Unemployment Numbers Mean More Easy Money and Delayed Exit Strategy
It seems the "exit strategy" talk will have to be pushed bask once again, not that it was ever really in play. Today's upside (downside?) surprise in the jobless numbers means a print over 10% for unemployment.
Not to worry, as Wall Street likes these numbers. As long as liquidity is ample, the dollar carry trade is alive and well, and banks can sit on reserves or deploy them into the stock indices jobs are sort of a drag anyway. Wall Street can make plenty of money while the masses are jobless. It is not as bad as the Great Depression because there are no foodlines is the common line, but what do you call the highest number of Americans ever on extended unemployment? That is not a bread line?
Of course easy money is all fun until it is not. When do you get into trouble? When you lose your credibility on repayment. Some economists like Paul Krugman think the way out of this mess (and the way out of everything for that matter) is t appear a little reckless with monetary policy to scare up some inflation. This chart from Eric Janzen of Itulip show just how disciplined in regards to deficit spending the USA has been over 19 years:
4 wins and 15 losses for fiscal sanity. We will really stop doing this world, we promise, just a bit longer and what's 50 years between friends anyway?
On the "Exit Strategy" page, there is a report out tonight on Zero Hedge which is important to this discussion:
Reverse Repo Failure Confirmation, Primary Dealers Want Exemption From Tier One Capital Requirements To Do Reverse Repos. Read the whole thing.
A few weeks ago we speculated that the Federal Reserve's attempt to conduct a reverse repo test as part of a liquidity drainage failed. In a stunning piece of news, Zero Hedge friend Jim Bianco sent us the following. Little commentary is necessary: the banks are about to unleash the massive leverage ploy all over again, this time with the pretext that they are happy to soak up liquidity, yet in the same time, their stupidity and inability to gauge risk will blow up the financial system once again when Tier One ratios for dealers are allowed to go back to 100:1. Zero Hedge will forward this information to all of our correspondents in Washington as what the Primary Dealer community is doing is extortion, pure and simple, and it is likely to be endorsed by their cronies at the Federal Reserve (which, in turn, has already received a carte blanche to do so by its purported master, Goldman Sachs)
I wrote about the money market angle that the FED was looking to use for reverse repo's a while ago. It seems the primary dealers see yet another way to game a system and this will need watching.
I had a bunch of other stuff I wanted to cover, but I am lacking in motivation.
Friday Night Entertainment
A little of this, a little of that for entertainment purposes only.
Name That Film
Some select quotes from various films, I supply the line, you supply the film. Test your knowledge of useless information!:
1) "1970 Pontiac Firebird. The car I've always wanted and now I have it. I rule!"
2) "The wine has no taste. The food sickens you. There seems no reason for any of it, does there? But what if I could give it back to you? Pluck out the pain and give you another life?"
3) "A guy once told me, "Do not have any attachments, do not have anything in your life you are not willing to walk out on in 30 seconds flat if you spot the heat around the corner."
Person A: In my business you prepare for the unexpected.
Person B: And what business is that?
A: I help people with problems.
B: Problem solver.
A: More of a problem eliminator.
5) "...you dropped a hundred and fifty grand on a fuckin’ education you coulda' got for a dollar fifty in late charges at the Public Library."
Person A: You can break a man's skull. You can arrest him. You can throw him into a dungeon. But how do you fight an idea?
Person B: Sir, you ask how to fight an idea. Well, I'll tell you how... with another idea!
Another great Fail Blog Post, you know how we all hate those verification words for comments:
see more Epic Fails
That's wrong on so many levels.
As a fan of boxing I have seen over 5,000 fights and the vicious activity in this College Women's Soccer game is as bad as any fight I have seen. ESPN video here, but here is a Youtube (less quality):
Number 15 belongs in the NHL! (hat tip to my good friend NG)
Friday night video fights is on hiatus due to lack of interest. Just some things to listen to.
I remember when Bon Jovi and Sugarland opened the Daytona 500 with "Who Says You Can't go Home":
A little Danzig and "How the Gods Kill":
Unleash your inner mayhem, and channel the freak inside with Rage Against the Machine and a live version of "Bulls on Parade" from Grand Olympic Auditorium:
I love YouTube.
Enjoy a little Ska and Rocksteady fusion with Bob Marley and "Could You be Loved":
Economic Disconnects favorite Journey song is "Wheel in the Sky" and I was able to dig up a live version through the magic of YouTube that is just very special indeed, live from the New York Palladium club 1978:
Have a good night.