Every Ferrari dealership in the country should
have a framed picture of Ben Bernanke in their lobby. It should read:
“Our #1 Salesman.”
The
largesse of the Federal
Reserve over the past five years has amounted to one of the
largest ever subsidies to the American wealthy—fueling record
fortunes, record numbers of new millionaires and billionaires, and an
unprecedented shopping spree for everything from Ferraris to Francis
Bacon paintings. The prices of the assets owned by the wealthy, and
the things they buy, have gone parabolic, bearing little relationship
to the weak, broader economy.
Yes,
the Fed has helped the overall economy as well, especially through
gains in home prices. But on this deciding day for the
Fed’s quantitative
easing program, it’s strikingly clear that most of the
gains from the program have flowed to the top 1 percent.
More
millionaires have been created over the past five years than during
the entire eight years of the Bush administration. According to
Spectrem Group, there were 2.3 million new millionaires created
between 2008 and 2012. This year, the number will likely grow by at
least 200,000, which would bring the millionaire population past its
previous record in 2007.
Gregor Peter
@L0gg0l 1 min
FED STATEMENT DOESN’T RULE OUT UNTAPER CONTINGENT ON ECONOMIC CONDITIONS
FED STATEMENT DOESN’T RULE OUT UNTAPER CONTINGENT ON ECONOMIC CONDITIONS
Fed
Tapers $10 Billion with Cornucopia of Dovish Statements; You Talk Too
Much!
….
Clearly the Fed is trying not to upset the
markets and wants the bubble to build. All the Fed can really do is
talk.
Will it work? The answer is “not forever”.
Of course bubble expansion is never in the best general interests of
anyone but the banks and already wealthy.
I offer this musical tribute.
Read
more
at http://globaleconomicanalysis.blogspot.com/2013/12/fed-tapers-10-billion-with-cornucopia.html#4SZdcWeSLiuW8jWS.99
The Fed Just Began The Taper — Here’s What
That Actually Means
So let’s break down what that means:
– The reduction in purchases is very small.
– The Fed has said in the past that it would
not consider raising rates until the unemployment rate fell to 6.5%
but today the language is indicating that they’ll wait until
unemployment falls significantly below that before they consider
raising rates.
– The Fed will not raise rates as long as
inflation is super-low.
– There’s no target date to ending QE, even
though the taper has begun.
That’s why the Dow is up 200.
Read
more: http://www.businessinsider.com/why-the-market-is-up-after-the-taper-2013-12#ixzz2nrYVhQNC
Fed’s
low rates may be juicing stock buybacks at the expense of jobs
From BTIG’s Dan Greenhaus comes the idea that
the Fed’s policy of ultra-low interest rates has had an
unintended consequence for the economy — less job growth.
In
his Bedtime with BTIG note late Tuesday, Greenhauspoints
to news earlier this week that Boeing BA -0.39% raised
its dividend by 50% and lifted its stock buyback plan. On Tuesday,
3M MMM +2.44% followed
suit with a hike in its own dividend rate by 35%.
In
the third quarter of this year, as Greenhaus points out, the
percentage of S&P 500SPX +0.98% companies
paying dividends — 84% — reached a 17-year high, while the number
of companies lifting their year-on-year dividends per share hit the
highest in nearly 20 years. As a result, says Greenhaus, the trailing
twelve month amount of dividends, at $339 billion, has jumped to 40%
above the ten-year average.
Housing
Market Setting Up for Another Crash
All
that Glitters, is not Gold
Affordability
Issues
The other problem is that property prices in
several parts of the country are too high relative to incomes, think
in terms of the two coasts, but there are many other areas as well.
This means consumers are paying too high a percentage of their
disposable income on housing.
This always means that the market will
eventually have to reset, or be forced to reset because any small
change in the local labor market causes disproportionate
reverberations in the real estate values, and substantially increases
the likelihood of add-on contagion which severally makes these
markets susceptible to large price drops in value for these expensive
real estate markets. In short, you get a market crash in real estate
values like we had in 2007.
Why
investors aren’t the only ones who will feel the pinch
The Federal Reserve’s funneling of trillions
of dollars into the economy over the past five years has provided a
shot in America’s arm. The stimulus has affected consumers more
than they realize, experts say, as will the tapering.
On
Wednesday, the Fed announced it
would begin to wind down the quantitative easing program known as
QE3. Analysts say consumers should start to prepare now —
especially those who are planning to buy a car or home within the
next three to six months. “The stimulus program was supposed to
boost spending going in, so it’s going to reduce spending going
out,” says Peter Morici, economist and professor at the University
of Maryland’s R.H. Smith School of Business.
Tapering
may increase the cost of financing big-ticket items and rates on
student loans. “If your furnace goes out and you only have $700 in
the bank, you will either have to freeze or buy it in installments,”
Morici says. “The same goes for any emergency repairs on your
home.” Similarly, college students struggling under the weight of
rising tuition fees may face a new challenge in 2014: rising interest
rates on loans. “Colleges are already seeing concerns
about this reflected in their applications,” Morici says. Law
schools are facing a fall in admissions due to rising costs: 54% have
reported cutting their entry law school classes for the 2013-14
academic year, according to the 2013 Kaplan Test Prep law school
survey.
Post-FOMC – Bonds, Gold, & Stocks Bid;
And 5th Hindenburg Omen Appears
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