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天大的笑話 October 3, 2014

Posted by hslu in Economics, Obamacare.
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THE American banker, I am sorry, former American banker, complained to a fellow economist a few days ago that he couldn’t get a refi loan on his house.

This is really unheard of. It is like  台灣中央銀行的彭淮南 can’t get a loan from the local bank he surpervises.

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Hmm…, Bernanke’s networth is probably north of $50 million. Just a guess.

His book will be published soon. His cut: a cool $1 million. He will be a senior fellow or some title we can’t relate to at the Brookings Institution. He’ll probably make $200,000+ a year from this part time job. He charges a 6 figures fee for each and every speech he gives. He has a generous government pension. He probably gets a pension from Princeton as well.

The only reason why Bernanke can’t get a refi that makes any sense to me is this:

Bernanke is not on Obamacare.

My suggestion to Ben is:

Just pay that damn mortgage off.

Ben, you are a fairly rich man. You don’t need a refi. The top 1% don’t need mortgage interest deduction at the tax time. Besides, we all know that your Turbo tax skill isn’t that great you know. You will be better of using 1040EZ on 4-15-2015.

Gold, Renminbi and the Gold Standard September 28, 2013

Posted by hslu in China, Economics, Global Affair, Gold.
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It is rumored that the Chinese government has accumulated more than 7,000 tons of gold since 2009. the central government also encourages Chinese citizens buy gold on the open market. Panda gold coins has been a popular collectors’ item since 1982. Ads like this one are very common at gold and jewelry stores in Shanghai.

20130922_203345

Wouldn’t you like some of those gold pieces on you?

Why the rapid pace of gold purchase on the open market? 

The Bank of China probably doesn’t like what Bernanke has been doing since 2008, I guess.

But, this is the obvious answer.  I wonder that is there a hidden agenda from the Chinese government?

Some reports speculated that the pace of gold purchase will continue and some even linked Renminbi with the gold standard as a way to fight inflation and teach America a lesson.

It is hard to know what the real game is.

Well, just so happens that Chinese has a saying for this situation:

“不知道中国的葫芦里到底卖的是什么药!”

闭门造车? August 21, 2013

Posted by hslu in Economics.
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Fed Chairman Bernanke gave a talk in March 2013 about long term interest rate in the United States. In it, Bernanke offered Fed’s prediction on US 10-year Treasury yield to 2017.

The following chart compares what has actual happened in the market from January 1, 2013 till August 16, 2013 and predictions by Bernanke and the others.

actual 10-Year rate vs Fed Predictions

 

 

 

Source: http://www.federalreserve.gov/newsevents/speech/bernanke20130301a.htm#pagetop

Of course, it is still too early to make any judgement, but I had a feeling that Bernanke and the bunch were actually living in ivory towers while pretending to know what the future will be.

闭门造车 literally means making cars behind closed doors without knowing what car looks like.

Que Sera, Sera,
Whatever will be, will be
The future’s not ours, to see
Que Sera, Sera
What will be, will be.

Stay tuned.

Bond Market: 1 Bernanke: 0 August 17, 2013

Posted by hslu in Economics, Global Affair.
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Bernanke lost the first run. He was out-gunned by the Bond traders. In the end, Bernanke will lose the war too.

Haruhiko Kuroda (黒田 東彦) will follow Bernanke’s steps into sunset but Kuroda, along with Shinzō Abe (安倍 晋三,) will be even worse off because of Japan’s national debt currently running at ~215% of Japan’s GDP.

US Interest rates and Yield Curve

US Interest rates and Yield Curve

Are Stocks cheap? August 3, 2013

Posted by hslu in Congress, Economics, jobs, Obama, Obamacare.
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You decide. Here is just one of its metrics.

P/E ratio of S&P 500; 1960 to August 2013

P/E ratio of S&P 500; 1960 to August 2013

Keep in mind that stocks do not have to be justified by what’s going on in the economy right now.

We also have QE3 by the Fed which has been manipulating the economy, the equity market and the Bond market. It also artificially lowered the savings rate at banks. of course, you already knew this when you opened your bank statements years ago. Bernanke justified his action by saying that inflation is low and people are more than compensated by the growth in the stock market and the equities of their houses. Besides Bernanke can hide behind his dual mandates from the Congress. But we have no where to hide but to chase yields at our own risk though.

The Fed has forced everyone to riskier assets. By doing so Bernanke has popped up the bubbles in equity market and the real estate market. By keeping the rate low, the biggest bubble is in the long bonds and not m=very many people knew it.

What if these bubbles are eventually popped by Fed’s own action? Will we get a bailout like the too-big-to-fail and too-big-to-jail banks? 

It appears that Fed’s money printing action will continue but September is a critical time. The stock market is probably betting on tapering starting in September.

Why? Isn’t the economy lousy?

Yes, the economy is very lousy. But:

About 69% of Fed’s money is not in the economy. Velocity of money is declining and the Fed knew it. The question you want to ask yourselves is this:

“Where is the growth in GDP?” and

“Where are the jobs?”

The trend doesn't lie

The trend doesn’t lie

All the Fed has managed to accomplish is a GDP growth rate of 1.7% in Q2 which is saying that the GDP has grown by the amount that roughly matches inflation. In other word, the economy didn’t grow at all in real terms. Despite all the QEs the Fed has done in the past.

And 162K new jobs created in July were not even enough to accommodate new entrants in the job market. The White House and liberal media hailed the new jobless number but they have stopped mentioning the fact that US economy has about 250K people entering the job market every month. In other words, the United States is falling behind very seriously.

Pretty amazing, isn’t it.

It is also very sad too.

In case you don’t know or you have been fooled by the 7.4% jobless rate headline number:

There are currently 90 million people who are not working in the richest nation in the world: The all mighty United States.

About 47 million of that 90 million people are on food stamps. No question that more than 47 million of that 90 million people are on other forms of government hand outs too.

That is about all Bernanke has been able to do.

Yeah, 7.4% unemployment rate! Great achievement by the Fed, Obama, and the Congress.

I have no doubt that Obamacare has something to do with the fact that part time worker has grown in the past several quarters.

More part time jobs created due to Obamacare

More part time jobs created due to Obamacare

Every where you see, you see the foot print by Obama’s failed policy which hinder job growth and business investments. The so-called middle class in the United States is disappearing and the United States has become a nation of hamburger flippers, hotel maids and night time stock persons at local Wal-Mart and maybe K-Mart as well.

This is the hallmark of the Democrat Party and the hall market of one of the most liberal president of the United  States: Obama.

Well, in conclusion, the Fed is very nervous of the unintended consequences of all the QEs they did in the past but they also knew  that they have no control of the Bond market.

To put it in simple terms:

The Fed has put itself between a rock and a hard place. Bernanke will probably do everything he can to taper. The economy may not let him to though.

We’ll have to watch the drama but we are actually one of the players in the drama as well whether we like it or not. Bernanke will retire and the “烂摊子” will be someone else’s problem by February, 2014.

He has had enough. I can tell.

But not to be too harsh on Bernanke on the eve of his retirement, he has to learn a lesson from Mario Draghi because Draghi has single-handedly calmed the European sovereign market without printing a single Euro.

History will be the judge on Bernanke. Not me. But his action will no doubt affecting my and your lives. We have no choices.

Well, I had enough QEs too.

But heck, no one listens to me. Not even my wife. LOL.

10-Yr T-Note vs. S&P 500 July 26, 2013

Posted by hslu in Economics, stocks.
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4/20/1981 –  9/17/1990

Bond vs Equity - 1981 to 1990

1/1/1990 –  7/1/2013

Bond vs Equity - 1990 to 2013

See link below for 1962 to 1983 data.

https://hslu.wordpress.com/2013/07/14/bond-vs-equity-1962-1983/

The conclusions stated in 1962 – 1983 blog stand. The question now is what will happen with the current rate increase. The difference this time is Bernanke is messing up the Bond and stock markets big time.

When the economy eventually turns the corner, the Bond market will give out early warning shots and the stock market will response one way or the other.

Well, don’t check in with Bernanke because he is just as in the dark as everyone else. He was very clear and precise as to when and what to do in May. But then he changed his mind the next day and said that he was wrong the day before. Starting today, he’d have to see the data before deciding what to do next.

So what’s it, Bernanke? To taper or not to taper?

The Fed made a mistake and they learned their lessons. We’ll just have to wait until the Fed makes the announcement on a Friday evening after market closes. It might be a long weekend.

Once taper starts, the Bond market and the stock market will be like “从此后  惊涛骇浪 烟也蒙蒙 雨也蒙蒙。” 虽然还达不到天崩地裂的程度但是小心一点还是应该的。

Watch what Bernanke does not what he says。Also pay attention to who will take over Bernanke’s position. Trial bloom will come out prior to the Jackson Hole meeting. The one who attends the Jackson meeting in Bernanke’s place could be the one. The Bond market will have a better idea.

I believe Bernanke told Obama in early April that, after 8 years, he has had enough and he’ll step down after his term expires on January 31, 2014.

Obama probably told Bernanke that he should skip the Jackson Hole meeting hence Bernanke’s announcement that he’ll not attend the Jackson Hole meeting; first time it has happened in 25 years.

I am going to stick my neck out and say that the new chairman won’t be any of the top two front runners: Yellen or Summers. Of course, this is purely speculation on my part. But I know that the one who is recommended by Krugman will be bad for the United States. We don’t need another liberal or Keynesian at the Fed. We already have Obama which is bad enough as is.

Of course, I don’t know who the new chairman going to be. We need someone with private sector experience who also has a firm grip on monetary policy and macro economics.

The FBI is doing the background check and rumors will come out soon after the drama at Jackson Hole dies down in late August.

 

Should China Label the U.S.a Currency Manipulator? Yes, of course. November 30, 2012

Posted by hslu in China, Economics, Euro, Global Affair, Obama, Politics.
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Obama administration has just decided not to label China a Currency Manipulator.

For good reasons.

Actually, the real question should be “Should China label the U.S.a currency manipulator? ” The answer is, of course, “yes!”

Just ask Bernanke! He’ll tell you that’s exactly what he intended to do and we have WSJ to prove this: “Bernanke wanted developing economies to let their currencies appreciate.”

http://online.wsj.com/article/SB10000872396390443749204578055600111447318.html

All that fiat money printed by Bernanke for QE3, $40 billion every month until who know when, is searching for higher yields and a lot of that has gone to the purchases of currencies of foreign countries.

America is not only manipulate the US dollar, it even wants to manipulate other weaker countries’ currencies.

It really give “currency Manipulator” a new meaning.

 

Whether Bernanke succeed or not is not the question answer

 

 

A $116 billion hole for Portugal May 4, 2011

Posted by hslu in China, Economics, Global Affair, Politics.
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In the midst of euphoria of Osama’s death “possibly” in the hand of  US navy seals, a story about Portugal $116 billion bailout didn’t get any attention on the main street media.

Countries like Portugal, Greece, Ireland and Italy, they owed so much money that they have no way of paying it back. And the solution to the problem: lend them more money.

Yes, they get more money from many sources with the knowledge that they may never be able to pay the original debt back , let alone the new lending they just got.

They had to borrow money from other EU countries simply because they can’t print Euro themselves.

Well, The United States isn’t doing any better but the United States has something these other countries didn’t have: America has four or five mints with printing presses operating at full speed: every day, every evening and every night.

You know that you know what will hit the fan when US dollar loses its reserve currency status.

Well, that won’t happen for a while but IMF is doing something in the background and one of these days it will happen.

In the mean time, let the good time roll and enjoy.

The hole which America is digging for itself is bigger than all the other holes combine.

The structural change in US economy and the prolonged depressing state of the housing market will make the situation even worse.

Do not believe Bernanke and his public statement because he has let the cat out of the bag and has stubbornly ignored the increasingly worsening inflation problem in the US and all over the world.He has consistently denied that inflation is happening until his first public news conference.

He was trying to set up America people for his mistakes, i.e., the extremely loose monetary policy.

The inflation cycle has just begun and it will not end easily. Bernanke has more than $2 trillion on his balance sheet and more than $2 trillion-dollar in the economy. He is waiting for a chance to sell what he has on his book but it will increase interest rate and hurt the economy that is still trying to find its footing.  When he finally starts to sell them, look for interest rate to pick up which will need more of our tax money to pay for the interests on the national debt.

In the mean time, China, India, Singapore, Australia, South Korea, Vietnam, Thailand, EU, England, Switzerland, and Brazil have raised their key interest rates in order to fight inflation caused by the loose monetary policy of the US Fed, i.e., Bernanke.

Even Nigeria, a country which relies oil export for almost 90% of its GDP, has raised its interest rate because of economic forces beyond its border..

It is no secret that Bill Gross, the $1.2 trillion PIMCO Bond fund had dumped all his US treasury holdings because he is very negative on US dollar. He went one step further and has shorted US treasuries because he sees the US dollar will be less valuable in the near future.

When Bill Gross stops buying US treasuries in the tune of a couple of hundred of billions, investors will demand higher interest rates.

Buckle up, Americans, the road of inflation will be very bumpy. We are going downhill fast!

And the view isn’t going to be pretty at all.

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