Tuesday, April 06, 2010


I mean what else can you say about this headline:

"Fed keeps eyes out for speculative bubbles."

It's like I'm living in a dream world where every day is April Fools and every story is from The Onion... only neither of those conditions apply.

I am starting to wonder if I'm surfing some hacked version of the internet where someone is trying to f*@k with my head.

Dear Federal Reserve:  the entire market is an asset bubble - driven by speculative mania searching out returns as a result of your Zero Interest Rate Policy!



Yangabanga said...

Well my mind is at ease...

Kid Dynamite said...

i mean - i'm starting to wonder if someone hacked my version of the internet and is just trying to fuck with me. this is insane....

THE ENTIRE MARKET IS AN ASSET BUBBLE, driven by their zero interest rate policy!

Anonymous said...

Its really not even amazing anymore. What they are doing is completely crazy. I guess they think that they have successfully manipulated us back to 2007.
And if they can get the markets to reflect what they did in 2007, then its reality

Anonymous said...

"Members noted the importance of continued close monitoring of financial markets and institutions--including asset prices, levels of leverage, and underwriting standards--to help identify significant financial imbalances at an early stage. At the time of the meeting the information collected in this process, including that by supervisory staff, had not revealed emerging misalignments in financial markets or widespread instances of excessive risk-taking." amazing.

scharfy said...

Its the dual mandate guys.

They have to inflate bubbles, but try to have stable yet bubbly prices.

Blowing the proper size bubble, as any 4 year old can tell you, is an art.

EconomicDisconnect said...

Thats why my header pic says:
"Sarcasm Is Just One More Free Service We Offer"

EconomicDisconnect said...

Here is one that could be from The Onion:
Women March Topless in Portland Without Incident

"Ty McDowell, who organized the march, said she was "enraged" by the turnout of men attracted to the demonstration. The purpose, she said, was for society to have the same reaction to a woman walking around topless as it does to men without shirts on.

However, McDowell said she plans to organize similar demonstrations in the future and said she would be more "aggressive" in discouraging oglers."

Women walk topless, get mad at men for looking!

Kid Dynamite said...

GYC - {banging my head against my desk}

EconomicDisconnect said...

Another laugher, I read all about the Panic of 1907 as of late and the real reason the FED was created was so that big banks could not put the country's system at risk! Another failure for the FED along with stable prices and full employment.

Anonymous said...

Just curious, but ow much money is actually being borrowed at interest rates approaching zero?

Is it really enough to drive an asset bubble?

Kid Dynamite said...

GYC - i just read this - from CBSNEWS.COM:

"Topless women shocked that people like to look at topless women" !!!!!!

Mainstream has become The Onion!!!!

JCH - the point isn't how much money is being borrowed at 0% - it's how much money is chasing other assets because 0% returns in savings/short term fixed income instruments are impossible for many people to accept.

a main reason lots of people cite for why money managers bought riskier securities leading up to the crisis is because they needed yield - they had to reach into riskier asset classes...

we already know how that worked out.

EconomicDisconnect said...

I think topless girls (ticker TPLSS) is breaking through resistance now and is set to be unleashed on a grand scale. There is always a bull market somewhere.

Anonymous said...

Yes, but that situation also existed in the late 1970s and early 1980s. My crazy Aunt bought church bonds because they offered 20%. At the time a CD was paying around half that. Needless to say, the churches declared bankruptcy.

Aren't people always trying to beat the CD/Treasuries-level rates of return?

Kid Dynamite said...

JCH - that's different. people cannot live on 0% interest. your grandmother could have taken a 10% return - she went for 20% instead. investment managers cannot offer 0% returns. they HAVE to get more - so they are forced to take risk.

But What do I Know? said...

I had the same feeling when I saw that headline, KD--although I didn't come up with the hacking paranoia thing. Must come from living in an isolated, snow-bound setting far-removed from civilization :>)

DH said...


"Fed keeps eyes out for speculative bubbles."

Speculative bubbles - no. Intentional bubbles - not so bad.

Akhil Khanna said...

The financial crises can be stopped from spreading by

• A total clampdown on the speculation by the Financial Institutions and hedge funds. Restriction on proprietary trading and not allowing the banks to use public deposits for trading is a step in the right direction.

• Banks should be restricted to accepting public deposits and lending them to the actual users. They should not be allowed to indulge in trading for speculation. The size of speculative financial institutions should be restricted so that they are not able to pose any risk to the main economy.

• Reduce the role of Derivatives and CDS to hedging by making it a prerequisite to own the underlying asset in order to take a derivative position on it. The margins for derivative trading too should be increased substantially so that it discourages speculation. This will also result in limiting the derivative positions to the quantity of the underlying asset.