Podcast: The Fed's Days Are Numbered

In last Sunday's podcast -- a feature that will in future only be available to members of Panzner Insights -- I argued that geopolitical risk, a threat that is often ignored until it is too late, is on the rise and must be taken into consideration.

In this week's edition, I discuss the Federal Reserve's failure to achieve its stated objectives on both a long and short-term basis, and why I believe the Fed's days are numbered (which could have serious consequences for investors and businesses alike in the years ahead).

[Note: click to play or right mouse-click and save to download].

 

Panzner Insights 092212

 

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Comments

[roger]

The government appoints and sets the salary's of the system's highest level employees,
other than that, it is an independent institution,LOL..LOL..LOL!
Not only we have class warfare, but the upper class is at war with itself.

[Rocky]

Michael, You place far too much blame on the Fed and expect far too much from Bernanke & Co. They aren't miracle workers and they don't walk on water. Over the past century, the US$ has performed far better than the British pound or the old French franc or the old German mark or the Italian lira.

I would place far more blame on American voters and the politicians they elected. As the late Randy Shilts might have put it, "The butcher's bill has now come due." We allowed cowboy capitalism to careen out of control and we started a two front war which turned out to be expensive mistakes. Prior to Bush & Co., I don't recall any industrial country ever cutting taxes in war time. Usually taxes go up and even then, wars tend to cause inflation. Many of the politicians succeeded in distracting the public's attention with bogus issues such as gay marriage and abortion and now the public has to pay the price.

When I first read your book in 2007, I thought we were headed for an inflationary depression and possibly another Holocaust. Things didn't turn out that badly, at least not for me or at least not yet. Social Security is still in business as is Medicare. The insurance company that issued my retirement annuity is still in business and the payments start soon. None of my bonds have defaulted in recent years and the ones that did default in the 1990's were all refinanced and paid off in full (with back interest), thanks to Allen Greenspan's easy money policy of the early 2000's. And, most important, no one has sent me a letter ordering me to report for resettlement.

Yes, the Fed has encouraged me to take more risks with my investments and I have stopped buying new bonds. More of my stocks are commodity related, just in case inflation does spike. One of the better investment moves I made when interest rates were normal was to invest in zero coupon bonds, mostly non callable. It avoided a lot of reinvestment risk.

I am appalled about family values politicians talking about cutting food stamps to help balance the Federal budget. Do they want young children to go to bed hungry? Sooner or later the Republican coalition of the religious and the tax cutters will collapse. I can't wait.

[It's all BS]

Jon Stewart: Chaos On Bull$hit Mountain

A kleptocracy is sucking the life out of working men and women by force and fraud. A group of sociopaths, who have committed one of the great crimes in history, not only blithely walk away with their loot unpunished, but come back to rob their victims once again, to finish the job. And they gorge themselves on the public trust even while begrudging the widow her pittance, or trying to steal it.

They pervert and corrupt so many, filling their hearts with their passionate lies, appealing to what is the very worst in them. They are truly a den of vipers and thieves.

http://jessescrossroadscafe.blogspot.com/2012/09/jon-stewart-chaos-on-bullshit-mountain.html

[Isn't the fed institutionally owned?]

Blackstone to buy $1 billion worth of Tampa Bay homes for rentals

A Wall Street behemoth plans to spend $1 billion on Tampa Bay's hobbled housing market, dispatching teams of brokers to scour neighborhoods and buy hundreds of homes a month.

But rather than resell the homes, the Blackstone Group is opting to become a landlord, renting the homes to tenants including foreclosed ex-homeowners burned by the housing crash.

Blackstone, one of the nation's largest private-equity firms, plans to buy as many as 15,000 homes in Tampa Bay over the next three years, many of them foreclosures, capitalizing on decimated home prices and growing rents.

The shopping spree, and those of half a dozen other big investment firms and hedge funds, could radically change the local home landscape, as big-money brokers compete with first-time buyers and mom-and-pop landlords over homes in tight supply.

"It's a land grab unlike anything we've ever seen," said Peter Murphy, CEO of Home Encounter, the largest manager of rental homes in Tampa Bay. "You're going to drive through parts of town and all of it is going to be institutionally owned."
Blackstone would install its own property manager and cover maintenance, taxes and insurance, Pavonetti said. He would not specify rental rates, but brokers seeking homes for other funds said rents would hover around 1 percent of the home's purchase price, or about $1,500 a month on a $150,000 home.
The competition is not just for rent checks.

Bankers are looking at bundling the future payments as trusts or securities to sell to investors, much like mortgages were pooled and sold during the housing boom.

Banks and mortgage giants are getting in on the growing rental market. Earlier this month, in its first bulk sale of foreclosures, Fannie Mae sold 699 Florida rental homes to a San Diego investment firm for nearly $80 million.
http://www.tampabay.com/news/business/realestate/blackstone-to-buy-1-billion-worth-of-tampa-bay-homes-for-rentals/1252624

[Foul on play]

QE3 To Infinity–The Final End Game

5. In the first and second round of QE the Federal reserve purchased OTC derivatives including the variety called securitized mortgage debt to remove them from the balance sheets of the Western world financial system, thereby improving the Western world’s financial institutions balance sheet and preventing an international industry wide bankruptcy. That means the Federal Reserve has impaired its balance sheet in order to repair some of the balance sheet integrity of the Western world financial system. The amount they have purchased is significant, but not compared to total outstanding above more than one quadrillion dollars.

6. The reason for QE to infinity, QE3, is the failure of business activity in the Western world to pick up with early huge monetary stimulation so as to repair the balance sheet of the Western financial world financial system. The unseen crisis is the hidden weakness of the Western world financial system thanks to FASB (The gatekeepers of world accounting) which allows financial institutions internationally to hide their losses by valuing their paper at whatever the bank wants it to be with no reference to seek a market value, primarily because there is none to seek.

8. As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.

http://www.jsmineset.com/2012/09/21/qe3-to-infinitythe-final-end-game/

[Marion Shaw]

The move by large investors to
buy houses for rent, by the
thousands is a disturbing trend
that will lead us back to the
18th and 19th centuries' conditions which
saw so much human suffering and
discrepancy in wealth. Most of
the large estate fortunes, for
instance in England and Ireland,
were based on rentals from the
mass of paupers. People always
have to pay the rent was first
principle and still is. During
the catastrophic potato famines
of Ireland in the 1800's, it
was discovered that there was
plenty of barley growing, not
affected by the potato blight,
but the cash from that had to
pay the rents. Therefore, although food was available,as
it always is even during a famine, only those with money
could buy it. The most disturbing thing about this
land and housing grab, is that
I hear they intend to drive the
rents up; not down. They will not be able to sustain that,
however, as people will eventually choose food and living in tents and cars,near
an open fire, over renting
a cold and foodless modern house.Fortunately there is still
a lot of private ownership in
this country which might delay
such dire possibilities; but
no one can predict the future
with certainty.

[sharonsj]

So what's left? Pitching a tent and living in one of the national forests? Oh, wait, people are already doing that....

[roger]

Western real estate has skyrocketed and what is now called (euphemistically) a bubble, is
really a gigantic transfer of wealth from the people who produced the wealth to a handful
of gigantic corporations, from family farms,family business to family manufacturing, artisans etc..the pattern is the same, the people are being disposes ted of their means of
making a living, we are not going back to past century's, this a completely different structure of the world, the future is happening now!
Searching for answers in the ripples will confuse the mind, it's the "whole"tide that counts. People have a choice: either submit to a form of modern Serfdom or institute a real
Democracy ruled by the people.

[Mad Max]

We need a new vision for the future. We have one way out of this mess. There is no quick or easy fix.

“Be Smart!” -
FIGHT THE CAUSE - NOT THE SYMPTOM

U.S. Citizens
Read “Common Sense 3.1” at ( http://revolution2.osixs.org )

Non U.S. Citizens
Read “Common Sense 3.2” at ( http://SaveTheWorldNow.osixs.org )

We don't have to live like this. We have choice.

[Feds not dead but most of us are...]

Doug Short at Global Economic Intersection has a must-read post that pulls together some Census Report data on US incomes since 1967 and draws some conclusions. He looks first at real, rather than nominal, incomes, and shows how income in the top 5% and top quintile have grown faster than for the rest of the population:
Read more at http://www.nakedcapitalism.com/2012/09/the-disheartening-state-of-american-incomes.html#poE6THIfoD3V4fh1.99

[Vicious cycle]

"Occupy the Economy: Challenging Capitalism"
David Barsamian; Richard Wolff
About the Program

Richard Wolff and David Barsamian talk about our economic crisis and argue that it can be traced back to the 1970s, when our economic system shifted from benefiting a vast majority of Americans to one which mostly benefits only the very rich. This event was hosted by City Lights Bookstore in San Francisco.

http://www.booktv.org/Program/13807/Occupy+the+Economy+Challenging+Capitalism.aspx

[Rocky]

"Romney Rules, Obama Slipping In Rural Battlegrounds" That's the headlines from NPR's lead story on its web site this morning. If these voters don't mind sending their brothers and cousins to the Middle East to rescue the holy places from the Infidels, then it's all for the best; things couldn't possibly be better", with apologies to Goldie from "Fiddle on the Roof".

I am surprised that Romney is doing so well, considering that he wants to keep the Bush tax cuts, cut the social safety net and that he has the same chicken hawk mentality as Bush. Even his role as the Great Job Creator should be taken with a grain of salt. Staples, the office supply chain, was the brainchild of Boston area supermarket retailers, not Mitt Romney.

If young, lowly paid store clerks in rural Wisconsin help elect Romney it will be good for my tax return but bad for the country and for the millions of people who really do need Obamacare. The choice is theirs.

[roger]

The Fed's Days Are Numbered,,maybe.
For the discerning mind, there never was a doubt about the role of the Fed, the boss is
always the one who signs the paycheck. The qualitative difference now is the visibility of
the competition taking place among the upper class, the actions of the Fed. clearly expose the schism. In the immediate future, the election will decide it's fate. One thing is certain, there will be some traumatic changes right after the election,regardless of who wins.

[Prolific Unicorn]

People that want Obama to win are the same ones that excuse the accelerating decline of America by saying nobody can do anything for us. If that's true why are they so hot for Obama?

The lie is put to the myth of obstructionist Republicans by the fact that Obama's first two years had a DEMOCRAT House and Senate. Everyone knows Obama spent his first two years ramming through Obamacare instead of creating the jobs that he promised.

Everyone knows that the true unemployment rate is over 11% (vs. 5% under Bush) when the discouraged job seekers are added. Obama laughed when confronted with his promise to provide 'shovel-ready' jobs.

Everyone knows Obama is shmoozing celebrities instead of taking care of the nation's business foreign and domestic. If the Mideast keeps on its current course we are headed for WW III. Yet Obama won't meet with Netanyahu. Homework assignment: What's he doing instead? Hint: Ask Beyonce and Whoopi.

Everyone knows the lieing media and their lieing polls are weighted toward Obama, scourging Romney and giving Obama a pass. Despite this, it is difficult to forgive the Obama apologists when the above facts in this post are clearly given.

Everyone knows Obama has let the banks get trillions in bailouts while the middle class continues to shrink. Why isn't Glass-Steagall even being discussed? Shouldn't our LEADER be curious enough to even ask?

It is too late to blame Bush. By that logic soon Romney will be blaming Obama, which is also unacceptable. But we know he won't blame Obama, don't we?

Obama is clearly a failure. Romney will be a full-time president and will address the problems that are making us a nation of dependents. That goes for the banks as well as the welfare cheats as well as the government unions.

We can care for our most vulnerable and still be able to compete and lead in the world.

I am tired of excuses and apologies. Romney 2012.

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[Prophylaxis]

Prolific you suffer from Romnesia...

Romnesia

A potent myth is being used to justify economic capture by a parasitic class.

By George Monbiot, published in the Guardian 24th September 2012
We could call it Romnesia: the ability of the very rich to forget the context in which they made their money. To forget their education, inheritance, family networks, contacts and introductions. To forget the workers whose labour enriched them. To forget the infrastructure and security, the educated workforce, the contracts, subsidies and bail-outs the government provided.
Every political system requires a justifying myth. The Soviet Union had Alexey Stakhanov, the miner reputed to have extracted 100 tonnes of coal in six hours. The United States had Richard Hunter, the hero of Horatio Alger’s rags-to-riches tales(1).
Both stories contained a germ of truth. Stakhanov worked hard for a cause in which he believed, but his remarkable output was probably faked(2). When Alger wrote his novels, some poor people had become very rich in the United States. But the further from its ideals (productivity in the Soviet Union’s case, opportunity in the US) a system strays, the more fervently its justifying myths are propounded.

As the developed nations succumb to extreme inequality and social immobility, the myth of the self-made man becomes ever more potent. It is used to justify its polar opposite: an unassailable rent-seeking class, deploying its inherited money to finance the seizure of other people’s wealth.

http://www.monbiot.com/2012/09/24/romnesia/