Well, my fellow Slope-a Dopes, your favorite intrepid seafaring Frenchman got blown out of the water by Benjamin Moby-Dick Bernanke once again. I have to hand it to captain grey beard, for a guy with a curiously quivering lower lip, who seems so utterly unsure of himself every time he opens his moronic mouth, he sure does have some pair of ballistic brass balls. Not only did he delivered on his QE3 promise, but he actually turbo charged it into a terrifying trifecta! Boatswain BDI was left for dead, desperately drowning in a sea of red DOOMs (Deep Options Out of the Money). So now that Moby Dick has breached and surged the equity waves to new highs, where do we sail from here?
It now seems clear as day light, that our crazed calculating captain has definitively decided to go all in full monty, embarking on Dalio's deft deleveraging design "hook, line and sinker". What exactly is this beautiful course our asinine Admiral has set sail for? For specific directions, be sure to read bearded Ben's most trusted tactician Ray Dalio's definition of beautiful deleveraging:
Enough “printing” occurs to balance the deflationary forces of debt reduction and austerity, in a manner in which there is positive growth, a falling debt/income ratio and nominal GDP growth above nominal interest rates.
I get this cool clever concept, and can see why it appeals to astute academic anuses, as on paper it does have a certain calculable credibility. Mr. Dalio goes on to further explain exactly what this newly chartered course we have been on since 2008 looks like thus far:
unlike both the US in the 1930s and Japan since
http://www.zerohedge.com/contributed/2012-09-16/there-she-blowsevil-plan-830-bdi-slope-hope
Let us now explore a few things that could rock this beautiful banana boat:
1) The price of Oil. The life blood of modern global based trade, could well spiral upwards out of control. For the first time in history, the national average gas price for the 2nd week of September were over $4.00. Not a good look for a largely consumption based economy.
2) Will this unprecedented action blow up the Petro-Dollar? As of this September 6th, China and Russia have decided to trade oil in non-petro dollars. Also, Iran can sell their oil to them without worrying about US sanctions. This is a huge development which has not fully sunk in to the general public yet. Perhaps the rest of the world will soon refuse to play ball with a the juiced up Fed as a cheating opponent. Will Asia increasingly turn away from the US capital markets, spending its hard earned reserves elsewhere? I sure as hell would.
2313) Agricultural commodities. The price of domestic Corn & Wheat are already at or near all time highs. A devalued USD caused by excessive money printing increases the cost of imported foodstuffs as well. QE3 will only make matters worse. Again, not a good look for a consumption based economy.
4) Much of the recent social upheaval / military conflicts in MENA, have at their roots the caustic effect of high food & oil prices in the region. The US open ended QE policy is exporting inflation, and therefore misery to many impoverished parts of the world. Will the continued instability in the area rapidly lead to even larger major military conflicts which we can already ill afford, not to mention the ominous oil price spike that would ensue?
China_1237680c5) The last thing that Europe needs right now is a weaker USD. Germany the only remaining ezone economic engine will suffer significantly, as their exports become less competitive vis a vis the US. The poor pathetic periphery counties will have zero chance to compete at all. While the ECB's printing money ability has increased within the past year, they don't have the same structural capacity as the U.S. to do so. Ben's destruction of the USD will adversely affect Chinese exports as well. We could soon see a collective Japanese/Chinese/European intervention in the currency markets buying up the USD to counter the effects of QE3, and this could quickly descend into Jim Rickard's dreaded currency wars.
ZeroPercent6) ZIRP forever. Are we not penalizing all savers by keeping rates so low for so long, and thus keeping the money they would have earned in their savings accounts from ever entering the real economy? And won't inflation and a weaker dollar further erode their purchasing power? Ben's policy hurts most retired folks living off a fixed income, and all who have a conservatively allocated retirement account they are counting on for future living expenses. Also, anyone who buys insurance, will now have to pay higher rates because insurance companies can't make money on their premiums anymore. Again not too cool for a consumption based economy.
7) Every municipality, town, city and state
more,,,,,,,,,,,,,,,,,,of course lol
WHERE IN THE HELL HAVE I HEARD THIS BEFORE??????????????????????????????????????
Up until now, the stock market has enjoyed the free QE bus ride no questions asked, however when the prosperous peeps are surprisingly startled by the tremendous thundering QE3 tailpipe backfire blast, they will quickly realize that the vehicle is running on nothing but fumes, and will all jump off at once before it runs out of regular real gas. Be sure to be the first ones out before the passengers crash the plexiglass doors.
Holy hubris ! Inflation Nation ! The Bernanke has blown the lid off his chrome dome!
Fear no beard....................P3 is here.
Lift off.........Rocket launch failure.........Houston we have a problem.........Evil Plan 83.0
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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