Tag Archives: Pretense Of Knowledge

John Hussman: The Coming Fed-Induced Pension Bust

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“What’s quite unfortunate, in my view, is that the strong realized past returns of the past 25 years are now actually being taken as a justification of current, unrealistically high pension return assumptions. This, in turn, encourages continued underfunding. This inclination appears to be wholly encouraged by Federal Reserve policies, and threatens to amplify an inevitable pension crisis in the coming years. The realized past returns of this period have been strong precisely because they have robbed from future expected returns. The tide will turn, as it always has in complete market cycles across history, and as investors discovered during the market collapses of 2000-2002 and 2007-2009.”

http://www.hussmanfunds.com/wmc/wmc160523.htm

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John Hussman: Bearishness Is Strictly For Informed Optimists

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“When the primary use of fiscal policy is to wipe up the catastrophe of weak productivity, lost income, unemployment, and malinvestment created in the repeated aftermath of collapsed financial bubbles, the endgame is going to be stagnant living standards and a debased currency.  Ultimately, QE may finally create inflation by provoking a loss of fiscal control.  Central banks have risked just that by encouraging yet another speculative bubble, heavy issuance of low-grade debt, and the diversion of savings toward unproductive investment. The inevitable fiscal consequences are likely to include bailouts, income-replacement and transfer payment programs as the third bubble since 2000 collapses.”

http://www.hussmanfunds.com/wmc/wmc160314.htm

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Audit the Fed Legislation Sinks: Plan Accordingly

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“Rand Paul and Ron Paul, the dynamic duo of anti-Fed forces, invested a lot of time and money trying to get that legislation passed. But even if it reached Barack Obama’s desk, it would have been vetoed.  Of course, the Fed pushed back against the legislation. Fed Chairman Janet Yellen penned a letter to senators before the vote claiming that the legislation would deprive the Fed of necessary independence. She also noted that passing the legislation might generate an inflation scare and cause interest rates to rise. One wonders if this was a subdued threat.”

http://www.thedailybell.com/news-analysis/36736/Audit-the-Fed-Legislation-Sinks-Plan-Accordingly/

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After QE failure, BOJ’s Kuroda says no plan to ease policy now

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“Bank of Japan Governor Haruhiko Kuroda said on Friday he had no plan to expand monetary stimulus now, blaming sharp declines in oil costs for keeping consumer inflation distant from the bank’s ambitious 2 percent target.  While he maintained his optimistic view of the economy, Kuroda stressed his resolve to ease monetary policy further if risks threaten achievement of the BOJ’s price target.  The remarks, made in response to a question by an opposition lawmaker, pushed down Japanese stocks on disappointment that no immediate monetary stimulus was forthcoming.”

http://www.reuters.com/article/us-japan-economy-boj-idUSKCN0UT0C3

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Obamacare architect: High-deductible plans overdone

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“One of the chief architects of the president’s health law said Friday the plans offered on government-run exchanges need to be more affordable in order to boost participation rates. High-deductible plans are part of the problem, Dr. Ezekiel Emanuel added. ‘We’ve overplayed the high-deductible plans. People are feeling this is less and less insurance. And just more and more, ‘I’m paying out of my pocket.” According to the government, the penalties for not getting health insurance are going up substantially in 2016.  The penalty is calculated as a percentage of taxable household income or per person, whichever is higher.”

http://www.cnbc.com/2015/11/20/obamacare-architect-high-deductible-plans-overdone.html

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Societé General Strategist: Yellen’s Dithering Fed Is Destined for Infamy

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“The Federal Reserve’s failure to recognize its role in driving the third dangerous asset bubble in 15 years will destroy the central bank’s reputation for good, said Albert Edwards, global strategist at Societe Generale. Edwards said it’s too late to avoid another massive collapse in asset prices.  ‘This time the Fed’s largesse has fueled another corporate debt explosion,’ he said. ‘The real rate of corporate borrowing is even greater than was seen during the late 1990s tech bubble. This is 100 percent attributable to the Fed’s excessively loose monetary policy.'”

http://www.newsmax.com/Finance/StreetTalk/Albert-Edwards-Janet-Yellen-Ben-Bernanke-Alan-Greenspan/2015/12/17/id/706234/

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Bill Gross: Central bank ‘casinos’ to run out of luck

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“Investors should cut risk heading into 2016 as central banks trying to pump up their respective economies make losing bets, bond guru Bill Gross says.  Institutions like the Federal Reserve and the European Central Bank are like ‘casinos’ that create money instead of chips ‘they’ll never have to redeem,’ said Gross, founder of bond giant Pimco who now runs the $1.4 billion Janus Global Unconstrained Fund.  Furthering the gambling analogy, he said central bankers are using a familiar ploy — doubling down on losing bets until they break even.  ‘How long can this keep going on? Well, theoretically as long as there are financial assets (including stocks) to buy,’ Gross said.”

http://www.cnbc.com/2015/12/03/bill-gross-central-bank-casinos-to-run-out-of-luck.html

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Ben Bernanke Was Incredibly, Uncannily Wrong [2009]

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“We now have the diametrical opposite of the famous ‘Peter Schiff Was Right‘ video (a compilation of 2006 and 2007 clips in which Schiff, a financial expert who subscribes to Austrian economics, predicted the deep recession that would follow the bursting of the housing bubble).  The new, opposite video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke. In it, Bernanke is shown to have been just as embarrassingly wrong as Schiff was uncannily right.  Could their differences in economic understanding have anything to do with this remarkable dichotomy?”

https://mises.org/library/ben-bernanke-was-incredibly-uncannily-wrong

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N.Y. Fed: Ample liquidity in U.S. corporate bond market

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“There is ample liquidity to buy and sell U.S. corporate bonds, a group of New York Federal Reserve economists found, dismissing worries that tougher regulations could threaten some investors’ ability to sell their holdings amid market turmoil.  Citing narrow bid-ask spreads and a low price impact from trades worth $100 million, the economists said their finding was ‘remarkable’ given the diminished role that Wall Street dealers have taken in making markets for corporate bonds. Dealers’ inventory of corporate bonds has plunged since the financial crisis to roughly a quarter from its peak of about $400 billion. Meanwhile, companies have been issuing U.S. corporate bonds at a record pace.”

http://www.reuters.com/article/us-usa-corporatebonds-fed-idUSKCN0RZ1RE20151005

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Deja Vu: The Fed’s Real “Policy Error” Was To Encourage Years of Speculation

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“Investors repeatedly forget that reaching for yield in speculative securities only works if capital losses don’t wipe out the ‘pickup’ in yield. Since mid-2014, we’ve emphasized the increasing deterioration in market internals and credit spreads, noting that this deterioration has historically been a reliable signal of a shift from risk-seeking to risk-aversion by investors. This risk-aversion is now accelerating. Last week, a number of high-yield bond funds placed delays on redemptions in order to give them time to liquidate holdings into a collapsing market. When a problem is specific to a particular fund, orderly liquidation can protect investors. But in this case, the need for liquidation isn’t specific.”

http://www.hussmanfunds.com/wmc/wmc151214.htm

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