Spanish ‘Anti-Austerity’ Protesters “Sick Of This System They Call Democracy”

"I'm here to fight for my children's future," exclaims one father as Spaniards rallied in Madrid against poverty and EU-imposed austerity. As Reuters reports, the largely peaceful protest later marred by violent clashes in which police fired rubber bullets. The so-called "Dignity Marches" brought hundreds of thousands to the capital with banners making it clear what their feelings about record 26% unemployment were – "Bread, jobs and housing for everyone" and "Corruption and robbery, Spain's trademark." One protester summed up the people's views of the government, "I'm sick of this system they call democracy… I want things to change."

 

 

 

Via Reuters,

The so-called "Dignity Marches" brought hundreds of thousands to the capital, according to estimates of Reuters witnesses. Travelling from all over Spain, they were protesting in support of more than 160 different causes, including jobs, housing, health, education and an end to poverty.

 

 

…Spaniards rallied in Madrid on Saturday against poverty and EU-imposed austerity in a largely peaceful protest later marred by violent clashes in which police fired rubber bullets.

 

 

Some protesters started to throw stones and bottles at the large numbers of riot police present and attacked cashpoints and hoardings. The police fired rubber bullets to disperse them, according to video footage seen by Reuters.

 

Central government representative Cristina Cifuentes said 19 protesters had been arrested and 50 police officers had been injured, one of them very badly, in the clashes.

Once again the issue is government corruption combined with austerity (or at least slowing growth in spending to be perfectly clear) – a combination that we have discussed numerous times tends to end in social unrest…

A housing bubble burst more than five years ago, forcing a 41-billion euro ($56 billion) bailout of Spain's banks, squeezing homeowners and throwing millions out of work.

 

 

The government introduced public sector austerity to whittle down the deficit, provoking widespread anger amongst middle- and low-income families as dozens of cases of corruption in the ruling class are investigated by judges.

The people's feelings were clear as the OECD says the economic crisis has hit Spain's poor harder than in any other country in the euro region.

Banners urged the conservative government not to pay its international debts and to tackle Spain's chronically high unemployment of 26 percent.

 

"Bread, jobs and housing for everyone", read one banner, "Corruption and robbery, Spain's trademark," said another.

 

"I'm here to fight for my children's future," said Michael Nadeau, a 44-year-old entrepreneur.

 

"For those who are in power we're just numbers. They value money more than they value people," he said, shouting to be heard above the din of chanting, whistling and drumming.

 

"(I'm here because) I'm sick of this system they call democracy," said Jose Luis Arteaga, a 58-year-old teacher whose wage has been cut 20 percent. "I want things to change."

It seems that almost record low bond yields and high stock market levels did not appease the people of Spain either…Time for that IMG income inequality equalizing wealth redsitriburion it would seem…


    



via Zero Hedge http://ift.tt/1gOGE5H Tyler Durden

Independents Rerun Open Thread for “Environmentally Challenged” Episode Featuring Bill Nye the (Off-Puttingly Argumentative) Science Guy & More!

I like that kid on the right. |||Several Hit & Run commenters worried that the
Friday theme episode of The
Independents
 (
re-airing tonight at 7 p.m. ET, 4 p.m.
PT), organized as it was around environmental challenges such as
climate change, would be one big cosmotarian sellout session. Well,
as a perusal of the
600+ comments
will show, those who watched the whole hour came
away with a different impression altogether.

Starting with
famous debater
Bill Nye the
Science Guy
, the show was a telling, asymmetrical demonstration
of global-warming worriers literally refusing to engage in
practical follow-up questions, like how much economic growth
are you willing to trade for climate-change remediation
, and
why have the forecasting models been so wrong these past 17
years?
 Instead, there were repeated attempts to put the
show’s co-hosts on “the other side,” which is self-evidently
composed of people beyond the reach of reason. Seriously, it was
that weird.

Anyway, here’s your open thread for a show that also included
Climate
Depot
skeptic Marc Morano, Center for American Progress
Director of Climate Strategy Daniel J. Weiss, New York
Times
science writer John Tierney,  “skeptical
environmentalist
” Bjorn
Lomborg
, energy economist Jerry Taylor of Cato,
and beloved Reason Science Correspondent Ronald Bailey.

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89% Of Venetians Vote For Independence From Italy, Will Withhold Taxes To Rome

Inspired by Scotland's hopes for independence and hot on the heels of Crime'a 95% preference for accession to Russia, 89% of the citizens of Venice voted for their own sovereign state in a ‘referendum’ on independence from Italy. As The Daily Mail reports, the proposed ‘Repubblica Veneta’ includes the five million inhabitants of the Veneto region and has been largely driven by the wealthy 'who are tired of supporting the poor and crime-ridden south' (Venice pays EUR71bn in taxes and receives only EUR21bn in services and investment). The ballot appointed a committee of ten who immediately declared independence from Italy. Venice may now start withholding taxes from Rome. Wonder why the US, Europe, and Japan have not announced the referendum "illegal" and announced sanctions yet?

 

Via The Daily Mail,

Venetians have voted overwhelmingly for their own sovereign state in a ‘referendum’ on independence from Italy.

 

Inspired by Scotland’s separatist ambitions, 89 per cent of the residents of the lagoon city and its surrounding area, opted to break away from Italy in an unofficial ballot.

 

The proposed ‘Repubblica Veneta’ would include the five million inhabitants of the Veneto region and could later expand to include parts of Lombardy, Trentino and Friuli-Venezia Giulia.

Wealthy Venetians, under mounting financial pressure in the economic crisis, have rallied in their thousands, after growing tired of supporting Italy’s poor and crime ridden Mezzogiorno south, through high taxation.

 

 

Campaigners say that the Rome government receives around 71 billion euros  each year in tax from Venice – some 21 billion euros less than it gets back in investment and services.

 

 

The ballot also appointed a committee of ten who immediately declared independence from Italy. Venice may now start withholding taxes from Rome. 

 

Campaigner Paolo Bernardini, professor of European history at the University of Insubria in Como, northern Italy, said it was ‘high time’ for Venice to become an autonomous state once again.

 

‘Although history never repeats itself, we are now experiencing a strong return of little nations, small and prosperous countries, able to interact among each other in the global world.’

 

‘The Venetian people realized that we are a nation (worthy of) self-rule and openly oppressed, and the entire world is moving towards fragmentation – a positive fragmentation – where local traditions mingle with global exchanges.’

 

 

'We are only at the Big Bang of the movement – but revolutions are born of hunger and we are now hungry. Venice can now escape.’

So how long will it before Barosso, Van Rompuy, Obama, Abe and th rest declare this referendum "illegal" and seek sanctions against the people of Venice…


    



via Zero Hedge http://ift.tt/1jjLpf6 Tyler Durden

City of Los Angeles Proposes Sales Tax Hike to Fix Sidewalks

Two policy analysts with the city of Los Angeles have
recommended elected officials put a half-cent sales tax hike on the
November 2015 ballot to pay for the repair of LA’s worst sidewalks
and streets. They say the tax hike would generate

$4.5 billion over the next 15 years, with $640 million for broken
sidewalks
. Reason TV took a look at LA’s crumbling sidewalks in
LA’s New Crack Epidemic: Sidewalks. Here is the original
post:

Ever walk down a Los Angeles city sidewalk? It may feel like
climbing the Himalayas.

Tree roots have uplifted many city sidewalks across L.A.,
turning a quick walk around the neighborhood into a treacherous
experience. According to  The
Los Angeles Times
,
 the city receives about 2,500
claims a year from people who hurt themselves on these cracks.

“People get hurt and people can die from falling down on and
hitting their head on the sidewalk,” says Los Angeles resident
Peter Griswold.

What’s the city’s solution to this problem? A three-year, $10
million survey of all of the city’s sidewalks.

Residents like Griswold say that price tag is too high. He has
come up with a plan of his own that involves photographs, GPS
devices, and – most importantly – volunteers. Griswold is confident
that his ragtag crew of sidewalk cartographers can find and report
trouble spots more quickly – and cheaply – than city workers.

“What Peter Griswold is trying to do with volunteers, the
advantage that has is that it’s decentralized,” says Adrian Moore,
vice president of research at Reason Foundation, the nonprofit that
publishes Reason TV.

Moore grants it may be hard to implement on a large scale but
you have to stack that up against the usual way city governments
fix local problems. Namely, writing a fat check to a contractor so
they don’t have to deal with it anymore. Hence, the $10
million.

Moore points out that these uplifted sidewalk cracks are
indicative of something bigger: bureaucracy run amok.

“One of the problems bureaucracies have, and LA in particular
has, is nobody who manages these departments actually invests the
management effort in saying lets be ruthless about prioritizing
what’s most important,” says Moore.

Written and produced by Paul Detrick.

Music by Lee
Maddeford
.

Approximately 4:23 minutes.

Scroll below for downloadable versions and subscribe
to Reason
TV’s YouTube Channel
 to receive automatic updates when new
material goes live.

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Nick Gillespie: Why is the Establishment Flipping Out Over Millennials’ “Individualism”?

In the wake of a recent Pew Research study on
Millennials (Americans between the ages of 18 and 33), conservative
and liberal columnists alike at The New York Times started
flipping out over Millennials as “Generation Selfie.” Their main
beef? Younger folks distrust the government and organized religion
and evince dangerous leves of “individualism.”

Writes Nick Gillespie:

That discomfort you’re sensing all around you? It’s the American
Establishment loading its Depends diapers over the prospect of a
younger generation that is turning its back on political parties
and other zombified artifacts of our glorious past….It’s easy to
understand why folks at The New York Times and,
say, at Democratic and Republican headquarters, and the National
Council of Churches are worried about all this. After all, it’s
their “traditional institutions” that are being left behind like
Mayan ruins. But who can blame Millennials for, say, vacating
worn-out, pre-Civil War political brands such as the Democrats and
Republicans, two groups that are about as relevant and dependable
as your father’s Oldsmobile?

View this article.

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NSA Hacks China’s Huawei “To Know How To Exploit Their Products

Having complained for years of China’s electronic espiohange, it is perhaps only fitting that, thanks to documents provided by Edward Snowden, the NY Times reports, the NSA pried its way into the servers in Huawei’s sealed headquarters in Shenzhen (Huawei connects a third of the world’s population). The NSA monitored communications of the company’s top executives in an operation called “ShotGiant” looking for links between Huawei and the People’s liberation Army. Furthermore, the NSA documents confirm, “we want to make sure that we know how to exploit these products,” it added, to “gain access to networks of interest” around the world. We await the repurcussions…

 

Via NYTimes,

While President Obama and China’s president, Xi Jinping, have begun talks about limiting the cyber conflict, it appears to be intensifying.

 

The N.S.A., for example, is tracking more than 20 Chinese hacking groups — more than half of them Chinese Army and Navy units — as they break into the networks of the United States government, companies including Google, and drone and nuclear-weapon part makers, according to a half-dozen current and former American officials.

 

If anything, they said, the pace has increased since the revelation last year that some of the most aggressive Chinese hacking originated at a People’s Liberation Army facility, Unit 61398, in Shanghai.

 

The Obama administration distinguishes between the hacking and corporate theft that the Chinese conduct against American companies to buttress their own state-run businesses, and the intelligence operations that the United States conducts against Chinese and other targets.

 

American officials have repeatedly said that the N.S.A. breaks into foreign networks only for legitimate national security purposes.

 

 

But even as the United States made a public case about the dangers of buying from Huawei, classified documents show that the National Security Agency was creating its own back doors — directly into Huawei’s networks.

 

 

One of the goals of the operation, code-named “Shotgiant,” was to find any links between Huawei and the People’s Liberation Army, one 2010 document made clear. But the plans went further: to exploit Huawei’s technology so that when the company sold equipment to other countries — including both allies and nations that avoid buying American products — the N.S.A. could roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations.

 

 

“Many of our targets communicate over Huawei-produced products,” the N.S.A. document said. “We want to make sure that we know how to exploit these products,” it added, to “gain access to networks of interest” around the world.

 

 

“If we can determine the company’s plans and intentions,” an analyst wrote, “we hope that this will lead us back to the plans and intentions of the PRC,” referring to the People’s Republic of China. The N.S.A. saw an additional opportunity: As Huawei invested in new technology and laid undersea cables to connect its $40 billion-a-year networking empire, the agency was interested in tunneling into key Chinese customers, including “high priority targets — Iran, Afghanistan, Pakistan, Kenya, Cuba.”

 

 

The N.S.A.’s operations against China do not stop at Huawei. Last year, the agency cracked two of China’s biggest cellphone networks, allowing it to track strategically important Chinese military units, according to an April 2013 document leaked by Mr. Snowden. Other major targets, the document said, are the locations where the Chinese leadership works. 

 

Read more here

Huawei’s view…

William Plummer, a senior Huawei executive in the United States, said the company had no idea it was an N.S.A. target, adding that in his personal opinion, “The irony is that exactly what they are doing to us is what they have always charged that the Chinese are doing through us.”

The US view…

China does more in terms of cyberespionage than all other countries put together,” said James A. Lewis, a computer security expert at the Center for Strategic and International Studies in Washington.

“The question is no longer which industries China is hacking into,” he added. “It’s which industries they aren’t hacking into.”

Read more here


    



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

China Affirms Yellen’s “Six Month” Guidance, Says Not To Expect Any “Big Stimulus” Out Of Beijing

Apparently China did not get the memo that the Fed’s apologists are furiously scrambling to packpedal on Yellen’s “6 month” guidance in virtually all media outlets. The is the only way to explain why Vice Minister of Finance Zhu Guangyao said overnight that “the U.S. Federal Reserve will begin boosting interest rates within six months after exiting “unconventional” monetary policy, and that will have a “significant impact” on the U.S. and world economy, as Market News International reported earlier. Zhu told China Development Forum this weekend “we believe a the Fed meeting this October, the exit of their quantiative easing will complete.” In other words while the spin for public and algo consumption is that the Fed will continue placating those long the stock market until everyone’s price target on the S&P 500 is hit and everyone can comfortably sell into an ever-present bid, China is already looking for the exits.

Understandably, Zhu Guangyao also indicated that China is uneasy about the impact of such a move. He should speak to the army of vacuum tubes which has no idea how to exist in a world in which the Fed isn’t injecting at least a few billions in reserves every month.

From Market News:

“The basic judgement, if there is no big accident, is that within six months after the Fed fully exits from its unconventional monetary policies, the Federal Reserve Bank will launch the process of raising interest rates and that will have a significant impact on the United States and the world economy as well,” he said.

 

“Based on the current progress, we believe at the Fed meeting this October, the exit of their quantitative easing will complete,” Zhu said at the China Development Forum at the weekend.

 

But Zhu’s comments — the most detailed from the top of the Chinese government since Yellen took over from Ben Bernanke last month — suggest that the authorities here are beginning to brace for an end to the extraordinary monetary accommodation of recent years. They come even as the Chinese government presses on with a sweeping reform program which has already plunged domestic financial markets into uncertainty.

 

The yuan fell sharply last week following the widening of the currency’s trading band to the U.S. dollar to 2% from 1% around the central parity. That was part of an ongoing move to deregulate the currency and interest rate regimes in order to better prepare the economy to handle swings in capital flows. The government also appears more willing to tolerate defaults as part of a long-delayed clean-up of the financial system.

But while the end of QE appears a given, at least until the market realizes there is no handover to an economy that is a moribund as it has ever been in the past five years, and the Fed has no choice but to  untaper and return with an “even more QE” vengeance (it certainly won’t be the first time – just recall the “end” of QE1, QE2, Op Twist, etc), a bigger question surrounds whether China, already sliding in credit contraction and suffering a plunging stock market with its housing sector also on the edge of a bubble bust, is about to take over from the Fed and proceed with its own stimulus program. The answer is no.

Bloomberg reports: “China used big fiscal stimulus in 2008 during the global financial crisis and this made the economy heat up quickly, Finance Minister Lou Jiwei says at a forum in Beijing, according to a transcript of his comments posted on Sina.com’s website.”

This year, however, China will focus on quality of growth this year according to Lou, which means no shotgun stimulus program. He added that China will pay more attention to the environment and won’t use  large-scale fiscal stimulus to spur investment in order to reduce overcapacity.

So with China caught in a deleveraging vortex, with the world used to Chinese “asset creation” in the range of $3.5 trillion each year, and with no endogenous credit creation to offset the phasing out of Fed QE, one wonders: will the next big surge in outside money come from the ECB, where outright QE is against the charter, or from the BOJ, where Abenomics has failed so miserably so far, that any additional surge in import food and energy prices may just lead to an outright recession. And it is in this context that we expect the stock “market” will surge to new all time highs again this coming week.


    



via Zero Hedge http://ift.tt/OOGrcu Tyler Durden

Biggest Baddest Bubble Blown Bursts

china-bubble

Well, my fellow Slope-a-Dopes, the time has finally come. The Idiot Savant has had more than enough.  BDI has unequivocally decided to prick Big Bad Ben Bernanke’s Bloviated Bubble Butt.  I have outlined below seven fine needles and six sharp scalpels that I shall use to slice and slay his sorry sagging ass:

1)  The extensive capital fight outflows, steaming out of the cratering Emerging Market economies, frightfully seeking a safe haven, have most certainly found their way into the U.S. equity markets, pumping the final bit of hot air into an already overly bullish bursting balloon.  Taper blow back begins.

2)  The Fed has finally begun tapering in earnest, fearfully curtailing QE because they know that the extreme asset valuations it engenders are dangerous weapons of mass misallocated monetary destruction.  The teetering global economy is now facing the unintended consequences of economic disequilibrium that the Fed has unwittingly unleashed on the world, which is now disintegrating before us.

2014-03-22_20473)  As a consequence of the announced and scheduled diminishing QE, the 10 year yield has most certainly based. Moreover, after a monumental 30 year down trend, is now clearly working its way higher.  Each marginal increase off of these extremely low levels is huge in terms of a percentage move, and thus, the total costs of servicing the outstanding debt loads held both privately and publicly will quickly become a backbreaking burden on the U.S. economy.

4)  The outstanding U.S. public and private debt has never been larger in terms of overall USD exposure, the debilitating cost of carry on that tremendous debt has only been temporarily held at bay by a shortsighted FED which synthetically suppressed treasury rates in order to bail out its desperate TBTF private member mega banks.  That dubious degenerate policy has completely distorted the treasury bond yields and therefore the natural market cost of money has been eviscerated.  Clearly, this can no longer be sustained due to the gross misallocation of capital it has induced, which flows primarily into fixed non producing assets of all kinds in the FIRE economy, as well as the precious metals, gem stones, fine arts and collectibles markets, at the expense of genuine productive growth on the ground in the real economy..

5)  The the polyannish assumption that the FED will be able to continue blissfully containing the ever building rate pressures by simply jawboning the debt markets is laughable. The Fed is about to lose control of the United States bond market, by far the largest capital market in the world.  Don’t be fooled, they are not and never have been an absolute omnipotent force with complete control of a private economy that generates an annual GDP of $16 trillion.  To believe that seven ace academic anal asses sitting in on an FOMC meeting, tweaking financial levers on a whim, can exert absolute control over the massive forces which drive the globe economy is preposterous.

China Corporate Debt to GDP6)  China, the acknowledged engine of economic growth for the world, over the past two decades, is apparently in serious trouble. The misallocation of overly cheap finance capital has created such tremendous economic imbalances on the ground, in terms of monumentally excessive development, productive over capacity with massive stock piles of raw materials ( all non cash producing assets), has now morphed into a full blown credit crisis spawned by the perilous parasitic shadow lending phenomenon which rapciously over leveraged the final ferocious funding feeding frenzy.

7)  Japan’s economy grew at a slower pace than initially thought in the last quarter of 2013, raising concerns about the pace of recovery under Prime Minister Shinzo Abe’s crazed crafty kamikaze monetary policies.  With Japanese data weaker than expected and their April consumption tax hike imminent, the state of the Japanese economy is cause for significant concern. Tora, Tora, Tora!

8)  Despite brash statements and confident claims to the contrary, the EU & ECB have yet to solve the crippling monetary and fiscal structural problems that currently afflict their unfinished and imperfect union, which are distinctly intractable in its current form.  The Southern periphery nation states, now joined by La belle France are firmly entrenched in permanent recessions.  The latest unemployment data out of Paris is the worst since WW II.

Brics summit leaders9) The BRICS, which remain heavily dependent on commodity trade are now struggling.  Dr. Copper has demonstrably diagnosed their incapacitating illness. Additionally, an increasing number of bi-lateral trade agreements are now being established between the commodity producing nations, completely outside of the USD world reserve currency monetary hegemony, putting added pressure on the Petro-Dollar. The current natural gas impasse in Ukraine and probable retaliatory sanctions against Russia will undoubtedly serve to push Beijing and Moscow even further along those lines.  The Arab Spring has morphed into MENA mayhem, Syria is bleeding, Lybia is imploding, Iraq is self destructing, Egypt is a basket case, Saudi Arabia is afraid of Iran fomenting further Sunni Shia anarchy along its borders.  All of which could undermine the Petro-Dollar.

10)  The USD Index has been trending lower, barely holding onto the all important 80 level.  A clear breach of that critical level will put undue pressure on an economy which is 70% based on consumer consumption.  Consuming cluttering crap created by countless countries will become considerably costlier.

11)  The developed world is in the midst of a substantial consumer slow down.  This is particularly true in the middle and low end mass market sectors, which are the meat and potatoes of the largest consumer economy on the planet. The recent results at Walmart & Target highlight this unwelcome development.  It’s not the weather stupid!

Goldman-Sachs-Twitter-IPO-prices-looks-promising112)  The freakish stock market sentiment boldly postulating that the wall street bull can never stumble again, because the global central bank reflation trade will always prop him up, is astoundingly foolhardy, you simply can not print your way to prosperity, same as it ever was.

13)  The fantastic social media gorilla glass gigabyte bubble will surely get the WhatsApp Snapchat Tweeter twits’ party started.  Please “Like” me, I’m a LinkedIn Pinterest head party animal!  In fact, the unsuspected unenlightened user-base unravelling may have already begun.  Friday’s bewitched Nasdaq action may be just the opening super social salvo.

6a014e60551070970c017d3d81aec6970c-800wi_yibaDi_m

 

The Joker red card’s the Fed and it’s fantastically foolish frenetic faux market.


    



via Zero Hedge http://ift.tt/1riVAlo Tim Knight from Slope of Hope

“Surely You Can’t Be Serious”, Mr. Chairwoman

Submitted by Ben Hunt of Epsilon Theory

The secret of life is honesty and fair dealing. If you can fake that you’ve got it made.

These are my principles, and if you don’t like them … well, I’ve got others.

I’m not crazy about reality, but it’s still the only place to get a decent meal.

A child of five could understand this. Send someone to fetch a child of five.

Room service? Send up a larger room

“Surely You Can’t Be Serious”

In periods of great global stress, like after a World War or a Great Depression, it’s not only our politics and economics that are thrown for a loop, but also our art and entertainment. New art, and comedy in particular, that rejects or makes fun of the ancien regime after some enormous crisis is as old as Aristophanes. This art is subversive, often masking its contempt with “low comedy” like puns and slapstick, and no one in the past century was better at this than Groucho Marx. I’ve lately found myself thinking of Fed communications as a form of performance art … some sort of Dada-ist comedy routine where Groucho might stick his head out from behind a curtain and photobomb the press conference … and never more so than on Thursday . If only it were so.

Yellen’s press conference was a disaster. Why? Because she said too much. Because on the one hand she took away the insane linkage between monetary policy and the unemployment rate – an ill-conceived and counter-productive misreading of market game-playing that I wrote about ad nauseam last summer, here and here – but on the other hand she gave a specific timing target for raising rates after QE is all tapered out. Combine this with the three-times-in-a-row pattern of cutting monthly QE purchases by $10 billion per meeting, and now even Jon Hilsenrath is projecting specific calendar dates for raising rates.

I mean, you really can’t make this stuff up. Did the Fed learn nothing from last summer? This isn’t an academic exercise, where statements are qualified and softened by exhaustive footnotes and asides so that no one is ever wrong. The market is a beast, not the review committee for the Quarterly Journal of Economics. Of course the market is going to leap at and devour a statement like Yellen’s 6 months comment, and you’d think that the Fed Chair would know that.

All together now, one more time with feeling: ambiguity is good; transparency is bad. You might think that transparency would be helpful in “shaping market expectations” the way you like, but you would be wrong. That’s not how the game is played. Can I nominate Bill Belichick for the Fed, at least as far as press conferences are concerned?

And I’m very sympathetic to Kocherlakota’s dissent … if you ARE going to take a stand with an explicit linkage to unemployment rates, then you can’t just say “oh, never mind that” less than a year later and expect that whatever new standards you set out for rate-setting are going to be particularly effective in molding expectations. It’s not a matter of credibility, per se. That’s a very specific word with a very specific meaning in game theory, and the simple truth is that the Fed will always be credible enough to be an effective game player. The problem is actually that the Fed is too credible, and that Yellen’s remark about raising rates within 6 months of stopping QE3 takes on far more import than was intended.

Sigh. Look, maybe I’m over-reacting here. Maybe we are all so freaking exhausted by the constant use of communication as policy, by the unceasing effort of the Fed and its media intermediaries to play the market, by the Orwellian nature of a monetary policy apparatus where everything is spoken for effect, that we will all just go about our business and slog along. And I’m sure we will see lots of back-tracking over the next few weeks, lots of data-dependence talk, lots of “Yellen really didn’t say anything new”, yada yada yada. But my fear is that we’ve set the stage for, if not an inflection point in the path of the stock market, then another rate shock similar to but smaller than last summer’s … an aftershock, in geological terms.

What am I looking for to see how this plays out? I think we are now even more strongly in a good-news-is-bad-news (and vice-versa) world. If we start seeing some strong economic data come out over the next few weeks and months, then I think the market – particularly the bond market and emerging markets – could get pretty squirrelly. Not that US stocks would be immune from this. Remember, the modern day Goldilocks environment for stocks has nothing to do with a happy medium between growth and inflation, but everything to do with growth being weak enough to  keep an accommodative Fed in play. Strong growth data would augment a Common Knowledge structure that the Fed is on track to raise rates sooner and more rather than later and less, and that’s no fun for anyone. Then again, if global growth data remains weak – and you really can’t look at what’s coming out of China, Europe, or Japan and think that the global growth story is anything but weak – that creates enough uncertainty about the Fed’s path (not to mention the cover for political and economic Powers That Be to wage a full-scale media war to keep monetary policy in QE la-la land forever) to support the markets. Sounds a lot like Freedonia to me. Rufus T. Firefly for President?


    



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