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jmc5-1-12

jmc5-1-12

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Published by richardck61

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Published by: richardck61 on May 02, 2012
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08/28/2013

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 Tuesday, May 01, 2012 All times ET.
Joan McCullough, East Shore Partners, 1-212-226-1223Trading: 1-800-222-8723 joanmccullough@eastshorepartners.com 
The market continues to play the same games
ad nauseam
. Most frustrating of all is theknowledge that HFT has taken over the show nearly completely. Another way in which ZIRPdestroys jobs, eh? Think about it.While vexed by the monotonous repetition of the daily shenanigans, at the same time I amnoticing a change elsewhere. In the rhetoric. Yessiree, Bob. In the past few days, there havebeen more articles written in serious complaint of how Bernanke
s policies are totally misguided.And about the damage being done to the US on account of them; the need to stop and switchgame plans is made very obvious. But fat chance that happens, right? Because you and I haveno voice; have not had one for quite some time as a matter of fact.I
m gonna
digress now and vent. So if you
re in no mood to be cranked or have your goatgotten, hit the delete button and I
ll catch you at McCann
s bar another day.
 Let
s put this right out on the table in plain English; I
m quite tired of being polite.
 Ahem.
You can fill in the blanks with the swear words of choice because the air is blue where Isit, trust me. I am that
. aggravated.I don
t give a flyin
 
. if you are a Democrat, a Republican, an Independent or a freakin
 Martian.It doesn
t matter a hill of beans if Obamacare persists, if we have a
. budget, if we hit the debtlimit again, if Europe takes a
, if the Supreme Court upholds the State of Arizona, if they buildthe
. pipeline or stick the pipeline up yer
, if we fight in Iraq, Afghanistan, ignore Syria orencourage Egypt, if we defend our borders or if we killed bin Laden or if we have same-sexmarriage or free birth control or any of the other flaming
they yap about and bicker overincessantly. As a matter of fact, I don
t even give a
if housing has or has not bottomed and if GDP is dependent on inventory build or on your Tia Teresita
s
.You got that? I don
t give a flyin
 
. .You shouldn
t either. And now I
m gonna
give my opinion as to why.It
s all about the money. Always has been about the money. Always will be about the money.Unfortunately for us, we are being robbed on a daily basis by the central bank. Yes and while
 
they are robbing us, they are stealing our standard of living to boot. To the point where
most
cannot keep up with the cost of living in terms of planning for retirement.Because the X amount of dollars they might have targeted as a nest egg in
1980
or so
with aview towards, retiring while still able to walk a flight of stairs
is but a distant memory interms of sufficiency.For those who married in the
90s and had children and made plans to send them to college,how
s that workin
out for you
and for them now, eh? The idea of spending $150k on a 4-year degree only to graduate and qualify for a $40k per year job or worse
for none
wouldbe too much for me to bear as a parent. I would have to be restrained, trust me.For those who have young kids at home now, I wonder each day how they manage to feed andclothe them. But from the looks of grocery prices, for example, beef, the answer is that theycannot. Is chicken the alternative per the BLS substitution hallucination? On a good day, theyget chicken. Once you step outside your Whole Foods fairyland, you
d see that the averagefamily
s cart has rice, pasta and hot dogs. Think about it.Bernanke has mentioned that the price of Gasoline has spurred a bit of inflation. But that it
s
temporary
.Let
s keep this confined to beef and as simple as possible for the sake of argument. Okay. SoGasoline trades up. The price of beef goes up. People eat less beef. (Demand slackens.) Theranchers thin their herds in response. (Supply is withdrawn.) Gasoline trades back down. Bigsigh of relief from the central bank.$10,000 dollar bonus question: Where the
are the herds now? Do they reappear and expandthe herd overnight once Gasoline prices ebb? See what I mean? Ranchers have fine-tunedsupply and Gasoline can trade at ten cents a gallon; it ain
t gonna
create more heads of steer in ahurry. As any Austrian will tell you, people are involved in this phenomenon. And try as hardas The Bernank might, he cannot stick a person into a formula, a spread sheet or a PowerPointpresentation. It
s just not that neat an issue. Sorry, Bambi. You lose.This started as a highly predictable housing implosion. I would have preferred to see a Swedishsolution to the banking crisis but that was not in the cards. As it turned out the FED performedan ad hoc brand of triage on the financial system. But then they forgot to back off. And crossedthe line. And just kept right on trucking.We are now
what 
since 2007? Awash with about $7 tril in printed money from the major centralbanks. And it has accomplished zilch. Bernanke is aware of that failure. And I am surmisingthat this is behind his suggestion that Congress and the Administration take steps to get the fiscalhouse in order. See? The FED can only do so much. Time to pass the baton? You bet.This requires a budget. Which requires spending cuts. Like Europe. Just like Europe. Wherethey call their budget cuts
austerity.
 
 
And guess what? Neither side of the Atlantic looks poised to swallow any of it. Put anotherway, neither party in the US wants to take the rap for cutting programs. Particularly not whenthe words
food, school or kids
are in the same sentence. As for European austerity, one byone, they have already started to back away from those promises, all of which were executedunder duress.Which throws the mess right back into the lap of the FED. Bernanke is already
in for a nickel
;no doubt he is gonna
go for the dime. He cannot fathom any other option. And until he is firedor the FED dismantled, that option is gonna
continue to ruin lives. And I for one, am at thebreaking point, sitting here watching it and being powerless to address it.We have already discussed the extreme disadvantage to which the FED
s absurdity has placedinvestors. As he has distorted the yield curve to the point that it is of no use in assigning value,risk or the time of day for that matter. I often marvel at those these days who claim that they are
fully hedged
. And then try not to laugh.But that
s just the financial stuff. The insidiousness of the printing of money with abandon hasmetastasized a lot further than most will acknowledge. It is way beyond stealing our nest eggs,enslaving our college-age kids, oppressing savers and those retirees who planned but who arenow screwed. It is beyond making the cost of education a joke. It is beyond even the tough callmany families must be making at dinner time and when it
s time to buy 4 pair of sneakers.It has made its way into our lives by invading us at the State and municipal levels. To wherecourtrooms are being shut down, DPW workers laid off and teachers jettisoned by the droves.And now it
s time to talk about how this money printing stuff really works.Here
s the lay of the land; you paint me the picture!The S&P 500 is +11.79% year to date.Meanwhile, these headlines in the last 72 hours:
Indiana public schools announce 150 layoffs
. City of Massillon to lay off 27.
 
ElyriaSchool District (Ohio) announces 45 job cuts.
 
Long Beach City College plans to lay off 55 aswell as reduce contracts.
 
Cobb County school budget: Fewer teachers, more crowdedclassrooms and fewer school days.
(If the Cobb County budget passes, 400 jobs are eliminated,350 of them are teachers. Cobb County is in Georgia.) Just as a validation, Cobb County is oneof the many who point to uncollectable ad valorem taxes as well as State cuts that have pinchedCounty coffers. (Which in turn, pinch the municipalities.)This goes on day in and day out. And as we have been harping, has been accelerating noticeablylately. City workers, public safety officers, county health nurses, police, fire, school workersfrom administrative to teachers to custodians, bus drivers and cafeteria workers.

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