Tag: news

Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, “Buy Gold”

It appears it is time for some Hillary-Clinton-esque backtracking and Liesman-esque translation of just what the former Federal Reserve Chief really meant. As The Wall Street Journal reports, the Fed chief from 1987 to 2006 says the Fed’s bond-buying program fell short of its goals, and had a lot more to add.

Mr. Greenspan’s comments to the Council on Foreign Relations came as Fed officials were meeting in Washington, D.C., and expected to announce within hours an end to the bond purchases.

 

He said the bond-buying program was ultimately a mixed bag. He said that the purchases of Treasury and mortgage-backed securities did help lift asset prices and lower borrowing costs. But it didn’t do much for the real economy.

 

“Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” said Mr. Greenspan. Boosting asset prices, however, has been “a terrific success.”

 

…

 

He observed that history shows central banks can only prick bubbles at great economic cost. “It’s only by bringing the economy down can you burst the bubble,” and that was a step he wasn’t willing to take while helming the Fed, he said.

 

…

 

The question of when officials should begin raising interest rates is “one of those questions I cannot answer,” Mr. Greenspan said.

 

He also said, “I don’t think it’s possible” for the Fed to end its easy-money policies in a trouble-free manner….

 

“Recent episodes in which Fed officials hinted at a shift toward higher interest rates have unleashed significant volatility in markets, so there is no reason to suspect that the actual process of boosting rates would be any different, Mr. Greenspan said.

 

…

 

“I think that real pressure is going to occur not by the initiation by the Federal Reserve, but by the markets themselves,” Mr. Greenspan he said.

And finally – while CNBC’s audience is told what a terrible thing gold is, “The Maestro”, having personally created the financial cataclysm the world finds itself in following a lifetime of belief in fiat, Keynesian ideology and “fixing” one bubble with an even greater and more destructive asset bubble, has suddenly had an epiphany and now has a very different message from the one he preached during his decades as the head of the Fed.

Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.

What Greenspan failed to add is that it is thanks to his disastrous policies (subsequently adopted by Bernanke and Yellen) that gold is the “place to put money.”

And now, paging Scott Nations.




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Robby Soave: Amash Sees Libertarian Triumphs Everywhere But D.C.

AmashIs the libertarian message winning? Coasting
toward a major electoral victory next week, freedom-friendly
Congressman Justin Amash certainly thinks so—even if
Washington, D.C. isn’t listening yet.

The libertarian Republican, who hails from a right-leaning
district in western Michigan, is widely expected to win reelection
on November 4. He already passed the real test: a significant
primary challenge from a well-funded opponent backed by
neoconservative and corporatist critics of Amash’s
views.

“It felt great to get a big win,” Amash told Reason’s Robby
Soave in an interview. “The people of the district came out and
said they like what I am offering, which is independent
conservative representation, libertarian representation… My
challenger was offering run of the mill, establishment big
government Republicanism. People are tired of that.”

Amash is optimistic that what’s true for his district is
true for the country at large. A growing cross-partisan swath of
the electorate is concerned about issues near and dear to the
hearts of libertarians, including police brutality, spying, and
drone warfare, writes Soave.

But that doesn’t mean Congress is getting on board. Leadership,
in particular, remains as hopeless as ever, according
to Amash.

View this article.

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Bond Buyers Spooked By Imminent FOMC, Lead To Tailing 5 Year Auction, Lowest Bid To Cover Since July 2009

A Treasury auction an hour before the Fed is set to announce the end of the latest (if not last) iteration of QE may not have seemed like the best idea, and sure enough moments ago the Treasury sold $35 billion in 5 Year paper in what can be described as a miserable auction, when the 1.567% high yield tailed by 1.5 bps to the 1.552% When Issued. Not only that but the Bid to Cover tumbled from 2.56 to just 2.36: this was the lowest BTC since July 2009 when it actually had a 1-handle. Finally, the less exciting internals showed that Directs were largely in line with recent auctions, taking down 10.5% of the auction, above the TTM average of 13.5%, as Indirects bought just less than half or 47.8%, leaving Dealers with 41.7%  of the final allotment, slightly above the 39.3% 12 month average.

And now, the Fed, which is doing everything in its power to bring bond yields higher but gradually and not with the volatility seen on October 15, knows that all it needs to get a disappointing auction is to have a Fed meeting just one hour later.




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Pentagon Approves Mandatory 21-Day Quarantine Of US Troops Returning From Ebola Missions

As President Obama explained yesterday, "it's different this time" for the military. And sure enough, while non-symptomatic civilians can come and go around the world in the hopes that they do not become symptomatic following potential contact with Ebola patients, Chuch Hagel has ordered a 21-day mandatory quarantine for all US troops returning from West Africa. The use of the 'q' word is clearly against White House protocols and so The Pentagon refers to it as "controlled monitoring" but, as AFP reports, Hagel calls it a "prudent" measure to prevent the spread of the deadly disease – which just this morning the WHO said had topped 13,000 cases worldwide.

  • *HAGEL APPROVES 21-DAY ISOLATION FOR TROOPS IN EBOLA ZONES
  • *HAGEL'S ORDER APPLIES TO ALL TROOPS RETURNING FROM EBOLA ZONES
  • *HAGEL SAYS MILITARY FAMILIES 'WANTED A SAFETY VALVE' ON EBOLA

As AFP reports,

Pentagon chief Chuck Hagel on Wednesday ordered a 21-day quarantine for all US troops returning from West Africa, calling it a "prudent" measure to prevent the spread of the Ebola virus.

 

The move means the military is adopting much stricter measures than those in place for civilian health workers sent by the US government to Liberia and Senegal, and the order came amid a debate about how to treat Americans who may have come in contact with those suffering from the deadly disease.

 

"The secretary believes these initial steps are prudent, given the large number of military personnel transiting from their home base and West Africa, and the unique logistical demands and impact this deployment has on the force," his spokesman Rear Admiral John Kirby said in a statement.

 

The quarantine was being introduced even though officials say the soldiers will be focused on building medical clinics and will have no contact with those infected with the virus.

 

But Hagel said the decision was taken partly because military families urged the quarantine.

 

"This is also a policy that was discussed in great detail by the communities, by the families of our military men and women, and they very much wanted a safety valve on this," Hagel said at an event in the US capital, the "Washington Ideas Forum."

Statement from Pentagon Press Secretary Rear Admiral John Kirby on Controlled Monitoring for Personnel Returning from Operation United Assistance

This morning, Secretary Hagel signed an order that validated a recommendation from the Joint Chiefs of Staff to place all U.S. military service members returning from Ebola response efforts in West Africa into a 21-day controlled monitoring regimen. This order will apply to all military services that are contributing personnel to the fight against Ebola at its source.

 

The secretary has also directed that the Joint Chiefs develop, for his review within 15 days, a detailed implementation plan for how this controlled monitoring will be applied across the force that takes into account the size and scope of the logistics required for this effort.

 

In addition, the secretary directed that the Joint Chiefs conduct a review of this new regimen within 45 days from now. This review will offer a recommendation on whether or not such controlled monitoring should continue based on what we learn and observe from the initial waves of personnel returning from Operation United Assistance.

 

The secretary believes these initial steps are prudent given the large number of military personnel transiting from their home base and West Africa and the unique logistical demands and impact this deployment has on the force. The secretary's highest priority is the safety and security of our men and women in uniform and their families.

*  *  *

And of course there is this…

Medical experts have sharply criticized recent strict quarantine orders adopted in New York and New Jersey as based on politics rather than science.

 

President Barack Obama on Tuesday urged Americans to respond to the virus with "facts" rather than "fear."

*  *  *

Over to you Christie and Cuomo…

*  *  *

And in an attempt to lightne the mood, The Onion explains an Ebola vaccine is maybe 50 white people away…

CONAKRY, GUINEA – With the death toll in West Africa continuing to rise amid a new outbreak of the Ebola virus, leading medical experts announced Wednesday that a vaccine for the deadly disease is still at least 50 white people from being developed.

 

“While all measures are being taken to contain the spread of the contagion, an effective, safe, and reliable Ebola inoculation unfortunately remains roughly 50 to 60 white people away, if not more,” said Tulane University pathologist Gregory Wensmann, adding that while progress has been made over the course of the last two or three white people, a potential Ebola vaccination is still many more white people off.

 

“We are confident, however, that with each passing white person, we’re moving closer to an eventual antigenic that will prevent and possibly even eradicate the disease.”

 

Wensmann said he remained optimistic that the vaccine would not take considerably longer than his prediction, as waiting more than 50 white people for an effective preventative measure was something the world would simply not allow.




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20-Year CBS News Veteran, Sharyl Attkisson, Details Massive Censorship and Propaganda in Mainstream Media

Screen Shot 2014-10-29 at 11.00.00 AMJournalists should be dark, funny, mean people. It’s appropriate for their antagonistic, adversarial role.

– Matt Taibbi, in this New York Magazine article

Reporters on the ground aren’t necessarily ideological, Attkisson says, but the major network news decisions get made by a handful of New York execs who read the same papers and think the same thoughts.

Often they dream up stories beforehand and turn the reporters into “casting agents,” told “we need to find someone who will say . . .” that a given policy is good or bad. “We’re asked to create a reality that fits their New York image of what they believe,” she writes.

– From the excellent New York Post article: Ex-CBS reporter’s book reveals how liberal media protects Obama

Earlier this week, I published a piece titled, Former CBS Reporter Accuses Government of Secretly Planting Classified Docs on Her Computer, which I thought was incredible in its own right, yet the information in that post seems almost trite compared to the flood of information Attkisson has revealed to the New York Post’s Kyle Smith.

The following excerpts from the piece will confirm all of your worst suspicions about mainstream media:

continue reading

from Liberty Blitzkrieg http://libertyblitzkrieg.com/2014/10/29/20-year-cbs-news-veteran-sharyl-attkisson-details-massive-censorship-and-propaganda-in-mainstream-media/
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Who Will Legalize Marijuana Next Week?

A week
before Election Day, it looks like at least one of the four major
marijuana initiatives will pass, while the other three races are
too close to call. Here is a rundown of the latest polling,
arranged by likelihood of passage:

Washington, D.C. Initiative 71, which would
make it legal for adults 21 or older to possess up to two ounces of
marijuana and grow up to six plants at home, enjoyed a 2-to-1
advantage in a
Washington Post poll conducted last month, with
only 2 percent undecided. As I
noted at the time, the initiative’s prospects were boosted by a
dramatic reversal of opinion among black voters in recent years,
presumably driven by concerns about the racially disproportionate
impact of marijuana prohibition. Despite this groundswell of
support, the fate of marijuana legalization in the nation’s capital
ultimately will be up to Congress, which can always override
anything that D.C. voters approve.

Oregon. A new
Oregonian poll puts support for Measure 91, which would legalize
commercial production and distribution as well as possession and
use, at 44 percent, with 46 percent opposed, with 7 percent
undecided and 2 percent declining to say. That two-point difference
is within the poll’s margin of error, so the results suggest a dead
heat. By comparison, a
poll conducted earlier in October, commissioned by Oregon
Public Broadcasting and the Fox station in Portland, put support at
52 percent, with 41 percent opposed and 7 percent undecided. The
sample in the latter poll was somewhat younger, based on different
projections of who will vote. Turnout by younger voters, who are
consistently more likely to support legalization, could be crucial
to the outcome.

Alaska. Surveys by Public Policy Polling
put support for Measure 2, which like Oregon’s initiative would
create a legal marijuana industry, at 48 percent in
May and 44 percent in
August. A few weeks ago supporters and opponents of Measure 2
released
dueling poll results showing the initiative winning by eight
points and losing by 10 points, respectively. In a survey by
pollster Ivan Moore, 57 percent of voters favored legalization,
while 39 percent opposed it. A Dittman Research poll put support at
43 percent and opposition at 53 percent. Both showed 4 percent of
voters undecided. The wording of the poll questions was somewhat
different. The Ivan Moore survey mentioned the elimination of
criminal penalties for possession of up to an ounce and noted that
“constitutional protections allowing home cultivation would be
preserved,” a reference to the 1975 Alaska
Supreme Court ruling that said the state constitution allows
people to possess marijuana for personal use in the privacy of
their homes.

Florida. Support for Amendment 2, which would make
Florida the first Southern state to approve medical use of
marijuana, seems to have
plummeted since July, when a Quinnipiac University
poll found that 88 percent of voters favored the measure. A

Gravis Marketing poll conducted last week puts support at 50
percent. As a constitutional amendment, the initiative needs 60
percent to pass. “Medical marijuana is done,” Gravis Marketing’s
managing partner
told the Orlando Sentinel. “It will not pass.” For
those
clinging to hope, United We Care, the Amendment 2 campaign,
cites an Anzalone
Liszt Grove poll it commissioned that puts support at 62
percent. The latter poll used the actual ballot language, while the
Gravis Marketing poll used a summary.

The New York Times notes
that the opposition has been well-funded only in Florida, thanks
mainly to $5 million in support from Republican casino tycoon
Sheldon Adelson. But before you conclude that money makes all the
difference, note that the campaign for the Washington, D.C.,
initiative has
virtually none.

The Times lends credence to complaints by
opponents of Oregon’s Measure 91 that they have been silenced
because critics
objected when they tried to use taxpayer money to campaign
against the initiative. At a recent anti-pot event in Keizer, the
Times says, “no one even mentioned Measure 91,”
because “audience participants and organizers, many of them from
government-funded nonprofit groups involved in drug treatment
services, were afraid of violating laws that ban politicking with
public money.” Clatsop Couny District Attorney Joshua Marquis, a
leading opponent of Measure 91, claims “they’ve done a pretty good
job of shutting everybody up.”

Please. If you address an audience of Oregon voters right before
an election in which marijuana legalization is on the ballot, and
you go on and on about the menace that marijuana poses to the youth
of Oregon, you need not explicitly say “vote no on Measure 91” to
get your message across. And if these anti-pot activists want to be
freed from the shackles of self-censorship, all they have to do is
spend their own money instead of using resources forcibly extracted
from taxpayers. Evidently it’s hard to find people who will
voluntarily part with their hard-earned money in support of the
prohibitionist cause. Marquis whines than the No on 91 folks have
“no sugar daddy” like Adelson. And as the
Times notes, “Opponents were, by their own admission,
late in forming a united organization.” It seems that 77 years of
prohibition have fostered complacency as well as a tendency to rely
on government support among the busybodies who insist on using
force to stop people from getting high. 

from Hit & Run http://reason.com/blog/2014/10/29/who-will-legalize-marijuana-next-week
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TSA Confiscates Raygun Belt Buckle BECAUSE TERRORISM!

Award-winning
videographer Sean
Malone had a raygun belt buckle confiscated recently by the good
folks at the Transportation Security Administration (TSA). You
know, because all of the 9/11 hijackers were packing rayguns or
something.

Malone emails that the pinch happened at LAX:

Same thing almost happened at DCA on my way out to Los
Angeles on Sunday, but I argued with them until I got a high
enough level supervisor to get it back.

Didn’t have time this morning to fight it because I was already
late for boarding when it started.

They called it a “replica” of a weapon….

PS. Here
is what I wrote on FB Sunday when they tried to take it
at DCA:

Now that I’m in a restaurant in Philly, I have time to share
more of the stupidity. First, they did a bag check, which happens
to me every time I fly anyway, so who cares. When I walked over,
the guy said, “Yeah, there’s something in there that’s kind of
shaped like a gun,” to which I replied, “Yeah. It’s a belt
buckle.”…

He pulled it out of the bag and
looked at it. Yep. Belt buckle. He didn’t seem like an idiot, but
he called his supervisor over, who instantly made it clear to me
that she was one of those petty authoritarian, logic-impaired
idiots you often come to expect in positions of middling power in
law enforcement. Her word was law… Even when, you know, it wasn’t
actually law. She said, “Listen, you can either go back out of
security and put this in your check luggage (which I don’t have),
or we’ll confiscate it.”

But this is honestly my favorite belt buckle, and I’m me, so –
realizing I was speaking with a woman with the brainpower of a
block of Parmesan cheese – I looked at her and said, “You
understand that this is a belt buckle, right? It is not a danger to
the safety of anyone nor is it against the law to carry. I have
also traveled with this belt buckle all over the country and it’s
never been a problem. So please explain to me how exactly you would
justify taking it.”

Her response was to suggest a hypothetical scenario. “What if”,
she postulated, “you take this object out of your bag and point it
– like a gun – at a police officer? He would have no choice to
assume that it was a gun, and take action against you.”

Now… Let’s leave aside for a second that the entire premise
behind this argument is that police officers are too dumb and
hopped up on their own power that they can’t recognize a dangerous
weapon from a belt buckle in the shape of a 1950’s toy ray gun. I’m
glad she recognized this reality, but I don’t think she really
processed what it says about law enforcement in America. But
leaving that aside… Why in the hell would I ever take my belt
buckle and point it at a police officer?

To this, she had no answer.

She also had no answer to the point that even if I did that, it
would represent a danger to me and not, say… an airplane full of
people.

At this point, she got red in the face and loudly declared that
she wasn’t going to argue with me or “have a debate about this”.
“You have two options. That’s it,” she said. So I asked to speak
with *HER* supervisor. Fine. She took the belt buckle and walked it
over to some other guy far out of earshot and talked to him for a
bit while someone else came over and talked to me. Also seemed like
a fairly reasonable guy.

Eventually the woman came back, curtly handed me the buckle and
said, “Here you go. Have a good flight, sir.”

— I was super late at LAX and I basically got to stage two
where mid level supervisor said I couldn’t take it on the plane and
didn’t have enough time to argue up the chain of command.

The agent at LAX said that it’s policy to reject all replica
weapons.

I pointed out that even if it was a “replica”, which is dubious,
it would be a replica of a fictional weapon used by Flash Gordon…
Which, you know, makes confiscation of the belt buckle even MORE
insane than it already was.

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The One Table That Explains Why There No Longer Is Any Treasury Liquidity

Earlier today, former CLSA strategist Russell Napier mused about the centrally-planned capital markets, pointing out the historic move in bonds in the morning of October 15 about which he said:

On the 15th of October 2014, as this analyst celebrated his 50th birthday, volume in the US Treasury market surged, suddenly and without warning, to a record high. Old timers smiled knowingly, as Magwitch did from behind the headstones, and younger members put aside their Angry Birds and wondered what was wrong.

 

There it was — a real market come and gone in half an hour, like a pregnant panda at Edinburgh zoo. What did it mean and what should you do? You should pay attention to what happens to the direction of prices when volumes surge and markets work. When the veil is lifted, pay attention to what you see beneath. Last Wednesday, in the space of half an hour of active trading, the Treasury market had one of its most rapid rises ever recorded and equities fell sharply.

 

There is a very simple lesson that when the markets finally break through the manipulation they move to price in deflation and not inflation. This is key because it means financial repression has failed. Such repression requires the artificial depression of interest rates but, crucially, it must be paired with boosting inflation above such rates. On October 15th 2014, if only for a few short minutes, market forces broke out and the failure of central bankers was briefly evident.

He may be right or wrong, but fundamentally there is a far simpler explanation of the events that took place that morning, one that requires just two words:

  • no liquidity

As we have been pounding the table since late 2012 when we explained how the Fed’s QE3 would absorb a record amount of 10 Year equivalents from the private market, what the Fed has done is take its holdings of all CUSIPs across the curve to above the level it that previously considered was the threshold limit above which bond market liquidity is impaired. We forecast most explicitly what would happen in May of 2015 when we wrote: “As Of This Moment Ben Bernanke Own 30.5% Of The US Treasury Market… And Will Own All By 2018.”

Of course, the Fed knew all about this, which is why back in December 2010, in a little noticed move, the New York Fed raised the SOMA Treasury limit from 35% to 70% per CUSIP, meaning that while previously the Fed could only hold up to 35% of any given Treasury CUSIP, since then it was allowed to take its holdings to over two thirds of total! Indicatively, the number 35% was there because based on extensive literature, liquidity begins to collapse around the time there is just about two thirds of the original outstanding notional of any given issuance left in circulation.

So where are we now? Well, as of the most recent data, as compiled by Stone McCarthy, the amount of ten-year equivalents held by the Fed was $1.947 trillion leaving some $3.674 trillion in 10Year equivalents available to the private sector. Or, in percentage terms, just about 34.57% of all 10 Year equivalents outstanding.

However, as noted, that is a blended average of all Fed TSY holdings across the curve. Where things get really bad is when one focuses on what once upon a time was the On The Run issue, i.e., the most liquid bond on the Treasury curve: the 10 Year.

It is here where as Brean Capital’s Peter Tchir shows in the table below, that the Fed is now the proud owner of over half of the total outstandings in the entire 10-15 Year bucket!

In short: the simple reason why there is no more liquidity in cash Treasury securities (Treasury futures are a different matter entirely) is because the Fed is now the proud owner of a majority stake of what once was the most liquid maturity across the most liquid bond market in the world.

So the next time the market freaks out and bonds have a 12 sigma move, once the shock and awe passes, fee free to send your thank you cards to the Marriner Eccles building for destroying what once upon a time was the deepest, most liquid market in the world.




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A Day After Tim Cook’s Veiled Threats, ApplePay Alternative Gets Hacked

Just yesterday Apple’s executives went on the offensive against retailers that refused to play by the Cupertino company’s rules with veiled threats. So it is ironic at best that today, Wal-Mart’s alternate-to-ApplePay mobile payment system – CurrentC – has been hacked. The company explains “within the last 36 hours, we learned unauthorized third parties obtained email addresses of some” of their clients…and “no other information.”

From CurrentC




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