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The Masked Tulip

If Interest Rates Go Up A Point Bernanke's Bankrupt

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Today's must see TV comes from the following interview of Pimm Fox on the consumer and the economy with retail expert Howard Davidowitz, who in 10 minutes provides more quality content and logical thought than we have seen from CNBC guests in probably all of 2010 (except of course for that one time when Erin Burnett kicked out Mike Pento, but that's a different story). Where does one start? Probably at the end:

"I am not surprised by the strength of retail sales, because i knew that 30% of consumers are responsible for retail sales, and these 30% did much better because of the performance of capital markets. I don't think it is indicative of anything going forward. I don't think the economy is going to get any better. If you look at our fiscal and monetary policy, we went two trillion in the hole last year. Two trillion... to produce this... and unemployment went up to 9.8%! We've spent two trillion we're printing money we're going bananas. Our balance sheet, we've got $2.6 trillion on there, and what;s on there government securities, and MBS." And here is the kicker for the world's biggest hedge fund, which at least one person besides Zero Hedge appears to get: "If interest rates go up a point Bernanke's bankrupt. Everything he's bought is underwater. All the MBS are underwater, the whole country is underwater."

Does anyone see the issue now with why rising interest rates, aside from predicting a "recovery", may also, courtesy of its now $2 billion DV01, "predict" the insolvency of the Federal Reserve?

Worth reading the full zerohedge article - including intereting take on commercial property landlords - and watching the linked video at:

http://www.zerohedge.com/article/must-see-howard-davidowitz-destroys-recovery-illusion-debunks-consumer-renaissance

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Does anyone see the issue now with why rising interest rates, aside from predicting a "recovery", may also, courtesy of its now $2 billion DV01, "predict" the insolvency of the Federal Reserve?

I would be surprised if there are any banks out there that have a net DV01 of 1/1,000th of the size of the Fed's interest rate risk position.

I find it a bit annoying that the regulators publicly and privately chastise banks for taking reckless positions in markets yet they happily take positions at least 1,000 times as large themselves.

It is hypocricy of the highest order.

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Worth reading the full zerohedge article - including intereting take on commercial property landlords - and watching the linked video at:

The very worst thing that could happen to retail in the face of online competition was for a rent/property bubble. They got it in spades, the fixed costs will be utterly unpayable for most.

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Guest spp

Better get protection.

Corrected.

Exactly what I did in March 09. When the Bernank got the keys to the kingdom and kicked the can straight into the black hole.

Did you notice how quick they got him off when he mentioned how $hit everthing is!? :lol:

The same thing happened to Schiff yesterday when he started to talk about inflation. :P

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Interesting how 30% of consumers are the real drivers. I notice this myself in day to day life. Maybe 10% of the population just keeps making more and more money, their talents and skills are becoming more valueable in this globalized, automated world. On the other hand for more and more people their labour is being devalued and their consumption is getting leaner. Especially now that their credit lines have reached the end of the road.

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Interesting how 30% of consumers are the real drivers. I notice this myself in day to day life. Maybe 10% of the population just keeps making more and more money, their talents and skills are becoming more valueable in this globalized, automated world. On the other hand for more and more people their labour is being devalued and their consumption is getting leaner. Especially now that their credit lines have reached the end of the road.

Most of the money is going to people who already have the money. They already have the resources or market dominance or the infrastructure or a printing press. Not much to do with talent anymore.

Of course, you could argue that they got to that position through talents and skills I guess, which could be correct, but it seems the old guard is where its going to stay for a while.

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Interesting how 30% of consumers are the real drivers. I notice this myself in day to day life. Maybe 10% of the population just keeps making more and more money, their talents and skills are becoming more valueable in this globalized, automated world. On the other hand for more and more people their labour is being devalued and their consumption is getting leaner. Especially now that their credit lines have reached the end of the road.

That's a mix for revolution.

If this is accurate that a 100 point increase will bankrupt the Fed it would appear the debt compound problem has already been well and truly breached.

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That's a mix for revolution.

If this is accurate that a 100 point increase will bankrupt the Fed it would appear the debt compound problem has already been well and truly breached.

Yes at some point the democratic vast majority should stand up and say lets divide this pie more equally. Its stupid to have a society where 10% of the population is getting bizarrely rich and the rest are actually going downhill.

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Most of the money is going to people who already have the money. They already have the resources or market dominance or the infrastructure or a printing press. Not much to do with talent anymore.

Of course, you could argue that they got to that position through talents and skills I guess, which could be correct, but it seems the old guard is where its going to stay for a while.

I would agree in all honesty. Most are people like professionals where there are legal barriers to entry. And also a great number are either directly or indirectly on the state payroll. A highly paid government upper manager is just as much on the state payroll as a welfare mom.

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I would agree in all honesty. Most are people like professionals where there are legal barriers to entry. And also a great number are either directly or indirectly on the state payroll. A highly paid government upper manager is just as much on the state payroll as a welfare mom.

Aye. As is the master of the universe that commits and contributes to a particular political party..

All bought and paid for.

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That's a mix for revolution.

If this is accurate that a 100 point increase will bankrupt the Fed it would appear the debt compound problem has already been well and truly breached.

you cant bankrupt the FED..they would just "buy" their own debt.

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You can! Where it gets to the point where white paper is more valuable than after you print it

ha ha!...nah, they just use a red biro and cross it all out.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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