Slow Monday

It was a muted day and the traffic was very light for the holiday. Not much news wise to go over so tonight will be more of the fun stuff.

Sunday Cookout
I did maybe my last large cook out on Sunday for friends of ours and their two boys. The youngest one (8 years old) came right in and made a bee line for the chess table and started setting up the pieces! He loves to play and luckily he is very good so it is not annoying to play with him. I squeaked out one game and maybe threw the second, I am a big softie after all!

I decided to try smoked chuck roast that would then be shredded for pulled beef. I bought two chuck roasts on Saturday. Cheap cuts of meat! They were about 4 pounds each.

I rubbed them up on Sunday with brown sugar, salt, and some rosemary leaves. I set up the Big Steel Keg for indirect cooking and aimed for a temperature of 250-275 degrees. I was having some temp control issues and could not keep the Keg from hitting 300-325 for the whole cook! Maybe the cooler air was really amping up the fire?

Here are the roasts all rubbed up:


I put them on the smoker at 9:30am with some apple wood for smoke, waited to make sure all was well, then headed out for grocery shopping. At about 12:30pm (3 hours) the internal temp was at 160 degrees. Here they are at that point:

Beef can dry out during smoking so I added a slice of bacon to the tops to drain down on the roasts. Bacon is good.

At this point I wrapped them tightly in foil and put them on the Keg for another 2 hours at 300 degrees. This step gets the meat very tender so it can be pulled easily. At 2:15 the internal temp was 200 degrees so I took them off and let them rest for a half an hour. I then pulled them apart using two forks and it was so tender it was falling apart. Here is the finished product ready for sandwiches:

A small dab of Sweet Baby Rays sauce and a hamburger roll and you are good to go! Everyone loved it and I was surprised it came out so well. The Keg must be idiot proof!

I brought a whole bunch into work for a friend of mine and her husband who loved smoked food. Enjoy guys!

Size Matters Not
Well, that's what Yoda said anyway. Where do you fall on this distribution chart?
Hee hee.

What Makes a Good Party?
You have to see this clip from Mississippi State College (I cannot embed it):
What Makes a Good Party
via Weird Universe.

For the Boxing Fans
Seems as if there are a few boxing lovers around!

From 1989.
Julian Jackson was one of the hardest punchers I have ever seen. Then the WBA junior middleweight champion he fought Terry Norris on ABC. I thought Norris would win this fight, and he had not been clipped with one of the biggest right hands of all time (skip to 4:50 mark and on) he might have:

WOW! Norris did end up becoming a world champion, but that shot was amazing.

Ha! Already interest! One more; how about Bernard Hopkins stopping Oscar De La Hoya with a killer body shot:

That hurts to watch!

Have a good night.

Saturday Soreness

I must have raked up over 1000 pounds of acorns today! Just unreal. The yard looks great but my arms and back are not happy at this point. Getting old is no fun at all.

I bought two nice chuck roasts for tomorrow's BBQ. I will slow smoke them and make pulled beef at the end. I should post some pictures tomorrow.

No real huge games in the NFL and seeing that my picks have been atrocious I am lay off making them until after week 6 when I hope I have a better read on the teams. The only game this week that is big will be the Jets and Vikings. Randy Moss will have the cover of Adrian Petersons running so I will enjoy watching him vs. Darrelle Revis once again.

Ozzy Osbourne
Reader Watchtower asks why I have not played any of the newest Ozzy songs from the latest album. To be honest I have not been a huge fan of the later Ozzy albums. Ozzmosis was the last one I really liked. I don't think Ozzy has changed too much, but his music now just does not grab me like the older stuff. I like to think of this group of men who made some of the greatest music I have ever heard:

That is Randy Rhoads, Ozzy, Rudy Sarzo and Tommy Aldridge.

Don't Go to the Bathroom
For the boxing fans.

In 1989 there was a fight between Michael Nunn and Sumbu Kalambay. It was supposed to be the IBF/WBA unification bout, but the WBA stripped Kalambay before the fight. Kalambay was a rock solid boxer who had never been knocked out. Nunn was a boxer that could not punch his way out of a paper bag. Still, it looked to be a chess match kind of fight. The prefight stuff moved fast and I was in the bathroom when the opening bell rang. I figured no big deal, long fight. I heard the crowd going nuts and when I got out, the fight was all over:

What a shot! Maybe Nunn's only real KO victory.

One more. Iran Barkley shocks the world with an upset win over Thomas Hearns as Barkley was about to be knocked out himself (skip to the 6:00 mark):

I remember seeing that fight and being totally stunned.

And for an Ozzy at the very height of his powers and armed with the songwriting genius of Randy Rhoads, here is "Tonight" as a special bonus:


ADDED
Huge News
In what can only be described as history altering news, NASA's picture of the day clearly was photoshopped to hide an alien spacecraft near the Saturn moons of Titan and Dione:

The picture on the right clearly shows a space craft with some kind of ion drive. Maybe E.T's need a bailout and heard this was THE galaxy for that?

Have a good night.

In the End, There Can be Only Friday

Another week in the books and it was a long one! Full day of yard work on tap for tomorrow. I will be having my last large cookout on Sunday so I should have some food pictures up Sunday night or Monday. A few things to touch upon and then off to the show.

Notaries, Foreclosures, and Congress Bits
A bit of drama today revolving around Foreclosure-Gate saga. Yves Smith had a tip that big time investor John Paulson was sending henchmen to Washington to try and get the notary bill pushed through:

Apparently he still has a substantial long position, because today a Paulson operative was making the rounds in DC, throwing temper tantrums about the impact various investigations might have on the residential mortgage backed securities market. He was particularly upset about the fact that the theory that we have discussed on this blog, that the problems facing deals where the notes were not properly conveyed (which we think are pervasive) are not easily remedied. As we have discussed, the “fixes” for the note conflict both with the provisions of the pooling and servicing agreement and New York Trust law.

What a loser.

There was plenty of confusion around if the bill could be passed (over-ride pocket veto) due to the Senate still being in session. Maybe there was enough concern that the clowns in DC would pass this thing at midnight (like the unlimited FRE/FNM assistance at Christmas!) so the president himself showed some balls and outright vetoed the bill once and for all. Thanks CONgress, try again? Thanks Mr. President, at least now a bailout will have to be debated before we all get screwed.

The only other economics story I wanted to touch on is a wonderful piece over at The Automatic Earth which is this weekends must read:
Wile E.'s Suspended Reality
Snippet to get you to go over there:

According to the official mantra, letting the main banks go belly-up would kill the entire system. Letting millions of Americans go belly-up, not so much. It's all a matter of priorities, don't you know, and you, yeah you, are not the priority.

Indeed.

In the End, There Can be Only Friday
Friday is like a peek inside my mind, I know, that is some scary stuff!

Will Anyone Listen?
I got an email tip that robots have been made that are using brain transplants from living things! One step closer every day it seems:
The Singularity is Near: Robot with Rat Brain
10 years from now when you are fighting a resistance war against the machines (if you live) they will all say "Economic Disconnect KNEW this would happen!".

Cool
Two items caught my eye today:
Japanese Flower has Biggest Genome in the World

A rare flower known as Paris japonica has a genome 50 times bigger than humans'. With 149 billion base pairs of DNA, it's the biggest genome in the world, and stretched out end-to-end it would be taller than Big Ben.

I am not sequencing that thing!

The Thing will Have a Prequel
If you know the old film with Kurt Russel, you will be excited! April 2011.

Comedy Stop
I found some top flight funnies for tonight!

If you have ever done work at an academic lab this song by UCSF Biology Grad students will crack you up to no end:
Priceless!

I found this one and I knew I had a winner! Please load "Pole Dance Ruins Wedding" and enjoy!:

And do not ask me how I came across a pole dancing video......

Finally I actually had to ask myself what I would do in this situation as the opportunity would be golden indeed:
The Opportunist

I am going to make this into a poster I think!

Films for Review
Some films you may want to check out. No embeds to save space, but the link will be a cool scene I promise.

-I really like GATTACA.
-I cannot believe some folks think "Tombstone" was a better film than "Wyatt Earp" and thus they must be crazy as there is NO comparison at all.
-Do not bother with the remake, stay true to the real "Red Dawn".

Rock Blogging

Out on the street, I'm stalking the night
I can hear my heavy breathing.
Paid for the kill but it doesn't seem right
Something there I can't believe in.

Reader Scharfy wanted a little Glen Fry and "Smugglers Blues" and I think it makes a great open:

"You be cool for 20 hours and I'll pay you 20 grand"
Nice! Great pick.

Reader C-T wanted some Talking Heads with "Naive Melody" and I had forgotten this tune:

Thanks!

Gawains requested "Sabbra Cadabra" from Sabbath so how can I dsay no?:

Hey Gawains, if you have the time I would love your full take on this document mess we are in. You are on the ground after all and a guest post spot is always yours if you want it!

I really think I have had this one up before, but a search cannot find it! In any case, I had the film "Tough Enough" on my mind and so enjoy "Rainbows Never Touch the ground" from the film:

I like it.

Step it up with Rob Base and "It Takes Two":

You remember that one?

Two to go! Two songs to say so much.

Please enjoy John Stewart's masterpiece song "Gold":

All time classic, and yes that is Stevie Nicks on support vocals! Too sweet.

Oh, it is last call! I hate last call! Still, it is what it is.

EconomPic started off with his video of the week (just 1 Jake??? LOL) and of course that got me thinking about the amazing talent that was Layne Staley and how he threw it all away for garbage.

Anyways, here is a live acoustic version of the Alice in Chains song "Would". I was going to try and play a newer version with the new lead singer, but he sucks and is no match for Staley:

Just unreal. For the full on studio version go here.

Have a good night.

Goody Bag

What a busy week! Busy at work, busy tape watching, busy at home. Just busy. I need a break. Mixed goody bag tonight, too much stuff going on. Tomorrow is Friday night and thus requests are welcomed.

Extreme Kid Dynamite
Kid Dynamite has a post up today titled:
Kid Dynamite Slaughters a Cow
And no this does not involve my northern neighbor using alcohol to roll with some unsuspecting college ladies in his youth or taking some huge pot off a tourist in Las Vegas in Hold'Em, he actually helped butcher a cow! I kid (pun intended) you not! Check it out if you like but note MY WARNING, IT IS GRAPHIC! Way to go man.

Foreclosure-Gate
Today had a few wrinkles in the tale of foreclosure fraud saga. First off, a bill was sprinted through the Senate (it had already passed the house on many occasions) that would have made changes to notary laws in relation to interstate commerce. I am no lawyer and I hate this stuff because I don't have a grasp on it, but there is evidence this new law if signed by the president could be played to help skirt around the lack of proper documentation rampant in these matters.

In a move worthy of hefty praise, President Barrack Obama used the "pocket veto" by which he will not sign the bill into law by just letting it exist in limbo. While I think the original plan for this bill may have made sense, there is NO reason now to rush it through until a better grasp on the laws regarding foreclosures can be examined. I offer well deserved thanks and praise for President Obama on this one, it was the right thing to do and went against the house, senate, and banking lobby all at the same time which I love.

Calculated Risk has a guest post by Tom Lawler up that asks:
Foreclosure-Gate: Who Will, and Who Should Pay?
Lawler has been creepy spot on with his housing sales numbers so I read him close! He thinks mortgage servicers will have to pay. That would be nice, but the taxpayer is the easier option!

I will say two things about this. First, I still believe that some new law will be passed to make all the short cuts legal and absolve the banks. There is NO WAY the banks are going to have to open the books and really be checked on this, I am not sure it is even possible. So far I am the only writer that has predicted this and has since the beginning. It does not fit the narrative that banks get clocked.

On the other hand, and second (on purpose I did that!), this story made the NBC Nightly News with Brian Williams and it lead the whole show! That is serious coverage. People are pissed about this (why now, why not before you lunatics!). There is no way a law can be done before the elections. I can see a new CONgress after the election passing a law to save the banks and then hope that voters forget (they will) but that will take time. One can hope for something real change.

SLV Was Good to Me
Back on August 30, 2010 I entered into my biggest trade ever. By trade I mean something I was using in a very short term time frame, maybe a month give or take. I was attracted to a silver play due to macro factors and this coupled nicely with an attractive chart pattern that I favor. I decided to make a move, which I covered here, to go for the gold, I mean silver!
(NOTE: In the post I stated about 50% of my trading portfolio went into this trade, and the exact number was 58%)

I placed my sell order last night for the whole position. Why?:
-My first target (most confidence) was $22 which was already passed
-My upper target was $24 which was getting a bit tired looking
-$23 split the difference, and I wanted to give NOTHING back
So here is the breakdown:
Buy $18.70, sell $22.88 (where my orders where filled)
Short term gain of 22%!

In case you are wondering, I had no idea gold and silver would get moved lower today so much, I just made the move last night.

I am ahead of my own yearly target for 10% returns and I have enough extra to rock on out to the Bahamas on October 22-October 25th so there will not be a Friday night post that week! Here is where I will be:

I would buy you all a drink, but it is all inclusive!

I Submit as Evidence Exhibit A
Some call me a nut job. Some call me a "gloom and doomer". Some label me as a pessimist. Do what you want I say.

I have spilled pixels enough on the ruinous policy of asset bubbles, I don't want to go over all that again. Instead how about a headline and a chart?

From this morning over at Reuters there was this gem which I saved a screen shot of in case it changed (it had not at time of writing; if it does change or get lost I have the picture):
Fed is banking on phony wealth effect
A nice section:

So, there you have it: pump up asset prices and hope that people spend some of the ephemeral gains. The idea that people will spend more if their houses and other assets rise in value is called the wealth effect, but this policy creates only pretend wealth.

Nasty!

I know plenty out there think they will of course wind up with all the loot at the end. Some will, but not me and no one I know! You cannot invest in such an environment, only bet or trade if you want to call it that. When every few years some monster percentage of your "gains" in whatever vanish, what can you do?

Pragmatic Capitalist was kind enough to supply permission to repost this chart (last one in this post) that shows the extremes which we can expect to continue should the FED/Whole crew succeed in their goals:

The red line is the "plan" for recovery. How is that going to happen?

The title of the post was excellent as well:
DID THE CONSUMER EVER RECOVER FROM THE NASDAQ BUST?
I can only answer, No. But they thought they did.

My man Mark is a huge believer in long term trend lines, and I am as well. I think you can figure these out on your own.

Shout Out
For my man that has a reputation as being a bit testy on the trading desk, I offer my version of:
ANGRY G!

My man!

Have a good night.

Differences Make the World Go Round

It has been rain up here for 4 days straight with one more to go. That Bahamas trip is looking better and better for the 22nd-25th this month.

New England Patriots Make a Move
Today when I woke up I saw a small print scroll on the bottom news ticker that said "Patriots in talks with Vikings on Moss trade". I was shocked and then I could not think of one thing the Viking had to offer us so I thought it was a joke. The radio guys were saying it was a done deal on the ride into work, and still I was thinking it was a trick. It was not.

The New England Patriots traded Randy Moss to the Minnesota Vikings for a 2011 3rd round draft pick. You read that right.

I do not want to get all worked up, but I really love Randy Moss. Can he be a big mouth? You. Does he take plays off? Sure. Is he the single most dangerous down field receiver in the NFL? Yes. In NFL history? I think so.

I am done thinking about how the Patriots do things, they think they are right and for years they have been wrong. I have read over 8 articles saying how the Pats will be better off without Moss. I say wait until about the second quarter in the next game vs Baltimore when Welker is getting destroyed by a double coverage slam job and get back to me. I am disappointed.

Oh yeah, the Pats play the Vikings in a few weeks and I am sure Darius Butler can cover Randy Moss. (EXTREME SNARK enabled)

More of the Same
Just in case you were inundated with the whole fraudulent mortgage news, even though I said this will go away by legislation, then here is an oldy but goody back again:

No-interest loans offered to jobless homeowners
Unemployed homeowners in Massachusetts will be able to take out interest-free loans of up to $50,000 to help them make mortgage payments, under a $1 billion federal program unveiled today in Roxbury by the US Department of Housing and Urban Development.

The program will provide about $61 million to struggling property owners in the state, according to HUD Secretary Shaun Donovan.

"Countless people who have lost their jobs through no fault of their own temporarily lack the steady income they need to pay their mortgage,'' Donovan said in prepared remarks. "That's why the Emergency Homeowner Loan Program will provide limited and targeted assistance to working families."

The effort, called the Emergency Homeowner Loan Program, is meant to supplement a $7.6 billion program launched by the US Treasury Department earlier this year to help jobless homeowners in 18 states and the District of Columbia, which were hardest hit by the recession. The Treasury program also targets homeowners who are "underwater," meaning they owe more on their mortgages than their properties are worth.

Just keep adding to the personal debt pile. Unreal. Oh yeah, the banks get paid with this money first! Too funny.

Differences Make the World Go Round
I had thought about this post most of the day and I was just going to leave things alone. I changed my mind and will go on with this post.

Today over at The Big Picture Barry Ritholtz had a item up called:
Do You Wanns be Right, or Do You Wanna Make Money?
It seems TBP get hit with all kinds of emails or comments that savage him for being bullish (at times, Barry is no blind permabull) and for not "telling it like it is" which must mean "saying all is fake and fixed and all a dream". From TBP:

My inbox is deluged with rants and demands from people who are insisting that This. Rally. Must. End. NOW!
A composite of their emails would read something like this: “How can you sit there so blithely while the Fed debases the world’s reserve currency? Why haven’t you commented on POMO?!? The entire game is rigged, and your just another @%$# salesman for Wall Street!”

This brought back a post from while back where I did indeed leave such a comment.

In the post Dow Zero Insurgency Peak? TBP asked whether with all the stunning headlines that come out from Zero Hedge can a blog get too over the top and move to sensationalism. The question was phrased as "jumping the shark". I offered in the comments:

This thing may get ugly but I did want to add my 2 cents.
TBP had a post a while back about “Buying What You Hate” and while it proved profitable, jumping the shark can be writing a book about bailouts and corruption then playing on that very dynamic for profit. Took a huge step down in my eyes on that one.

I stand by that comment as it really bugged me very much. Barry responded:
BR: We manage assets for people who want returns, not my lectures. That is the asset management business for you.
I draw the line between owning stocks you do not like, and being a lying cheating thieving scumbag. Its a pretty bright line, so long as you don’t squint . . .

I gave this plenty of thought all day and so I just want to go over a few points.

Whether it is FED intervention, Treasury bailouts, CONgress passed handouts, or some other thing over the last two years, it has worked very well in getting the stock market up. A lot. This was an opportunity if you wanted to get on board and ride a liquidity wave higher. This is not a pipe dream, crazy talk, or a misunderstanding of the way "markets work".

There is no real way to put this easy, so I will just let it ride;
The very same levers that were pulled to cause the Tech boom and the Credit mania are the same levers being pulled to get money flowing back into stocks. It is an opportunity for gains, but at the cost of contributing to a failed policy.

That's it and that's all. As long as the behavior of those looking for short term gain can be counted on 100% nothing will ever change. It probably was never going to anyway.

Now I do agree with Barry that nothing is more annoying than listening to some guy say the same sort of crap I do (I am an amateur economic wonk after all) then whining that his bond short is getting dusted due to this stuff or that his AAPL short is killing him because the market is "wrong". If you are "fighting the tape" you are pretty dumb and have been a solid loser for some time.

Not everyone is complaining about losing money or not gaining on the move up in equities. I have not lost as all and made more than my yearly goal. I am going to complain about the massive support thrown under this market because it will not end well. I also will not allocate my funds towards being a part of it.

Now you may argue my metal positions are "taking advantage" of something and they are. Crazy spending and fiat games being played the world over.

All this said, I have nothing but respect for people that put money to work day in, and day out using their skills and doing well. It is a philosophical difference as to what some will be a part of and what they will not. The world takes all kinds and there is nothing "wrong" with that. Philosophy is the talk on a cereal box or a smile on a dog and all that.

Have a good night.

Who Knows What?

Well that was a shocking display of football last night! After an ugly first half, the Patriots returned the 3rd quarter kickoff for a score and Miami fell apart. Like completely. I would love to say the Pats are in good shape, but that was a serious meltdown by the Dolphins. Thanks anyways guys!

Who Knows What?
If you follow things finance today was a wild day across all markets. Things are a real mess and there are many currents at play. Instead of speaking to a small item or a a few points I thought it may serve better to step back and take a look at the whole picture.

I wrote last night that I had serious questions about the reason the FED and associated players felt it was needed to go out and make all kinds of statements about future policy accommodation. The answer perhaps was found this morning when I opened the computer:
Bank of Japan Reverts to Zero Rates in Surprise Move
The headline is dumb because Japan was at 0% anyway, but they did go further in their own QE quest:

The central bank also decided to set up, as a temporary measure, a 5 trillion yen ($60 billion) fund to buy assets ranging from government bonds and short-term government securities to commercial paper and corporate bonds, and will also accept another 30 trillion yen of those assets as collateral under a loan scheme.The BOJ said it would guide the overnight call rate at a range of zero to 0.1 percent, against the previous target of 0.1 percent. It also pledged to keep rates effectively at zero until prices were seen stabilizing.
"The BOJ is bringing its monetary policy closer to quantitative easing, allowing market rates to hover near zero and pledging to keep a near-zero interest rate policy in the longer term until prices stabilize," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.
"These steps are more aggressive than markets had expected. The BOJ's decision is a surprise and will have an impact on currencies due to the message it delivers."

If the move had any effect on Japan's currency, I could not find it!

So going back, the FED on Monday all but screams we are set for another Trillion or so in QE here, and overnight Japan pulls the trigger on their own QE move. Now this makes sense. The Golden Truth had this to say and I find it compelling:

So what is going on here? I believe the market is responding to what it believes will be the U.S. Fed's "counter-measures" to Japan's move last night. In fact, Japan's QE proposition is actually quite small (including the bank lending pool announced, it's not much more than $400 billion) compared to the first round of QE of roughly $1.7 trillion in total by the U.S. It is my view, in conjunction with the speech issued last week by the NY Fed's William Dudley (who is also a former Goldman Sachs partner, meaning he is plugged into the policy channels if not creating them outright), that the U.S. is getting ready to announce, in some form, an even larger stimulus program next month.

The precious metals market and the US dollar index are thus behaving in a manner which is consistent with the expectation by the market that the Fed/Obama Administration will respond to Japan's currency war shot with an even more powerful shot across the bow of its own.

I agree.

And for good measure another FED player, Chicago Fed President Charles Evans, removes any doubt on what the new story is:

"In the last several months I've stared at our unemployment forecast and come to the conclusion that it's just not coming down nearly as quickly as it should," [Chicago Fed President Charles] Evans said in an interview with The Wall Street Journal Monday. "This is a far grimmer forecast than we ought to have," he added. As result, he said, he favors "much more [monetary] accommodation than we've put in place."

One could wonder why the forecast by the FED on unemployment has not mattered one bit until Monday, but why bother. Clearly the FED have been scared by what they are seeing and reacting in a near panic about it.

After yesterday's stunning public policy moment of truth (that the FED targets asset prices with their policy) some were somewhat worried as to where this is headed. Pragmatic Capitalism has good coverage of a David Rosenberg piece that is well worth a look. Prag Cap summarizes

I am honestly still trying to grasp the fact that they have admitted to trying to run what is really nothing more than a ponzi scheme….That is our great American growth strategy. Unbelievable.

Prag Cap is level headed and while I often disagree with things over there, this snippet really got me concerned.

I offered in the comments section that I wonder what S&P 2000 will really mean to a regular person. Many own little or no stocks; others borrowed from their 401k to buy a home or get through being unemployed for 3 years; others have moved their money into bonds, the list goes on. I don't think a higher stock market will carry as much punch as believed. I could be wrong.

After being welcomed to the recovery by Tim Geithner, praise for saving the world up to our ears, constant news of the recovered stock market, and victory laps all around I cannot help but think more expanded accommodative policy should not be needed at this point. Unless all that other stuff is pure crap.

For the final evidence of how messed up things are in the world, this was making the rounds today:
Lend Mexico Money at 6% for 100 Years
There is no bubble in bonds and credit, none at all.

Have a good night.

The FED is Delusional

Short on time waiting to see the New England Patriots gets crushed in Miami tonight. Not anywhere near as much fun as waiting to go out and crush Miami, but it is what it is.

Jealous Much?
One of the main reasons I really hate stopping over at The Reformed Broker is that Josh Brown runs with a great idea for a post that leaves me thinking I need to stick with the day job. Today in maybe the best post of all time, Josh uses the medium of Transformers to annotate some major market robot players:
Decepticon Tradebots
One sample and then you should read them all:

StopDropper - Sniffs out all outstanding stop loss and stop limit orders, triggering them with short sales, covering once the stock has been drilled lower. Guaranteed profits await, also transforms into a dump truck.

Love it!

The FED is Delusional
Monday was a full court press by FED members and associated players screaming how QE 1.0 saved the economy and maybe stopped global warming. Just think of the possibilities for QE 2.0! We just might have peace in the Middle East yet if the 10 year would just drop another 14 basis points! We are all saved!

First up was Brian "The Potato" Sack who chimed in with such glowing praise for QE I felt a little warm and made sure I had not peed in my pants (via Calculated Risk):

It is true that certain aspects of the transmission mechanism are clogged because of the credit constraints facing some households and businesses, and it is true that monetary policy cannot directly target those parties that are the most constrained. Nevertheless, balance sheet policy can still lower longer-term borrowing costs for many households and businesses, and it adds to household wealth by keeping asset prices higher than they otherwise would be.

At least they have stopped pretending what their primary mission has always been. Refreshing honesty, though for a LONG time many refused to believe this. There is more in Sack's long speech but that was the main point.

Boom Boom Bernanke was stuck talking to college kids, most of which will not be able to find a job after graduation, but thanks to QE 2.0 maybe they will not need one if AAPL and BIDU go to $5000 a share and then split 5:1. Some notes from the low rate guru:

Bernanke says more Fed asset purchases could help
In a wide-ranging, hour-long forum with university students, Bernanke also defended the U.S. government's often-criticized program to support banks during the global financial crisis.

The Troubled Asset Relief Program, or TARP, has turned out to be a "pretty good investment" for taxpayers as the money loaned to banks is returned with interest, he said.

Many people don't understand that the financial bailout fund was designed to help the economy, not the banks, and that the country's economic downturn would have been much worse without it, Bernanke said.

The $700 billion program was approved by the U.S. Congress at the height of the financial crisis in October 2008. The program came to an end on Sunday as the Treasury Department's authority to make new investments expired.

The Obama administration said last week the ultimate cost of the program to taxpayers was likely to come in below $50 billion.

Bernanke, speaking to about 150 students from universities across the state, tried to allay their fears about facing huge student loans and a weak jobs market upon graduation.

"I'm sorry the economy is not stronger for you right now, but it will get stronger," he said.

That was some sickness Boom Boom. You have no shame, but you do have balls.

So TARP was for the economy, not the banks! QE 1.0-10.0 will be for the economy as well and not a shuffle game between the FED and Banks. No way. With unemployment at the same level for over a year, Bernanke still thinks a higher stock market will lead to a recovery in the real economy. Just put on a Greenspan suit already Ben!

So what can we expect from QE 2.0? I checked in with Econbrowser and there was an estimate:

In recent years, a 100-basis-point move in the fed funds rate has translated into about a 40-basis-point move in the 10-year yield (e.g., Table 2 of my 2008 study). Hence if we use the lower end of Dudley's range, we might come up with a number of (400/500)(1/2)(40) = 16 basis points as another ballpark estimate of the effect on the 10-year rate of another $400 B in long-term bond purchases.

But even if we agree that the Fed could depress long-term yields with these kinds of measures, it is a separate question as to whether it should. I discussed this issue a few weeks ago. I remain of the opinion that while the Fed is understandably reluctant to embrace QE2, it may have little other choice.

16 basis points for 400 Billion of purchases? I can imagine businesses all across the land chomping at the bit to grab this deal when it comes through!

So this all comes down to one thing and one thing only:
Does the FED think 16 basis points lower on the 10 year will result more economic activity?

There is only two ways to answer;
-They do and they are so clueless it is dangerous
-They know full well it is baloney, but hope the sheep will bid up assets all over due to the perception the FED is "on the case".

I have written before that even though I am rough on the guys over there, they are not stupid. I 100% believe they think most of us are though, and we usually deliver on that promise as well.

What jumped out at me today was the timing of these remarks. It is a full month before the actual QE 2.0 can be rolled out and I wonder if the FED was not looking to get the markets going on taking rates down ahead of that time. I try never to think like the FED because I get visions of destroying the middle class and firebombing people's savings stuck in my head and it is kind of creepy.

"Mr Bernanke, you WERE the caretaker of the Overlook Hotel Saving and Loan were you not?"


"Here's Easing!!"


Have a good night.