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?


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

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