Wednesday, May 14, 2014

Today's links

1---The Obvious Reason QE Doesn't Work, zero hedge

Paul Gambles -  the managing partner of MBMG Group - explains at CNBC, there is an obvious flaw in QE:

BoE's Quarterly Bulletin ... states that a "common misconception is that the central bank determines the quantity of loans and deposits in the economy by controlling the quantity of central bank money — the so-called 'money multiplier' approach."

This "misconception" is obviously shared by the world's policymakers, including the U.S. Federal Reserve, the Bank of Japan and the People's Bank of China, not to mention the Bank of England itself, who have persisted with a policy of quantitative easing (QE).

2---The next mobile frontier: Trailer parks lure white-collar types seeking double-wide profits, WA Post

3---Colombian Government Peace Talks Slow, Drastically--The Momentum of FARC, cp

The interviewer’s reference to “U.S. participation at the table for dealing with the theme of illicit drugs” prompted colleague Andrés París to observe that, “Drug war is an integral part of how narco-trafficking works; it’s the link between North Americans arms sales to Colombia and equipping the Armed Forces. And there are the chemicals supplies for processing these drugs that also are North American.”...

. Drug trafficking is a transnational, capitalist business, which has penetrated institutions and the national economy … [I]t has nurtured the scourge of narco-paramilitarism, which has caused so much damage, especially to the poor.”...

Rondón indicated that, “The advance of the revolutionary process, the clandestine communist Party, and the guerrilla forces is notable, so much so that we will be able to root out the establishment’s political solutions.” “The FARC is not just men under arms,” he added; “We are present in struggles of workers, small farmers, young people, women, and Afro-Colombians.”
Presently, however, “Realities in Colombia still justify armed struggle.” Rondón claimed that “our guerrilla fronts” are deployed along Colombia’s borders with Ecuador, Venezuela, and Panama, also in the “heart of the homeland

4-- Fed Governor Admits Truth About QE: "Can't Go From Wild Turkey To Cold Turkey Overnight, zero hedge

5--Russia Holds "De-Dollarization Meeting": China, Iran Willing To Drop USD From Bilateral Trade, zero hedge

The "de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar. A subsequent meeting was chaired by Deputy Finance Minister Alexey Moiseev who later told the Rossia 24 channel that "the amount of ruble-denominated contracts will be increased”, adding that none of the polled experts and bank representatives found any problems with the government's plan to increase the share of ruble payments.

6---Hyping the "losers", Testosterone Pit

We believe the recent pullback represents a particular opportunity among large cap Internet stocks, with multiples having retraced to levels not seen for more than two years, with no/little change in fundamentals, and with investment profiles that sync well with what portfolio managers are seeking in today’s market.

7--Young Student Loan Borrowers Remained on the Sidelines of the Housing Market in 2013\, NY Fed

8--The Wall Street bonanza, wsws

9--IMF report: No end to economic breakdown, wsws

10--Advice to Democrats: Don't say 'recovery', yahoo

11---More signs of US inflation stabilizing, sober look
Since our last discussion on the issue (see post), more evidence has emerged that inflation in the US has bottomed out. While the treasury markets seem to be completely ignoring this inflection point, core PPI came in materially above expectations today. We know that food prices have been on the rise recently (see Twitter post), but this PPI measure excludes food and energy. Complacency about inflation seems to be rampant - both among fixed income investors as well as at the Fed.
Reuters: - "We think a number of policymakers at the Fed and many market participants are overly complacent on the outlook for inflation," said John Ryding, chief economist at RDQ Economics in New York. "We are not sounding an inflation alarm at this point but ... concerns about deflation or too low of an inflation rate seem quite misplaced at this point."

12--Housing Kool-Aid: House prices going to the moon!, oc housing

13--From Estonia To Azerbaijan: American Strategy After Ukraine, Forbes (anti Putin rant)

In my view, Russian power is limited and has flourished while the United States was distracted by its wars in the Middle East and while Europe struggled with its economic crisis. That does not mean Russia is not dangerous. It has short-term advantages, and its insecurity means that it will take risks. Weak and insecure states with temporary advantages are dangerous. The United States has an interest in acting early because early action is cheaper than acting in the last extremity. This is a case of anti-air missiles, attack helicopters, communications systems and training, among other things. These are things the United States has in abundance. It is not a case of deploying divisions, of which it has few. The Poles, Romanians, Azerbaijanis and certainly the Turks can defend themselves. They need weapons and training, and that will keep Russia contained within its cauldron as it plays out a last hand as a great power.

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