Month: November 2014

Scientists warned that an earthquake could take out Fukushima. The Japanese ignored the warning.

(The Fukushima reactors were damaged by the earthquake before the tsunami hit, because the design of the reactors was defective.)

But that couldn’t happen in the U.S. … right?

Well, the engineers who built the Fukushima reactors also built a nuclear reactor at Shoreham, New York … which is highly vulnerable to an earthquake:

The plant was riddled with problems that, no way on earth, could stand an earthquake. The team of engineers sent in to inspect found that most of these components could “completely and utterly fail” during an earthquake.

Indeed:

(1) the company fraudulently changed the seismic report to pretend the plant was earthquake-safe;

and

 

(2) the exact same thing was done at Fukushima.

And the same company that designed the failed Fukushima plants and the vulnerable Shoreham facility is:

the designated builder for every one of the four new nuclear plants that the Obama Administration has approved for billions in federal studies.

But surely the U.S. government agencies regulating nuclear plants are protecting us from earthquake danger?

Well, no …

U.S. regulators haven’t implemented any of the emergency measures which their staff urgently recommended in the wake of the Fukushima disaster, and have actually weakened safety standards for U.S. nuclear reactors after the Fukushima disaster.

Indeed, the Nuclear Regulatory Commission is a pro-industry group which is largely funded by the nuclear companies. (This is true of all nuclear agencies).

The NRC is using obviously-faulty models to pretend that the ancient, crumbling reactors are safe.

David Lochbaum – Director of the Nuclear Safety Project for the Union of Concerned Scientists, who worked as a nuclear engineer for nearly two decades, and has written numerous articles and reports on various aspects of nuclear safety and published two books – says that 27 U.S. nuclear plants aren’t protected against earthquake risks. (He also says that half of all American reactors don’t meet the NRC’s fire protection regulations, a third aren’t protected against flooding if an upstream dam fails).

Indeed, NRC whistleblowers say that the risk of a nuclear meltdown is even higher in the U.S. than it was at Fukushima.

The former head of the NRC says:

• The current fleet of operating plants in the US should be phased out because regulators can’t guarantee against an accident causing widespread land contamination.

• The biggest problem with the NRC continues to be the heavy influence that the industry has in selecting the members of the commission. It is a very political process. There are few commissioners who ever get onto the commission who are not endorsed by the industry.

Moreover, regulators allow earthquake-causing fracking to be conducted within 500 feet of nuclear plants.

The NRC has repeatedly covered up for the nuclear industry.  For example, NBC News reports:

In the tense days after a powerful earthquake and tsunami crippled the Fukushima Daiichi power plant in Japan on March 11, 2011, staff at the U.S. Nuclear Regulatory Commission made a concerted effort to play down the risk of earthquakes and tsunamis to America’s aging nuclear plants ….

 

The emails, obtained via the Freedom of Information Act, show that the campaign to reassure the public about America’s nuclear industry came as the agency’s own experts were questioning U.S. safety standards and scrambling to determine whether new rules were needed to ensure that the meltdown occurring at the Japanese plant could not occur here.

 

***

 

There are numerous examples in the emails of apparent misdirection or concealment in the initial weeks after the Japanese plant was devastated … :

• Trying to distance the U.S. agency from the Japanese crisis, an NRC manager told staff to hide from reporters the presence of Japanese engineers in the NRC’s operations center in Maryland.
• If asked whether the Diablo Canyon Power Plant on the California coast could withstand the same size tsunami that had hit Japan, spokespeople were told not to reveal that NRC scientists were still studying that question. As for whether Diablo could survive an earthquake of the same magnitude, “We’re not so sure about, but again we are not talking about that,” said one email.
• When skeptical news articles appeared, the NRC dissuaded news organizations from using the NRC’s own data on earthquake risks at U.S. nuclear plants, including the Indian Point Energy Center near New York City.

Similarly, nuclear engineer Arnie Gundersen and others pointed out in a roundtable discussion:

• The NRC purposely delayed starting its earthquake study for Indian Point nuclear power plant in New York until after relicensing was complete in 2013, because the NRC didn’t consider a big earthquake “a serious risk”

• Congressman Markey has said there is a cover up. Specifically, Markey alleges that the head of the NRC told everyone not to write down risks they find from an earthquake greater than 6.0 (the plant was only built to survive a 6.0 earthquake)

California: At Risk

But surely California – that environmental haven – has better nuclear safety standards?

Nope …

In 2011, the California Energy Commission held hearings concerning the state’s nuclear safety. During those hearings, the Chairman of the Commission asked government experts whether or not they felt the state’s nuclear facilities could withstand the maximum credible quake. The response was that they didn’t know.

The same year, KCET public television reported:

PG&E Acknowledges Seismic Uncertainty at Diablo Canyon at Public Hearing, Maintains They Have No Concern.

 

***

 

On Tuesday, The San Luis Obispo Tribune featured an article describing Diablo’s back-up cooling systems that are designed to function during an emergency similar to one experienced at Fukushima.

 

***

 

Controversy relating to the Diablo plant was also featured in the Huffington Post where it was pointed out that PG&E was not required to include earthquake procedure in its emergency response plan.

 

California State Senator Sam Blakeslee (R, San Luis Obispo, 15th District) is a geophysicist with a PhD in earthquake studies and is a member of the California State Senate Select Committee on Earthquake and Disaster Preparedness. During this week’s hearing, he repeatedly asked PG&E to withdraw its license renewal application and perform a new seismic study of the [Diablo Canyon nuclear site]. The known presence of the Hosgri earthquake fault, two and a half miles away, and the newly detected fault that runs within a mile of the plant should be thoroughly charted and studied before PG&E applies for a license renewal.

In August, CBS reported:

A senior federal nuclear expert is urging regulators to shut down California’s last operating nuclear plant until they can determine whether the facility’s twin reactors can withstand powerful shaking from any one of several nearby earthquake faults.

 

Michael Peck, who for five years was Diablo Canyon’s lead on-site inspector, says in a 42-page, confidential report that the Nuclear Regulatory Commission is not applying the safety rules it set out for the plant’s operation.

 

***

 

What’s striking about Peck’s analysis is that it comes from within the NRC itself ….

 

The conflict between Peck and his superiors stems from the 2008 discovery of the Shoreline fault, which snakes offshore about 650 yards from the reactors. A larger crack, the Hosgri fault, had been discovered in the 1970s about 3 miles away, after the plant’s construction permits had been issued and work was underway. Surveys have mapped a network of other faults north and south of the reactors.

 

According to Peck’s filing, PG&E research in 2011 determined that any of three nearby faults – the Shoreline, Los Osos and San Luis Bay – is capable of producing significantly more ground motion during an earthquake than was accounted for in the design of important plant equipment. In the case of San Luis Bay, it is as much as 75 percent more.

 

Those findings involve estimates of what’s called peak ground acceleration, a measurement of how hard the earth could shake in a given location. The analysis says PG&E failed to demonstrate that the equipment would remain operable if exposed to the stronger shaking, violating its operating license.

 

***

 

Peck, who holds a doctorate in nuclear engineering and is now a senior instructor at the NRC’s Technical Training Center in Tennessee, declined to comment on the filing.

The Ecologist writes:

An earthquake on nearby geological faults could trigger a Fukushima-scale accident causing 10,000 early fatalities. The owner’s response? Apply to extend the site’s operation for another 20 years.

 

***

 

It’s apparent to any visitor to the stretch of California where the two Diablo Canyon plants are sited that it is geologically hot. A major tourist feature of the area: hot spas.

 

“Welcome to the Avila Hot Springs”, declares the website of one, noting how “historic Avila Hot Springs” was “discovered in 1907 by at the time unlucky oil drillers and established” as a “popular visitor-serving natural artesian mineral hot springs.”

 

Nevertheless, Pacific Gas & Electric had no problem in 1965 picking the area along the California coast, north of Avila Beach, as a location for two nuclear plants.

 

***

 

It was known that the San Andreas Fault was inland 45 miles away. But in 1971, with construction already under way, oil company geologists discovered another earthquake fault – the Hosgri Fault, just three miles out in the Pacific from the plant site and linked to the San Andreas Fault.

 

In 2008 yet another fault was discovered, the Shoreline Fault – just 650 yards from the Diablo Canyon plants.

 

***

 

Michael Mariotte, president of the Nuclear Information & Resource Service, commented Monday that in “plain English” what Peck’s report acknowledges is:

 

“The NRC does not know whether Diablo Canyon could survive an earthquake, within the realm of the possible, at any of the faults around Diablo Canyon. And the reactors should shut down until the NRC does know one way or the other.

And Friends of the Earth noted in October:

On September 10, PG&E released a long-awaited seismic study, the Central Coastal California Seismic Imaging Project, which revealed that earthquake faults surrounding Diablo Canyon are both larger and interconnected and therefore capable of far greater ground motion than had been known before. Nonetheless, PG&E claimed that the reactors could “withstand the ground motions that would be produced by potential earthquakes” from these nearby faults.

FOE has filed suit to shut down Diablo Canyon:

In a petition filed with the California Public Utilities Commission in late September, Friends of the Earth called for a ratemaking investigation into whether or not the expensive and aging Diablo Canyon power plant should be closed and replaced by cheaper, renewable energy and efficiency measure. In a statement, former TVA [Tennessee Valley Authority] head David Freeman called for an end to the “benefits of a sweetheart deal that forces consumers to pay whatever the [PG&E] spends plus a guaranteed return on investment.” [Indeed, nuclear power is a form of crony capitalism, where taxpayers fund an industry which would not even exist in a free market.]

 

***

 

Prompted by the seismic report, which found that the Shoreline Fault was twice as long as previously thought, Friends of the Earth filed a petition to the NRC on October 10, intervening in the process to allow the Diablo Canyon reactors to run another 20 years.

 

***

 

On October 28, Friends of the Earth petitioned the U.S. Court of Appeals to overturn the NRC’s secret, illegal decision to alter the Diablo Canyon plant’s license, a move revealed one month earlier in the agency’s rejection of Dr. Peck’s DPO. The change, made without public notice in September 2013, altered the way the NRC assesses earthquake risks at the plant without following the agency’s own rules or the federal law

Like Fukushima, Diablo Canyon holds thousands of radioactive fuel rods in pools. If power is cut off, the fuel rods would release their radioactivity within a couple of days.

Brilliant …

via Zero Hedge http://ift.tt/1o3sdFm George Washington

On Friday Morgan Stanley cut a note highlighting European equity data.  Here’s a few key charts.

via Zero Hedge http://ift.tt/1rLvN26 CalibratedConfidence

Submitted by Marcia Christoff-Kurapovna via The Ludwig von Mises Institute,

The story of the destruction of the German mark during the hyper-inflation of Weimar Germany from 1919 to its horrific peak in November 1923 is usually dismissed as a bizarre anomaly in the economic history of the twentieth century. But no episode better illustrates the dire consequences of unsound money or makes a more devastating, real-life case against fiat-currency: where there is no restraint, monetary death will follow.

"It matters little that the causes of the Weimar inflation are in many ways unrepeatable; that political conditions are different, or that it is almost inconceivable that financial chaos would ever again be allowed to develop so far," wrote British historian and MP Adam Fergusson in his 1975 classic, When Money Dies. "The question to be asked — the danger to be recognized — is how inflation, however caused, affects a nation."

The US Federal Reserve of 2014 is not the Reichsbank of 1914. Yet today's policy mindset is dangerously reminiscent of the attitudes that helped to excacerbate the economic downfall of inter-war Germany. These include: the unrestrained financing of budget deficits under war and post-war conditions; the unaccountable creation of the money supply by a central bank; the creation of undisciplined credit linked to this expansion of the money supply; the aggressive inflating of asset values; the discounting of short-term treasury bills and notes in practically unlimited amounts; rapid currency depreciation, and a ratio of federal debt to GDP over 100 percent.

Prior to World War I, the German mark, the British shilling, the French franc, and the Italian lira were all valued around the same — about four each to the dollar. By the end of 1923, the rate for the mark was one trillion to a dollar — one million-millionth of its former self. In mid-1922, a loaf of bread cost 428 million marks, while the entire equity capitalization of Daimler Corporation bought the equivalent of 327 of their cars. In November 1923, that which before the war could have purchased, in theory, 500 billion eggs could, that infamous month, procure but one egg.

Former Prime Minister Henry Lloyd George, writing in 1932, remarked that words like "catastrophe," "ruin," and "devastation" were not enough to describe the situation, given the common usage into which such words had fallen. Looting, vandalism, theft, the rise in prostitution, famine, disease, the consumption of dogs; people robbed of their clothes on the street — all were routine events of the "bourgeois" social quotidien. The constant threat of civil war loomed, as did neighboring Bolshevism. Bavaria had to declare martial law.

The Rise of Paper Currency after 1910

The price inflation had begun slowly. In 1914 there was a minor increase in the wholesale price index. That index, with a base of one in 1913, had increased to 2.45 by the end of 1918. Beginning in 1919, the speed of the inflation increased, advancing to 12. 6 in January 1920; 14.4 in January 1921 and 36. 7 in January 1922. By the second half of 1922, that index stood at 101 in July; it was 74,787 in July 1923 and 750 billion on 15 November 1923.

The 100 trillion note was then issued and the presses of the Reichsbank were printing money to the record tune of 74 million million million marks a week. Rather than stop this madness, the Reichsbank continued to print more money, claiming that it was keeping employment steady, and promising the population that relief was always just around the corner. An atmosphere of civil chaos reigned.

The Versailles Treaty was not the main culprit: it only worsened a bubble-blowing monetary policy in place prior to the war. Before 1914, the credit policy of the Reichsbank dictated that not less than one-third of the currency issue had to be covered by gold. But once paper currency became legal tender in Germany in 1910, such currency became a reckless expedient.

By the outbreak of war, most of the world had given up the gold standard and had gone over to paper money. The commodity was withdrawn from circulation and was largely piled up in the vaults of a few central banks, but mainly that of US: from August 1913 to August 1919 the US stock of monetary gold in the US increased by 65 percent.

Back in Germany, massive bond issues were sold appealing to mass patriotism in order to pay for the war. Private fortunes were transferred into paper claims on the state as the Reichsbank suspended the redemption of notes into gold. Loan banks were established that printed money at will and banks gave out unconstrained credit to advance money for war-bond subscriptions. The most ominous measure for the future was that which allowed the Reichsbank to include three-month treasury bills in its currency coverage such that unlimited amounts could be rediscounted against banknotes.

In contrast, Great Britain handled financing the war far more prudently: London met the cost of war by raising taxes aimed primarily at those industries and groups that best stood to profit from the war.

In Germany, gold was depleted paying for war reparations and as a result of the French invasion of the Ruhr. Yet only gold provided occasional relief to citizens at large when a handful of industries were able to issue small gold marks to pay employees. Höchst Dye Works, for example, paid workers from the 400,000 Swiss francs it had stashed in Swiss bank reserves.

Germany Turns to the Rentenmark

At the breaking point, monetary policy was taken out of the hands of the Reichsbank via what was effectively a coup d'etat by Chancellor Gustav Stresemann. All loans to the government were cancelled. Monetary policy was decentralized. The state was rigorously separated from economics.

A parallel banking structure was organized by a prominent non-governmental economist-maverick who came up with a new currency scheme first backed by rye-bread —the most coveted value at the time —and later gold, once that commodity could be procured again. Those "gold-backed" notes, the Rentenmarks, were guaranteed by mortgages on landed property and by bonds on German industry in the amount of 3 billion gold marks.

In reality, there were practically no gold reserves left. Yet, the incalculable social and psychological effect upon the population in announcing a return to currency with gold parity on a one-to-one basis calmed social tensions and jump-started economic stabilization immediately.

"The genius of the Rentenmark is that it released the Reichsbank from having to finance the government," writes Fergusson. Rigorous discipline of state expenditure followed, as well as the refusal of further credit to the government, and the eventual return of the mark to parity between gold and the dollar. For many years afterward, gold mark clauses in long-term obligations were characteristic of the German capital market.

Today's conditions are not Weimar conditions. But there are unsettling parallels in terms of monetary policy and the inflation money and credit. Since President Nixon abandoned the gold exchange standard in 1971 up through 2003, the supply of money in the US increased by 1,100 percent. The Fed's balance sheet, ballooning from $500 billion in 2000 to $4.4. trillion at the end of 2013, has been the result of money printing.

"In a few years time, most of the world will be as sick of managed paper currencies as it was twelve years ago. The main trouble will be that popular ignorance and lethargy, coupled with selfish special interests, forces politics into the management of economics and the management of economics into politics. Politically speaking, the world is yet far from being ready for managed paper currency standards."

These words were written in 1932 by the American economist Edward Kemmerer, one among the clearest arguments against fiat-currency ever written. ‘No gold, "No printing" history tells us: the most important monetary lesson that central banks, once upon a time up through the present day, refuse to learn.

via Zero Hedge http://ift.tt/1wSFlg5 Tyler Durden

It appears few remember the epic failure of Japan’s first experiment with quantitative easing from 2001 to 2006 (that even the NY Fed can’t find a silver lining to crow about) and yet, not only is QE heralded as a success (or not) but additional QE seems to be something to celebrate (even when it’s shown to fail to achieve anything economically).

How’s QE working out for Japan?

 

As Michael Chadwick notes in this oddly bearish interview on CNBC, where has Japan gone in the last 14 years (since its QE started), “absolutely nowhere,” and yet, he exclaims, “sadly, across the globe all central banks are following the same failed path.” Chadwick reflects on the explosion of central bank balance sheets and asks, rhetorically, “do we really need QE every time the market gets nervous?“

Chadwick, rightly proclaims: “At this point not much matters apart from central banker comments, QE, and political promises… I wanna know about valuations, I worry about the consumer; this feels a lot like 1999 to me.”

 

“We have to wonder, are the central banks working together; our QE ends one day; Japan QE ramps up the next – you gotta wonder?”

 

“Right now the world is a very vulnerable place… we are in the midst of a big bubble that will – down the line – be referred to as ‘The QE Bubble'”

Brief clip below:

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During the month of October, three things happened that destroy any credibility that ‘believers’ had about the stock ‘market’ being an efficient discounter of fundamental earnings. Stocks began the month weak on geopolitical fears, concerns about the end of QE, and falling earnings; then Bullard unleashed his “but but but we might do QE4” words and stocks exploded higher. But a funny third thing happened as this malarkey occurred… analysts kept on slashing EPS estimates – in fact they slashed them by more than double the average EPS downgrade of any quarter in the last 10 years… So, if earnings are the mother’s milk of the market, central bank promises are the Human Growth Hormone, EPO, Steroid cycle of all-time highs.

Fundamentals or Central Bank liquidity!

 

As Factset reports,

During the month of October, analysts lowered earnings estimates for companies in the S&P 500 for the fourth quarter. The Q4 bottom-up EPS estimate (which is an aggregation of the estimates for all the companies in the index) dropped by 2.7% (to $30.96 from $31.82) during the month. How significant is a 2.7% decline in the bottom-up EPS estimate during the first month of the quarter? How does this  decrease compare to recent quarters?

During the past year (4 quarters), the average decline in the bottom-up EPS estimate during the first  month of the quarter has been 1.3%. During the past five years (20 quarters), the average decline in the  bottom-up EPS estimate during the first month of the quarter has been 0.6%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the first month of the quarter has been 1.8%. Thus, the decline in the bottom-up EPS estimate recorded during the course of the first month (October) of the fourth quarter was higher than the 1-year, 5-year, and 10-year averages.

However, most of the reductions to earnings estimates have occurred in the commodity-based sectors. As noted in last week’s report, the Energy sector (-10.8%) has recorded the largest decline of all ten sectors in terms of bottom-up EPS, followed by the Materials sector (-7.5%). No other sector has recorded a decrease in bottom-up EPS of greater than 3.3% through the first month of the quarter.

In terms of price, the value of the S&P 500 has increased by 1.1% (to 1994.65 from 1972.29) during the month of October. This marks the 7th time in the past 12 quarters that the bottom-up EPS estimate has  decreased while the price of the index has increased during the first month of the quarter.

via Zero Hedge http://ift.tt/10cMmhf Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

If you think anything is going to change for the better after Republicans take control of the Senate, you might have come down with a severe case of stupidity.

Just like the Democrats before them, the new crop will answer to the same Wall Street masters.

From Bloomberg:

Most of America isn’t interested in next week’s elections. Wall Street is an exception.

 

The $169 million from donors in the securities and investment industry is the most they’ve ever contributed in a midterm election, according to Center for Responsive Politics data. That makes them the most generous group for the first time in decades, with about two-thirds of the money going to Republicans in what the Washington-based nonprofit projects will be the country’s most expensive non-presidential election.

 

The industry’s biggest donor was Paul Singer’s hedge fund Elliott Management, with $12.1 million. Among top givers were employees from Ken Griffin’s Citadel LLC, Soros Fund Management LLC and Goldman Sachs Group Inc. Wall Street’s lead over retirees, lawyers and other groups grows wider when commercial banks including JPMorgan Chase & Co. are added.

 

Switching Allegiance

 

After giving more to Democrats in 2006 and 2008, securities and investment donors switched allegiance in 2010, when President Barack Obama signed the Dodd-Frank Act’s financial regulations into law. Three Republicans, House Speaker John Boehner, Senate Minority Leader Mitch McConnell and Minority Whip John Cornyn, each received more than $1 million from the industry from the beginning of last year through Oct. 15, according to the center’s data.

Switching allegiances? Give me a fucking break, Bloomberg. Both parties are the same, Wall Street just shifts around to whichever figurehead has the momentum in any given election cycle in order to protect their criminal enterprises and get future bailouts.

Wolf’s peers are paying more attention than most Americans to the Nov. 4 elections that will determine control of the Senate. About two-thirds aren’t following midterm news closely or at all, a Pew Research Center survey conducted Oct. 2 through Oct. 5 found. Attention lags behind where it was four and eight years ago, overshadowed by interest in Ebola, Secret Service missteps and airstrikes against the Islamic State.

Of course, that’s because the American public knows that it doesn’t matter which Democrat of Republican crony they vote for. In contrast, Wall Street understands it still needs to sponsor the winning puppet.

When Pew asked voters which parties control the House and Senate, fewer than half answered both correctly.

Check please.

via Zero Hedge http://ift.tt/1ttsC4B Tyler Durden

In a somewhat stunning announcement, Spain’s State Secretary for Security, Francisco Martinez, said in an address to the parliament, that extremists connected to the Islamic State (the terrorist organization formerly known as ISIS) have been considering using Ebola as a weapon against the West. As RT reports, Martinez notes a close eye is being kept on online chat rooms, where such attacks are reportedly discussed among jihadist groups where “The use of Ebola as a poisonous weapon against the United States” was the topic of conversation. So far US Homeland Security Secretary Jeh Johnson denied these allegations citing “no specific credible intelligence.”

As RT reports,

The Spanish government said it is concerned that terrorists could use the Ebola virus as a biological weapon against the West. A close eye is being kept on online chat rooms, where such attacks are reportedly discussed among jihadist groups.

 

Extremists connected to the Islamic State (IS, previously ISIS) have been considering using Ebola as a weapon against the West, Spain’s State Secretary for Security, Francisco Martinez, said in an address to the parliament.

 

Martinez stated that this type of activity serves as further proof that the internet is an “an extension of the battlefield” for the Islamic State, which uses cyberspace for “threatening enemies through propaganda, preparing operations, exchanging information, ideological training, recruiting new members and acquiring finance.”

Furthermore, Mr Martinez, the second in command in Spain’s interior ministry, said investigators had identified ‘many examples’ of threats to use Ebola as a chemical weapon.

He pointed out three specific cases in which aspiring jihadis ‘linked to ISIS’ had used internet chat rooms to seriously discuss the viability of harnessing the deadly virus and other toxins as part of a new terrorism offensive, according to Spain’s RTVE media company.

 

One conversation, identified as having taken place between ISIS sympathisers in mid-September, referred to ‘the use of Ebola as a poisonous weapon against the United States,’ he claimed.

 

Another conversation reportedly saw militants working out how best to employ ‘deadly chemical products’ they had stolen from laboratories.

 

Mr Martinez went on to say that a spokesman for the terror group had also taken to the internet to urge supporters to kill Westerners by any means possible – adding that he had suggested ‘poisonous injections’ as a possible method.

Despite increasing evidence of biological attacks on the West, US Homeland Security Secretary Jeh Johnson denied allegations of the Islamic State’s plans to use biological weapons. “We’ve seen no specific credible intelligence that [the Islamic State] is attempting to use any sort of disease or virus to attack our homeland,” Johnson said earlier in October.

*  *  *

via Zero Hedge http://ift.tt/1pfvGkY Tyler Durden

This week saw not only the end of QE but an unending parade of told-you-so talking-head willing to proclaim not only QE’s success (unemployment ~6%, stocks at record highs, corporate profits at record highs) but to scoff at the naysayers warnings that post-QE stocks will slide since ‘the whole rally has been driven by central bank liquidity’ because “see, stocks are ripping higher post-FOMC.”

Obviously they fail to see the link between extraordinarily low rates (enabling cheap-funded financial engineering), printed money (repressing investors into buying stocks), and the fact that stocks are surged after another central bank – the BoJ – unleashed another round of even bigger insanity.

To those that suggest QE was a victory, we have words and pictures…

If it was so successful, why did they stop?

 

and does this look like the chart of a successful monetary policy action?

 

Chart: Bloomberg

via Zero Hedge http://ift.tt/1tNnEj6 Tyler Durden

Submitted by Alhambra Partners' Jeffrey Snider via Contra Corner blog,

Last week my good friend Fred Everett emailed me the Wall Street Journal’s take on GDP. They were, as you might expect, quite optimistic about what 3.5% implied toward future acceleration finally out of this seven-year depression:

The U.S. economy expanded steadily again during the third quarter, a sign of sustained growth fueled by American consumers and businesses despite mounting concerns about the health of overseas economies.

The problem with that assessment is that it is simply untrue. GDP expanded with very little aid from American consumers and businesses, especially since PCE contribution to GDP was among the lowest since 2009 (and true capex wasn’t any better). As my recent analysis of GDP history shows, that is a reason to be very pessimistic about trends due to the simple fact that over time GDP converges with American consumers and businesses, who continue to be quite and “unexpectedly” dour despite all these hugely positive narratives.

As it turns out, a few hours later, the Wall Street Journal seems to have become aware of all of this. The opening paragraph in the same article now reads:

The U.S. economy expanded at a healthy pace during the third quarter, a sign of sustained growth fueled by government spending and a narrower trade deficit despite mounting concerns about the health of overseas economies.

While the last clause in that sentence maintains the sunshine optimism, it is hardly the same interpretation, is it? “Sustained growth” has never been “fueled” by government spending and there is nothing to indicate, short of a total collapse in demand domestically, that the trade balance will remain “narrower.” Actual and significant improvement in American consumers and businesses would indeed “fuel” sustained growth, but it has been a decade since anything like that has been experienced (and even then it was largely insufficient and artificial). Despite the headline number for GDP, that doesn’t erase this deficiency.

Did they simply just run that paragraph assuming that 3.5% would necessarily mean what they said? Was it all just hope that no one would notice?

This is, to me, beyond simply bias toward whatever orthodox narrative is convention – which right now means the FOMC’s idea of recovery. Content and pesky facts should matter more than the narrative, which becomes all-too-clear in the retraction; it completely changes the context, and thus meaning, but yet the dominant sentiment remains unaltered despite the illogic of the correction. In this case, as with so much commentary, the data can change but that does nothing to modify the narrative as it is “too important” to simply let go.

via Zero Hedge http://ift.tt/1qhHNJi Tyler Durden