Monday, November 1, 2010

What Passes for Monetary Policy

Glad the Prime Rib cook was a hit! It was a great cook indeed.

Randy Moss Finds a Way
I will be honest, I was pretty pissed when the New England Patriots let Randy Moss go to the Vikings for a 3rd round draft pick. I have always thought Moss is maybe the single most dangerous man in the NFL. After what happened in his stint at Minnesota I just have no idea what is going on.

Here is where things are; Moss was waived today by the Vikings after just 3 games there. The post game press conference was very strange as Moss went nuts talking about how great the Patriots are and how much he misses the team. It has never been clear what drove the breakup between Moss and the Pats, but maybe he was becoming more unhinged and they saw that. I don't know.

The major issue for Moss now is that he is looking for a contract and he wants big time receiver money, maybe 8 million a year. No one in their right mind will pay him that now, no one. Not even the Raiders or Redskins (well maybe). I have always been a fan of Moss and I can only hope he can get his head on straight before it is to late. What the heck is going on here?

Election Eve
Before I became a hard core financial junkie, I was once very into things politics. I followed everything and read tons of stuff. I remember when Instapundit was my first and last stop on the computer. I remember emailing the author on several occasions telling him the the biggest issue coming up was the housing bust (2006-2008) but only after it broke was there coverage! Anyways, what I am saying is that I used to be all gung ho about politics.

Looking to tomorrow's election you will hear that this is "the biggest election maybe ever" or until the next one or the next one. Is it big? Yes and no.

Look I want to tell you if the Republicans win big tomorrow things will change. I don't baloney my readers so I cannot write that. I want to say a whole slew of old time incumbents will get the boot, but I think the hype has been overdone on that angle.

US politics will never change as long as voters cannot correctly identify the major issues and then make sure candidates face them. Items like gun rights or unlimited abortion at 7-11's pale as issues next to the reckless spending and nasty economic issues facing this country. The last 2 years have seen the biggest frauds in financial history and never before has the taxpayer been on the hook for losses so large it makes one dizzy. The FED and the Treasury operate without law and without oversight. Theses things are issue number one, the rest is background. If one cannot be sure of their future security, what does all that other stuff really matter?

I don't want to get all political here. I will leave at I suggest you vote out anyone that voted for any bailout and anyone really in office Dem or Rep. Change as many seats as possible. Just don't expect the new guys to be much different from the old guys (or girls). At least we could scare them a little!

What Passes for Monetary Policy
Things will be flat until the elections are over and the FED makes their big splash (or splat?) on Wednesday. There were some words out today about an investigation into JP Morgan regarding their Magnetar dealings but look for a smallish settlement to occur on that. Ambac (ABK) is going bust in what was the slowest motion wreck ever (No worries MBIA rallied on the news!) but again such things matter little when free money is around. Kid Dynamite covers an important item about the Wilmington trust bank selling itself today at 1/2 off Friday's price. All the time I spent on the evils of mark to myth are covered here; when the rubber meets the road the banks are in trouble.

One other note was a Paul Krugman item that reminds me why I call him "The Krugmonster". In an opinion blog post The Krugmonster offers this dandy of an item:
The End Of Western Civilization
Gauti Eggertsson writes in to follow up on my piece on quantitative easing in the Great Depression. He points me to a 2008 paper (pdf) in which he shows that the coming of FDR, combined with America’s exit from the gold standard, was seen by markets as a huge regime change; it was, said FDR’s own budget director, “the end of Western civilization.”

This regime change immediately shifted expectations of future inflation, well before there was any actual surge in monetary base. That, rather than the quantitative easing per se, is how monetary policy — or more accurately, expectations of future monetary policy — gained some traction in the 30s liquidity trap.

Again, an important lesson — but how relevant is it to current circumstances? Bernanke, unfortunately, cannot convince people that he’s bringing the end of Western civilization.

Clowns like The Krugmonster would prefer you panic and buy 10 tons of rice and 5 houses out of fear your money will be worthless just to support "aggregate demand" on one of his stupid equations. This kind of thinking shows how dangerous thinkers like this can be. No care is given to imbalances or whether this kind of thing is a long term solution. When I read something like this I wonder how far Bernanke will go to scare people into blowing their cash. A Yahoo Finance story has this gem:
Fed Puts Stamp of Approval on Riskier Assets
You can read the whole thing, but the ending is the best line:
Here's the key to understanding QE2's impact: Don't think of it as a stock movement. Instead, think of it as a risk movement with a seal of approval from the Federal Reserve.

Maybe it is time to get stocked up on rice, toilet paper, and some shiny metals.

Have a good night.


getyourselfconnected said...

I almost had that robot on the Friday blog but it creeped me out too much! Scary thing I think.

Anonymous said...

We shall see if Moss clears waivers. (Meaning does someone pick up his existing contract)

Either way thevikes just gave up a 3rd rounder for nothing.

If the pats pick him back up it will be genius.


getyourselfconnected said...

I don't see how Moss comes back to NE, but this year I would not rule anything out!

Anonymous said...

GawainsGhost said...

I don't see Moss signing with any team soon. He's worn out his welcome everywhere he's been. That's a major red flag.

Does he have skills? Yes. Does he have a bad attitude? Yes. Those two don't mix well together in a professional football organization.

getyourselfconnected said...

agreed 100%

getyourselfconnected said...

thanks for the link but I was emailing Glen for some time about all this to no avail.

insanity shelter said...

>US politics will never change as long as voters cannot correctly identify the major issues and then make sure candidates face them.

Shit, like you just said even the elite press can't identify the right issue, even when you put it right under their noses.

US politics will never change until... the dollar goes worthless.

The new currency might be backed by gold. That will force some changes.

watchtower said...

Warning, I'm going to ramble a bit, mostly so that I can try to help my own thought process.

Could the US have a currency crisis?

I say yes, and all the fallout that goes with it.

This is my main thought when I think of things financial.

On the surface it seems ludicrous to think the US won't continue in it's 'Pax Americana' tradition but even Rome finally crapped out.

Personally I don't think the US will have hundreds of years to wind down like Rome.


Everything is going faster at this point in history, we now have instant global communication for one.

Who would have ever believed such a thing as the internet for example, or that ordinary people from most western civilizations (and elsewhere) would have access to it?

It appears that mankind has made huge strides in the past 100 - 150 years, but one thing that never changes is human nature.

And a part of human nature is greed.

And out of greed usually comes deceit.

And to my way of thinking that is where we are at, living in a stinking sarcophagus of fraud.

Not a house of cards as some say, but a burial tomb in which the first stone was laid around the turn of the last century for our nation.

Some say that they won't kill the goose that lays the golden eggs, but it's just human nature to do so, whether they want to or not.

There was a program on 60 Minutes that showed a movie crew filming in San Francisco just a few days before the big earthquake in 1906.

People were going along their merry way, no thought of imminent disaster or that their world was about to be violently shaken.

I sometimes get that feeling when going about my daily routine of meeting and greeting this person and that.

Sure they know that things have changed, but do they really have a concept of the precipice that we are on?

Not in my opinion.

I would love to believe that everthing is going to turn out OK but I just can't.

I've been raised to believe that the piper has to be paid, and to my reckoning there is one hell of a bill coming due.

It's coming.

"...and the wind began to howl"

getyourselfconnected said...

wow, great comment. Sums up how i think pleny feel and how I see much of what is going on. Would love to post it on the blog, you cool with that?

watchtower said...

Ok, but I hope it doesn't run off your readers.

getyourselfconnected said...

I doubt it. Hits home I think. I will post it tomorrow.