Friday, June 20, 2014

Sucker money

Moral: Wherein we consider how the Fed is setting up for losses by those who cannot afford such.

In other words, sucker money will (may) be flowing in. May? Perhaps, people are smarter this time around. The "sucker" post was from 2010. That was before Ben did some of his trickery.

In the meantime, savers were flayed to within an inch of their lives. Perhaps, they'll be like cats and have nine of these to give up.

You see, several things needs to be explained. We'll get to that. In the meantime, it will be interesting to watch how all of this unfolds. Except, the victims will be those who were pulled late due to all of the hype that has inflated as much as have the markets.

Those late buyers will buy from the early entrants (or even those who stayed in last time, getting what they expected Ben to do (and now Yellen), in hopes that the punch bowl would be kept full) who will have massive gains. Then, as things tumble, those late buyers are guaranteed losers (assuming they sell, if they do not sell, what type of trickery will be required for the next load of dope for the addicts?).

Minsky's notions, of course, will come into play as we look at this matter, again.


But, we can talk moral hazard, too. Lots to talk about there.

Then, we will look at how savers have been hurt, using numbers. Perhaps, it's time to re-evaluate the model that has consumer spending weighted so heavily. Near-zero's reality is lurking.

You see, our infrastructure is decaying all around us. The fat cats don't usually bother with such things (as we will show). Why? Their position (as in, they're the best, deserve everything they can obtain via exploitation, and a whole litany) leads them to believe in perpetual motion (we'll do a post on this - something from nothing, if you must ask - as we see with the chimera). Yes, idiotic, isn't it?

Remarks:  Modified: 06/20/2014

06/20/2014 -- Last fall, there was a flurry of activity, looking at Yellen's approach. Two examples: Folly of the Fed, P/E Multiples. That was last fall, who is looking now? Well, Smithers is still at it. Also, quote from the Economist (May 10, 2014) -- emphasis mine: Janet Yellen, the Fed’s head, rather bizarrely used the prospective price-earnings ratio, one of the weakest of all measures, to justify a statement that Wall Street was not overvalued. (This was doubly strange since her husband, George Akerlof, co-wrote a book with Robert Shiller, who has championed a much better measure, the cyclically adjusted price-earnings ratio.). ... From my analysis, we'll see something else: the earnings are less than expected just by definition (such that allows book cooking in order to reduce the influence of costs - see infrastructure allusion earlier). 

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