Central Banks Can’t Fix the System! Fed’s Plan To Use Stocks To Boost U.S. Economy Has Failed, Yellen Collapse ‘Will Be Unlike Any Other’.

Art Cashin – Fed’s Plan To Use Stocks To Boost U.S. Economy Has Failed

Today one of the legends in the business explains why the Fed’s plan to use the stock market to boost the U.S.economy has failed.  50-year veteran Art Cashin, who is Director of Floor Operations at UBS ($650 billion under management), also included a guest commentary discussing the Fed’s failure.

By Art Cashin Director of Floor Operations at UBS 

April 23 (King World News) – “On this day in 1985, one of the savviest marketing teams at one of the savviest marketing companies in history stunned the world with a product announcement.  They proclaimed that they were phasing out their main product and replacing it with a new improved version.  Pretty tame stuff for most products.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/4/23_Feds_Plan_To_Use_Stocks_To_Boost_U.S._Economy_Has_Failed.html

Billionaire Warns: Yellen Collapse ‘Will Be Unlike Any Other’

Another horrific stock market crash is coming, and the next bust will be “unlike any other” we have seen.

That’s the message from Jeremy Grantham, co-founder and chief investment strategist of GMO, a Boston-based firm with $117 billion in assets under management.

Grantham pulls no punches when he discusses who he holds responsible for the coming financial carnage. In a recent interview with The New York Times, he calls Federal Reserve Chair Janet Yellen “ignorant” and said the Federal Reserve all but killed the economic recovery.

He also says that he isn’t putting his clients’ money into the market right now.

“We invest our clients’ money based on our seven-year prediction. And over the next seven years, we think the market will have negative returns. The next bust will be unlike any other, because the Fed and other central banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We have never had this before.”

http://www.moneynews.com/MKTNews/economic-JanetYellen-stockbust/2014/03/26/id/561923/#ixzz2xkTF4LEuGLY

Turk – Western Central Banks To Run Out Of Gold This Year

Turk: “What’s going on in the gold market is just unbelievable, Eric. It’s really never happened before. We’ve had this prolonged backwardation starting in the middle of last year when the lows in gold and silver were reached….

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/4/23_Turk_-_Western_Central_Banks_To_Run_Out_Of_Gold_This_Year.html

The United States Debt Meltdown, And The Coming Dollar Collapse

The United States government and the Federal Reserve must keep interest rates near zero – because if they don’t, there will be great difficulty in paying the interest on the debt they’ve accumulated, which could bring it all (the economy and our way of life) crashing down.

There’s one problem though. The only way the United States can maintain their zero interest rate policies is for the world to continue accepting the dollar as the world’s reserve currency. The thing is – they’re not, and plans are nearly implemented to circumvent the United States dollar for major countries such as Russia and China (and others).

The carrot and the stick approach (by the United States) isn’t working so well anymore. The carrot (the strength of the dollar) is becoming increasingly rotten and the stick (the willingness to use the military) has weakened considerably as Americans have grown war weary.

http://modernsurvivalblog.com/current-events-economics-politics/the-united-states-debt-meltdown-and-the-coming-dollar-collapse/

Measured by Gold and the Dow, Wheat Is Cheap (But Maybe Not For Long)

by Charles Hugh Smith

Priced in gold and stocks, wheat is near multi-decade lows. That may not last.

Measuring the cost of anything in currency can be misleading. As we know, inflation can be gamed by authorities to appear low, and supposedly low inflation is actually high inflation if wages are declining while prices rise.

Longtime correspondent Harun I. has often recommended in these pages that we look to other yardsticks to get a more realistic assessment of price and value.

For example, what is the cost of wheat when priced in gold rather than dollars?Harun has graciously provided a chart of the wheat/gold ratio, which I marked up to identify when gold was expensive and wheat was cheap, and vice versa.

Priced in gold, wheat is at multi-decade lows; technically, this long downtrend appears to have reversed into an uptrend. If this is so, the only direction in the price of wheat (priced in gold) is up.

Here is wheat priced in the Dow Jones Industrial Average (DJIA). In essence, how many bushels of wheat can be purchased with one share of the Dow index?

In 1975, at the nadir of the stagflation-ridden stock market, wheat was expensive and the Dow cheap–once again, this is pricing wheat in the Dow, not the dollar.

At the top of the stock market bubble in 2000, the Dow was expensive and wheat was cheap.

When the Dow hit bottom in March 2009, wheat went up when priced in stock market shares.

Despite some impressive volatility since 2000, the trend in the price of wheat (when priced in stocks) is clearly up. Once again, it seems a long-term downtrend in the price of wheat has reversed and is now an uptrend.

The only way for wheat to regain its previous trading range is for gold and the Dow to both plummet or for wheat to rise in cost, i.e. it takes more gold or shares of the Dow to buy a bushel of wheat.

Priced in gold and stocks, wheat is near multi-decade lows. That may not last.Technically the trend has reversed, suggesting much higher prices–in dollars, gold or stocks–for wheat and indeed, by extension, for all food.

We may be tasting the first minimal increases in food prices that could soar to unimagined heights in the years ahead.Want to give an enduringly practical graduation gift? Then give my new book Get a Job, Build a Real Career and Defy a Bewildering Economy, a mere $9.95 for the Kindle ebook edition and $17.76 for the print edition.

Plan to trap feral hogs and feed them to Houston's hungry

HOUSTON (KTRK) -- A plan is being put into place that would both rid local areas of property-destroying feral hogs, and feed Houston's hungry at the same time.

County Commissioner Steve Radack says this is a "gift from God." He's behind the program which he says solves two problems -- feeding the hungry with feral hogs.
For years Harris County has been looking for a better way to get the hogs under control in and around George Bush and Congressman Bill Archer parks. They've caused thousands of dollars' worth of damage to property in neighborhoods nearby as they root for food.
 "There may be as many as 8,000 to 10,000 feral hogs in each of the reservoirs," said Mike McMahon with the Harris County Commissioner's Precinct 3 Office.
On Thursday Harris County commissioners signed off on the purchase of four large, mobile pens to capture the hogs. The wild pigs will then be taken to J and J Processing in Brookshire, where they will be inspected, slaughtered and packaged. The meat will all be sent to the Houston Food Bank.
Some are reportedly concerned about diseases which the hogs may carry. But at the processing facility, they point out that harvesting of the animal will occur just the same as any other meat, and it will be watched by an onsite USDA inspector.
At the Houston Food Bank, they're excited about all the food this will mean on their freezer shelves for distribution. Each hog they say can produce an average of 40 pounds of meat. The county estimates it will be able to trap 2,500 wild pigs in the first year.
"This is a huge win for everybody in all the communities that we serve," said Dr. Pamela Berger with the Houston Food Bank.
The new program begins in mid-May.

(Copyright ©2014 KTRK-TV/DT. All Rights Reserved.)

           

WARREN BUFFETT Laughs & Jokes About The 1% CLUB. Doesn’t Want To Join 99% CLUB

Fed’s Wealth Effect: Richest 200 Moguls Made $13.9 Billion Today

Wolf Richter www.testosteronepit.com  www.amazon.com/author/wolfrichter

Former Fed Chairman Ben Bernanke doesn’t regret much about the Fed’s actions during and after the financial crisis, he told the Economic Club of Canada on Tuesday, during a speech for which he was most likely paid a small fortune.

So he doesn’t regret that the Fed, under his reign, handed out trillions of dollars to the largest banks and corporations, US and foreign, to teach them once and for all a crucial lesson, that the Fed – and hence the public at large – would always be there for them when their horrid and reckless bets got them into very predictable trouble; that the Fed would always do whatever it would take to fan inflation in order to raise corporate revenues and profits, whittle down real wages, and inflict financial repression on savers.

He doesn’t regret either that the Fed has destroyed what was left of the financial markets as a means of price discovery. Nor does he regret that the wealthy were bailed out during the financial crisis and that they have then become much wealthier while the rest of the people were left to struggle the best they could with the conditions the Fed has created.

But there’s one thing he does regret: that he wasn’t able to explain the Fed’s actions well enough to the vast majority of Americans, namely those who’ve gotten shafted by the Fed’s very actions. “They think somehow or another that we favored Wall Street instead of favoring Main Street and that’s unfortunate,” he said. “I still think there are a lot of people out there who really don’t understand why we did what we did.”

For sure for sure. But there are a few people out there who do understand: the billionaires, or those who became billionaires during the worldwide money-printing and interest-rate repression binge. It’s been one heck of a bonanza for them.

Just today, the world’s 200 richest people made $13.9 billion. In one single day, according to Bloomberg’s Billionaires Index. That’s big bickies, as my friends from down-under might say.

We may quibble over the accuracy to the penny of these net-worth estimates, and their daily changes, but Bloomberg is pretty confident, even concerning assets that are not publicly traded. And in case of doubt, they’re left out, Bloomberg explains in itsMethodology. And so here is the crème de la crème:

Steven Cohen, founder of SAC Capital Advisors, the hedge fund that got embroiled in a mega-criminal insider trading scandal which it settled by agreeing to pay a $1.2 billion fine and stop managing funds for outsiders – well, he made it to the front of the lineup today with a gain of $2.3 billion for a day of blood, sweat, and tears.

Sheldeon Adelson, CEO of a gambling empire in Las Vegas and Macao, among other things, wasn’t that far behind with a gain of $1.9 billion for today.

Mark Zuckerberg, whose Facebook puts the NSA to shame with its all-encompassing worldwide personal-data dragnet and internet surveillance expertise, saw his net worth jump by $763 million today.

Amancio Ortega, Spanish fashion mogul, was in fourth place. The millions of unemployed Spaniards, and the lucky ones who have jobs but whose real wages have been decimated so that companies could become more “competitive,” would be proud of him. At least somepeople are doing well in Spain! He booked a gain of $734 million today.

Stefan Persson, Swedish business mogul, saw his wealth grow by $576 million. Elon Musk, hype-machine extraordinaire and CEO of, among others, Tesla which sells about 2,000 cars a month, pocketed $558 million [read.... Tesla’s Sales Stall, Don’t Even Amount To A Rounding Error].

Our favorite Uncle Warren Buffett, whose financial and insurance empire was bailed out by the Fed and who has become one of the largest beneficiaries of the “bold” policies of central banks worldwide, only made $417 million today, barely enough for 7th place. Tsk, tsk, tsk.

Bernard Arnault, richest mogul in France, CEO of luxury-goods empires LVMH and Groupe Arnault, who applied for Belgian citizenship in late 2012 to escape newly elected President François Hollande’s tax strangulation, but then abandoned his application in April 2013 under withering ridicule and political pressure – well, he scraped by with a gain of $408 million today. His beleaguered compatriots probably have no clue.

Etc. etc.

This is the Fed’s “wealth effect,” on a daily basis, as seen from the top. It’s a construct that the Greenspan Fed conjured up out of thin air and presented to the incredulous American people as a valid economic theory. Bernanke then promoted it to the Fed’s stated raison d’être. His theory: if we immensely enrich during years of bailouts, money-printing, and interest rate repression the richest few thousand people in the world, everyone would be happy somehow.

And so central bankers, with glowing support from the bondholder bailout organ, the IMF, inflated by hook or crook and for over five years the prices of assets that these chosen few were holding, and they gave them free money to acquire every asset insight and drive up values even further. It all worked out wonderfully and like clockwork for over five years, and the numbers of this “wealth effect” are truly impressive as we can see above. The only thing that Bernanke regretted not doing, based on his own admission, was to explain the whole noble construct to the American people.

There is nothing like a wealthy central bank chief admitting that he wants to, one, help governments default gradually on their debts; and two, cut the real wages of those less lucky than he –  an honesty the Fed never dared to exhibit when it inflicted waves of QE on American workers. Read…. Draghi’s Bold Push For Creeping Defaults And Real Wage Cuts (Illustrated With Hilarious Cartoon)

Furious Russia, Downgraded To Just Above Junk By S&P, Proposes “Scorched Earth” Retaliation Against NATO Countries

Source: Zero Hedge

Cyprus and Russia – what’s the difference (aside from the fact that the former was a money laundering offshore center of the latter until last year of course)?
If you said one is a lackey to statist, selfish banker interests, and after having its economy thoroughly destroyed by the great doomed European sociopolitical (and pathological) experiment, came crawling back to its Eurozone masters, while the other couldn’t care one bit about Pax Petrodollariana and the global central bank cabal, you are right. In which case it will also be clear why a few hours ago that joke of a rating agency, Standard & Poor’s, which also earlier announced it was “affirming” France at an AA rating making it very clear it will no longer accept being sued for telling the truth and downgrading sovereigns or otherwise have its offices abroad raided, not only upgraded Cyprus from B- to B (please deposits your funds in Cyprus banks now: they are safe, S&P promises), but – far more importantly – delivered a political message to the Kremlin, and downgraded Russia from BBB to BBB-, one short notch away from junk status. This was the first downgrade of Russia by S&P since December 2008.
WSJ reports:

“In our view, the tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects,” S&P wrote in its report.

Moscow’s MICEX stock index fell by 1.5% after the move. The ruble weakened 0.6% against the dollar to 35.977.
A further cut to junk status would be a big move, given Russia’s relatively modest level of debt, according to Tim Ash, an economist at Standard Bank.
“But if the crisis in Ukraine deteriorates further, and we see sustained capital flight and pressure on the ruble and Russian markets further, then it is possible,” he said.

Russia’s response was prompt.
First, in retaliation to the downgrade, Russian economy minister Alexei Ulyukaev said S&P’s downgrade of Russia’s rating was expected by investors, won’t significantly change their behavior, adding the obvious that the decision to cut Russia’s rating was partly political, partly based on economic situation. In other words, entirely symbolic – it is not as if Russia has access to bond markets anyway, plus as we wrote earlier this week in “Why Putin Is Smiling At The Bond Market’s Blockade Of Russia“, it is not as if it needs them.
But far more importantly, and ahead of yet another round of western sanctions which appears imminent unless Obama is to look even more powerless than he currently is (granted, a difficult achievement), Russian presidential adviser Sergei Glazyev proposed plan of 15 measures to protect country’s economy if sanctions applied, Vedomosti newspaper reports, citing Glazyev’s letter to Finance Ministry. According to Vedomosti as Bloomberg reported, Glazyev proposed:

• Russia should withdraw all assets, accounts in dollars, euros from NATO countries to neutral ones

• Russia should start selling NATO member sovereign bonds before Russia’s foreign-currency accounts are frozen

• Central bank should reduce dollar assets, sell sovereign bonds of countries that support sanctions

• Russia should limit commercial banks’ FX assets to prevent speculation on ruble, capital outflows

• Central bank should increase money supply so that state cos., banks may refinance foreign loans

• Russia should use national currencies in trade with customs Union members, other non-dollar, non-euro partners

In other words, a full-blown scorched earth campaign by Russia.
Granted, Russian holdings of US Treasurys are not that substantial (and could be monetized entirely in three months of POMO by the Fed), and western financial linkages to Russia, aside from trade routes, are not life-threatening, but if Russia were to take the baton, and other BRIC countries, already furious by the recent US decision to not boost their IMF status, follow suit, then Obama’s life is about to become a living nightmare. Especially, if that most important BRIC member – China – does any of the many things it can do to indicate if, in this brand new Cold War, it is with or against the US…
Finally, those curious what are the linkages between the west and Russia are, review our recent post on the matter: All You Need To Know About Russia, In Charts.

Visa admits Russia sanctions hitting business

RIA Novosti/Iliya Pitalev

Visa, the world’s largest card services company, says its revenue growth slowed to a four-year low, as cross-border operations with Russia were hit by the political tension over Ukraine.
"We are caught between the politics of the United States and the politics of Russia,"Reuters quotes Byron Pollitt, Visa’s Chief Financial Officer."We're clearly seeing a drop-off in cross-border volume, and sanctions are expected to have some impact on volume."
For the first time in more than four years Visa’s quarterly revenue growth declined to single digit percentages amid a strengthening dollar. In the second quarter ended March 31 it was 7 percent, down from 11 percent in the first quarter. The company projects revenue growth to slow further this quarter.
In March Visa and another US-based payment system MasterCard suspended services to two Russian banks after President Barack Obama imposed sanctions on Russia.
President Vladimir Putin said Russia would develop its own payment system, which should start operating in about 6 months.
Visa in turn said it has assessed the situation and hopes it would still have a “meaningful opportunity” to continue business with Russia, as it would benefit both sides.
"We have 100 million cards there and it is not in anyone's best interest, inclusive of the Russians, to make those cards not available to their own citizens," Pollitt said.
Visa and MasterCard control 90 percent of the Russian market.