Friday, March 29, 2013

Ben's largess, again

Moral: Wherein we look at how Ben has stiffed the savers (see Ben's largess, I).

A couple of years ago, we were just beginning to hear Ben say that there would be no limit. Some got to calling the program, QE Infinity. It would be funny, if it were not so sad.

Ben was before his supervisors recently. He said that his largess helped the world's economy. Oh? Does he know that he's breaking the patriotic backbone. Yes, I've said that he's slapping the savers silly, but there many ways that he is doing this that need to be brought ought.

Why is there not outrage for what follows? It's a table of values related to Savings Bonds bought in 1997. Why that year? Well, we could go into that, but let's just look at the numbers. In this case, let's say that there were twenty-four bonds bought over the year. At the end of the year, $1,800 was spent to buy the bonds.

Now, think of the purchase as being related to a bond sale that had a patriotic flavor. These used to be common occurrences. The intent was to get money set aside to help the government. For this money, there would be interest paid. The bonds would go on for thirty years and pay out something at that time.

You see, the bonds, too, were said to be good for grandparents to give to their grand kids. Foster patriotism. Too, help our good old Uncle Sam. A lot could be discussed here, but let's just look at the numbers.

By 2006, the bonds were worth around $2,500. That's not a bad return (again, arguable and it will be). By 2008, the value was up to almost $2,800. But, look at the value at maturity. It had grown to be of interest to most reasonable people.

Then, Ben's long-term coddling of those who were responsible for the problems began to sink in. Notice, two things, please. The incremental value (Yrl Chng) diminished from 2008 to 2013. Then, there was a negative impact on the maturity value. That, folks, is one of the many ways that Ben is eating into the pockets of those who can least afford it.

Ah, so much that we could say, but won't for now.

---

In a discussion, some wise guy said: well, those people could adjust their portfolio. Again, I will hold the tongue. As Adam Ferguson, what reasonable person would subject themselves to the vicissitudes of the gaming table that is the market. He, by the way, was a contemporary of Adam Smith. Will get back to these two.

Yes, Ben wants us to put our money in the game. Where it can be lost by someone talking. Please see the article on Einhorn at Bloomberg's Businessweek. Chimera, indeed.

The image is from the article and show stock dropping or rising about the time of Einhorn's comments about the company or things related to their operations or any number of other things.

For me, it's patently ridiculous to say that this is how our monies ought to be handled let alone think that such is capitalism at its best.

---

There is a lot to talk about here. We'll be back at it, from time to time.


Remarks:

02/11/2015 -- Wikipedia: Zero interest rate policy.

12/05/2013 -- If only Ben would put a shot across the bow.

09/18/2013-- Pop, fizz, ... Ben had to show largess because of idiots who ran the economy to the ground (rogues all around). Ben is going. What do we have to look forward to? Businessweek has a review issue (of the past five years). Several articles are especially interesting. Too, phrasing shines: spin dross into gold (in relation to mortgage bonds). Perhaps, we'll get back to some of the more pertinent ones, at some point. If we do, it would be to bring forward what has been said here, from the beginning. To wit? Tranche and trash (WSJ has a good take on that). Securitization? This article brings on weeping (one example of the misuse of mathematics and computing that has been harped about). Adoption, and improved understanding, of lazy evaluation let loose the powers that resulted in the wild web and its little children, namely social media and more. To grasp the problem, we have to go back to computing that is in some type of responsible area. Avionics comes to mind. If what is couched as software in looser domains (financial engineering? -- looser?, yes bailouts are the norm despite all of the protestations of the ruling elite; or the whole cadre of the poorer folk can just suck it up when there are problems in order to relieve the fat cats' loss) were to used in flight controls, would we not have planes falling out of the sky? We'll get back to the simple issues that seem to not be seen by the elites chasing after the bucks that Ben has been throwing out of his helicopter.

08/15/2013 -- FED siteFEDofNYPre-FOMC Announcement "drift"

07/31/2013 -- Ben cannot unwind or taper downhe has too many Doves.

06/22/2013 -- So, how many traded their paper gain (chimera) to solid debt with the downturn? Okay, forget the size of the loser set, how much went from illusory gain (backed by a promise to pay later) to real debt that has to be paid with blood and guts? Wait! Some of those doing the margin calls, and ilk, have some way to weasel (not disparaging the grand animal) out, not doubt.

06/05/2013 -- Singularities (understanding how and why these arise, how to manage) will be of extreme importance. Hint: related to computability but concerned more with what might be termed "vertigo" (subtle, yet not).

05/22/2013 -- Need to look at the cosmology of business (Remarks this day). --- Also, see Remarks on 04/01/2013 which point to someone talking about central planning. Let's recall, please, that the brains of the west (many of them) scoffed at the efforts of the commies (of several ilk, such as the USSR). Ah, we don't do that in capitalistic societies, they would say disdainfully (ah, everything is driven by the invisible hand of the markets). The truth of the matter is that, yes, there is such a function done in modern economies. Ben's ability to do what he does is proof enough (and, he's a regular attendee at meetings under the auspices of the leaders of the free world). ... But, then, the proper lens would note the need for this type of function, to an extent. So the question would be: has Ben's little take on the matter led us to dire straits and perdition, in the future? Ah, we will see. And, we will be prepared to do the analysis that is necessary.

04/10/2013 -- Soar, DOW, soar.

04/01/2013 -- Ben as the new Central Planner.

03/30/2013 -- The whole thing makes a mockery of U.S. Savings Bonds. It's just one of those little side-effects that Ben must think of as minor. Perhaps it is to him and those high-falutin'. If he looked at it closely, he would see that one avenue for building a small nest egg has been trashed. Thanks, Ben. You want everyone to reach for the glory of riches by the chimera. Tsk, tsk!

03/29/2013 -- See comments at this Seeking Alpha article.

Modified: 02/11/2015

Friday, March 22, 2013

Cyprus, no lesson for Ben

Moral: Wherein we consider Ben and Cyprus.

Last time, we said that Ben has slapped the savers silly. Then, the EU tells Cyprus to take a tithing out of deposits in order to cover the shambles left behind by supposedly smart financial types. Who, by the way, we bailed out (still an open issue, as Ben knows; he won't let an unwind happen so that we can see the real crud).

Now that EU deal was last week; an article at Seeking Alpha (to which I commented -- Aroound the bloock) suggested that the equity markets would go down. The week isn't over.

As well, "tithe" is about 10%. We, the savers, have given much more (a multiple of that), and Ben tells us, with a straight face, that he'll continue to slap us silly.

How do we know? They, (the FED money printers) met this week. Someone asked Ben if he would pull a Cyprus. Evidently, he doesn't think so. Yet, he does not see the equivalence of his slapping savers now (and for the past few years) with the EU suggestion.

Today, The Daily Ticker, had on Jim Rickards who says that Ben is stealing, in a sense, from depositors. But, Ben must not see this, as I'm sure that he knows the moral issues (unless, he's taken the secular route to the extreme - screw the helpless - that is what power leads to - corruption -- thanks, Lord Acton).

---

There may be another issue though that needs to be explained to Ben. He's heavy into mathematics and modeling. But, Ben doesn't seem to have insight into the issues related to quasi-empiricism that need to be updated to the modern context. In short: computational power has leveraged the misthoughts and misdeeds (of the financial ilks as they focus on unfair games, err "products" - can you imagine? almost implying some reality to these things - chimeras that they can be - almost if we can eat or wear the things) enormously so as to present us with out-of-control situations. The related notions may seem to be subtle and to be a stretch, quite frankly. But, that is one of the issues; these people run off (as did Ben) with new ideas spawned out without suitable foresight (unless it's to the amount that can be gained) into impact on the wider economy (we need a sandbox for these folks -- anyone trying to define this, Ben?).

One saving grace might be the new guy from Harvard. We'll see.

So, Ben puts out the message, No bubbles. Yes, we'll have an interesting look-back, at some point. At that time, we can also put a number on Ben's little negative impact (let's say, a 30% loss to date which has no floor as Ben continues to stumble along, albeit suavely, while slapping with both hands -- must be doing so in a sleep-walking mode).

Remarks:

03/26/2013 -- Let's see, some (many) who were under water on their house loans got bailed out (even to the extent of 6 figures), some in the equity markets have gained (a whole lot more have not - but, one could argue that it was their own misdeed - as stupid as that argument is, I'll put it here), banks are rolling in the dough (enough for some to get big paychecks, okay?), et al. Now, on the other side, there are the unemployed and the underemployed; there are those who lost without any means to recover; et al. Then, we have the savers who are saints. We've given up 30+% of our deposits to Ben's little scheme; many of us have no recourse or way to recover. So, think of it, folks, as a gift (that's why I used tithe - except that it's in the church of money - yet, money is the blood of the economy and has some spiritual value -- which does not mean to take a bath in it like old Scroog or whoever that comic character was who would fill the but with money -- what about paper cuts?). We would for Ben, at least, to acknowledge that he did wrong and that he ought to see that means are there in the future to offset his (the next FED aerator) harming ways.

03/22/2013 -- Imagine. WSJ using both chimerical and moral hazard in the same article, albeit with a twist that we'll respond to (that is, clarify what the notions mean -- has to come from outside the financial community).

Modified: 03/26/2013

Tuesday, March 5, 2013

Slaps in the face

Moral: Wherein we use today's closing of the DJIA being above 14.2K in order to reconsider the use of the chimera and train metaphors; perhaps not until Ben unwinds.
  • Chimera? -- Several times, this has been put to use. See Oct 5, 2012 post. 
  • Train? -- Consider it's November, 2009. Ben had dropped interest rates real low. He had a QE 1 going. So, the market had been going up a year from the bottom. Things were looking perky to many who were touting the need to jump on the train that was leaving the station. But what was the train (still an open question)? See three posts on Nov 6, 2009: The markets II7oops7Truth Engineering. This was followed up with another post on Nov 7, 2009: What? A train!
  • Unwind? -- Ben, today, has met his goal of the QEs, plus. He has goosed the equity markets. He has not made much progress, otherwise. However, Ben has been experimenting real time on his subjects, namely us. The long term impact from this experimentation is what exactly? We do not know. Ben could, as an experiment, drop the current QE and raise the rates. The effect would definitely be measurable. Mind you, he would still have his enormous balance sheet to contend with at some point. 
Aside: Savers? -- Those with the piggy banks to be pilfered (like rats attacking the grain bin). 

---

So, does today show that there was a train? No. Look at all of the interventions that Ben has done to keep up the illusion. Of course, it's paying into the pockets of some (real for them). It'll pay for those who sell at the higher points. But, from a non-zero sense, the downside is much more than what has been gained. And, that is for us to describe.

Ben's Put, to 2014
The three images (12/06/2013 - for first two: Seeking Alpha, the third: calculatedriskblog.com) show what has happened graphically. Since 2010, the train has morphed from Ben's meddling. Morphed into what and how did Ben do this?

For the former question, we'll need to look at the issues. For the latter, Ben has done a lot of mischief. Yet, he's pure, he says, to Congress. He knows what he's doing; they don't seem to know enough to ask the right questions.

Ben's Put, to 2011
For instance, it has been five years since he started to slap the savers silly. Ben continues to do so while saying that he'll continue the torture (say, of the older people, retirees) for as long as he pleases (Yes, Ben can do this, as he is not hearing the cries of the oppressed. How can he with his fancy office and perks?).

For the first two images, see the discussion at Ben's Put.

Now, this last image shows the whole scenario. Every time the little engine, that could (it was a train, remember?), started to run out of steam, Ben gave it a boost. At the same time, he was slapping the savers silly. So, he gave his love to the marketeers and big pockets, and he kept his poor savers hungry.

Who foresaw Ben's actions at that time over four years ago? If you look at these QEs, especially the early one, people cautioned about over-stimulation. The discussion along the way ought to be looked at further in this regard. But, for an overview now, recall that just before the last surge, Ben promised what has become known as QE infinity (as in, will it ever end?). On the other hand, he ended up telling the savers to get over it as he could do much more than slap their silly little faces if he wanted to (so, savers, use make-up to cover your bruises).

---

Now, the crux of the matter is whether to admit "egg on the face" by acknowledging the train. Too, ought there be some recognition for what Ben has accomplished with his efforts. Well, the first notion can be answered this way. I'm not after money nor power. Rather, my intent revolves around what we need to do to have a sustainable economy, albeit finance is one of the necessary roles. So, whatever we see going sky high is not a train nor does it have much basis. And, yes, we see the equity realm soaring. There are some who have really big pockets because of this. Does Ben really sleep at night while ignoring the growling stomachs of his saving subjects?

---

Disclosure: I do have long-term CDs expiring this year that were paying way more than the bank liked to offer. Now, I know that I will go in and get slapped in the face (which slaps were delayed by earlier choices - hey, who knew that Ben would be such a jerk? -- yet I've seen it happen to many others over the past few years) that ultimately go back to Ben's choices (and directions on how to get the best effect thereof). Ought to be a sweet moment for me. I just wanted to let Ben know in case he would like to to come down to the bank and observe me taking my penance.

---

There has been some talk about the crash and what we might learn. Ben has a different perspective, of course, since he has to deal with entrenched financiers. Too, he undergoes regular scrutiny as we saw last week. He has said words about the politicos' lack of proper sight and action.

We ought to congratulate him on his successful re-inflation of the air bag albeit that he had to huff and puff. Is that bag able to pull up the rest of the economy? No. You want to know why not? It used to be thought, say in the times of Ben's grandpa, that equity markets provided means for accomplishment. It wasn't so, as we know of the various booms and busts. So, given that notion, the market's state could have meaning. That is, it could act (could have acted, it was thought) as some sort of measurement of health. Of late, it's like the horse is behind the cart. Inflate the equities, and things will follow. Ben knows better than that. If he did not know before, the past few years have been a lesson to us all (including Ben, if he would be truthful and not play the stupid oracle - which we know he is not).

Now, one chief troublemaker has been the ca-pital-sino that has evolved. Ben exacerbated that whole thing with his continued largess to the players. There are so many layers of gaming involved now, that no accounting can be done. Hence, moving these types of things to a sandbox is imperative. Then, at the core, there ought to be something that the Treasuries were thought to provide: some notion of future payout that has some semblance of reality. That would help the savers, even if they only got a percentage (aside, Ben ought not to have gone below 1%). It's the high likelihood of payout that is the key. The only way to do that now is with insurance (many times, at the end of things, being pushed back to the taxpayers - that is, privatization of profit, socialization of loss). Re-insurance and the other highfalutin financial schemes may have a place, but they, too, would be more sand boxy than not.

---

What this post does is collect thoughts, and comments, that were written over the period (and times) that Ben has been playing with out economy. The posts are time-stamped to show the correspondence in time. Now, I'll have to go back, collect all of these thoughts, and organize them in order to start the next round. Ben's focus on equities is not what he ought to be doing; but, is what I'm talking about beyond the scope of the Fed? I don't think so, as Ben is the one who gets listened to. The Great Persuader, if you would. Wait! His term expires soon. Will we get another player, different game?

Remarks:

09/17/2014 -- Yes, she did. The coo-coo, goo-goo goes on. The landscape is strewn with the lifeless bodies of the savers. Thanks, Janet.

12/19/2013 -- Ben did his parting shot (whimper that it was); they're going to taper slowly, less than a 1/8th on the bond buy, starting next month. And, he's going to torture savers for another year or so. We'll have to see how the pieces fall. The markets got heavily seeded today in hopes of luring in the idiots and moms/pops (who cannot afford the pending losses). So, it's pop, fizz, ..., again. Too, we'll see more goo-goo talk to the immature markets and the addicted investors thereof. One of many technical issues that we'll have to get into: Nanex's view.

12/06/2013 -- If only Ben would put a shot across the bow.

09/18/2013-- Pop, fizz, ... Ben had to show largess because of idiots who ran the economy to the ground (rogues all around). Ben is going. What do we have to look forward to? Businessweek has a review issue (of the past five years). Several articles are especially interesting. Too, phrasing shines: spin dross into gold (in relation to mortgage bonds). Perhaps, we'll get back to some of the more pertinent ones, at some point. If we do, it would be to bring forward what has been said here, from the beginning. To wit? Tranche and trash (WSJ has a good take on that). Securitization? This article brings on weeping (one example of the misuse of mathematics and computing that has been harped about). Adoption, and improved understanding, of lazy evaluation let loose the powers that resulted in the wild web and its little children, namely social media and more. To grasp the problem, we have to go back to computing that is in some type of responsible area. Avionics comes to mind. If what is couched as software in looser domains (financial engineering? -- looser?, yes bailouts are the norm despite all of the protestations of the ruling elite; or the whole cadre of the poorer folk can just suck it up when there are problems in order to relieve the fat cats' loss) were to used in flight controls, would we not have planes falling out of the sky? We'll get back to the simple issues that seem to not be seen by the elites chasing after the bucks that Ben has been throwing out of his helicopter.

09/10/2013 -- Atlantic article: language and savings. However, note the U.S. position on the chart. Ben has slapped the savers silly (making them battered and bruised). Is he anti-savings?

08/21/2013 -- I was wrong. I thought that Ben would go goo-goo, again, as his doves want him to do. But, there is talk of a taper, albeit slowly. Sheesh. No one does "cold turkey" anymore? That's how I quit smoking. Why is it that the FED feeds addiction (that's a monetary policy?)? Now, when does the slapping the face silly quit?

08/07/2013 -- Investors? After the last taper talk (more than a month ago), things jiggled a bit. Some lost money. Some gnashed their teeth (but, for someone, like my ilk, who has been slapped silly for several years now, what comfort ought we give to those who don't know how to wean themselves from their addiction? --- in the meantime, Ben, we, the savers (saviors?), continue to be good citizens despite the Fed's attempt to trample us under the dirt). At that time, Ben had his Doves talk goo-goo. So, the mania began again. Yesterday, there was a slight downturn supposedly as some Hawk (or two) said, perhaps, next month there might be some fiddling with the taper (the talk wasn't that the investor would get reamed - forgive me, I was in the U.S.Army at 17 and learned some good lessons -- also, I was a medic so I know of orifices, to boot). Ben's problem is that he's in a fog (who isn't?). Yet, he runs around with the elite like an oracle (he ought to consider some of the Prophets about which he knows, perhaps), strokes the addicts, bends in to the money'd, and more. And, he looks for signs (omen analyzer -- ah, age-old behavior). And, he misses the obvious. For instance, what they're calling jobs (related to his triggers) are really just glorified indentured servancy roles. In fact, these things are to drive a consumer-oriented economy? ...

06/19/2013 -- Ben, this week, I'll undergo a slapping event, again. Would you not like to be there?

06/19/2013 -- All the media (financial type) were saying that investors were awaiting "guidance" from Ben, and the Fed, this morning. So, Ben has spoken. No change. Yet, other heads, like Stockman (ought we agree with him on this?), say that Ben is asea, doesn't know how to extract himself from the corner into which he has painted himself and us. All the while, Ben has been slapping the savers, way beyond silly.

05/08/2013 -- Got slapped silly, again. Ben wasn't there. But, his influence lingered large. Yes. A CD rate of 0.05%. Some would say ridiculous. If a simple account cannot be paid a reasonable amount, on what basis if an economy? Ben wants the ca-pital-sino (why not add Russian Roulette, Ben)?

04/01/2013 -- Ben as the new Central Planner.

03/29/2013 -- Ben has taken a big chunk out of the Savings Bond payback.

03/24/2013 -- Well, Ben didn't turn up for the torture. But, his long arm was there. I got slapped silly (while being held in the stock like those old Puritans used to do to people -- you would think that Ben, with his background (wandering peoples) would be a little more sensitive to the little guy) this past week even further than has happened, to date. I know, I ought to count my blessings, and I do. Ben has stolen from my pocket, but it's been like a mouse's gnawing in a grain bin. What happened this week was that 5 year-old CDs matured. They were the last of a bunch that we didn't think would mature until Ben came around (how silly of us - who would have known that Ben would be so enthralled with getting the ca-pital-sino back into its errant ways). So, this week, my total bank-related return went below 1%. Yes, Ben, you're now letting the banking industry give me a mere 0.5% for my money. Fortunately, there are other resources that raise the overall return for me (and, no Ben, not equities -- sheesh). Am I still using banks? Where the heck else will I put money? Ben would like for me to play with the money in his casino, but I have not done that yet. Don't intend to, either. If Ben would listen, I'll tell him why. I do have what are considered conservative returns coming in that pull the overall return up (from the bank's 0.5%) to a point beyond where Ben ought to have a floor for old people like myself. So, it's not hopeless. It's just that each month the tally that began with Ben's idiocy a few years ago (his idiocy in how he responded to the collective idiots, okay?) increases. It's beyond a slap in the face now. He has allowed the suits to run rampant (as if they control the game) and to suck value from people like myself. To where do we turn? No, it's not inflation, yet, that is the problem. It's just that the opportunity lost for a little gain has more value than Ben can conceive, poor guy. Over time, that is. And, we're facing this same idiocy for the unknown future. The only consolation is that inflation will kick in at some point, and rates will rise. By the way, Ben, I bought I-bonds when they were worth something. That is, before you guys (I know, it's Timmy, too, but you, Ben, print) changed the rules to make them go negative. What kind of gaming is that for people who are trying to build for the future?

03/22/2013 -- Imagine. WSJ using both chimerical and moral hazard in the same article, albeit with a twist that we'll respond to (that is, clarify what the notions mean -- has to come from outside the financial community).

03/21/2013 -- Ben on Cyprus as a type of archetypal situation, or not.

03/17/2013 -- The lessons of saver sacking that Ben taught us has carried over the pond. EU wants savers in Cyprus to tithe (10% outlay) to bail out the profligate? Looks like the rats have gotten into the grain bin.

03/05/2013 -- Cochrane, in the Monday (3/4) WSJ, says that the Fed ought to promise to not do these structural experiments in the future. Ben has been experiment real time on us (hey, guy, come down to our level and see your impact). Too, Cochrane notes that an interest rate rise to, say, 5% would put the national debt service number to $900B, yes billion per year. Ben has been bragging about his 80-90B tithing to the Treasury. It's about the right ratio for a tithe. How many years at 90B would it take to pay 900B? But, then, that 900B would be growing due to interest. What a mess we see. And, those at fault (we've already done the list) have not learned much. From what I hear, golden sacks is being clever in how they get around the old man's counsels. What's his name? Volcker.

03/05/2013 -- So, the equity markets are soaring, with the assistance of Ben. Ben ought to know that it's like a kid on a bike with training wheels and help. So, the kid can now peddle down the road. Ben can take off the training wheels: in other words, let off the QE and raise the interest rate. The kid on the bike will continue to peddle down the road but might fall a few times. That's called learning.

Modified: 09/17/2014