Tuesday, November 30, 2010

The Cost of Capital

Just a quick note for tonight.

The Cost of Capital
There has been a strange dynamic in play for about a year now in regards to the cost of capital. In normal markets rates are set by various inputs that in the end give both the borrower and the creditor a feeling that they are getting "fair value" both in taking the loan and in making it.

That is not how things work anymore. What would a mortgage written by a bank cost right now if they were left alone to set rates? With the double dip in home prices already here and a slew of inventory on the books, I think the 10 year US Treasury number would not even be in the ball park. Of course policy now is to make sure those rates stay ultra low.

CDS spreads have gone crazy for many European countries, but I have been watching CDS spreads for some time and they fail to make me take them too serious. What is serious is even a troubled state like Portugal is looking at rates going up to the 7% level(up from 4% in March) but along comes the ECB and they say "that is not right, we will lend money at 4% or 5%". The US FED has done much the same here. Add to this troubled US states like California have been taking advantage of US backed muni debt sales at rates far below what a open market would demand.

Now I think we all know that distortions cause problems....eventually. Easy money has a nasty habit of finding poor places to live. You can get things like bubbles or woefully miss priced instruments of all kinds that imply a lack of risk that simply does not exist. I think this should be clear. But let's look at another point.

If creditors are forced by the will and actions of government to lend at lower rates than they might want to, they are going to push rates where they can much higher. I would ask you all to review your credit card rates over the past year and see how they are moving. I just got a huge letter from my bank explaining the monster fees and penalties that will result now if I go into overdraft or miss any kind of payment on anything. Of course no one speaks for the little guy here, we will all just pay high rates and fees because that is where the banking system has pricing power now. They will chase return where they can.

Taking a step back, when you read that Ireland or whomever simply cannot pay debt back at such "high rates" as 7%, or even 10% there is an issue there. If a US state is on the verge of going bust over a 2% difference in a loan rate that is really walking a fine line. Yes, I know we are talking big bucks and it adds up, but really? I have argued that artificial low rates are now a structural necessity, not a short term support mechanism. Can the 10 year really be at 6% in 2 years without major issues? I would ask that the readers ponder what steps will be needed to keep rates of all stripes at all time lows for the next 5 years at a minimum and write them down or write them in the comments. Going further, ponder what avenues will be used by creditors to balance out their "fake risk" book with their "real risk" book. I think the answers will be useful in making investment decisions going forward.

Have a good night.

Sunday, November 28, 2010

Sith Lords of the Star Wars Expanded Universe

I spent the better part of the last two days fixing up the half bathroom on the first floor. New counter vinyl covering, new light fixtures, and new bathroom sink and faucet. The sink was quite an issue as the supplied gasket for the drain would not seal and I went all over creation trying to find a larger gasket to fit the larger sink. I think I have it done now, but what a path to get there. At least the bathroom looks good and I also changed the hallway ceiling lights as well. Time for a break!

Sith Lords of the Star Wars Expanded Universe
Most of you know I am a monster Star Wars fan, especially for all things Sith related. I understand that not many know of the characters of the Expanded Universe, so here is a gallery and quick note on some Dark Lords of the Sith you may not know.

Darth Sion
One of the three members of the Sith Triumvirate in the game Knights of the Old Republic: The Sith Lords, Darth Sion was held together by his embrace of the darkside of the force:

Darth Traya
Another member of the KOTOR Triumvirate, Darth Traya is as cool a character as there is in Star Wars:

Darth Bane
The Sith Lord who made "The Rule of Two", Darth Bane is perhaps the greatest Sith in the Expanded Universe:

My personal favorite.

Darth Zannah
Darth Bane's apprentice and eventual conqueror, Darth Zannah is a master of Sith Alchemy and uses a double bladed lightsaber:

Darth Plagueis
The master of Darth Sidious, it is thought that Plagueis was the first to create life through influence on midichlorians (Anakin Skywalker) and next year there will be a new novel about this mysterious Sith Lord:

Naga Sadow
An ancient Sith Lord, Naga Sadow pictured here with his meditation Sphere:

The ancient Sith used Sith Swords which were created with alchemy and could withstand lightsaber battles.

Freedon Nadd
One of the first Sith Lords to have the ability to imbue his spirit to remain, Freedon Nadd is a curious Expanded Universe character:

Of course the Sith used Holocrons like the Jedi, but Sith artifacts were triangle in shape:


Of course the greatest of all the Sith, Darth Sidious, was a master of influence. Here is a picture I love of Sidious and the future Darth Vader:

Have a good night.

Thursday, November 25, 2010

Happy Thanksgiving

Happy Thanksgiving
Could not ask for more today. Weather is about 50 degrees, not cold but still cool like this time of year should be. All the grub is on schedule to be cooked (sorry, wife said NO to a turkey on the smoker) and plenty of football on the way.

The Wiki entry for today:

Don't bother me with comments about how we used native Americans and Thanksgiving is a scam, I like this holiday so too bad:

Thanks to everyone that makes this so much fun. Thanks for all the great readers that come by and offer so much. Have a drink on me all.

Have a good day.

Tuesday, November 23, 2010

Darth Vader and Lord Voldemort: A Comparison

Another funny find today.

Darth Vader and Lord Voldemort: A Comparison
Here is a contest of supervillains! Via NerdBastards (click over or click picture for better view):


Have a good night.

Monday, November 22, 2010


Nifty find today.

US Debt in Perspective
Found this gem of a post over at Ptak Science Books. Click on over for the ultra cool graphs of US debt from the later 1800's.

Key summary by the author:
What we see here is a history of American federal indebtedness from 1791 (when the public debt stood at 75.1 million dollars) to 1881 (about 2 billion). Using the CPI (consumer price index) as a factor to translate that number in 2008 dollars (or so), the 2 bil grows to about $40 billion (a nickel then is about a dollar now). The interesting part of the legend--and what drew me to this graphic even before its somewhat unique shape--state "1"--370 millions", that is one inch of pink horizontal bar stands for about $370,000,000, and the last bar on this graph is about 6 inches long, which, adjusted for inflation, would now be about 10 feet long. .That said, the really interesting part comes next--if we use this measure to graph a horizontal bar for the American debt as it stands in 2008, it would pink a pink bar that was about a HALF MILE long to express our 10(+) trillion dollars of debt. OR, somehow, the old debt of 1881 would be about 1 story of a house, while the 2008 version would be up one side of the Empire State Building and down the other (and yes that includes the aerials). I don't know how to put this comparison in context, the differences are so staggering.

Again, go there for the graphs, it is worth the stop.

I guess it is true, some have worried about the US debt for a long time but it never matters! This is excellent news. Soon I am thinking a new 100 year roll over of all national debts of the world will happen and we can deal with it then.

Have a good night.

Sunday, November 21, 2010


Allow me:

The New England Patriots held on for a huge win in a huge game against the hated rivals Indianapolis Colts. 31-28 and the difference was a slight jam against Peyton Manning on his final pass that resulted in a game ending interception. Tom Brady has now won 25 games in a row at home and the Patriots are 8-2. Shocking really.

My second love, the New Orleans Saints have caught fire and are looking very stout indeed. Who in the NFC can beat them? Exactly.

In racing news Jimmie Johnson won his 5th straight title which would make him the greatest driver of all time, but allow me to be blunt; those fuckers cheat and everyone knows it. Johnson is a pansy and a bore. Where the hell is Dale Earnhardt when you need him? How many IROC races has Johnson won (in identically prepared cars against the best drivers???? NONE.) Sad really.

I have to work Monday and Tuesday then off until the next week! That will work.

Have a good night.

Saturday, November 20, 2010

Cover That!

Saturday night and nothing to do!

Cover That!
I ran across some great stuff on YouTube today and so a short post is in order.

One of my favorite songs is "Tears of the Dragon" by Bruce Dickinson (front man of Iron Maiden) when he had one of his solo albums, Balls to Picasso. The song is really wonderful and you can see the original here.

Now of course the wonders of YouTube can bring you covers of said song. Some are terrible, some not bad, and some are really good. I of course have zero music talent and the dream of playing the guitar was not to be, even with my Dad's best efforts to help me.

Here is a fellow, jesustcbtv, who plays his heart out on acoustic and does his best with a tough vocal song:

Right on! Great effort.

Here is an amazing acoustic cover of the song played by a lady named Yves:

When I heard that today I was stunned silent. Very nice playing.

Of course if you play a sick cover a tune like Crazy Train, you may get Ozzy's attention and get to play a live show like 7 year old Yuto Miyazawa:

The kid is good!

How about an all time classic tune like "Hotel California"? Well, julianaeveryday has you covered and then some:

Most impressive.

Here is oooopmymom wailing out Van Halen's ultimate rock tune "Atomic Punk":


A band named Sabre tries out Dokken's ballad "Alone Again" and it is not bad! Posted by CompGEED:

I like it.

How about a father and son playing my favorite Journey song, "Wheel in the Sky"? Here is tonedr:

Great stuff.

If you know the guitar duel from the film "Crossroads" then you may like this cover of Eugene's winning riff by bolajunky:


See, you can find most anything if you want to look.

Have a good night.

Friday, November 19, 2010

Just the Good Stuff

Who needs deep thought on a Friday night? Not I!

What about "Personalized Medicine"?
Reader Watchtower asked a question about how having genomic information may play a role in possible treatments for people. This is an area that I have tons of experience and knowledge about so you can imagine I wanted to go all out! For the sake of brevity and simplicity I will just use a few links and offer some commentary.

I was at a company when I first started working that was at the forefront of thinking about "personalized medicine". Today it even has it's own Wiki entry!:
Personalized MedicinePersonalized medicine is a medical model emphasizing the systematic use of information about an individual patient to select or optimize that patient's preventative and therapeutic care. Personalized medicine can broadly be defined as products and services that leverage the science of genomics and proteomics (directly or indirectly) and capitalize on the trends toward wellness and consumerism to enable tailored approaches to prevention and care.

This sounds complex but it is not too bad. Every person has a unique genome. While maybe 99.9% of it is just like anyone else's there may be differences (as small as single nucleotide polymorphisms, SNP's or as large as gene fusions or re-arrangements) which can be used to predict how various treatments may impact that person. This is especially true in the case of cancer cell genomics. Some treatments may target a certain pathway to kill the cancer, but if that patient's cancer can side step that pathway or has a mutation in that gene then the treatment may not work at all and would be a waste of both time an resources.

Pharmacogenetics is a large area of interest right now as companies are looking to find their target markets ever more tightly. Clinical trials will often screen a patient group for markers that have been shown to be important for a drug's activity. One can focus on patients that will see a benefit this way.

I think the question was more in a broad sense and in that way having the genomes of various types of people (Norther European, Asian, African, etc) can help the choosing of treatments. We are still a ways away from being able to sequence a person's genome quickly, but luckily most time just small sections need to be looked at to determine the best treatment options. This goes on right now, no waiting for the future! Looking ahead I think the focus will result in better treatment on a patient to patient basis and cut down on dead end treatments. Still, there is a long way to go. Hope this helps!

Writing Sample
I have often teased that I sort of work on a possible long short story (novella?) that has been in my head for some time. I do try and think about it from time to time, but it never seems to come out right. I wanted to put what I had written down for the prologue section on here and see if it grabs anyone. No title, that's in flux, but here is how it would be set up:
Look, I never set out to make "the device".

I was a kid in second grade with a new set of colored pencils. One day I sat down and started drawing. This led to the first schematics of the machine I imagined. It all made sense at the time, very useful, and I even thought it was possible. I was in second grade!

Don't ask me if I had a vision. I was not visited by aliens. No God whispered in my ear. I was just doodling and something appeared from no where. If I had it to do over, I would have drawn a fucking rainbow or a pony.

But I didn't.
Let me know what you think!

Good Joke
Caught this over at the Big Steel Keg cooking board. Men, do we need to enroll?:
Southwest Tech is offering a new 2 year associates degree: Becoming a Real Man. That's right, in just six mini-mesters, you, too, can be a real man as well as earn an associates degree in MA (Male Arts).
Please take a moment to look over the program outline.
Autumn Schedule:
MEN 101 - Combating Stupidity
MEN 102 - You, Too, Can Do Housework
MEN 103 - PMS: Learn When to Keep Your Mouth Shut
MEN 104 - We Do Not Want Sleazy Under things for Christmas
Winter Schedule:
MEN 110 - Wonderful Laundry Techniques
MEN 111 - Understanding the Female Response to getting in at 2AM
MEN 112 - Pa renting: It Doesn't End with Conception
EAT 100 - Get a Life, Learn to Cook
EAT 101 - Get a Life, Learn to Cook II
ECON 001A - What's Hers is Hers
Spring Schedule:
MEN 120 - How NOT to Act Like a Buttface When You're Wrong
MEN 121 - Understanding Your Incompetence
MEN 122 - YOU, the Weaker Sex
MEN 123 - Reasons to Give Flowers
ECON 001C - What Was Yours is Hers
Autumn Schedule:
SEX 101 - You CAN Fall Asleep without It
SEX 102 - Morning Dilemma: If It's Awake, Take a Shower
SEX 103 - How to Stay Awake After Sex
MEN 201 - How to Put the Toilet Seat Down
Elective (See Electives Below)
Winter Schedule:
MEN 210 - The Remote Control: Overcoming Your Dependency
MEN 211 - How to Not Act Younger than Your Children
MEN 212 - You, Too, Can Be a Designated Driver
MEN 213 - Honest, You Don't Look Like Tom Cruise
MEN 230A - Her Birthdays and Anniversaries Are Important
Spring Schedule:
MEN 220 - Omit! ting %&*! from Your Vocabulary (Pass/Fail Only)
MEN 221 - Fluffing the Blanket After Passing Gas Is Not Necessary
MEN 222 - Real Men Ask for Directions
MEN 223 - Thirty Minutes of Begging is NOT Considered Foreplay
MEN 230B - Her Birthdays and Anniversaries Are Important 2
Course Electives:
EAT 101 - Cooking with Tofu
EAT 102 - Utilization of Dining Utensils
EAT 103 - Burping and Belching Discreetly
MEN 231 - Mothers-in-law
MEN 232 - Appear to Be Listening
MEN 233 - Just Say "Yes, Dear"
ECON 001C - Cheaper to Keep Her

I pass many but not all of these!

Some nifty finds today.

Maybe a Native American went back to Iceland with the Vikings?:
Native Americans Visited Europe 1000 Years Ago
Very interesting and found via genomic sequencing!

Money tends to stay in certain geographic areas. Check out how closed up New England is with the cash!:

Very interesting.

Video Killed the Radio Star
Some items of possible interest.

Here is how all that genomic sequencing gets done in an easy to see sort of way:

There are newer ways that this is done as well, but this covers the basic idea. Here is a PCR reaction.

I think the film "The Fountain" could have been an all time great, but they missed the mark a little. Still, it is well worth a look and I can recommend it:

Just picked this classic up and will probably watch it tonight, "American Werewolf in London":


Rock Blogging
A few tunes to send you off for the weekend.

Gawains provided quite a list to choose from, so let's take a trip with KISS and "Room Service":

Never heard that one. My favorite KISS clip here.

Get your lighters up for Saigon Kick's ballad "Love is on the Way":

You know you like that one!

This maybe a repeat, but who cares! "Signs" by Tesla is a good tune:

I am past the no 1 year repeat zone with Soul Asylum and "Runaway Train":

'And everything seems cut and dry, day and night, earth and sky'

I like Garbage, not that kind, the band! Here is "The World is Not Enough":


Two left. Two and out.

A little Pat Benatar goes a long way! Here is "All Fired Up":

Love that lady!

Last call! Get up, get up and get down, 911 is a joke in your town!

Close the show with a live clip of Metallica's "Ride the Lightning":

Have a good night.

Thursday, November 18, 2010

Any Ideas?

Hello All!

I am open to ideas for Friday night's off topic post if anyone has any.

Poll added at top left for answers.

Have a good night.

Tuesday, November 16, 2010

What If?

Came across something crazy today.

World War II Axis Invasion Plans for the United States
This kind of stuff always catches my attention.

As a thought experiment or real fear, possible Nazi invasion plans for the United States were fabricated for Life magazine. From the article over at io9:
These diagrams from the March 2, 1942 issue of Life detailed the Nazi invasion of America shortly after the attack on Pearl Harbor. Check out such alternate reality battles like the bombing of Detroit and invasion of Norfolk, Virginia.

Link is here. Worth a look.

More details can be seen here.

Have a good night.

Monday, November 15, 2010

Why So Nervous?

Just a quick note for the evening. No real posts for a bit.

Sunday Night Football
I was shocked by the New England Patriots last night. One week after they could not do much of anything right, they put it all together for a huge road win against the Pittsburgh Steelers.

I think last night was about the third time I saw Tom Brady in "the zone" and when he is on like that you are witnessing something special. I don't care about Peyton Manning and all his baloney numbers; there is no better big game quarterback than Tom Brady. There is not, get over it.

Speaking of Manning, the Indianapolis Colts travel to Foxboro next week for another big game with playoff implications. The season is getting very interesting indeed.

Why So Nervous?
All of a sudden muni bonds are getting hammered. Why? I have no idea, why does anything happen these days? Does someone know something? Is this frontrunning the FED who may be looking to buy this crap in QE 23? No idea, but it is kind of funny to watch.

Jeff over at The Housing Time Bomb goes over other bond news tonight. Check it out, maybe Mr. Market is about done with Boom Boom Bernanke? Credit markets tend to lead stocks but this has not been true for some time. Who knows.

Of course, if you want great writing The Automatic Earth has another stellar post up:
The Keynesian Vacuum Universe

Have a good night.

Sunday, November 14, 2010

Big Game Sunday

Hello all! I trust you are having a good weekend.

Big Game Sunday
Economic Disconnect has had a constructive Sunday and is feeling pretty good tonight.

The New England Patriots travel to Pittsburgh tonight to play the Steelers. I think it is a TALL order for the Pats to be able to handle the Steeler running game and I have a feeling the passing game of New England will have a hard time as well. I think the Steelers win this game tonight, but I want to see how the young players on the Patriots react to a rough environment and harsh conditions in a road game.

Any way you look at it, this game is between two of the best teams in recent history. I am hoping for a good tilt.

Have a good night.

Friday, November 12, 2010

I am Ambivalence

Thanks to many for the kind words in the comments last post and a few very nice emails. I can assure you I am ok and that the break I need is not due to burn out or being frustrated by markets or policy. Sometimes personal issues require attention and that is all I want to say. Thanks again.

I am Ambivalence
A few not-quite-poetry verses to sum up ambivalence.

Stocks have raged 80% since the lows;
The market is never wrong so I should buy;
Should I hedge that position or go all the way long?;
Do that.

Silver and gold are real money;
Always have been and always will be;
Get physical or keep paper shares?:

I am worried about retirement;
Everything is so volatile;
What can I do to protect what I have?;
Wear a cup.

The Republicans won the election;
Only 48% of voters are happy about a GOP majority;
Why isn't anyone excited about this?;
I missed the question.

QE adds no new money to the system;
Commodities were flying until margin increases;
If there is no new money, why is this happening?;

If it is best to be contrarian;
But a contrarian will know the contrarian view;
Is it better to be the second contrarian in the chain?;
6th would be best.

The I-phone rules;
The I-pad is genius;
Apple is god?;
The dinosaurs are extinct, killed by a huge meteorite.

I have doubts;
I have fears;
Will it always be this way?;

Friday Night Entertainment
Ok! After that it may prove difficult to salvage a post, but here goes.

Quantitative Easing Cartoon
This was making the rounds and these things crack me up to no end. Enjoy this one, it is a classic:

"What is 'The Deflation'? Its not two funny it's three funny.

Pump and Dump
This could be a news story, but I find it more in the realm of comedy. As Kid Dynamite likes to say "Sold to you, SUCKA!":
David Tepper Dumps 20% Of Financial Holdings During Quarter Of Infamous CNBC Speech
So fitting.

Robotic Sponge Baths?
Submitted without comment:
A Sponge-Bathing Robot
Nothing is sacred.

Comic Relief
Turn that frown upside down!

From FailBlog, maybe the best (worst?) ever:
epic fail photos - Peek-a-Boo FAIL gif
see more funny videos

So true:
see more Very Demotivational

Film Clips
A few movies you may have seen or not but should.

Not too many Stephen King novels translate well to film, but "The Dead Zone" certainly did. Big scene:

You can catch a young Jason Gedrick in the touching film "The Heavenly Kid":

I have always loved this film.

Rock Blogging
Even in bad times, rock and roll is good. That is good for something.

Watchtower, the longest running reader of Economic Disconnect was interested in Journey's song "The Party's Over" so it leads off the show:

I think I heard this song one time before. Not bad.

Scharfy noted a neat Johnny Cash tribute that you can check out here. I wanted to run a Cash clip, so let's go with "Sunday Morning Coming Down":

I love that one.

From the film mentioned above, enjoy "Out on the Edge" by Jon Fiore:

Not bad.

Pardon the dark selection, but "Down in a Hole" is a great one by Alice in Chains:


I have had this up before, but I was in the mood for The Cranberries and their heavy duty tune "Zombie":

Nasty good.

Last two for the night. What's on tap?

Found a sick as all get out live video of No Doubt and "Don't Speak" that is well worth the time:


Last call.

Look, it's my blog and I am sorry to replay but the writer was going to watch "Streets of Fire" in a bit so you get "Tonight is What it Means to be Young". Sorry:


Have a good night.

Thursday, November 11, 2010

Had to Post This

I am thinking about taking a bit of a break from writing for a little bit. I think I will post short takes and links, and the Friday Night fun is always a nice time for me at least. Again, I am sorry but you have to do what you have to do.

Had to Post This
Saw something today that made me feel that I do know what the f%ck I am talking about! From Mish:
“We do also need creditors to be involved in the costs of restructuring,” Merkel said today in Seoul, where she’s attending a summit of the Group of 20 leaders. “There may be a conflict here between the interests of the financial world and the interests of politicians. We can’t constantly explain to our voters that taxpayers have to be on the hook for certain risks, rather than those who make a lot of money taking those risks. I ask the markets sometimes to bear politicians in mind, too.”

Trichet’s Stance
Trichet says such talk risks exacerbating the situation for indebted nations as they struggle to cut their budget deficits.

“The more you talk about restructuring debt, the harder it is to obtain debt,” Irish Finance Minister Brian Lenihan said Nov. 2. “That is the reality.”

Thank you! Thank you!

If there was ever a more clear picture of the reality we are now in please show me. As long as debt can be rolled and everyone pretends it's all good then no problems! Like I have written, if anything happens that demands real money in today's system it's all gone in about 10 minutes.

Have a good night.

Wednesday, November 10, 2010

Things to Keep in Mind

Blog Note
I want to apologize to the readers. I am having some problems concentrating and being motivated due to a personal issue. Add to this the clock change now guarantees it to be dark when I go to work in the morning AND when I come home and you get a blogger more than a bit off his game. Just when I had a grand plan to get some work done. Thanks for your understanding.

Things to Keep in Mind
Today featured quite a few things we have discussed over the past few months so no reason to beat them to death. A few things to keep in mind going forward are presented below.

Margin Issues not Just for Old School Companies?
I am not sure how much I can read into one report, especially with the idea that Cisco (CSCO) may well be pulling a fast one by lowering guidance so much, but a billion dollar revenue shortfall is not a small matter. Market Ticker has some ideas on were the pressure is coming from:
Companies talking about input cost margin problems (remember the commodity ramps from late 2007 into 2008?) and forward guidance cuts.
Folks, you buy stock on tomorrow's earnings expectations. You've been buying 'em lately on the premise of multiple expansion driven by The Fed.
I said you would get destroyed doing this, and it might have started this evening.
If you remember this article, I said that it is my thesis that economic Depressions come not from credit collapses so much as they do from margin collapse. That is, the inability to make a profit due to input cost ramps while you are unable to pass through those costs to the consumer of your product or service.
This in turn forces you out of business, and you then lay off all your workers. They now have no money, and thus can't buy as much as they used to. That in turn tightens the spiral on others in business - they have the input costs but can't drop prices to what people with damaged incomes can afford.
Cisco seems to have been "blindsided" by public sector, cable company and consumer softness. How could they be? I've been charting this in durables for the last two months!
This bears watching if technology companies are seeing end user issues due to cost problems.

Retail is Aggressive
At both Home Depot and Lowes this weekend all the Christmas stuff was already up and looked like it had been for some time. It is not even Thanksgiving yet! As a kid I never even considered Christmas until after Thanksgiving, but now the holiday sale season lasts for months. Another data point, old warhorse Sears will be open on Thanksgiving for the first time ever to try and increase sales:
Sears to be open Thanksgiving for first time

Might as well I guess.

Year End POMO is Almost Every Day
The 2010 POMO schedule was released today and if you think Silver is a crowded trade, this thing is 10X worse!

That said, no reason at this point to doubt the magic effects of the FED bond buys. Some commentary better than mine:

Tim Knight
How to Get on POMO's Side
With today's announcement of over $100 billion POMO purchases in the coming weeks, I gave some thought as to how to try to get on the Right Side Of Ben, since I'm kind of sick of griping about POMO and would rather benefit from it.

Evil Speculator
Ben’s Middle Finger
Well, there you have it, folks – do I care about those POMO auctions? Not really – I’ve long given up on the notion of final justice for either Mr. Bernanke or the fat cat banksters he’s feeding cookies on a daily basis. But what I care about is downside risk and that’s pretty much eliminated if you can lever $105 Billion by a factor of 100 and throw it into the equity maelstrom.

Trader Mark
In the grand mass psychology experiment i.e. the herding of rats through a maze the conventional wisdom is you can no longer bet against the market on POMO days as the Fed lifts treasuries off the primary dealers hands in return for mad money and the primary dealers...well magical things happen to assets. If you take out the middle man (primary dealers) you are just left with the Fed and the magic of a market that jumps when commanded and asks how high. And now that the rats are trained to front run the primary dealers it has become self reinforcing.
There is so much money coming down the pike and if the next months schedule is reflective of the ensuing 7 months bears apparently will have 2 days a month to operate in a free market.

I think you get the idea. Now that the banks have returned to their perfect or near perfect trading day records it would take some kind of major event or shock to stop this animal from running until years end. None of this is trading advice, you have to be brave and/or crazy to be playing on this field but I wanted to cover it once again.

Have a good night.

Tuesday, November 9, 2010


Short on time tonight so a few links of interest.

I Have No Idea What this is But Somebody Does
I have seen the videos and the pictures of the "mysterious" object that was in the air of the coast of southern California. I don't know what it is to be 100% honest, but I am leaning towards it not being a simple contrail from an airplane.

Great write up here:
NORAD: Er, we’re still not sure what the mystery missile is; Update: Looks like a plane, say defense analysts
Now maybe I am mistaken but I am pretty sure we have dedicated launch surveillance satellites in the sky that look for a missile launch 24 hours a day 7 days a week. There should not be this kind of confusion as to what is going on. This did make the Nightly News and that is not good.

Here is what I mean for detection capabilities:
General Ballistic Missile Defense
PAVE PAWS Radar System
Just check them and then we will know if it was a plane or what.

Rising Costs Hit Bottom Line
The Reformed Broker covers some stories about rising input prices having an effect on bottom lines. While prices has been on the uptrend since summer, only now is that making it's way into reports. From TRB:
The Cow in the Coal Mine
How do dairy and packaged foods companies like Endless Zero interest rates and the dollar/commodity one-way seesaw? Well, they do not like it at all judging by their big earnings misses. Commodity costs are now eating up their profits....

...My pal Barbarian Capital notes that the company saw its EBIT margin drop by 40% in Q3 vs. Q3 last year: 3% vs. 5%. As someone who knows this industry cold, it's not encouraging to hear him say "Thanks for playing and welcome to QE2 wonderland."

"And That's the Bottom Line, Cuz Stone Cold Said So!"

Silver Isolated for Higher Margin Requirement
As we all know speculation in stocks and houses = AWESOME and speculation in gold and silver = Not Funny. The dichotomy is a puzzler because I am sure metal holders will feel more wealthy and spend their money in the economy should prices rise so what is the difference? I think you know the difference. Via Zero Hedge:
When JPM/HSBC Don't Like The Results, The CME Just Changes The Rules: Full Revised Silver Margin Schedule
Hypocrisy, hallowed be thy name.

Great Post for Right Now
Spotted a great write up over at Fund My Mutual Fund. Small excerpt:
Thrilled with This Morning's Sale of Silver Wheaton (SLW), Wish I had Shorted
Trader Mark made a great exit on a stock going bananas this morning. What caught my eye:
Back to SLW - it's fast approaching that gap at $30, but the whole commodity complex to be is one big Silver Wheaton. When these trades reverse this market is going to enjoy very ugly skid marks... all shorts have been eviscerated (hence they cannot provide support by 'short covering' i.e. buying on the next downturn) & huge air pockets exist on countless charts. I can only find one blogger out of about 40-50 blogs I scanned this weekend (ex daytrader types) who is actively shorting this market on the intermediate term...

The farther we go up, in non stop fashion, the higher the risk for people who are buying with no thought process and little risk control. Maybe the selloff will be from here... or S&P1300 or 1800 or 2500; I don't know because this type of market is foreign to me - but once again we live in an artificial atmosphere, no different from NASDAQ 99 and housing 2006. The only question is, are these days more like April 1999 or February 2000. I wonder how many Fed induced wealth destruction cycles we need to go through before anyone not named Ron Paul points at the Fed.
Spot on.

Hubble Capture
An edge-on look at the Galaxy NGC 4452:

Great stuff.

Have a good night.

Monday, November 8, 2010

How Much Room to Run?

The bad weather has come to Massachusetts with some wet snow falling a bit west of here. It will not be long now.

How Much Room to Run?
I have been looking at markets quite a bit as of late and wanted to touch upon a dynamic that should be coming into play fairly soon.

By now most are aware that huge runs in equities, metals, and commodities have been reflected in a weakening dollar. The QE 2.0 talk that started this summer initiated a melt down in the buck and assets soared. It may be helpful to take a look at where we are. Here is a dollar index chart going back to 2008:

It should be readily apparent what we are looking at:
-the March 2009 lows in stocks were a top in the dollar
-the dollar was smashed during the run up in asset prices
-the buck was king kong again at the height of the Euro concerns and the summer slowdown
-QE 2.0 hopes have taken the dollar down once again

That's nice, but what does it mean?

Looking at the charts the dollar has found a continual bottom around 74, and maybe has touched 72 a few times over the years. I have seen discussions about the dollar breaking down under 70 and what that may mean. While I have little doubt the FED could lose control, I just do not see it happening. 74 or 72 will hold and by then the Euro mess may come back to the front pages.

Recent history has shown that a stronger dollar will be bad for stocks and most everything else. We are sitting at about 77 right now, so another 5% move can be expected to the downside for the dollar. This may not correlate to a 5% upside in other assets, it may well be more than that. What I am trying to show here is that the upside will be limited going forward. Unless.....

Asset classes decouple from the dollar dynamic that has been in play for some time. This is not impossible but I do find it unlikely. Still, this is something I am watching right now and will make plans accordingly. You will want to be watching at the 72-74 range for the dollar if a shift occurs. Many trades right now are very crowded and upon a reversal the exits could be jammed.

I am Not an Alarmist
My long held vision that the world will be over run with robots is not new, yet I am sure we have never been as close as we are now! Take a look at this wishful thinking from long ago:
News Article from 80 Years Ago Warns of the Impending Robot Age
Here is the scary vision from way back:

I think this was a bit premature. Now, not so much!

Have a good night.

Saturday, November 6, 2010

Special Bonus Post

A Saturday blog due to a great find today!

New Tool Now in Play
I have been impressed with iBankCoin's Chessnwine since starting to read him on a hat tip from Josh Brown of The Reformed Broker. After watching this guy make uncanny calls for months I wanted to learn a bit more about the PPT, a trading tool and screener based on their own program.

I signed up today and I am impressed already with everything the PPT can do. There is a TON of useful stuff there and it will take me a bit to figure it all out and do some testing before I start using it to support my own secret way of picking out positions. I think it is going to be fun. I will update in a while when I am ready to start getting to work.

College Band CD Find
The wife found a CD with songs from a band some members of my college program (biotechnology) had made way back in 1997-1998! I was so excited because I knew there was a particular song I used to love and I have not heard it in years!

The band was called Man Bites Back, which was funny. I have no musical ability so I was not involved, but some of my best college friends were in the band. They played all kinds of stuff and got to play local clubs in Lowell. They even scored a show at T.T. and the Bears in Cambridge! That was a wild time!

For a bunch of scientist hopefuls, they could really play! Here is my favorite song by the band titled "Ghetto Starlight". This song is about 1000% better in a live setting when the singer can really let it rip, but the recorded version is awesome as well. I spent about an hour figuring out how to put it on YouTube and so here it is:

"She took me by the hand on a rocket ride! Into the sky! And I don't know why!"

Thought I would share a great memory from the old days. I hope you like the song.

Have a good night.

Friday, November 5, 2010

That Was Some Week

Glad this one is over!

Reader Submission
I was going to write about a few things tonight but I am tired and the week has had enough written on it. All I can say is I already see serious discussion about how and when QE 3.0 will happen and I know that I will be proven right that the FED is now a permanent part of our markets. Here is a picture for you to think over:
demotivational posters - IN CAPITALIST AMERICA
see more Very Demotivational

Alas, a reader left a sharp comment the other night in the post on 11/1/2010. I am including it here because I think it has real value when thinking about how far we are going to go to attain the old levels of blow off top spending after a huge bubble collapse. From reader Watchtower:
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 everything 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"

A thoughtful comment that I am thankful for.

Friday Night Entertainment
I know I need some distractions, how about you?

Jack Finney
I do believe that Jack Finney's special novel "Time and Again" has a new fan! Who wants to go ice skating in front of the Dakota Hotel?:

One of my favorite novels.

Win or Fail, it is Funny
Some selections from Failblog.org?

Looks like fun:
epic fail photos - Family Reunion Banner WIN
see more funny videos

We usually went to the zoo or the Lowell Library for field trips but this would have worked:
epic fail photos - field trip fail
see more funny videos

Star Wars Travel Posters
Amazing and original work by Steve Thomas! Check them all out but here was my favorite:

That is so going on my wall in the den.

Clips and Stuff
Some items worth a look.

It seems ALL of the episodes of the series "The Highlander" are now full length on YouTube. Yes, I know I am an addict. This show was what really great TV could be, I only wish it was an HBO series with a proper budget. Oh well.

In any case, take a few minutes and watch this clip from the episode "Finale part I" and the scene I love starts at the 12:17 mark. Follow through to the 19:50mark and tell me it was not special:

Great stuff.

Speaking of HBO series, No more "Rome" and no more "Carnivale". At least "True Blood" looks like it will be on forever....


Rock Blogging
Time for the tunes. With no requests I am on my own. You have been warned!

I like this song and I guess I have no idea why, but lets go back to 1965 with Billy Joe Royal and "Down in the Boondocks":

Old music is wonderful.

From old to new, here is Pink's new song "Glitter in the Air":

I like that one.

Set aside the theatrics and the make up! Alice Cooper's "I'm 18" is a great tune:

WISH I was 18 again. Thought I knew everything. Such a waste.

On a lighter note, try Primus and "Winona has a Big Brown Beaver"; sure to get a chuckle:

So very wrong, but strangely funny.

In case you missed the million times I played it, here it is again! "Two of the Lucky Ones" by Droge and Summers Blend (with lyrics):

What a special song.

Two left! Unlike some bloggers (Hi Jake of EconomPic!) I deliver the tunes. I also have nothing else to do so I have that going for me. Which is nice.

A little romance song for you all! Take a ride back with Whitesnake and "Is this Love":

The song is good too!

Last call! Last tune, last chance for what? Redemption? Absolution? Revelation? Who can say.

All I can say is if you leave me with no requests, you get a live Randy Rhoads tune to close! Rock out with "Children of the Grave" and I triple dog dare you to listen to the whole thing and not get a little amped up. I dare ya!:

That is just moving to the very core.

Have a good night.

Wednesday, November 3, 2010

Another QE Term

While there was some turnover last night in the elections, not as much as would have been needed to really scare the politicos enough. Still, one can hope a message got through to D.C: The economy stinks, the FED and the bailouts help the banks, and we are all getting pretty sick of it.

Another QE Term
Another terrible candidate won again today, Quantitative Easing. QE 2.0 as it is known now (later QE, WOW! That was a long time ago!) won another stint at the plate for the next 8 months. The FED will work hard to monetize almost all Federal debt and this is a good thing in some way. Fine, it is what it is.

Some have argued this may ignite a currency war but what do we care, we are the reserve currency and thus cannot concern ourselves with the problems (real or perceived) of others.

QE has been ineffective in much of anything useful. It has set a real bid under commodities and equities, but those are not reflected in the CPI anyway.

The yield curve will remain steep which will aid the banks in case mortgage losses and putbacks end up not being solved through legislation due to the new makeup of CONgress.

So what does this all mean?

Short Term (next 8 months or so)
-equities will rise
-commodities will rise
-gold and silver will rise
-junk yields will soar

Basically what you have seen for a while will continue on. I can see a scenario where a monster move up occurs in stocks to a blow off top, but I think it will more of the stair step 1% days as far as the eye can see kind of thing. Commodities may see a more violent surge. This is not a good thing but it may support aggregate demand if folks try to stock oil in tanks under their home. You have heard of contango, right?

What can you do? Well, savings are trash and cash is dead. It has been and I had hoped for a more sane policy and reform but then I am a fool. Some ideas:
-Past a POMO day schedule near your desk and if you can day trade move with the POMO schedule as detailed many places like Zero Hedge. One note: this has been so obvious and written about the real players may try and move this around a bit but the vicinity will remain.
-Buy broad equity indices and hold them.
-Buy junk bonds
-Buy bad muni bonds
This is almost Tepper-esque in the "can't lose" sense.

This is not advice. Here is what I aim to do.

I am going to really spend some time looking at buys that I can stomach. This will exclude broad indices and in particular anything financial, housing, or US automotive. I am looking to start trying to get some return on my money that I can play with, plus it would be more fun.

To this end I am using my own way of looking for buys and I will be buying and testing the iBankCoin PPT as another tool. I will test some ideas out on the thing and see how it fits my way of trading. I hope it proves useful.

Long Term (who cares, we are all dead right?)
This move serves as a start of a long term commitment by the FED to markets for support without end. While this did not work well for Japan, things are a bit different here. Nothing over the next year will really get much better in the real economy, but that hardly matters when banks are making serious coin, corporations can get money on the ultra cheap to buy back shares, and expansion overseas where much of the free cash will be deployed will prove a hit. So what if we have no job growth here and consumer attitudes and spending stay low. Who needs them anyways, rail traffic is through the roof!

Do not despair or take this blog the wrong way. I am interested in getting involved on a limited scale to see if some things I have been working on play out and make a few bucks off it. Am I doing what Bernanke'e FED wants me too and being a robot? To a degree perhaps, but then I know the specific plan I have in mind for gains (hopefully) I am going to make and it does not involve buying BAC secondary offerings.

Never fear, the same material will still remain on macro issues, sarcasm, endless whining, and assorted fun. Use the comments to let me know what parts of all this you find most interesting.

Have a good night.

Tuesday, November 2, 2010

McRib? Who Cares! Bring Back the Old McDonald's Chicken Sandwich!

Voted tonight and there were more people this time then when Scott Brown won here in Massachusetts. We shall see what this all means tomorrow, hopefully.

Tonight will be a blow off night as most are looking for election news or getting set up for the big QE 2.0 speech tomorrow. A few notes and then some fun stuff.

I Have Always Said the Stock Run Up is Not Helping Most People
Barry Ritholtz over at The Big Picture covers a point I have made time and again, most "normal" people really do not have much money in stocks and the money they do is parked in hard to get out vehicles like 401k's and other retirement plans. From Barry:
Home Equity as a Percentage of Household Net Worth
Key metrics:
Two other factors to keep in mind when discussing the wealth effect:
1) The vast majority of Americans have very little money tied up in equities. The median family’s portfolio is worth well under $50k
2) The biggest investment remains real estate, with a median value of $200k. At 20% down, it still reflects 10 to 1 leverage.
Hence, why nationally, the wealth effects of real estate are far more than stocks . .

Now I am aware many writers out there have big bucks. I am glad many of you have friends and family that are smart and have worked hard and may have large holdings that they use well. The fact remains most Americans do not. The QE 1-50 HFT FED pump job on markets has been for the benefit of traders and banks. It also makes a nice talking point "Look the markets are UP huge! You know what that means right?" The tech wreck was the last time regular folks chased stocks, not anymore. After being wiped out on real estate I doubt gold, silver, cotton, sugar, or oil will soon become favorites either.

Financial Blog Wars
Downtown Josh Brown of The Reformed Broker (Ha, reformed from what I wonder....?) must have spent hours putting together the coolest grouping of finance blogs of all time. Set with the backdrop of "Star Wars" we get a breakdown of a monster list of names. The categories in the post are:
Jedi Masters - Macroeconomics, Capitalism, Big Picture Wisdom
Droids - Technicals, Trading, Charting, Options, Quantitative Analysis
Jawas - Distressed Asset Salvage, Value Investing, Fundamental Research, Stockpicking
Death Star - Mainstream Media Blogs, Commentators for The Empire
Rebel Alliance - Misfits, Rebels, Originals & Wild Cards
Galactic Senate - News, Multiple Voices, Aggregation
Bounty Hunters - Mercenary Journos, Newsletter Authors, Pundits for Hire - not necessarily financial bloggers but definitely part of the conversation

If you click on over you will notice Economic Disconnect has made the list in the Rebel Alliance - Misfits, Rebels, Originals & Wild Cards category! I have to admit, this made my whole week and it is only Tuesday! Thanks so much Josh!

P.S. That category is the best one, IMO.

None of the Above
the 1985 film "Brewster's Millions" is a favorite of mine. Starring Richard Pryor and John Candy the film's summary notes:
Brewster is challenged to either take $1 million upfront, or spend $30 million within 30 days to inherit $300 million. If he chooses the former, the law firm becomes the executor of the estate and divides the money among charities (after taking a sizable fee). In the latter case, after 30 days, he may not own any assets that are not already his, and he must get value for the services of anyone he hires. He may donate only 5% to charity and lose 5% by gambling. Neither may he buy expensive goods and destroy or give them away. And he's not allowed to tell anyone, even Spike. Monty decides to take the $30 million challenge. A paralegal from the law firm must accompany him to keep tabs on all spending.

Seems easy but it is quite hard. Brewster finds innovative ways to spend the money including mailing a million dollar collective stamp as postage and running for Mayor of New York.

Well, not really. One of the best ways to burn cash is a political campaign, and thus Brewster runs on the platform of "None of the Above" which aims to have no one win the mayor race! It is very funny and almost sadly true that candidates are usually bad and slightly less bad to chooses from. Here is a clip:

Of course we cannot vote for none of the above, but I do hope plenty of incumbents get shown the door tonight. Banner from the film:


McRib? Who Cares! Bring Back the Old McDonald's Chicken Sandwich!
I saw this headline today and it got me thinking:
The McRib Returns
Who cares? The McRib is actually pretty good, but the limited time thing is a drag. From the article:
It's like running through a field of four-leaf clovers. It's like finding a unicorn chillin' at the fountain of youth. It's like a hundred Christmases slathered in barbecue sauce. It's the return of the McDonald's McRib sandwich. And, to many people, it's an event to get excited about.

The McRib phenomenon is something special in fast food. It's an incredibly popular pork sandwich (cut to look like a short stack of ribs) that only appears once every so often. Despite fans clamoring for it to become a full-time member of the McDonald's menu, the folks at the Golden Arches unleash its pork-flavored fury only once in a while. That time is now.
That was too funny.

This put me in mind of two McDonald's items that deserve their own letter writing campaign to bring back as soon as possible.

This thing was cool because it came in two halves that you put together. It was fun! You could even make the sound that the robot Transformers make when they transform when you did it, not that I EVER did that! Here she is:

We need this to come back, it will support aggregate demand I promise!

Ok, now the main point of this post,

The Original Fried McDonald's Chicken Sandwich
Oh, childhood!

What was better than a fried chicken sandwich from Mickie D's? Not much, not at all! This thing was just pure awesome and it condensed perfection on the styrofoam packaging.

Made with a little lettuce (who cares) and a ton of mayonnaise this baby was just the ticket. Report cards were maintained at straight A's (except handwriting!) by Economic Disconnect on the promise of McChicken dreams coming true. Here is a picture of the now extinct holy grail of fast food:

Economic Disconnect actually invented the "double stacker" idea KFC seems to like over twenty years ago. You get two of these bad boys, get rid of the bun from one, and stack the two McChicken's together and now you are really in business! It was a double stuffed thing of desire. It was what was best in the world. It was safety and warmth in a box. It was all this and so much more.

Please join me in my campaign to get both the transforming McDLT and the old school McChicken sandwich back on the menu. In these troubled times, we need all the help we can get. We can even skip the styrofoam I guess.

Have a good night.

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.