Hear Me Now and Believe Me Later

Too early in my predictions but not wrong?  I incorrectly assumed that the Federal Reserve would "do the right thing".  Not in my wildest dreams would I have thought that the "Greenspan Put" would morph into "Bernanke Fun Bucks", "Yellen Coddling of the Obama Administration", "Covid-19 Stimmy Checks" and "Powell's Incompetent Policy of Transitionary Inflation".  

But, here we are.  What is not sustainable will not be sustained.   For many over-indebted Americans, the road to recovery goes through the local Bankruptcy Court, just as it has in decades past.

Kevin Warsh was confirmed - we shall see if he follows through with his past convictions on the proper activity of the Federal Reserve.

For many over-indebted Americans, the horse has left the barn.  It is not a question of lower interest rates.  The level of debt that they have voluntarily committed to is simply too great to repay.  Poor loan underwriting and short sighted policies adopted by lenders looking for customers have consequences.

Stay tuned....

Abe said "Where ya' want this killin' done?" God said "Have it out on Highway 61"

 

I took this photograph many moons ago while on a motorcycle trip from Missouri to Mississippi

So many foreign holders of U. S. Treasuries and so little time.  Strangely, some of those investors are Communists.... Talk about a Bizzarro World we are living in today.

When The Wealth Effect Dries Up

 

The Atlanta Federal Reserve recently revised the G.D.P. expectation for the first quarter of 2025 into the negative.  A large part of the economy is being supported by an increasingly smaller and smaller part of the population.  Those with some real wealth continue to spend no matter what the cost.  Those who would like to be presumed as wealthy continue to borrow in order to spend.  A very large part of the population has officially tapped out.  Their borrowing capacity is maxed out.  Their earnings have stagnated against the cost of goods and they purchase only that which is absolutely necessary.

Stocks are said to be "priced to perfection".  The only way to go from here is down.  Housing has "jumped the shark" in many markets and inventory is building.  The only way to go from here is down.  Some people who thought themselves to be bullet proof where their jobs were concerned are having a come to Jesus moment.  A lot of paper wealth is about to go up in flames.  People with gold, cash, silver or easily convertible securities are going to be well positioned to buy some bargains.

It will be interesting to see if the Federal Reserve jumps into the fray again with Q.E., money printing, Z.I.R.P., etc.  If it does, inflation roars.  If it does not, a crash in several areas of the economy as true price discovery takes place.

So Long 2024 - to Better Days to Come

 

Meanwhile, at Clown World Central Command

 

It's a beautiful building.  Too bad so many terrible plans have been hatched there.

Truthfully, I do not envy the Fed's position at this point.  No matter what they do, someone is going to shit the bed.  They came out with a quarter point cut today.  In the commentary, they mentioned that there should be no expectations of many more further cuts.   The stock market had the typical hissy fit over that statement and many share prices dumped.  (my opinion: they were over valued in the first place and should dump no matter what the Fed did)

In the meanwhile, inflation is back.  I think that all of these "Masters of the Universe" should step back and remind themselves that a large number of their fellow Great Americans are not connected to the stock market in any meaningful way.  They do not have 401k's.  They do not own a Vanguard account.  They do not know what "Blackrock" is and they do not have a Fidelity fund.  

They do repair your toilets, cut your grass, mop your floors, stock your shelves, babysit your children, etc. usually for nominal wages.  My prediction is that they are at some point going to tire of living in the Clown World created for them by the market manipulators and interest rate setters and the go-getters and the jet-setters.  Who knows what they're capable of once they figure out who's been exploiting them just so that a small number of beautiful people can buy a second private jet or a beachfront compound in the Hamptons.

For your old Uncle Kenny, watching paint dry (a.k.a. Treasury yields) was a lot of fun today.  The long bonds are showing signs of life and the yield curve is steepening nicely.  Keep up the great work Fed and good luck with all of that "transitory" inflation.  Bwahahahahaha!

A Default Laden Recession is Baked Into the Cake

 

Bankruptcy filings are on the rise and terms for credit are tighter.

Mass Expulsion - Good for Illegal Aliens and Good for Worthless Washington D.C. Bootlickers