Archive For: April 2014

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Japan's 10th Round Of QE: Still A Flat-Out Failure

The interest in the plight of the Japanese and “their” economy is not just one of morbid curiosity, but of high relevance and perhaps even a glimpse of the future. It is both a cautionary tale about the command economy and, at the same time, a warning about such apathy derived from the failure to [...]

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Inside The "Low-flation" Myth: A Disquisition On Inflation Seen And Not Seen---Part 1

So herein an essay on the overwhelming evidence of inflation during the decade long era in which the central bankers have been braying about "deflation". Herein, too, some startling evidence of the complicity of the government statistical mills in using the inflation that is not seen (i.e. "imputed") to dilute and obscure the inflation that is seen (i.e. utility bills)...

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The Deformations Of QE: Bank Trading Desks Fattened; Failing Business Models Extended

The primary problem with cyclicality is that by keeping money losers afloat it only congregates the eventual defaults and retrenchments together into one big event rather than spread out over many months, even years. There is no doubt that ZIRP and the perpetuation of “emergency” QE force some “reach for yield” into exactly this kind of procyclical behavior....

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Well, I Did Tell You So: The Texas Gas Bubble Massacre (TXU) Was Bankrupt From Day One

The wildest speculators in Leo Melamed’s pork-belly rings at the Chicago Merc could never have dreamed up a commodity trade as fantastical as that underlying the $47 billion LBO of TXU Corporation. It was basically a bet on a truly aberrational price gap between cheap coal and expensive natural gas—a “fuels arb”—that couldn’t possibly last. So the largest LBO in history was the ultimate folly of bubble finance....

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Abenomics At Work: Japan's April Output And Orders Fall Sharply

The Markit/JMMA Purchasing Managers’ Index™ (PMI™ ) posted at 49.4 in April, down from 53.9 in March. This was the first time in 14 months that the Japanese manufacturing sector saw a deterioration in business conditions. Output fell to the greatest extent seen since December 2012.

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Now Comes "P/E Ex-Neg Earnings" Or Why The Russell 2000 Is Trading At 102X Reported EPS

If you go to the “fact sheet” for the Russell 2000 index trying to find the standard PE valuation metric, the only one provided by the index keepers is something called “P/E Ex-Neg Earnings.” The current valuation offered is 22.61, which sounds much more reasonable than the latest (April 25) raw PE estimate from the [...]

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The Madison County Bridges In Nowhere And The Perennial Myth Of Crumbling Infrastructure

Whenever the beltway bandits run low on excuses to run-up the national debt they trot out florid tales of crumbling infrastructure---that is, dilapidated roads, collapsing bridges, failing water and sewer systems, inadequate rail and public transit and the rest...but the ballyhooed national infrastructure crisis is a beltway racket of the first order. It has been for decades.

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The Johnson-Crapo Scam: More Reasons To Kill Fannie/Freddie Dead

This is such an outrageous, in-your-face ripoff, it shouldn’t even require a response. These jokers should be laughed out of the senate. All the same, the bill is moving forward, and President Twoface has thrown his weigh behind it. Is there sort of illicit, under-the-table, villainous activity this man won’t support?

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How The Fed Fixed Housing: March Contracts Down 7% Y/Y; Listing Prices Up 10%; Inventory Still MIA

The US housing market’s raging inflation without recovery of demand epitomizes the extreme distortions caused by the Fed’s policies of QE and ZIRP....

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Memo To Dr. Yellen: Don't Look Now But The Wealth Effect Is Over

Real estate and equity values have already lost their momentum, as the Fed is removing its massive support for these assets.... New Home Sales fell three months in a row and plummeted 14.5 percent in March.... But Wall Street will try to convince investors that the spring pollen vortex is unusually bad... nobody wanted to go outside and purchase a new home, even after all the snow melted...

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