the program was not declining, as evidenced by the substantial effects in financial markets in recent months of news about the likely path of purchases.

Uhm yeah: remember “The Fed Now Owns One Third Of The Entire US Bond Market“, and that the Fed now has a DV01 of over $3 billion. Someone at the Fed finally got the memo.

On the Overnight Reverse-Repo Facility:

… the Committee considered a proposal to increase the caps on individual allocations in the ON RRP test operations from $1 billion to $3 billion per counterparty. The proposed increase in caps was intended to test the Desk’s ability to manage somewhat larger operational flows and to provide additional information about the potential usefulness of ON RRP operations to affect market interest rates when doing so becomes appropriate. Participants generally supported the proposal, with one participant emphasizing the usefulness of extending the end date of the program beyond the end of January. However, some participants questioned the extent to which the proposed limited increase in the caps would provide additional insights about the operational aspects of the ON RRP program or the potential market effects of ON RRP operations. A few participants suggested that it would be useful to evaluate the potential role of an ON RRP facility in the context of the Committee’s plans for monetary policy implementation over the medium and longer term.

Usefulness? Why window dressing of course.

Remember peak uncertainty? “The staff viewed the uncertainty around the projection for economic activity as similar to its average over the past 20 years.” So much for that.

Finally, some housing market perspectives:

The pace of activity in the housing sector appeared to continue to slow somewhat, likely reflecting the higher level of mortgage rates since the spring. Starts for both new single-family homes and multifamily units increased, on balance, from August to November, but permits—which are typically a better indicator of the underlying pace of construction—rose more gradually than starts over the same period. Sales of existing homes and pending home sales decreased further in October, although new home sales rose in October after falling markedly in the third quarter….  Mortgage rates rose over the intermeeting period to levels about 100 basis points above their early-May lows. On balance, refinancing applications were down substantially since May while purchase applications declined much less. House prices rose significantly in October, but  some indicators suggested that the pace of house price gains continued to decelerate relative to earlier in the year.

Full minutes below:


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BwkhPJ8ZhcA/story01.htm Tyler Durden

Fed Minutes Reveal "Waning Benefits Of QE", Mentions Risk Of "Capital Losses"

As one might have expected the tension during the most recent FOMC meeting was palpable in the minutes as opposing dovish and hawkish less dovish views on the costs and benefits (and non-comprehension of the machinations) of QE were evident.

  • *FED OFFICIALS SAW WANING BENEFITS FROM MONTHLY BOND PURCHASES
  • *MANY FOMC MEMBERS FAVORED QE TAPERING IN `MEASURED STEPS’
  • *MOST FOMC PARTICIPANTS WERE MORE CONFIDENT IN JOB MARKET GAINS
  • *FOMC PARTICIPANTS `MOST CONCERNED’ ABOUT QE RISKS TO STABILITY

The likely path of tapering seems clear (and mention of extending the reverse repo facility is notable) but how forward guidance will be implemented remains the hottest topics and Eurodollar prices suggest the latter even more so than the former.

Pre-FOMC Minutes: S&P Futs 1832.0, Gold $1225.5, 10Y 2.995%, EURUSD 1.3570, USDJPY 104.95

Here are the key sections:

The staff presented a short briefing summarizing a survey that was conducted over the intermeeting period regarding participants’ views of the marginal costs and marginal  efficacy of asset purchases. Most participants judged the marginal costs of asset purchases as unlikely to be sufficient, relative to their marginal benefits, to justify ending the purchases now or relatively soon; a few participants identified some possible costs as being more substantial, indicating that the costs could justify ending purchases now or relatively soon even if the Committee’s macroeconomic goals for the purchase program had not yet been achieved. Participants were most concerned about the marginal cost of additional asset purchases arising from risks to financial stability, pointing out that a highly accommodative stance of monetary policy could provide an incentive for excessive risk-taking in the financial sector. It was noted that the risks to financial stability could be somewhat larger in the case of asset purchases than in the case of interest rate policy because purchases work in part by affecting term premiums and policymakers have less experience with term premium effects than with more conventional interest rate policy. Participants also expressed some concern that additional asset purchases increase the likelihood that the Federal Reserve might at some point suffer capital losses.

Shouldn’t the Fed never, ever mention the possiblity of capital losses as it immediately becomes a self-fulfilling prophecy? It continues:

… it was pointed out that the Federal Reserve’s asset purchases would almost certainly provide significant net income to the Treasury over the life of the program, especially when the effects of the program on the broader economy were taken into account, and that potential reputational risks to the Federal Reserve arising from any future capital losses could be mitigated by communicating that point to the public.

So, as long as the public knows that the Fed’s DV01 of $3 bilion can and will lead to massive balance sheet losses, all will be well?

The punchline:

Regarding the marginal efficacy of the purchase program, most participants viewed the program as continuing to support accommodative financial conditions, with a number of them pointing to the importance of purchases in serving to enhance the credibility of the Committee’s forward guidance about the target federal funds rate. A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue, although some noted the difficulty inherent in making such an assessment. A couple of participants thought that the marginal efficacy of the program was not declining, as evidenced by the substantial effects in financial markets in recent months of news about the likely path of purchases.

Uhm yeah: remember “The Fed Now Owns One Third Of The Entire US Bond Market“, and that the Fed now has a DV01 of over $3 billion. Someone at the Fed finally got the memo.

On the Overnight Reverse-Repo Facility:

… the Committee considered a proposal to increase the caps on individual allocations in the ON RRP test operations from $1 billion to $3 billion per counterparty. The proposed increase in caps was intended to test the Desk’s ability to manage somewhat larger operational flows and to provide additional information about the potential usefulness of ON RRP operations to affect market interest rates when doing so becomes appropriate. Participants generally supported the proposal, with one participant emphasizing the usefulness of extending the end date of the program beyond the end of January. However, some participants questioned the extent to which the proposed limited increase in the caps would provide additional insights about the operational aspects of the ON RRP program or the potential market effects of ON RRP operations. A few participants suggested that it would be useful to evaluate the potential role of an ON RRP facility in the context of the Committee’s plans for monetary policy implementation over the medium and longer term.

Usefulness? Why window dressing of course.

Remember peak uncertainty? “The staff viewed the uncertainty around the projection for economic activity as similar to its average over the past 20 years.” So much for that.

Finally, some housing market perspectives:

The pace of activity in the housing sector appeared to continue to slow somewhat, likely reflecting the higher level of mortgage rates since the spring. Starts for both new single-family homes and multifamily units increased, on balance, from August to November, but permits—which are typically a better indicator of the underlying pace of construction—rose more gradually than starts over the same period. Sales of existing homes and pending home sales decreased further in October, although new home sales rose in October after falling markedly in the third quarter….  Mortgage rates rose over the intermeeting period to levels about 100 basis points above their early-May lows. On balance, refinancing applications were down substantially since May while purchase applications declined much less. House prices rose significantly in October, but  some indicators suggested that the pace of house price gains continued to decelerate relative to earlier in the year.

Full minutes below:


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BwkhPJ8ZhcA/story01.htm Tyler Durden