Criminals, Dynamite, and Heroin Injections

"Apparently the criminals who run these trading operations are willing to put it all on red that the Fed will never respond to the runaway in commodities and its stranguflation effects. My sense is that they have strapped dynamite to themselves and are daring the Fed to act. I don’t even pretend to know or even guess as the cluelessness of pumping up a stranguflationary hurricane, so the key is to focus on real economic effects, which are horrifically negative. That way I don’t really have to wait with baited breath for every Fed heroin injection into the patient or protestations from financial gangsters, I just know the patient is dying."

Russ Winter, Wall Street Examiner

Wonderful Thing

It's official.  The QE2 has left the port and so far she's sailing with a full passenger list. Captain Bernanke is at the helm!  Steward Obama is hoping that the passengers are hungry!

I had the pleasure of experiencing QE2 live last night as I was buying a car.  When I finally made it to the finance office to cut the check, the dealership employee was begging me to not pay cash.  "Mr. Barrell, do you realize how cheap credit is right now?  You'll never find cheaper money."  And I replied, "I know, but debt is not a good thing anymore."  He looked at me with great confusion.  The Kool Aid party resumes and many will be suckered in to adding more to their debt load.  Haven't we just decided to add "fuel to the fire"?  If your house is burning, you don't soak it in more kerosen do you?  The personal savings rate across the country has been on the rise, we'll see if this next round of "free money" doesn't drive it back to negative numbers.

"Wonderful thing, wireless, isn’t it?"
Captain Arthur Rostron, to Second Officer James Bisset, on the Titantic having told him the latest news on the known positions of icebergs. This was at around 10:00 p.m., April 14th, 1912.

Under The Radar

It looks like there are some really happy folks today and some sad ones.  The see-saw tilted back in the other direction as predicted. Meg's $141 million just wasn't enough.  Imagine if she started the Meg Whitman Foundation instead with the $141 million?  What a legacy that could have left.  It's ironic that she probably lost due to the fact that her nanny was not a legal citizen.  Fortunately, Fiorina only spent $6.5 million of her own money in her defeat.

Who would have thought that the witch would lose?  Rand Paul proved that a Libertarian disguised as a Republican can get some votes.  Reid squeaked one out.  S. Carolina shocked us all by electing a female of Indian descent. That's a first time for both in that state.

I'll just repeat my comments from November 8, 2008.  Just replace Democrats with Republicans.
"On the flip side, I say to my Democrat friends 'be careful what you wish for'. The Democrats have complete control over the near future. For that, they will be given complete credit for 100% of what happens."
Random Roving, November 8, 2008

Of course, no one has 100% control now.  That's what will make the next two years so interesting.  It will be "finger pointing madness".  Can you hear it already, "if we controlled the House and Senate, then......" or "if we controlled the House and the Presidency then....." or "if you wouldn't have...., then......".  The foundation is now laid for the chaos of 2012.

As the post-election hoopla and Sheeple grazing continues, the Federal Reserve today is making their decision on the next "cruise ship", the QE2.  Stay tuned.

The Delusional Election

"If you think all the game-changing decisions to be made on November 2 will be by voters at the ballot boxes, think again! In his latest online presentation, Monty Agarwal reminds us that, on that very same Tuesday, Fed Chairman Ben Bernanke will ... corral together the other voting members of the Federal Open Market Committee ...send any dissenters off to the shearing shed, and ...before the following day, close the deal on QE2 — the next major round of mass money printing.  How ironic the twists and turns of history can be!  while millions of voters will likely vote to transform Capitol Hill into a new stable of fiscal conservatives ...Just 12 men — meeting two and a half miles away — will be voting to transform America into a field of money trees.  Strangely ...The vote at the polls will put the padlock on America's fiscal stimulus. But ...The vote at the Fed will unleash a whole new round of monetary stimulus, potentially driving more liquidity into gold, commodities, foreign currencies, and emerging markets.  End result: One of the greatest disconnects of all time between ...A sinking economy on the one side, and ...The real possibility of roaring bull markets in certain asset classes on the other side."
Martin Weiss, Weiss Research

The Marketing of Madness

One of my personal "flags" is when someone creates a catchy phrase or name for something that seems to be too important to be summarized by that catchy name.  A few examples might be "War On Terror", "WMD's", "Axis of Evil", "Shock and Awe", and "Main St. vs Wall St.".  When we were kids, we called it the "atomic bomb". That quickly presented images of a mushroom cloud. WMD's sounds really high tech and not really intimidating. "War On Terror" is nice and vague. It's better than saying "waging war on people that don't think like us". That's just too many words. "Shock and Awe" sounded really cool. Who wants to say "dropping missiles in a Middle Eastern city so that we can obtain control of oil reserves". That's just too complex.  Then we had "Desert Storm" and "Desert Shield".  With Mexico we now have the "Battle on The Border".  Main Street and Wall Street is perfect because it quickly creates a victim-villian relationship.  BP provided us with "Top Kill" and "Static Kill".
 
The latest one that I like has even been shortened to an abbreviation, "Q.E.".  Yes, quantitative easing.  This cute phrase represents the process where the Federal Reserve prints a bunch of money and we quickly go spend it on things we believe that we have to have.  The short term result is economic stimulation and a facade of economic strength.  The media now just calls the upcoming "printing event" QE2.  Sounds like a ship named after a British queen.  Get prepared for QE2.  The timing with an election only appears to be a  coincident.  Wink wink.

"The economy is weak. So you print money. The money pushes up asset prices.  People think they are wealthier. They think there’s a real boom going on.  They invest. They hire. They spend.  Then, there is a real boom!  Do you believe it works like that, dear reader? If you do, you should be an economist. Or a doorstop. There’s no doubt that printing money can create a boom. But it’s a phony boom, not a real one. And when it blows up…which it inevitably does…people are worse off than they were before.   It’s one thing to introduce small amounts of extra “money” into a growing, prosperous economy. It’s a fraud. It’s a mistake. But it doesn’t blow-up the system. It’s petty larceny; nobody cares.  It’s another thing to introduce large amounts of new currency into a funky, struggling economy."
Bill Bonner, The Daily Reckoning