Example #7,345 of Diabolical, Incestuous World of Finance: Secretly pulling back QE so only Investors benefit

So many reasons to hate Wall Street.. to hate the Federal Reserve..

To hate Benjamin S. Bernanke specifically...

Would take far too long to list them all, so in today's post we will focus on one specific reason why we hate all three entities so deeply...

They all directly tamper with and manipulate True Capitalism.

In True Capitalism, people survive, thrive or perish on their own.   Make a good investment choice and  congrats to you..  Make a poor one and its up to you to essentially wipe the figurative 'dirt' off and get up and try again..

Or stay on the ground in a fetal position...  Up to you..

But Capitalism in its Truest sense is about fairness.  You put an idea or product or service into the marketplace and compete with everyone else.  The better the idea, product or service, the more you profit..

Everyone benefits.

But that's not what you have currently of course..  Everything is rigged..

Let's take Quantitative Easing-- we explained many many times that this is a catchy term for pouring fresh liquidity into a stale stock market via buying of toxic mortgages and other assets which cause the values of stocks to artificially raise to give appearance of a 'recovery' that does not exist for 99%

Now that the Dow hit 15,000, everyone assumes it will last forever..  So mom and pop and other everyday gullibles are putting their precious money into that market expecting a nice profit ultimately..

Except...  Did you hear?

Oh you didn't?

Oh.. well..  The Fed plans on stopping QE ultimately.

Its true.. came from the Fed's official media regurgitator, spin-meister and dirty whore at the Wall Street Journal himself-- Jon Hildenbrath..

"Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program... they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves"

In other words, like a cowardly academic which Bernanke is, the Fed will reduce its monthly purchases starting at an undecided point and the first sign.. the slightest little Whiff that the Investors and Banks and Profiteers are unhappy and losing money, will turn on the spigots again.

Yep..

In a perfect world, the market would drop so dramatic and precipitously that professional Investors would take a blood bath and cause people to finally wake up and start pulling their money from banks instead of naively assuming all is always to be well

Sorry but people are just too damned complacent and its exasperating...

Anyways.. wonder why you didn't hear about it?

Simple.. All news of genuine importance to the market where the big wigs and power players need time to digest is released on a late Friday afternoon after market closes for weekend..

God forbid there's a panic where they make end up taking any sort of loss..

Yep, everything is tailored for the Investor and the financial sector.

A very brief history of QE and how the bearded bastard has used it for maximum effect--  QE 1 started in March, 2009 and by mid 2011, QE 2 was completed..  and the market rose.

But Bernanke wanted it to continue to rise without having to keep using QE, so for the next 12-14 months, he successfully got all the greedy, selfish rats and roaches who profit off the market to push up the Dow simply by rumor, hope and assumption that the next wave of QE was coming..

Ultimately, Benny had to give the mongrel dogs their 'meat' so he enacted QE3 in mid 2012, then unlimited QE 4 & 5 combined and now the Evilest entities to share breath with good, decent people are raking in the profit.

And don't look to Obama to rectify this.. No no no..

No President would dare do anything to stop this meddling especially if it is to help the market bubble expand and expand...

This is a modern phenomenon actually.. started with Clinton back in the 1990s with that phony dot.com bubble where everyone thought they could become a multi-millionaire simply by creating a website.

In January 1993, while he just beginning Clinton's first term, the S&P 500 stock market index was at 437.  It then propelled upward until it breached 1,500 in March 2000, a 243% gain.

The wealth effect bamboozled people into borrowing against the fruits of their stock-market wisdom. Some became day-traders (disgusting barnacle feeders).  And as this money was spent, it cranked up local economies. Sales-tax revenues jumped.

Companies like Cisco used their inflated stocks as homemade currency to acquire other companies, sometimes paying billions for tiny startups. Unemployment dropped below 5%. Income-tax revenues soared. And suddenly there was a mirage on the horizon: a federal budget “surplus.”

Then it crashed.

When President Bush was inaugurated in January 2001, the NASDAQ was evaporating, and the S&P was down to 1,342. But for Clinton, it was still up over 200% compared to Jan, 1993 so he was pleased as punch to have his Legacy

Bush rode the S&P down to 800.   Then the recovery started – the first “jobless” one.

Wall Street was goosed by the Fed’s easy money, and housing was performing miracles thanks to a massive bubble where no one bothered to check or care if lendees had adequate means to ever pay back the mortgages they were taking out..

And then of course, those despicable house-flippers who artificially would buck up housing prices by 10-15% with each greedy self-centered 'flip' sale...

Stocks marched upward and upward, and in early October 2007, Bush was already working on a rough draft of his legacy while the S&P set a new record, oblivious to the hissing from the housing bubble and the stench around banks.

Then on November 7, Cisco CEO John Chambers, during the earnings call, said that growth in the US would be “very lumpy.”

Markets went south. The rough draft of Bush’s legacy went up in smoke.

By the time he handed the scepter to President Obama, the S&P was at 831.

The government that had for the briefest moment seen the mirage of a surplus at the beginning of his term was running a deficit of over $1 trillion. During Bush’s time in office, the S&P had plunged 38%.

A catastrophic legacy.  And we're not even mentioning the two needless wars and the tax cuts and passing the Bankruptcy Overhaul bill making it more difficult for struggling Americans to declare Chapter 7, etc..

And here's the big irony of it all:  If the Fed had printed a few trillion in 2007 and 2008 to delay the blowup and drive the S&P to 2,000 or such, Bush would be bragging to this day in a Clintonesque manner about how his economic policies made Americans better off.   He would have handed President Obama the bubble to let it blow up in his face.

Instead, on March 2, 2009, less than two months after Obama had become President, the S&P bottomed out. The Fed had been handing trillions to Wall Street to re-inflate asset prices and bail out the banks.

Now the S&P is once again setting records on a near daily basis. The Federal Government is raking in tax revenues from income and capital gains. It had the largest April surplus since 2008. Even California is stepping away from the brink of declaring bankruptcy (for now at least..)

And though three and a half years is an eternity in the markets, you best believe Obama will do all he can to manipulate and ultimately mask a popping bubble until the next person takes office.

All that ever matters to second-term Presidents is legacy..

That and securing funding for their egotistical Library.

So yep, politicians love a good asset bubble...

And this god-damn stock market, with margin debt at a near record, no longer knows any limits even though corporate revenues have been lousy and employment has barely kept up with population growth.

No one seems to care about That anymore..  The populace either is clueless or oblivious.

You know the adage.. recession if your neighbor lost his job, a depression if you lost yours and if you are not affected, then *shrug*

Its so scary-sad how many have been so indoctrinated to admire and fawn over the wealthy; to actively root and cheer for their continued success.. The more wealth you hold, the more you're respected and few care How you earned it...

Some even give moral justification why its completely alright for men and women who possess wealth in the hundreds of millions, if not billions to wake up each morning and seek out acquiring more..

Some admire the Warren Buffetts of the world..

We see them as they are i.e. 'an organism that lives on or in an organism of another species, known as the host, from the body of which it obtains nutriment and gives nothing back in return'

Parasites.

~ Isn't it funny: high markets, student loans and April jobs report

We will call today's posting 'Isn't it funny..' even though very little of what we will discuss is humorous or amusing, but it allows us to cover an array of different mini-topics...

~  Isn't it funny how proud we are as a nation are at Dow 15,000 as if its some patriotic act?   Certainly we know why the rats and roaches who Invest are pleased as punch, but the nation as a whole?

Are they that out of touch with reality?  Do they really attach national pride to wealthy people making More wealth??

Used to be a strong Dow meant a strong national economy.  Now its actually the opposite.  For instance in England, On May 5, 2008 their stock market, the FTSE closed at 6,204.

Five years later, their economy is an utter mess; so bad they, unlike in the US, actually Admit they're back in recession... Their unemployment rate is 7.9% and in a population of 63 million, 2.56 mil are out of work..

So how's their stock market doing today?

Closed at 6,521 -- the market is 317 pts Higher today with a dreadful economic situation than it was 5 years ago today when things were much rosier.

Why?  Because whoever runs their finances are big believers in QE as well.

Another example-- Japan.  They've been economic purgatory for the last couple decades but five years ago, on May 5th 2008 their market called NIKKEI 225 closed at 13,655.

In October 2008 it dropped to a low of 7659 and after a lot of up and down, it finished the week of November 7th, 2012 at 8757.

And now, in a mere six months... 180 days, their market has artificially climbed up to a close today at 13,694..   That's a jump of 4,937pts in less time does it take to conceive a child.

And pray tell, what was the secret of their 'success'?

Lots of QE and Heavy and we mean HEAVY devaluation of their currency, the Yen which makes it very attractive for foreign businesses and investors but kills the Japanese consumer, much like what the Fed does hurts Americans.

So what was once a barometer of the strength and economic vitality of a nation is now the opposite-- the stronger the market tallies, the more fucked up those nations are financially and the worse off for the bottom 99% of those populaces.

~  Isn't it funny how easy as pie it is to apply for and receive loans to attend college?

All one has to be is 18 years old an have a pulse.

You can major in anything you want- Philosophy, Religious Studies, Ancient Languages...  The loaner doesn't care-- its not even a prerequisite that you put down a major that may give you a fighting chance at a job one day.

Then again we suppose, why should it?

If its not a prerequisite that the applicant for financial aid have a job, have any property or collateral or even have any savings, then it would be silly for the government, who backs the loans to inquire how you will ever pay them back while taking on degrees in worthlessness...

And yet, try getting a loan for an automobile...  Try applying for a credit card..  'What is your annual salary?'  'Do you own or rent your home?'  'What is your credit score?'

Wonder why this is?

Certainly we all know that loans for homes, cars, credit cards and such can be removed in a bankruptcy while student loan debt is with you until you pay in full with interest or your last breath is extinguished, in which case, the government goes into your estate and takes what's needed to pay that debt before your kin get a penny...

But why is everyone steered to getting a college education?

Mainly because going to college delays filing for unemployment.  This is precisely why the GI Bill was enacted back in 1944.

Prior to WWII, in 1940 the unemployment rate in the US was 14.9%  1941 it was 9.9%.  By 1944, it dropped to 1.2%.   Eventually these servicemen were going to come home and needed jobs, which were not always easy to come by...

So by providing all this assistance, GIs were able to delay re-entry into the work force by 2-4 years, allowing the government time to adjust from a war to peacetime economy.

The situation with today's young adults are a little different in that unlike GIs who had the education provided for them, it is the student and that heavy debt load who are supposed to piggy-back the floundering economy

For the first time in history, US student loan debt surpassed one Trillion.  And that hasn't phased parents one bit from pressuring their kids to take on that debt.

And most young people are more than happy to have an additional 4-6 years to avoid being adults while spending four years drinking, drugging, partying and unsafely sexually experimenting...

They just assume magically a job will be there at the end and forget student loans are only the first of a lifetime of debts accrued.

~  Lastly, isn't it funny how people believe stats without taking any time to delve into them on their own?

Let's take last Friday's announcement by the Bureau of Labor Statistics that 165k new jobs were created in April-- Horray~  We'll put aside the fact that 250k new jobs must be created at minimum to keep up with population growth...

How do the jobs break down?  (All stats come from the BLS report)

* Professional and business services added 73,000 jobs.   Of that figure, temporary help services were (+31,000), professional and technical services  (+23,000), and management of companies (+7,000).

73k averages to 1,460 new jobs per state.  42% of those jobs are worthless Temps with no rights who can be fired at any time for any or no reason...  Less than 10% were managers i.e. those with higher education who expect higher salary.

* Within leisure and hospitality, employment in food services and drinking places rose by 38,000 over the month.

This averages to 760 new servers, etc per state...

These are where many college graduates and those still in school are turning to make ends meet.  Turnover rates are usually 50% so often these new 'hires' are those who may have quit other leisure or food services jobs a month or two prior.

Thus, its not 'new' labor.

Also, because servers and bartenders in particular are heavily dependent on tips, its no skin off owners' noses to hire them en masse.

* Retail trade employment increased by 29,000 in April.  Job growth occurred in general merchandise stores (+15,000) and in health and personal care stores (+5,000).

That averages to 580 jobs per state...  These 'professions' usually pay around $9-11/hr.  That's $18,720 to $22,880/yr Before taxes

* Health care added 19,000 jobs in April. Within the industry, employment rose in ambulatory health care services (+14,000).  Employment also continued its upward trend in social assistance.

That averages to 380 jobs per state.   So if you have actual licensed medical knowledge or training, its still a rough go.  But if you can drive an ambulance or assist the elderly i.e. wipe their bottoms and drive them to Dr appointments, there's work for you.

* Employment changed little over the month in construction, with small offsetting movements in the residential and nonresidential components.

Employment in other major industries, including mining and logging,   wholesale trade, transportation and warehousing, financial activities, and government, showed little change over the month.

In other words, stagnant to no job growth.

Wall Street cheered over this report...

If you cheered along with them, pardon us, but you're clueless.

Rationalizing each trading day's spin.. One lie upon Another

The market is up +64 pts at 14,764 as of 11am

And there's always some rhyme and reason-- here's today's professional version of blowing smoke up people's bums:

"Stocks gained after data showed the number of Americans applying for unemployment insurance fell last week to its lowest level since the early days of the 2007-2009 recession." (Reuters)

Wow!  That's simply terrific.. Yay Government & Private Sector!

Oh course the recession Never Ended but.. you know..

Oh, and wait-- Didn't the Dow go down over 100pts less than 24 hours ago because the private sector only created 141,000 or so new jobs in April in a nation with population of around 315 million?

AP Says, "The number of Americans seeking unemployment aid fell last week to seasonally adjusted 324,000, the lowest since January 2008. The drop points to fewer layoffs and possibly more hiring."

Understand, that's not the number of people NEEDING unemployment assistance like the Millions who can't collect any more benefits...  Or the number of people RECEIVING unemployment assistance now..

Nope..  It is SEEKING.  As in, just recently got fired.. As in people who may have had employment a month ago.. or a week ago..

See how these MF bastard corporate media people twist and manipulate bad news into something good or well, not so bad?   The second sentence is glowing empty optimism about 'possibly' more hiring.

If only 230k private sector jobs have been created in the last two months, Federal and state governments aren't hiring and there's acknowledgment all around the entire global economy is in a slowdown, um.. one quickie Q...

Where are these magical jobs to come from?

So every day the market does something.. really one of five things:  It goes up, down, Way UP, Way Down or finishes pretty much where it started.  

That's it-- Just 5 scenarios.  And the finance media always has rationalizations and explanations to cover each twist and turn as to optimize the positive and minimize the negative.

And if a negative is too big to gloss over, it ends with 'the cavalry is coming' pitch i.e. 'The Fed will save the day folks.. no worries..'

For some 'fun', we thought we'd go back and look at how the stock market did over the last 5 business days starting at Friday, April 26th and more importantly focus on how the media explains it, doing so as concisely as we can...

Now the explanations:

Friday 4/26:  14,715 (+7 pts)

"Stocks closed mixed in a quiet trading session on Friday. Investors were focused on numerous earnings reports during the day and a couple of economic reports that offered a mixed view of the economy.

The final revision to the University of Michigan Consumer Sentiment Index came in well above consensus estimates, but was still down from March. Also, the advanced GDP report showed that the economy grew 2.5 percent in the first-quarter of 2013, but this was less than had been anticipated." (AP)

A bunch of gobbletygook nonsense-- Consumer sentiment continued its descent as less people felt confident a recovery was going to ever reach them and 2.5% GDP growth for a nation of this size is anemic at best.

Investors ignored all the negatives because Bernanke is pumping in that $85B in fresh money every month for they and banks to play with.

Monday 4/29: 14,801 (+95)

"A rally in U.S. stocks was sparked in part by better than expected consumer spending for March. Stocks closed off their best levels of the session, but all of the major averages recorded strong gains, including a near triple digit move in the Dow." (AP)

So the rats and roaches who trade and profit on Wall St knew about consumer confidence supposedly going up based on experts predictions (yet still really worse than March) and decided to wait until Monday to stage a rally??   Can you say 'bullshit'?

Truth is, whoever wrote the market wrap summary hadn't a clue why it went up but one can not keep a job with a news reporting outlet if you don't fill those empty columns with some words now and then.

Tuesday 4/30: 14,835 (+25)

"The U.S. stock market was resilient again on Tuesday. Stocks traded lower in early trade, before rising throughout the rest of the day to finish near session highs... Investors were heartened by a sharp rise in consumer confidence for April and a report which showed home prices continue to jump throughout much of the country." (AP)

Yes, that's not a typo-- the same empty consumer confidence survey was used to explain away not one or two, but THREE straight trading days!

Most people don't read the summary reports and if they do, its instantly forgotten.  All that matters to Ma & Pa trader is the market goes up and any rhyme or reason will do..even the same reason over n over n over..

Wednesday 5/1: 14,700 (-135pts)

"The U.S. stock market was hit hard on Wednesday as investors reacted to a report which showed slowing employment conditions for the month of April. The losses were also likely amplified by profit taking as the Dow and S&P have been hovering near record highs in recent days." (AP)

Utter gloss over!  No mention of the putrid job growth in the public sector... No acknowledgment the economy is at worst, slowly collapsing and at best, in a meandering rut.   Nope.. that 135pt drop was due to 'profit taking'..  That's 'good'..

'See boys and girls, there's Sooo Much Profit to be made in the Stock Market that 135pt drops are nothing...'

~ Demi Moore looking great

And today, 5/2 as of 11am--  A manipulative report mentioned a reduction in those newly unemployed seeking assistance and the ECB copying a page from the Fed by lowering interest rates even more which kills European savers but helps their insolvent Banks (they can lend to each other and borrow from the ECB cheaper) and Investors greatly.

Truth is, most of the time there's no sincere reason it goes up beyond Federal Reserve manipulation, impressive quarterly dividends from a company or sector or a big merger & acquisition between companies.

The rest of the time, the reasoning is as poorly made up as explaining to a spouse why you keep coming up from work at 11pm with lipstick on your collar.

And when the market goes down, its severity is always minimized.

The day you ever read or hear the word 'Sell!' in finance media, is the day it hits pre-Reagan levels i.e. Dow 1000, and even then, we wouldn't hold our breath.

Wall Street-- an evil business run by evil people with evil in their hearts looking to make as much money as possible while separating you from your wealth.

~ 'This is my body paint..  Meoww.. um.. Oink Oink!'

The War on the Saver (w/ more unrelated Body Paint pics)

~ Kate Upton

There are basically two kinds of economies going on at once which make up the world we all live in...

One is called the macro economy.  In simple terms, its the greater economy of a nation.  The focus is on things like GDP, unemployment rates, inflation v deflation, interest rates, etc..  The Big picture..

Then there's the macro economy.  This means you, the individual.  Your spending behaviors and ability to budget and save or get into debt, and from this type of information, the government determines things like income tax rates...

If it is deemed too many people have too much money, especially when the overall macro economy is doing poorly, the government will conceive every trick and scheme it possibly can to separate you from your wealth.

In simple terms its called the War on Savers.

Put aside notions of super-wealthy people living high on the hog..  While certainly many super-wealthy people have a good deal of savings put aside, the skill and resolve to save is one which crosses all economic demographics..

Its the instinctual behavior to put aside something for that proverbial 'rainy day'; It should be both Admired and Respected..

Of course reality is the behavior of self-sufficiency and fiscal responsibility are in many ways the biggest threat to the functioning of both the US and the global economy.   More so than foreign threats, nuclear weapon saber-rattling or even a market crash...

This is no exaggerative prose..   If the vast majority of Americans lived within their means, kept a strict budget consistently putting money aside for future use or want and successfully fought most temptations of advertisers, our economy would implode upon itself..

It would cease to function.  If both the US and global economy were living, breathing organisms, the 'oxygen' keeping it alive would be debt:

Both the micro debt of millions and millions of people holding mortgages, second mortgages, car loans, student loans, credit card debt, etc..  And the macro debt of nations living beyond their means requiring evermore international bank loans and Investors to step in to buy their bonds and Treasuries..

It can not survive if everyone pays bills on time and has wealth personally held for the future.  The system can tolerate a select few holding wealth but not most..  So it Must do all it can to Destroy savers..  Those who save are to government the equivalent of cancer..

Nothing personal-- they must be eradicated.

Even when the economy was strong, think about it.. what is the purpose of estate taxes?  It is to punish those who spent their lifetimes saving and building a nest egg, by depriving as much of it from going to next of kin who may have the audacity to continue saving..

So back to the present.. how do you rape those who save?

First you knock interest rates to near zero to give banks the means to loan each other $$ cheaply and force savers out of the risk-free security of savings accounts and money markets into the shark tank of the stock market..

Then you try enticing the savers to spend by giving very low APR so they'll buy a bigger home or flashier car or take that 5-star deluxe trip around the world..

In some places like Cyprus, if that doesn't work you simply reach in and steal as much money as humanly possible from savers' personal accounts to pay for national debts knowing full well that as long as insured savers aren't hurt, there will be no mass upswell, riots or coups...

Or like in nations like Australia, you place penalties on adding to national equivalents to IRA's such as 15% taxes where none was there before..  Whatever it takes to get money circulating..

Or in the US, as President Obama is proposing, you place caps on retirement savings..

From US News & World Report:

"The White House claims some people are saving 'more than is needed' for their post-employment future...  The Obama Administration's new budget will cap retirement savings for the nation's super-rich, but it's possible that it could affect even smaller-scale savers.

According to advance reports, the administration's budget due out on Wednesday will propose a cap limiting the amount of annual return a retirement account can create to $205,000. If that proposal were enacted today, that would mean retirement accounts would be limited to $3 million in assets. The White House estimates that caps on the tax-preferred accounts would generate $9 billion over 10 years."

The problem is this-- who the Hell is the government or really Anyone to determine what is proper savings vs 'more than needed'?

We've always felt Enraged by that mindset-- that in a supposed Free society where individuals can pursue their personal happiness, that others..  Strangers no less!.. could have the power to make moral judgments and impede upon the liberties of others.

Who are we to tell you that you either save or spend too much??

No entity--person or government should have the power to determine who much savings another wishes to posses just like its no one else's business to make blanket assumptions as to justifications to own assault rifles or what is acceptable weight or personal grooming style for a person..

That is true Communism-  making decisions for the so-called 'collective' good based on the opinions and decisions of a few or One at the very top of the power pyramid.  That is China.

In China, you're told how many babies you may have and how many homes you may own and what you may read and see, and what content is to be edited out..

But the problem is that behind the veil of cocky confidence of USA #1 and 'Recovery' and evil stock market near all time manipulative highs, the powers that be know things are very bad.. Anything can cause those delicate spinning plates to stop oscillating..

And thus a 4+ yr secret War on the Saver.

And the worst part is unlike the War on Drugs or War on Terror, those declared war upon-- most have no clue their the new enemy of the State; a scourge that must be weakened if not outwardly destroyed..

If you're a saver, the best way to fight the enemy is this:

1)  Don't trust your money is safe in banks beyond anything Federally secured.. In time of true emergency, accounts will be frozen and seized... Make preparations to keep your assets protected..

Laugh at us now but when it happens, we'll be laughing at you when you're crying..

2) Keep living your life as you are..  Don't succumb suddenly to the clutter of ads to Buy, Buy!..  Don't start living beyond your means or budget..

Its far easier to spend $$ than it is to recoup it..

3)  Encourage others to save..  You don't have to be wealthy to do it.. It just takes a little discipline..

For instance, a pack of Marlboros locally where we are cost $6.88 after taxes.  If a smoker cut back by just one pack every week and put that $$ in a coffee can, after a full 52 week year, he/she would have $357.76!   

One could buy a very nice 32in HDTV for that price or less and not have to put it on a credit card with 18.99% APR interest

Whether you are rich or poor, learn to save wherever possible.