Ben Benanke's Incompetent

[flow5]

The Euro was set up to break up. The question is how to achieve the theoretical ngDp target. You ignore the preliminary "transitory" price increases and accompanied asset speculation, while gunning MVt for 3 qtrs - then abruptly tighten.

[flow5]

Well, just like quantitative easing, they tried it, the GDP is still growing slowly weakly prices still not doing well. So it's not a huge harm at least in the first instance, but in two ways I think it's damaging.

Read more: www.businessinsider.com/richard-koo-on-ngdp-europe-currency-intervention-2011-11#ixzz1eGIwWyab

[flow5]

Marshall Auerback "He notes grimly, “the more you deflate these economies, the bigger the public debt problem is going to become."

www.creditwritedowns.com/2011/11/auerback-the-more-you-deflate-the-bigger-the-debt-problem-will-get.html

[flow5]

With the constant roll-over of some of the long-term debt and it becomes obvious that the burden of higher interest rates will be compounded. The burden becomes a function of the major portion of the debt, not just the current deficits. The burden, in fact, becomes exponential. In other words, if the trend is not stopped, the debt inevitably has to be repudiated.

[flow5]

Message deleted by flow5.

[flow5]

Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe’s debt turmoil, buttressing the dollar’s status as the world’s reserve currency.

Forty-seven non-U.S. banks held balances of more than $1 billion at the New York Fed as of Sept. 30, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP Plc, the world’s largest inter-dealer broker. The dollar has appreciated 7.2 percent since Standard & Poor’s cut the nation’s AAA credit rating Aug. 5, the second-best performance after the yen among developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes

www.bloomberg.com/news/2011-11-21/dollar-preeminence-grows-as-foreign-banks-double-deposits-at-new-york-fed.html#

[flow5]

Sales of previously owned homes in the U.S. unexpectedly rose in October, a sign falling prices may be attracting buyers.

Purchases increased 1.4 percent to a 4.97 million annual rate, the National Association of Realtors said today in Washington. The median forecast of 75 economists surveyed by Bloomberg News was for a 4.8 million rate. The median house price dropped 4.7 percent from a year earlier, and the number of properties for sale was the lowest for any October since 2005.

www.bloomberg.com/news/2011-11-21/sales-of-existing-homes-in-u-s-unexpectedly-increase-to-4-97-million-rate.html#

[flow5]

The Federal Reserve said it will be increasing collateral requirements on 21 primary-dealer banks in transactions dealing with mortgage-backed securities, in a move that would be aimed at securing an extra layer of protection against settlement risks with its counter parties.

[flow5]

Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe’s debt turmoil, buttressing the dollar’s status as the world’s reserve currency.

Forty-seven non-U.S. banks held balances of more than $1 billion at the New York Fed as of Sept. 30, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP Plc, the world’s largest inter-dealer broker. The dollar has appreciated 7.2 percent since Standard & Poor’s cut the nation’s AAA credit rating Aug. 5, the second-best performance after the yen among developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes.

www.bloomberg.com/news/2011-11-21/dollar-preeminence-grows-as-foreign-banks-double-deposits-at-new-york-fed.html#

[flow5]

Gold 1676.78


US Dollar 78.327

=============

Inverse relationship


BOARD LOCKED UP ON ME

[hvfpaints]

Flow - what's your prediction for this mess these days?

[flow5]

Jan top. But only trade the May thru June market decline.

[sil0730]

Joe Granville called a top this past Friday. Did Joe consider the Ben factor?

[flow5]

The rate-of-change in monetary flows (MVt) was faster/higher than previously thought. But nominal gDp was reported lower than expected for the 4th qtr. Therefore May & June's market decline won't be as steep as forecast (because very low interest rates have shifted depositor balances from savings/investment type accounts to transaction based accounts thereby overstating the rate-of-change in money flows). Principle drop in stocks is now forecasted to be concentrated in June.

Thought Dow topped @12,756.96 on Jan 25th as forecast. But was wrong & the DOW continued up to 12,890.46 on Feb 9th. Only time MVt has topped in Feb in the last 20 years was just last year - 2011.

[flow5]

See: bit.ly/yUdRIZ

Quantitative Easing and Money Growth:
Potential for Higher Inflation?
Daniel L. Thornton


Important shift in monetary concept -- from Friedman's monetary base to required reserves. I.e., currency has never had an expansion coefficient & excess reserves are idle, unused, & don't circulate. This graph displays the money supply's true expansion coefficient.

[Aman A.K.A. Ahamburger]

I happy to see you posting again Flow5. I know that BTI and I miss the daily dose of flow. Investing Perspectives would love to have some of your input.

[wyouser]

Feb 13, 2012 2:43:02 GMT -5 Aman A.K.A. Ahamburger said:

I happy to see you posting again Flow5. I know that BTI and I miss the daily dose of flow. Investing Perspectives would love to have some of your input.

Ditto that

[dothedd]

Bernanke: US Recovery Could Go Off 'Massive Fiscal Cliff'
Thursday, 01 Mar 2012 07:15 AM


Federal Reserve Chairman Ben Bernanke on Wednesday offered a tempered view of the U.S. economy, pouring cold water on the notion recent upbeat signs herald a stronger recovery.

Bernanke told Congress that unless growth accelerated, the unacceptably high U.S. unemployment rate would not keep dropping.

But he stopped short of signaling further Fed bond purchases, dashing the hopes of some traders in financial markets who were betting on more monetary stimulus.

"The job market is far from normal," Bernanke said.


"Continued improvement ... is likely to require stronger growth in final demand and production."

The swift decline in the U.S. unemployment rate in recent months, to a three-year low of 8.3 percent in January from 9.1 percent in August, has surprised economists both within and outside the Fed given the economy's relatively soft performance.

Last year, the economy expanded only 1.7 percent, although the fourth quarter proved to be the strongest.

"The decline in the unemployment rate over the past year has been somewhat more rapid than might have been expected, given that the economy appears to have been growing during that time frame at or below its longer-term trend," Bernanke told the U.S.House of Representatives Financial Services Committee.

Bernanke's tentative outlook knocked the Dow Jones industrial average below the symbolic 13,000 level it had closed above on Tuesday. The Dow closed off 53 points, or 0.4 percent.It is up 2.5 percent on the month.

Stock prices had been marching higher all year on optimism about gathering economic momentum.

While Bernanke's tenor was dovish, the lack of a direct allusion to the possibility of a third round of so-called quantitative easing also undercut prices for government bonds and pushed the dollar up.

Gold prices slumped 3 percent, their biggest one-day drop in 2-1/2 months.

"Bernanke implied that the Fed was no closer to QE3 ...Investors were disappointed," said Cary Leahey of Decision Economics in New York.

Minutes of the Fed's January meeting released earlier this month suggested a consensus for more bond purchases would only emerge if the economic outlook worsened.

In a report prepared for its next meeting on March 13, the Fed said on Wednesday that the economy has expanded modestly since the start of the year, with hiring picking up in some areas.

FED ARITHMETIC

The U.S. central bank cut overnight interest rates to near zero in 2008 and has bought $2.3 trillion in bonds in an effort to keep interest rates low and boost economic activity.

After a policy meeting last month, the Fed said benchmark rates would stay exceptionally low through late 2014.

Bernanke made clear on Wednesday that the pledge referred specifically to the current zero to 0.25 percent range for overnight rates. Some analysts had speculated it could encompass a somewhat higher but still historically low rate level.

Sustaining a highly accommodative monetary policy stance is consistent with the Fed's goals of achieving full employment with low and steady inflation, he said.

Asked whether the Fed was hurting savers with its easy monetary policy, Bernanke said a case could be made that interest rates should be even lower and that savers would benefit from a stronger economy.

"It is arguable that interest rates are too high, that they are being constrained by the fact that interest rates can't go below zero," he said.

Cleveland Federal Reserve Bank President Sandra Pianalto on Tuesday said it could take four to five years to ratchet the jobless rate down to about 6 percent.

SAYS OIL CUTS BOTH WAYS

Bernanke also addressed the recent rise in oil prices, which he said could both raise inflation for a time and curb spending.

"Gasoline prices have moved up ... (which is) a development that is likely to push up inflation temporarily while reducing consumers' purchasing power," he said.

Strong jobs and factory data since the Fed last met have calmed fears U.S. growth would slow sharply early this year, and have led economists to scale back expectations for a further easing of monetary policy.

But tensions between Western nations and Iran over Tehran's nuclear ambitions have escalated, threatening a repeat of 2011 when a spike in energy prices hit the recovery hard.

Some financial market participants thought Bernanke's nod to potential price pressures from energy costs, however qualified, marked a heightened level of vigilance on inflation.

"Any acknowledgement of inflationary pressures by the Fed could potentially shut the door on additional stimulus," said Ashraf Laidi, chief global strategist for City Index in London.

Nervousness about oil supplies has pushed prices for crude to 10-month highs, although prices fell on Wednesday as U.S. data showed higher-than-expected oil inventories.

Bernanke also warned that the U.S. recovery could come off the rails in 2012 if Congress failed to take action to address a "massive fiscal cliff" of tax increases and spending cuts due to kick in early that year.

"I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date," he said.

However, Bernanke played down risks to the United States from a likely euro zone recession.

"If Europe has a mild downturn, which is what they are currently forecasting, and if the financial situation remains under control ... the effect on the U.S. might not be terribly serious, at least it probably would not threaten the recovery," he said.

[jarhead1976]

Thank you flow5 .