3 years after the high of stock markets in November 2007, 2 years after the bankruptcy of Lehman Brothers, and trillions of dollars used to "save" the financial systems and economy, Ben Bernanke still think that is not enough.
Helicopter Ben are ready to throw in more money into the system to "help" the economy.
I think he is a shame to the field of economics and a shame to MIT, the institution that granted him a PHD in 1979.
How stupid is he?! Which theory is he using? How can a continuous expansionary monetary policy save the economy.
US interest rate already at 0% (well theoretically it is 0% to 0.25% but we all know all the banks will get 0%), what can you do with an economy that have 0% interest rate and high unemployment rate?
Create more money with 0% interest will only contribute to higher inflation. Even a degree level economics student know that but a PHD in economics from MIT can't see that!
one million dollar question: how much money created by Federal Reserve and Commercial banks in US? Money supply in US is now harder than rocket science. I truly believe if Feds announce the M3 in US, gold will shoot up to at least $10,000 per ounce and silver will go to $750 per ounce.
Let us look at US economy in term of macroeconomics objectives.
1. High but sustainability GDP growth - Fail. US GDP growth is horrendous. US GDP just came out of negative growth as government and Feds artificially pump up the economy with easy money.
2. Full employment - Fail. US unemployment rate is at 9.6%, highest rate in real term since the 1933 and highest ever in nominal term.
3. Price stability - Fail. Although official US inflation rate is at a very moderate growth and even have the risk of deflation, we all know that the actual inflation rate is much higher than that figures. With such a crazy amount of money created by Feds, it is impossible inflation rate can remain that low.
4. External balance - Fail. US domestic (government) deficit and external (international) deficit are unsustainable. Latest (2009) current account balance for US is $380 billions. That mean last year alone, US spend $380 billions more in international trading and where is that $380 billions come from? Yes, debt from China, Japan, middle east, Russia and countless countries that are debtor of US.
5. Sound currency - Fail. everybody knows that US dollar is dead. It will be replaced by other currencies such as Euro, Yen and RMB. The depreciation of US$ theoretically can boost export and reduce import but US current account deficit prove that US is still importing in a huge quantity. So depreciation of currency make it worse.
6. Equitable distribution of wealth - Fail. Just look at the bonus of banks' executives and look at the underpaid people in Mississippi, Alabama and Arkansas. US fail miserably in this area and the so called "capitalism" is just a term to discriminate the poor.
7. Increasing Productivity - Arguable. According to US Bureau of Labor Statistics, US labor productivity is higher than East Asia countries (japan, China, South Korea, Hong Kong etc.) and Eurozone (including France and Germany). However look at export and GDP growth of US suggest otherwise.
Wow! By analyzing US economy we will see how terrible it is. Fail in 6 out of 7 macroeconomics objectives!
28.8.10
Uefa Champions League and Uefa Europa League Draw
2010/11 UEFA Europa League group stage | |||||||||||||||||||||||||||||||||||||||||||||||
| Group A | Group B | ||||||||||||||||||||||||||||||||||||||||||||||
| Juventus (ITA) | Club Atlético de Madrid (ESP) | ||||||||||||||||||||||||||||||||||||||||||||||
| Manchester City FC (ENG) | Bayer 04 Leverkusen (GER) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Salzburg (AUT) | Rosenborg BK (NOR) | ||||||||||||||||||||||||||||||||||||||||||||||
| KKS Lech Poznań (POL) | Aris Thessaloniki FC (GRE) | ||||||||||||||||||||||||||||||||||||||||||||||
| Group C | Group D | ||||||||||||||||||||||||||||||||||||||||||||||
| Sporting Clube de Portugal (POR) | Villarreal CF (ESP) | ||||||||||||||||||||||||||||||||||||||||||||||
| LOSC Lille Métropole (FRA) | Club Brugge KV (BEL) | ||||||||||||||||||||||||||||||||||||||||||||||
| PFC Levski Sofia (BUL) | NK Dinamo Zagreb (CRO) | ||||||||||||||||||||||||||||||||||||||||||||||
| KAA Gent (BEL) | PAOK FC (GRE) | ||||||||||||||||||||||||||||||||||||||||||||||
| Group E | Group F | ||||||||||||||||||||||||||||||||||||||||||||||
| AZ Alkmaar (NED) | PFC CSKA Moskva (RUS) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Dynamo Kyiv (UKR) | US Città di Palermo (ITA) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC BATE Borisov (BLR) | AC Sparta Praha (CZE) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Sheriff (MDA) | FC Lausanne-Sport (SUI) | ||||||||||||||||||||||||||||||||||||||||||||||
| Group G | Group H | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Zenit St. Petersburg (RUS) | VfB Stuttgart (GER) | ||||||||||||||||||||||||||||||||||||||||||||||
| RSC Anderlecht (BEL) | Getafe CF (ESP) | ||||||||||||||||||||||||||||||||||||||||||||||
| AEK Athens FC (GRE) | Odense BK (DEN) | ||||||||||||||||||||||||||||||||||||||||||||||
| HNK Hajduk Split (CRO) | BSC Young Boys (SUI) | ||||||||||||||||||||||||||||||||||||||||||||||
| Group I | Group J | ||||||||||||||||||||||||||||||||||||||||||||||
| PSV Eindhoven (NED) | Sevilla FC (ESP) | ||||||||||||||||||||||||||||||||||||||||||||||
| UC Sampdoria (ITA) | Paris Saint-Germain FC (FRA) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Metalist Kharkiv (UKR) | BV Borussia Dortmund (GER) | ||||||||||||||||||||||||||||||||||||||||||||||
| Debreceni VSC (HUN) | FC Karpaty Lviv (UKR) | ||||||||||||||||||||||||||||||||||||||||||||||
| Group K | Group L | ||||||||||||||||||||||||||||||||||||||||||||||
| Liverpool FC (ENG) | FC Porto (POR) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Steaua Bucureşti (ROU) | Beşiktaş JK (TUR) | ||||||||||||||||||||||||||||||||||||||||||||||
| SSC Napoli (ITA) | PFC CSKA Sofia (BUL) | ||||||||||||||||||||||||||||||||||||||||||||||
| FC Utrecht (NED) | SK Rapid Wien (AUT) | ||||||||||||||||||||||||||||||||||||||||||||||
Bernanke Says Fed Will Do `All It Can' to Ensure U.S. Recovery
ederal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery and said more securities purchases may be warranted if growth slows.
“The Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly,” the Fed chairman said today in opening remarks to central bankers from around the world at the Kansas City Fed’s annual monetary symposium held in Jackson Hole, Wyoming.
The Fed chairman gave a detailed analysis of the economy and said growth during the past year has been “too slow” and unemployment too high. Still, he said a hand off from fiscal stimulus and inventory re-stocking to consumer spending and business investment “appears to be under way.” He also said that the “preconditions” for a pickup in growth in 2011 “appear to remain in place.”
Bernanke said the risk of an “undesirable rise in inflation or of significant further disinflation seems low.” He said the Fed has several tools if prices decelerate, or job growth stagnates, including shifting the composition of its bond reinvestment strategy.
Stocks advanced and Treasuries declined after Bernanke’s comments. The Standard & Poor’s 500 Index rose 1.2 percent to 1,059.35 at 11:33 a.m. in New York. The yield on the 10-year Treasury note climbed to 2.61 percent from 2.48 percent late yesterday.
‘Ready to Take Action’
“The Fed is ready to take action if needed,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “They are aware the economy is not doing as well as expected.”
Federal Reserve officials put their exit strategy on hold this month and decided to purchase Treasury securities to keep their portfolio from shrinking as their mortgage bonds mature. Economists at Goldman Sachs Group Inc. and JPMorgan Chase & Co. say the Fed could boost monetary stimulus if the economy continues to deteriorate.
“The FOMC’s recent decision to stabilize the Federal Reserve’s securities holdings should promote financial conditions supportive of recovery,” Bernanke said. “Additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions.”
Fed Symposium
The Kansas City Fed is hosting central bankers from more than 40 countries including Brazil, Malawi and New Zealand this year as well as economists from firms such as Bank of America Corp., Morgan Stanley and International Strategy & Investment Group Inc. U.S. central bankers next meet Sept. 21 for a one-day meeting.
Bernanke offered more detail on how securities purchases provide monetary stimulus.
“Specifically, the Fed’s strategy relies on the presumption that different financial assets are not perfect substitutes in investors’ portfolios,” he said. Fed purchases of Treasuries should push investors into other types of bonds with similar types of risks, lowering their yields as well, he said.
Risks of the strategy include a lack of “very precise knowledge” of the effects of the purchases and the chance that expanding the Fed’s balance sheet further “could reduce public confidence in the Fed’s ability to execute a smooth exit from its accommodative policies at the appropriate time.”
Communications Strategy
A second option, Bernanke said, would be to communicate that the Fed will keep its benchmark rate low for a “longer period than is currently priced in markets.” While the Bank of Canada’s 2009 adoption of the strategy “seemed to work well” there, a risk is that investors “may not fully appreciate that any such commitment must ultimately be conditional on how the economy evolves,” Bernanke said.
Lowering the interest rate on banks’ deposits at the Fed to 0.10 percentage point or zero from 0.25 percentage point is a third choice, Bernanke said. The effect of such a move on financial conditions “in isolation would likely be relatively small,” and it risks making the market for overnight loans, or federal funds, “much less liquid,” he said.
“In normal times the Fed relies heavily on a well- functioning federal funds market to implement monetary policy, so we would want to be careful not to do permanent damage to that market,” Bernanke said.
Proposal Dismissed
Bernanke dismissed a proposal by some economists to increase the Fed’s inflation goals “above levels consistent with price stability.”
“I see no support for this option on the FOMC,” he said. “Inflation would be higher and probably more volatile under such a policy, undermining confidence and the ability of firms and households to make longer-term plans, while squandering the Fed’s hard-won inflation credibility,” he said.
Bernanke spoke after the Commerce Department today cut its estimate for U.S. economic growth in the second quarter to an annual pace of 1.6 percent from an initially reported 2.4 percent pace. Reports on employment, manufacturing and housing in the past month have indicated the recovery is faltering.
“Incoming data suggest that the recovery of output and employment in the United States has slowed in recent months, to a pace somewhat lower than most FOMC participants projected earlier this year,” Bernanke said. “Consumer spending may continue to grow relatively slowly in the near term.”
Capital Spending
The economy is expanding at about a 1.7 percent annual rate in the current quarter, according to estimates by Macroeconomic Advisers in St. Louis. Capital spending declined in July, and sales of existing homes fell a record 27 percent. Manufacturing in the Philadelphia region weakened in August, according to an index compiled by the Philadelphia Fed.
Intel Corp., the world’s biggest chipmaker, today cut its forecasts for third-quarter revenue and gross profit margin, citing weaker demand for personal computers in mature markets.
“Investment in equipment and software will almost certainly increase more slowly over the remainder of this year, though it should continue to advance at a solid pace,” Bernanke said.
Back-to-back quarters of growth below 2 percent are likely to push unemployment higher and put more downward pressure on inflation, which is already lower than the Fed’s longer-term desired range, economists say.
‘Big Split’
“There’s a big split” on the Federal Open Market Committee “between people concerned about inflation rising in the future and those concerned about deflation,” said Dean Croushore, a former Philadelphia Fed economist who is now chair of the economics department at the University of Richmond in Virginia. “The Fed is unlikely to make any major changes soon.”
Economists estimate that the unemployment rate will rise to 9.6 percent in August from 9.5 percent in June and July, according to the median forecast in a Bloomberg News survey. The Fed’s preferred inflation indicator, the personal consumption expenditures price index, minus food and energy, rose at a 1.1 percent annual rate in the second quarter.
Fed officials said in June their longer-run preference range for inflation is 1.7 percent to 2 percent.
‘Sharp Downturn’
Consumer confidence has been sapped by this year’s 5.7 percent decline in stocks, with the S&P 500 Index falling 5 percent this year. Confidence rose less than forecast in August from an eight-month low, a Thomson Reuters/University of Michigan index of showed today.
Central bankers this month decided to reinvest about $18 billion a month of maturing agency and mortgage-backed securities back into U.S. Treasuries. They also adopted a $2.05 trillion floor for their securities portfolio.
Bernanke said that lower long-term interest rates increased mortgage refinancing, causing a more rapid prepayment of the Fed’s $1.1 trillion in mortgage-backed securities holdings. Further weakening of the economy, and even lower long-term rates could create “a bad dynamic” in the Fed’s portfolio, he said.
“Any further weakening of the economy that resulted in lower longer-term interest rates and a still-faster pace of mortgage refinancing would likely lead in turn to an even more- rapid runoff of MBS from the Fed’s balance sheet,” Bernanke said. “Thus, a weakening of the economy might act indirectly to increase the pace of passive policy tightening -- a perverse outcome.”
Mortgage Repayments
The Fed has already experienced about $140 billion of repayment of mortgage and agency debt, he said.
“Although mortgage prepayment rates are difficult to predict, under the assumption that mortgage rates remain near current levels, we estimated that an additional $400 billion or so of MBS and agency debt currently in the Fed’s portfolio could be repaid by the end of 2011,” the Fed chairman said.
Policy makers in August decided that allowing the Fed’s balance sheet to shrink when the economic outlook “had weakened somewhat was inconsistent with the Committee’s intention to provide the monetary accommodation necessary to support the recovery.”
27.8.10
BELA LUGOSI
"I love Bela Lugosi!!!!"
Although the blog is suppose to be the place where i talk about my though on the economies and stock markets, but i just wanna talk about Bela Lugosi as he will always be my favorite actor.
You can find about the man from the web with tons of information especially from Wikipedia, but i just wanna talk about the LEGEND from my point of view.
Before he was the "Master of Horror" in the US with his famous 1931 Dracula, he was the prime actor and stage performer in his native country: Hungary.
Political issues forced him to leave Hungary and went Germany where he had major success there for a brief time.
Upon arriving in US in December 1920, he started his acting career for European immigrants. At that moment he still don't know English at all.
After that, he starred in several films but only played minor roles. At the same time, he was a Broadway actor and played numerous time as Count Dracula, the role that will make him famous and ultimately, kill his acting career.
With some luck (death of Lon Chaney) and great efforts, He got his first major role in a motion picture in US and it was a big one. A movie that would define the horror genre for years to come: 1931's Dracula, directed by Tod Browning.
This movie is an instant classic. Lugosi and Dracula combined into 1 and it was marvelous. With such a tight budget, it managed to become the sixth highest grossing film in 1931.
Lugosi was so good at the role that his image of Dracula is permanently stamped into our brain as "THE DRACULA". although he was not the first Dracula (Nosferatu's Max Schreck was arguably the first), but he will always be recognized as the true vampire from Transylvania. However, he was paid $500 per week for 10 weeks of shooting which is considered extremely low. (for comparison, here are the prices of some of the goods and services in 1931: Average Cost of new house $6,790.00, Cost of a gallon of Gas 10 cents, A loaf of Bread 8 cents, New Car Average Price $640.00)
After Dracula, his acting career was constantly on the downhill. Although he got a new contract from Universal Studios, his pay never increased (500 per week).
The most important event in Bela Lugosi career beside Dracula is his rejection to the role of Frankenstein monster in 1931. According to Lugosi, "Anybody can moan and grunt". Little to his knowledge, he was killing his own career. Frankenstein monster was eventually played by Boris Karloff, and the rivalry between Lugosi and Karloff has begun!
Frankenstein become the highest grossing film in 1931 and Karloff become the new "master of horror" and number one choice in the horror movie actors list for Universal Pictures.
There are no true friendship in Hollywood. Lugosi and Karloff did not like each other and that was not a secret. Although they always denied this fact, it was undeniably true. I truly believe Lugosi regretted his rejection of Frankenstein monster roles till the last day of his life.
Nonetheless, Karloff career went on so great that he owned 2 Hollywood Walk of Fame. He starred in high budget horror movies from Universal Studios such as The Mummy and 2 more Frankenstein films. (Bride of Frankenstein and Son of Frankenstein, which Lugosi played Ygor).
Meanwhile, Lugosi always get secondary roles in Universal Studios horror films behind Karloff. He was so great as Dracula (in which he appeared with minimal makeup, using his natural, heavily accented voice) that his was typecast to similar roles.
To survive, Lugosi started to involve with independent film makers and as a result, he got dozens of "shitty" movies to his credit (although he was always great in every films).
After Abbott and Castello meet Frankenstein (which Lugosi played Dracula for the second and last time), Lugosi was forced to perform in front of small live audiences and stupid TV shows.
In 1952, he starred in Bela Lugosi Meets a Brooklyn Gorilla which was amazingly stupid and lousy yet quite entertaining. It was the last film before he was associated with Ed Wood, the notoriously bad director and producer.
Lugosi and Wood worked together in 3 films: Glen and Glenda (1953), Bride of the Monster (1955) and Plan 9 from Outer Space (1959) which had only 1 shot of Lugosi in his Dracula cape.
His career ended in 1956 (74 years old) when he passed away in his house on August the 16th, 1956.
For me, there are 4 reasons Lugosi career slumped so bad into working with Ed Wood and other lousy producers / directors:
1. His Accent. To be honest, some time i can't even listen to what he said in his films. His thick Hungarian accent limited his chance to shine in Hollywood.
2. His Ego. Lugosi got big ego and in some ways, it hurt his career. He always think that he is the greatest and as a result, make some silly mistakes (such as turning off the role of Frankenstein).
3. Karloff. Karloff greatness in Frankenstein put him in the prime seat in horror movie industries in the 1930's and directly nailed Lugosi into the coffin of shitty films.
4. Morphine. He was addicted to Morphine in the mid 1930, due to injuries received during military service in world war I.
For me, Bela Lugosi will always be the greatest actor of all time and certainly the ICON of horror movie for eternity (although some may feel Karloff is the best). Both of them are superb, but Lugosi could act in horror films without makeup while Karloff needed makeup to perfect his roles, and for me, that separate Lugosi with Karloff and perhaps, the rest of the world.
Bela Lugosi?
or Boris Karloff?Bull vs Bear
4.7.10
S&P 500
SPY broke its big head and shoulder pattern on a weekly basis and close below the neckline!!!!
Based on the height of the head, SPY will at least retrace back to 90 or S&P 500 at 900.
22.5.10
My Analaysis on FBMKLCI
I am an amateur in TA and this is the first time i publish such an analysis.
Now this is a monthly chart going back to 1999. I believe the 5 waves uptrend ends at early 2008 and we are going down.
Just look at the similarity between these 2 periods: mid 2006 to early 2008 high vs early 2009 to last month's high. Look at the momentum, macd and stochastic. everything is virtually identical.
Now i am not saying this market will move back to the floor of around 800 for sure but it sure has pretty good chance of doing that.
Subscribe to:
Posts (Atom)