Former Goldmanite And Head Of New York Fed Bill Dudley: “Let Them Eat iPad”
by Zero Hedge - March 11th, 2011 1:01 pm
Courtesy of Tyler Durden
Earlier today, Goldman New York Fed plant, and Jan Hatzius predecessor, Bill Dudley, emerged from his ivory tower to make a trek to Queens to deliver prepared remarks written by some intern, discussing the prospering state of the New York burrough (speech link). Unfortunately for the multi-millionaire, things quickly went from Unicorny and Rainbowy to horribly wrong. During the Q&A, one audience member asked: “When was the last time, sir, that you went grocery shopping?” A stunned Dudley did no have the heart to elaborate that the caviar and ambrosia eaten on the Dudley family table is hand delivered through the Fed’s G-6 from Kamchatka, so instead, as Reuters reports, he “tried to explain how the Fed sees things: Yes, food prices may be rising, but at the same time, other prices are declining. The Fed looks at core inflation, which strips out volatile food and energy costs, to get a better sense of where inflation may actually be heading.”
So, Dudley sought an everyday example of a price that is falling.
“Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he said referring to Apple Inc’s (AAPL.O) latest handheld tablet computer hitting stories on Friday.
“You have to look at the prices of all things,” he said.
This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment “tone deaf.”
As for the FTMFW comment from the audience, which apparently did not realize (unlike the prevailing thought at all other Dudley luncheons) that there is massive career risk in highlighting that the emperor is naked, has rolls of fat around his neck, and has a hairy ass, it was the following:
“I can’t eat an iPad,” another quipped.
Oh, but you will soon my dear. Just you wait – after all QE666, the Chairsatan’s personal favorite, is just around the corner. Also, per rumors, the Fed has commissioned MIT to discover a plastic decomposing bacteria and lace the Fluoride in the drinking water with it, and… Presto.
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RANsquawk US Afternoon Briefing – Stocks, Bonds, FX etc. – 11/03/11
by Zero Hedge - March 11th, 2011 12:58 pm
Courtesy of RANSquawk Video
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Radiation Leak Feared At Fukushima Nuclear Power Plant As Radiation Level Rising
by Zero Hedge - March 11th, 2011 12:20 pm
Courtesy of Tyler Durden
Per CNN: Radiation level rising in Fukushima No. 1 nuclear plant turbine building, Kyodo News Agency reports.
That’s not good.
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Gold And Silver Surge On QE3 Expectation Rerack
by Zero Hedge - March 11th, 2011 11:58 am
Courtesy of Tyler Durden
Who’d a thunk that BTFD works for commodities even better than it does for stocks. Desks now advising clients that QE3 is likely (whether or not due to this article is irrelevant) and the result is presented below.
Silver
Gold
Next up: as bond yields jump by 100+ bps next, Bill Gross will be more than happy to load up at a special, new low price.
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If We Must Have a Corporate Tax, Let’s Tax Gross Receipts
by Zero Hedge - March 11th, 2011 11:42 am
Courtesy of Value Expectations
by John Tamny, Toreador Research and Trading (Guest Contributor)
Taxes are always on the mind of the electorate, and while individual rates of taxation garner the greatest fraction of our attention, the way corporations are taxed is important too. A change in direction in this area could potentially free up a lot of capital, all the while reducing a great deal of waste.
By now most investors are familiar with the statistic showing that the U.S. rate of taxation, at 35%, is only exceeded by that in Japan among economically developed countries. Those who would like to see it lower argue that the high rate is reducing company formation stateside, so the clear answer is to reduce it.
No doubt the above is a worthy goal, but it brings to mind the old saying that “if you want the government out of your pockets, remove your hands from its pockets.” To get to a lower corporate tax rate it would be essential to abolish the myriad corporate deductions that presently dictate a high headline rate.
In short, the ideal corporate tax would be a flat tax rate levied on gross receipts. All businesses would be equal before the IRS, and could be judged by investors solely on the basis of their economic prospects, as opposed to prospects that to varying degrees are distorted by the tax code.
Distortions. In the tax bill recently passed by Congress, businesses will enjoy some new tax write-offs, and the most notable one concerns expenditures on capital equipment. Businesses will be able to depreciate immediately 100% of new equipment in 2011, and 50% in 2012.
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The problem with such a write-off is fairly obvious. As numerous Wainwright Economics publications have made plain over the years, government policies can’t stimulate economic activity as much as they can reschedule it. Stimulus today realistically implies stagnancy down the road.
In this case, businesses have the incentive to bring forward capital expenditures into the current year and (less) into 2012, but logic tells us that will reduce similar expenditures that would otherwise have been made beyond 2012.
Worse than that, no reasonable business opportunity can attract capital based merely on its ability to simply spend it. Enterprises are…
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Skyscrapers vs Earthquake: The Benefits Of Reinforced Concrete
by Zero Hedge - March 11th, 2011 11:30 am
Courtesy of Tyler Durden
Skyscrapers made in Japan:
Skyscraper being made in Taiwan:
Read all about the various earthquake mitigation strategies for skyscrapers here.
h/t hitthebit
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It’s Official: Wisconsin Gov. Walker Signs Bill Taking Away Public Worker Collective Bargaining Rights.
by Zero Hedge - March 11th, 2011 10:59 am
Courtesy of Tyler Durden
While the signature of Governor Walker to the Bill that had passed both the Senate and the Assembly, was inevitable, it is now also history. The first shot across the bow at America’s unions is now official. What happens in Wisconsin next is anyone’s guess. Probably nothing much. And any union member who may consider protesting today should carefully evaluate whether they should be doing so at the Senate building or on Wall Street/D.C. where the root of America’s insolvency, and all of its financial problems stems from.
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Market Down => NYSE Börse Breaks
by Zero Hedge - March 11th, 2011 10:33 am
Courtesy of Tyler Durden
If this impacts the NYSE’s “Liquidity Replenishment Points”, ever the useful Flash Crash scapegoat, watch out below.
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$440 Billion Drop In Shadow And Conventional Banking System Liabilities In Q3 Gives Bernanke Carte Blanche For QE3
by Zero Hedge - March 11th, 2011 9:59 am
Courtesy of Tyler Durden
When we last updated on the size of the shadow banking system, the financial “system” that is far more important to the economic prosperity of the US economy than the traditional liabilities held by conventional banks, we observed that after declining for 9 consecutive quarters, having hit a peak of $21 trillion in 2008, the shadow banking system had reached an inflection point and had posted a very modest increase at around $16 trillion in total liabilities in the third quarter of 2010. Well, following yesterday’s Z.1 release, it seems the bulk of the data was revised, and it appears that not only was last quarter’s upward pre-revision data a fluke, when in reality it was another decline of $191.7 billion, but the Q4 data further reinforced the negative trend, with shadow liabilities declining by an even greater $206.4 billion. The components responsible for the decline were ABS Issuers whose liabilities declined by $94 billion, securities loaned by funding corporations declining by $40 billion and lastly repos, which dropped by $79 billion. In other words, speculation that the Fed had achieved its goal of stimulating an organic reflation in the shadow banking system at which point it would be able to end QE and hand off releveraging over to the private sector were premature, and recent data confirms that the Fed has no choice now but to continue with its quantitative easing process, as it does more of the same: take capital from the public sector and proffer it to Primary Dealers in an attempt at ongoing asset reflation, which will, the theory goes, be matched by a comparable hike in liabilities.
So far this theory has been a massive disaster with 11 consecutive quarters of shadow banking liability declines. And where it gets far worse, is that after 5 consecutive increases in traditional bank liabilities which hit a record $13.1 trillion in Q3 2010, this number declined by $231 billion in Q4 to $12.8 trillion. Thus the combined move in Shadow and Traditional Banking liabilities was a whopping $438 billion in Q4!
Unfortunately, while events from Japan this morning may or may not be a catalyst for further QE, the biggest clue as to what the Fed will do is in the charts below.
Shadow banking subcomponents:
Sequential change in shadow banking liabilities:
Combined shadow…
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$440 Billion Drop In Shadow And Conventional Banking System Liabilities In Q4 Gives Bernanke Carte Blanche For QE3
by Zero Hedge - March 11th, 2011 9:59 am
Courtesy of Tyler Durden
When we last updated on the size of the shadow banking system, the financial “system” that is far more important to the economic prosperity of the US economy than the traditional liabilities held by conventional banks, we observed that after declining for 9 consecutive quarters, having hit a peak of $21 trillion in 2008, the shadow banking system had reached an inflection point and had posted a very modest increase at around $16 trillion in total liabilities in the third quarter of 2010. Well, following yesterday’s Z.1 release, it seems the bulk of the data was revised, and it appears that not only was last quarter’s upward pre-revision data a fluke, when in reality it was another decline of $191.7 billion, but the Q4 data further reinforced the negative trend, with shadow liabilities declining by an even greater $206.4 billion. The components responsible for the decline were ABS Issuers whose liabilities declined by $94 billion, securities loaned by funding corporations declining by $40 billion and lastly repos, which dropped by $79 billion. In other words, speculation that the Fed had achieved its goal of stimulating an organic reflation in the shadow banking system at which point it would be able to end QE and hand off releveraging over to the private sector were premature, and recent data confirms that the Fed has no choice now but to continue with its quantitative easing process, as it does more of the same: take capital from the public sector and proffer it to Primary Dealers in an attempt at ongoing asset reflation, which will, the theory goes, be matched by a comparable hike in liabilities.
So far this theory has been a massive disaster with 11 consecutive quarters of shadow banking liability declines. And where it gets far worse, is that after 5 consecutive increases in traditional bank liabilities which hit a record $13.1 trillion in Q3 2010, this number declined by $231 billion in Q4 to $12.8 trillion. Thus the combined move in Shadow and Traditional Banking liabilities was a whopping $438 billion in Q4!
Unfortunately, while events from Japan this morning may or may not be a catalyst for further QE, the biggest clue as to what the Fed will do is in the charts below.
Shadow banking subcomponents:
Sequential change in shadow banking liabilities:
Combined shadow…
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