Reality Check: A FED Policy Change Would Cause Unprecedented Trauma

Jackson Hole – What Have We Learned?

Robert Eisenbeis, Ph.D.  

 Chair Yellen’s much-awaited Jackson Hole speech has been touted in the media as suggesting that there will soon be a second rate hike to follow the FOMC’s December 2015 move. However, many have noted that there was actually little, if anything, new in the speech. She did note that there was continued improvement in the economy, especially on the employment front. Some suggest that a possible move in September would hinge upon the release of the next employment number for August, and some of the FOMC participants in attendance noted that all meetings were still live.

However, both Chair Yellen and other FOMC participants were also painfully on message to point out that any policy move would depend upon incoming data, that rates would remain low for some time, and that the subsequent path for further policy moves was more important than the exact starting date. None of this is new, and nothing said should be surprising to most Jackson Hole participants. After all, the purpose of the conference is to discuss policy issues and conceptual policy frameworks and not to serve as a substitute for an actual FOMC meeting. It is out of character for FOMC participants to prejudge actual policy positions and/or to suggest that a policy decision has been made, one way or another, in front of a pending FOMC meeting.

Unlike the press, markets revised only slightly their views on the probability of a rate hike in either September or December. The CME estimate, based upon Fed Funds futures prices, put the probability of a move in September at only 33%, with a 35% chance in November and only a 57% chance for a move in December.  

Why might the market’s assessment be so subdued relative to the rhetoric in the press?  There are several reasons. First, although FOMC participants suggest that the next employment number will be important, it is also the case that the Committee’s employment objects are close to, if not already, consistent with their statutory mandate. Even there, Governor Powell, in particular, sounded a cautionary note in Jackson Hole. He stated that he believed there was considerable slack remaining in the labor market and that the FOMC could afford to be cautious. Mark him down as a dove, along with Chair Yellen and Governor Brainard.

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Strangely, White House And Germany Are Panicking

MERKEL PREPARES FOR A DELIBERATE CRISIS WHILE WHITE HOUSE PLANS FOR A DISASTROUS SUCCESSION

Europe is convulsed by Islamic immigration, Brexit and a brutal economic state-of-affairs that are making it difficult for the average European citizen to live anything like a normal life or plan for the future.

Germany is one place where this sort of fear is being aimed at the population on a daily basis. Angela Merkel’s government has just urged Germans to stockpile enough food and water for ten and five days, respectively “in case of an attack or catastrophe.” Germany is also mulling a return to a military draft.

On the surface, Merkel is simply trying to prepare Germans for every eventuality. She is, you see, a caring leader who wants the best for her people.

In fact, Merkel is simply a handmaiden for a much larger group of elites who are continually plotting “chaos” in order to lay the groundwork for a continued evolution of global governance.

People are supposed to exist on the knife-edge of panic. Merkel has been very good at bringing chaos and fear to German communities. Her immigration policies have welcomed millions of Muslims displaced by wars of aggression by the US and NATO to Germany, and while  this only accounts for one percent of Germany’s population, her government has skewed the demographics for maximum impact.

While the median age of  Europeans is 40,  the median age for Islamic immigrants is 32. And the population Merkel has knowingly injected into Germany is sharply male.

Like other European and other Western leaders, she is very obviously not interested in securing the safety and well-being of German citizens.

No, let me be blunt: She is actually interested in the dissolution of German culture. She is interested in destroying that culture in order to strengthen a larger pan-European society.

Fear is just one tool, but an effective one. Fear is where it always begins. Later on Merkel and other leaders will manufacture more false flags – terrorist attacks or outright war – to make it seem as if their predictions were wise.

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The Dumbest Guys In The Room - With Hindsight

Why They Did It: Madoff and Enron’s Fastow Explain the Biggest Frauds in U.S. History

Why do business executives—people who already possess status and wealth—commit financial crimes? 

Eugene Soltes offers some interesting theories in his new book, Why They Do It: Inside the Mind of the White-Collar Criminal, including the notion that many senior business people operate in a moral "gray zone." An associate professor at Harvard Business School, Soltes posits that they step over the line—breaking accounting rules or making illegal insider trades—in part because they rely on intuition. And, it turns out, their instincts stink. 

More compelling than his analytical efforts, the author's unusual research method ought to draw a large audience to his book. With an admirably naive eagerness, Soltes wrote letters to some four dozen convicted criminals, ranging from Ponzi scheme legend Bernard Madoff to Andrew Fastow, late of Enron Corp., to Dennis Kozlowski, once the chief executive of Tyco International Ltd. Lo and behold, many of them wrote back.

Soltes thus had the opportunity to pepper his book with the first-person observations and self-justifications of a colorful Murderers' Row of white-collar crime. Here are some examples:

I’ll pay them all back. Promise.

"It's like a comedy of errors," Madoff told Soltes. "To cover the losses, I decided to take in money from hedge funds. And in order for me to do that, I had to commit to a long-term strategy that I wouldn't send the money back [to investors]. I kept taking in more money, figuring that once the market allows me to do the strategy, I will be able to fix it."  That's the classic explanation of supposedly well-intentioned Ponzi masters: Eventually the scam will miraculously produce profits and everyone will be made whole. Madoff, 78, has plenty of time for correspondence, as he's serving a 150-year federal prison sentence.

 

Oops, I forgot about right and wrong.

 Bloomberg

EYE on the World - Global Physics: An Unsustainable Shrinking Pie

 Stories Going Beyond The Mainstream 

 

    Global Physics:

 An Equation That Is Not Sustainable.  

" Our Daily Shrinking Planetary Pie With More Mouths" 

We Are Running Out of Natural Resources - Now What?

Humans are gobbling up natural resources at a terrifying rate

Humans are using too much crap.

That’s the official word from a new U.N. report on the use of natural resources. It found that, from the food we eat to the homes we live in to the fuels we burn, our rates of consumption are just unsustainable. That’s not too surprising, but the real shock is that our extraction of the primary materials used to make all of our stuff has more than tripled in the past 40 years.

“We urgently need to address this problem before we have irreversibly depleted the resources that power our economies and lift people out of poverty,” said the U.N.’s Alicia Bárcena Ibarra. 

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Scotland On Path To Completely Ditching Fossil Fuels

 

Scotland just produced enough wind energy to power it for an entire day

Strong winds combined with low demand on a sunny summer Sunday help Scotland reach ‘significant milestone’ on path towards ditching fossil fuels entirely

For the first time on record, wind turbines have generated more electricity than was used in the whole of Scotland on a single day.

An analysis by conservation group WWF Scotland found unseasonably stormy weather saw turbines create about 106 per cent of the total amount of electricity used by every home and business in the country on 7 August.

Gale-force winds lashed much of the country with a speed of 115mph recorded at the top of Cairngorm mountain. 

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Serious Money Moving To The Sidelines

Investors Stockpiling Cash Like It’s 1999

Wealthy investors are stockpiling cash at levels we haven’t seen since 2001, in the wake of the Dot Com crash. The cash slush pile is larger even than in 2008 when investors fled the market during the Lehman collapse. According to a recent survey, large investors, including asset managers and institutional investors, have almost six percent of their holdings in cash. The amount of cash being squirreled away by just the world’s billionaires, not solely in the U.S., but worldwide, is estimated to beas high as $1.7 trillion dollars. That’s ten percent of the entire U.S. GDP.

There are a lot of reasons that the investment world has retreated to cash, but this is the first time it’s happened when there was no clear ongoing economic disaster. In other words, seasoned investors are behaving as if there’s been a market collapse at a time when equity markets continue to march higher—when to all outward appearances we’re in a boom.

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Last Days For Oil Industry? 

Heinberg: Is the Oil Industry Dying?  

The peak oil controversy stages a comeback as the industry confronts a future of higher costs — and low prices. A spindletop spouter gushes oil in 1902. (Image: Wikimedia Commons) Talking about “peak oil” can feel very last decade. In fact, the question is still current. Petroleum markets are so glutted and prices are so low that most industry commenters think any worry about future oil supplies is pointless. The glut and price dip, however, are hardly indications of a healthy industry; instead, they are symptoms of an increasing inability to match production cost, supply, and demand in a way that’s profitable for producers but affordable for society. 

Is this what peak oil looks like?  

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No Future For Middle-Class Or Wage-Earners

Here's Why Wages Have Stagnated--and Will Continue to Stagnate

The only way to reverse declines in labor participation and stagnation in wages and demand is to make it easier to start enterprises and hire people.

Mainstream economists are mystified why wages/salaries are still stagnant after 7+ years of growth / "recovery." The conventional view is that wages should be rising as the labor market tightens (i.e. the unemployment rate is low) and demand for workers increases in an expanding economy. 

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Overpopulation Ultimately Leads To Global Food Shortages

The Odds of a Global Food Crisis Are Rising

The vulnerability of global food production to extremes of weather is a profound reality that few grasp.

Given the current abundance of food globally, confidence in permanent food surpluses and low grain prices is high. Few worry that the present abundance of food could be temporary. But the global food supply is more fragile than we might think, despite historically low grain/agricultural commodity prices.

Both corn and wheat have plummeted in price due to current demand/supply:

Let's start with one salient fact: there are 7+ billion human mouths to feed now plus hundreds of millions of animals that are being fed grain to supply humanity's insatiable appetite for meat:

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