Wall Street’s Latest Plot: Blame the Financial Crash on the French

Wall Street appears to have a plan to get the deregulation it wants by pinning the start of the epic financial crash of 2007-2010 on (wait for it) the French, rather than its own unbridled greed, corruption and toxic manufacture of junk bonds known as subprime debt that it paid to have rated AAA by ethically-challenged and deeply conflicted rating agencies. (The same rating agencies that are getting paid by Wall Street to rate its debt issues today.)
One of the men helping to peddle this narrative is Steve Hanke, a Senior Fellow at the Cato Institute, a taxpayer-subsidized nonprofit that was secretly owned by the billionaire Koch brothers for decades.
Hanke’s bio at Cato lists him as a Professor of Applied Economics at John Hopkins University in Baltimore and provides the following titillating background:
‘Prof. Hanke served as a State Counselor to both the Republic of Lithuania in 1994-96 and the Republic of Montenegro in 1999-2003. He was also an Advisor to the Presidents of Bulgaria in 1997-2002, Venezuela in 1995-96, and Indonesia in 1998. He played an important role in establishing new currency regimes in Argentina, Estonia, Bulgaria, Bosnia-Herzegovina, Ecuador, Lithuania, and Montenegro. Prof. Hanke has also held senior appointments in the governments of many other countries, including Albania, Kazakhstan, the United Arab Emirates, and Yugoslavia.’

This post was published at Wall Street On Parade on August 21, 2017.

Central Banks Have a $13 Trillion Problem

Paycheck to Paycheck
GUALFIN, ARGENTINA – The Dow was down 118 points on Wednesday. It should have been down a lot more. Of course, markets know more than we do. And maybe this market knows something that makes sense of these high prices. What we see are reasons to sell, not reasons to buy.
Nearly half of all American families live ‘paycheck to paycheck,’ say researchers. Without borrowing, 46% couldn’t raise $400 to cover an emergency. This is at least part of the reason why retail sales dropped for the second month in a row in March. Despite seven years of economic ‘recovery,’ millions of Americans don’t have much money.
According to Census Bureau figures, 110 million Americans receive benefits from means-tested federal programs – food stamps, disability, and the like. And according to the Bureau of Labor Statistics, about 125 million Americans have full-time work (with another roughly 112 million without jobs).
That means there are only 125 million people in full-time jobs supporting the whole kit and caboodle of the U. S. economy, with a total population of 323 million. At that rate, each full-time worker supports about 2.6 people… including almost one person receiving money from the feds.
They are also supporting a government debt of $20 trillion and private debt of another $40 trillion or so. That puts the debt-to-full-time-worker ratio at $480,000. The average salary for a full-time worker is just $48,000. At a modest 5% interest, his share of the debt cost would set him back $24,000 each year.
He’d have only the remaining $24,000 to support (1) his own family… and (2) all the malingerers, cronies, and zombies who are drawing government benefits. Obviously, those numbers don’t work. But they explain much of the weakness in the U. S. economy.
The feds’ cheap credit keeps moving money (mostly in the form of asset price increases) to the wealthiest ZIP codes… while the average person’s budget gets tighter and tighter.

This post was published at Acting-Man on April 21, 2017.

Will Latin America Finally Embrace Markets?

Much talk has been made lately about the Left’s recent defeats in countries throughout Latin America: Argentina, Brazil, and Venezuela most notably. These countries have been characterized by Leftist governments that had the luxury of exploiting commodity prices during the early-to-mid 2000s to finance their profligate social programs.
Various experts saw this new ‘pink tide’ as a viable alternative to free-market models of economic organization. However, the game has completely changed as of late. These very governments now find themselves on the ropes not only because of low commodity prices, but also due to increasing degrees of corruption and economic malaise – largely the result of years of economic interventionism now taking its toll on these nations’ economic and institutional foundations.
Essentially, the commodity price booms only masked the institutional rot that was dwelling underneath the economic house of cards many of these countries were already built on. Once prices plummeted, these governments could no longer maintain their artificial economies and quickly saw significant political reversals.

This post was published at Ludwig von Mises Institute on December 23, 2016.

Latin America’s Pink Tide Crashes on the Rocks

Ten years ago, South America was witnessing the rise of what came to be known as the “pink tide.” Characterized by an allegedly kinder and softer version of socialism than the “red” communism of Castro’s Cuba, the pink tide had begun with the election of Hugo Chavez in Venezuela in 1998, followed by the election of Lula da Silva in Brazil in 2002, and followed by the rise of the Kirchners in Argentina in 2003. The tide continued to roll in with the election of Evo Morales in Bolivia in 2006, and Rafael Correa’s election in Ecuador in 2007.
As these new leftist candidates gained traction, their success was said to herald a new era of leftist politics in South America that would bring to an end the “neoliberal” consensus and impose a new, more humane economics on Latin American society.
Eighteen years after Hugo Chavez’s inauguration, things haven’t gone quite as planned.
The economy of Venezuela is in seemingly terminal decline with riots, shortages, and enforced slave laborimposed in an attempt to force more production out of the population. Meanwhile, the economies of Brazil and Argentina – while not comparable to Venezuela – are among the worst in Latin America, with Brazil heading for its its worst depression since 1901.
As economies worsened, corruption and authoritarian tactics worsened as well. Venezuelans have gotten the worst of it with citizens groaning under the weight of a police state that shuts down small business and persecutes even the smallest entrepreneurs for alleged economic “crimes” such as being a “class traitor.” In her final years, Kristina Kirchner became increasingly autocratic and paranoid, going so far as to prosecute and impose fines on economists who made economic forecasts the Argentinian state found to be be unflattering. Meanwhile in Brazil, corruption reached new heights as President Rousseff – the pink-tide successor to da Silva – attempted to save the economy and her political career by showering her political allies with “stimulus” cash.

This post was published at Ludwig von Mises Institute on Sept 8, 2016.

The US is becoming Argentina

Although many are confused by these markets, there is a simple explanation for every strange thing going on right now: The United States is rapidly devolving into a Third World country.
We’ve got the politicians to prove it. On one side is the classic insider, handing out favors to cronies and corporate big-shots while not-so-secretly covering her tracks and lining her pockets; on the other side is the classic Strongman, full of machismo, bluster, simple sloganeering, and even a trademark hair-do/spray tan combo. Just slap some epaulets and a row of chest medals on Donald’s blazer and he could easily pass for our first Yankee Generalissimo.
But the analogy goes even deeper with monetary policy, debt, and spending. We are swimming in debt and deficits, with no other plan but “even more,” which leads eventually to an Argentina-style default. Actual economic growth is anemic, while the insiders that live in Washington D. C. and environs grow ever richer on fat contracts and sweetheart legislative deals for big corporations, written by an ever-expanding minion army of lawyers and lobbyists. It’s Third World cronyism on a grand scale.

This post was published at GoldSeek on Monday, 8 August 2016.

Not “The Onion”: Argentina’s Fernandez Says She Deserves A Nobel Prize In Economics

Cristina Fernandez de Kirchner, former First Lady and President of Argentina (2003-2015), confessed in an interview that ‘instead of having the courts chase us, they should be giving us a Nobel prize for economics… We inherited a country in default and we left it without any debt. ‘ Brilliant.
Amongst her accomplishments, Cristina boasts one sovereign debt default after failing to negotiate with creditors (2014), cooking the national economic figures for 8 years, an IMF censure for faking such data, devaluing her currency from 4:1 to 15:1 USD, and leaving her successful with 50% inflation. Perhaps the BoJ could use her advice?
She and her cabinet have also been the subject of multiple corruption scandals following her departure of office. She has naturally expressed shock, condemned any corrupt officials and denied any knowledge of such actions.
For those who like to focus on her track record, Bloomberg has compiled a helpful GDP growth that compares GDP in Cristina’s mind versus GDP growth in the real world.

This post was published at Zero Hedge on Aug 3, 2016.

USA Watchdog Interview

Greg Hunter does a nice job, and asked me to appear — here it is, embedded at the bottom.
The take-away from this, if you don’t feel like watching the interview, is quite simple: Without the Rule of Law we have nothing, and our nation currently faces a critical fiscal emergency at the federal level just a few years down the road — certainly, during the next President’s term.
There is no way out of that box without taking on the medical monopolies. None.
That’s the math.
2009 / Obamacare was an attempt to “buy more time” along with protecting said monopolies from a market-driven incipient collapse. This was rank public corruption on a grand scale, and it did nothing more than add a small amount of time, much like closing “watertight” doors on the Titanic when the water can cascade over bulkheads (as I expected it would and wrote on at the time) because all it could do is force more people onto a sinking ship. The compound growth nature of federal spending on medical care has remained unaltered; it was not flattened to zero, or even to the expansion of nominal GDP. Worse, the expansion rate for Medicaid, several years after its one-time expansion under Obamacare (in other words the one-time effects are gone), exceeds that of Medicare — so those who claim the cost escalation is due to people getting older are lying through their teeth.
The bigger-picture issue, and the one that threatens to turn this entirely-predicted fiscal catastrophe (one that I’ve talked about for 25 years and written about pretty-much continually for the last 8 right here in The Ticker) into an economic and social disaster never before seen in America (but seen repeatedly in other nations such as Venezuela and Argentina!) is that innovation has effectively collapsed at the same time.

This post was published at Market-Ticker on 2016-07-31.

How Deadbeat Argentina Sold $16.5 Billion Of Junk Bonds – -The Mindless Scramble For Yield

Debt investors should be a little nervous that Argentina received such a warm welcome back to the world’s debt market this week.
The South American country, which was returning to global capital markets for the first time since its 2001 default, easily sold $16.5 billion of bonds, the biggest one-day issuance of a developing nation on record. It could’ve probably sold twice that amount. It certainly got good rates, which were lower than similarly rated debt.
The sale was so successful that other developing nations are lining up to get a piece of the frenzied investor interest.
Here’s the problem: A lot of this demand is being driven by a broad-based desire for higher-yielding sovereign debt without much analysis about the specific countries seeking money. Investors who measure their performance relative to benchmark indexes bought Argentina’s bonds in anticipation of their inclusion in those gauges, according to a Bloomberg News article by Carolina Millan and Katia Porzecanski.
‘If you get it wrong, that’s a huge performance gap,’ Jean-Dominique Butikofer said in the article. ‘It’s like poker. Sometimes you have to pay up, even if you think you might lose,’ said Butikofer, who oversees $3 billion in debt as head of emerging markets at Voya Investment Management in Atlanta.

This post was published at David Stockmans Contra Corner on April 21, 2016.

Washington Continues To Destroy Latin American Reformers – Paul Craig Roberts

Currently, Washington is conducting operations against Latin American presidents who tried to represent their own peoples instead of American business interests and Washington’s foreign policy. Washington is trying to unseat and indict President Nicolas Maduro in Venezuela, President Evo Morales in Bolivia, President Rafael Correa in Ecuador, and President Dilma Rousseff in Brazil. Washington has succeeded in getting the president of Argentina, Chistina Kirchner, out of office, and is now seeking to have her indicted. To round off its attack on Brazil’s reformist political party, Washington is orchestrating crimes with which to tar and indict Rousseff’s predecesor, Lula da Silva.
Everyone on Washington’s Latin American list of people to be destroyed is a far better person than anyone in Washington. Washington’s Latin American targets have far more integrity, are tainted with far less corruption, and are far more committed to those who voted for them than anyone in Washington.
The danger that these reformers face is due to their innocence. They naively believe in good will between classes. They think that the rich elites, who are well connected to Washington, and that Washington itself, will accept democratic outcomes.

This post was published at Paul Craig Roberts on April 11, 2016.

Puerto Rico Bonds Plunge After Senate Passes Debt Moratorium Bill

The ongoing feud between Puerto Rico and its mostly hedge fund creditors is promptly shaping up as the next “Argentina”, where “vulture investors” may well end up holding the island commonwealth hostage for years, during which time, however, they won’t get paid.
This is shaping up as the latest development in the saga in which earlier today Puerto Rico’s Senate approved a bill calling for a moratorium on a wide range of debt payments, including general-obligation bonds, through January 2017 in what Bloomberg dubbed “the latest escalation of the Caribbean island’s fiscal crisis.”
The measure, passed around 2:30 a.m. local time, would allow Governor Alejandro Garcia Padilla to suspend payments on debt backed by the government, the island’s Government Development Bank and other public agencies, according to a copy of the legislation obtained by Bloomberg. That includes the Sales Tax Financing Corp., known by its Spanish acronym Cofina. A default on those obligations would be a first for Puerto Rico, which so far has only failed to pay on bonds backed by legislative appropriation and rum taxes.
The bill has yet to be enacted: it remains to be reviewed by the island’s House of Representatives on Tuesday after stalling there previously. It’s the culmination of months of posturing by commonwealth officials and bondholders since Garcia Padilla declared that Puerto Rico’s debts were unpayable in June 2015. It reflects the governor’s long-held position that the island can’t continue to pay creditors on time – even those holding constitutionally guaranteed securities – while still providing essential services to residents.

This post was published at Zero Hedge on 04/05/2016.

Latin America – Seven Ugly Sisters In Deep Political Trouble

Get beyond endless Latin American headlines burning column inches and you come to far broader strategic conclusion: The seven ‘ugly Latino sisters’, namely Brazil, Venezuela, Ecuador, Bolivia, Colombia, Mexico and Argentina are all deep political trouble from collapsed benchmark prices. It’s merely a case of who’s in more advanced states of political decay where left leaning governments’ can’t hang on much longer vs. those trying to buy a bit of time with more ‘centrist’ positions. In either case, it’s going to be a classic example of too little too late where the seven ugly sisters have committed at leastseven deadly sins when it comes to resource mismanagement over the past decade. This isn’t about whether crisis can be avoided, but how bad the impacts will be. Another ‘lost Latino decade’ beckons.
The ugliest twins are obviously Brazil and Venezuela right now. We firmly expect Rousseff to be impeached next month on the back of endless corruption scandals, and the drastically ill-judged return of Lula that poured far more oil on corruption cover up flames. Watch for Michel Temer to take over the reins of a coalition PMDB government, busily negotiating posts behind closed doors with other players to tee up a formal Worker’s Party split to form a caretaker government through to 2018. How much Temer can get done depends on how far the outstanding ‘car wash’ scandal still rubs off on PMDB factions for major economic reforms, where the rot still runs pretty deep. Initial rhetoric (and inevitable market lifts) on supposed ‘structural reforms’ and far broader liberalisation measures remain unlikely to play through. Although it’s possible Petrobras might push through 2017 licencing rounds purely for political appearances, it’s not going to deliver tangible results in current price environments. Dig just ‘under the salt’, and Petrobras leverage will remain high; local content even higher. Until Brazil can properly clear its electoral decks in 2018 Mr. Temer is going to have a very limited mandate. If anything, his core challenge is trying to make sure his caretaker outfit doesn’t end up ‘washed out’ day one, given Temer is by no means beyond political reproach, with the PMDB basically as corrupt as the ruling PT. The smart move for Brazil would actually be calling fresh elections with the TSE (electoral authority) invalidating the entire Rousseff-Temer 2014 ticket to put a line under what currently shapes up to be the worst commodity driven economic crash Brazil has ever experienced. Regrettably, Brazilian politics has nothing to do with national interests at this stage, and everything to do with narrow self-preservation societies.

This post was published at Zero Hedge on 03/26/2016.

The Lie Beneath the Bookends of the BRICS

They were the darlings of the Davos set, the bookends of the BRICS. Simultaneous booms raised millions out of poverty and generated billions for a lucky few.
But now, Brazil and South Africa are united by political scandals and economic misfortune. Gloom has descended as the presidents of each country fight off corruption allegations that threaten to end their political careers. For the leaders, Dilma Rousseff and Jacob Zuma, it’s a stunning fall from grace, a humiliation made worse by markets rallying on the prospects of their demise.
‘What many thought would be locomotives of growth have become risks,’ said Mario Blejer, Argentina’s former central bank governor and a vice-chairman at Banco Hipotecario SA. ‘They gave the appearance that lots of progress was taking place. Suddenly we saw it was really just a lie.’
Their rise always had an aspect of illusion. Their emergence was launched as part of an investment thesis promoted by Goldman Sachs Group Inc. In 2001, the firm’s Jim O’Neill christened the BRIC countries, Brazil, Russia, India and China, as the engines of global growth; they were later joined by South Africa to become the BRICS.

This post was published at David Stockmans Contra Corner on March 22, 2016.

Global Trade Is Collapsing – -Chinese Exports To Brazil Down 60% In January Y/Y; All Containerized Shipments To LatAm Down 50%

Chinese exports to Brazil collapsed last month in the latest dramatic sign of the deepening recession in Latin America’s biggest economy.
Containerised exports from China to Brazil of goods ranging from automotives to textiles fell 60 per cent in January compared with a year earlier as the weak real limits Brazilians’ ability to buy imported goods, according to Maersk Line, the world’s largest shipping company. Total volume of containerised imports into Latin America’s biggest economy halved, data showed.
‘What we are seeing right now from China is not only a phenomenon for Brazil, we are seeing the same all over Latin America, declining [Chinese export] volumes into all the markets,’ said Antonio Dominguez, managing director for Maersk Line in Brazil, Paraguay, Uruguay and Argentina. ‘It has been going on for several quarters but is getting more evident as we move into [2016].’
China is Brazil’s biggest trading partner in a commercial relationship that developed rapidly during the commodity supercycle of the first decade of the century. But China’s economy has slowed since the bursting of a stock market bubble in the middle of last year that has sent shockwaves around the world. The Chinese economy grew at its slowest pace for a quarter of a century in 2015 and is expected to slow again this year.

This post was published at David Stockmans Contra Corner on February 26, 2016.

Seeking a Saviour

It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better.
Politicians, of course, are famous for promising panaceas for whatever troubles voters and inventing new troubles for voters to worry about, presenting themselves as the only ones who can solve these woes.
It’s not surprising then, that over time, any nation may slowly deteriorate into a population of nebbishes who not only let their government do all the thinking but also hand over all responsibility for the future.
In the last year, the world has seen many elections in which the top spot (president, prime minister, premier, etc.) was contested. In Brazil, Socialist President Dilma Rousseff was returned but almost immediately ran into trouble over a failing economy, scandals and corruption charges. In less than a year, her popularity sank to the lowest level for any Brazilian president on record.
In the UK, Conservative Prime Minister David Cameron was returned, which immediately triggered riots in London by the anti-austerity crowd. He will soon be facing increasingly angry voters of all stripes who are boiling over from the dramatically worsening immigration question. In addition, he’ll soon be facing a referendum on the UK’s membership in the EU – an event he’s been postponing for quite some time.
In Canada, voters have chosen to oust the Conservatives and return to the golden promises of the Trudeaus. With that, the Canadian dollar dropped immediately. Mr. Trudeau is planning a vast programme of public spending in the face of a declining economy, but he hasn’t offered any explanation as to how this can be paid for.
Argentina has just had its election. The departing Peronist, Cristina Kirchner Fernndez, has passed the baton (and a failing economy, rapidly declining peso and civil unrest) to the more conservative Mauricio Macri.

This post was published at GoldSeek on 10 December 2015.

The Trouble with the Future

PARIS – Yesterday, we got so much mail on our recent issue on Donald Trump we couldn’t read it all. Pro… con… off the wall – readers’ sentiments were all over the place.
But a clever reader mercifully brought the discussion to an end with this quote from fellow Baltimorean H. L. Mencken:
‘As democracy is perfected, the office of the President represents, more and more closely, the inner soul of the people. On some great and glorious day, the plain folks of the land will reach their heart’s desire at last and the White House will be occupied by a downright fool and complete narcissistic moron.’
All over the world, elections allow the people to express their innermost thoughts and feelings. This is a big day in Argentina, for example. Outgoing president Cristina Kirchner is supposed to hand over power to her successor, Mauricio Macri.
But when we looked yesterday, there was dispute as to exactly what time the baton would be passed. And Cristina has let it be known she would not attend the inaugural and would generally make life as difficult for Mr. Macri as possible.
Deep State in Control
Elections are misunderstood. On the surface they are contests between zombies and cronies. The zombies (leftists, socialists, Democrats) want lots of little handouts. The cronies (rightists, Wall Streeters, Republicans) want fewer but bigger ones.
All the loot comes from the voters – who willingly give up both their money and their liberty believing that, somehow, they are better off for it. But the real winner is the Deep State. It usually controls the candidates… and continues to gain power and resources, no matter which side wins.

This post was published at Acting-Man on December 11, 2015.

‘One Big Shock Away from a Global Downturn…’

Zombies vs. Cronies DUBLIN – Most elections these days are contests between cronies and zombies. The left favors the zombies. The right favors the cronies.
In yesterday’s presidential elections in Argentina the zombies lost. It’s time for the cronies to take over.
More on that tomorrow …
Big Shock The financial news continues to confound and confuse investors. The Fed is telling one story. The world economy is telling another.
The Fed is talking about increasing the federal funds rate – eventually getting rates back to ‘normal’ – because the U. S. economy is so healthy. Meanwhile, the world heads toward deflation.
Says Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management:
‘We are now just one big shock away from a global downturn, and the next one seems most likely to originate in China, where heavy debt, excessive investment, and population decline are combining to undermine growth…’

This post was published at Acting-Man on November 24, 2015.

Banks that run credit-default swaps market suspect their own corruption

Fifteen of the biggest players in the $14 trillion market for credit insurance are also the referees.
Firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. wrote the rules, are the dominant buyers and sellers and, ultimately, help decide winners and losers.
Has a country such as Argentina paid what it owes? Has a company like Caesars Entertainment Corp. kept up with its bills? When the question comes up, the 15 firms meet on a conference call to decide whether a default has triggered a payout of the bond insurance, called a credit-default swap. Investors use CDS to protect themselves from missed debt payments or profit from them.
Once the 15 firms decide that a default has taken place, they effectively determine how much money will change hands.

This post was published at bloomberg

A True American Crony …

An Innocent Crime?
PARIS – Volkswagen CEO ‘falls on his sword,’ reports the Financial Times. The FT was speaking metaphorically, of course. Martin Winterkorn is German, after all, not Japanese.
A Japanese businessman in a similar circumstance would have his intestines on the floor by now.
Volkswagen supplies motor vehicles to the world – millions of machines that work at least as well as any other. We have one of its small diesel pickup trucks at the ranch in Argentina. It serves us well.
Volkswagen employs 600,000 engineers, machinists, accountants, metallurgists… and hundreds of other mtiers… all gainfully working in the modern economy. And judging from its revenues, the company is doing as much to make the world a better place as practically any other enterprise in the world.
Or perhaps not… Yesterday, Mr. Winterkorn resigned, after the company was caught rigging emissions tests. And VW stock plunged. Estimates of the fines, civil settlements, and other penalties the company will have to pay ran into the hundreds of billions of dollars.
What do you have to do to earn this kind of a flogging? How many customers did Volkswagen’s reckless engineering kill? How much money was stolen from buyers by its underhanded marketing techniques? How many women were raped in its showrooms, and how many pets drowned in its dark pools?
What’s this? None of the above? Apparently, not a single person suffered injury… and not a single pfennig was lost or stolen. The total measure of harm suffered by the public?

This post was published at Acting-Man on September 25, 2015.

Uruguay Does Unthinkable, Rejects Global Corporatocracy

Often referred to as the Switzerland of South America, Uruguay is long accustomed to doing things its own way. It was the first nation in Latin America to establish a welfare state. It also has an unusually large middle class for the region and unlike its giant neighbors to the north and west, Brazil and Argentina, is largely free of serious income inequality.
Two years ago, during Jos Mujica’s presidency, Uruguay became the first nation to legalize marijuana in Latin America, a continent that is being ripped apart by drug trafficking and its associated violence and corruption of state institutions.
Now Uruguay has done something that no other semi-aligned nation on this planet has dared to do: it has rejected the advances of the global corporatocracy.
The Treaty That Must Not Be Named
Earlier this month Uruguay’s government decided to end its participation in the secret negotiations of the Trade in Services Agreement (TISA). After months of intense pressure led by unions and other grassroots movements that culminated in a national general strike on the issue – the first of its kind around the globe – the Uruguayan President Tabare Vazquez bowed to public opinion and left the US-led trade agreement.
Despite – or more likely because of – its symbolic importance, Uruguay’s historic decision has been met by a wall of silence. Beyond the country’s borders, mainstream media has refused to cover the story.

This post was published at Wolf Street by Don Quijones – September 22, 2015.

Inside Janet Yellen’s Brain at 4 a.m …

No Return to Sanity
GUALFIN, Argentina – Poor Janet Yellen. Usually, we reserve our pity for the poor, the downtrodden, and the hopeless. But today, we spare a thought for the clueless… and feel Yellen’s pain. Markets are tense. Investors seem to be holding their breath. Everyone is waiting to see what the Fed will do.
There must be hundreds of thousands – if not millions – of well-educated adults sitting on the edges of their seats… eager to hear what this rather ordinary functionary will say.
Will Janet Yellen proudly put the Fed on the side of the angels, announcing that she and her crew have decided to move the Fed’s key interest rate to a more normal level… regardless of how much it costs the cronies?
Will she admit that the Fed’s ZIRP and its three QE programs have been failures? Or that they have shifted trillions of dollars toward the rich while leaving Main Street poorer? Will she beg forgiveness for such errant policy decisions over such a long time and vow publicly never to interfere with the market again? No, she won’t.
She will say the outlook is favorable – generally, clearing skies and fair weather is in the forecast. But there are some clouds forming out to the east that could lead to stormy weather. So she will urge a cautious return to normalcy.
She may be feeling confident and allow for a small rate increase… or she may be feeling fearful and decide to hold off for a while. We don’t know. And it probably doesn’t matter much.

This post was published at Acting-Man on September 16, 2015.