Thursday, May 07, 2009

The World's Largest Hedge Fund

Here. Via implicit and explicit guarantees, loans, and outright ownership, the Federal Reserve and Treasury essentially constitute the largest hedge fund in the world. It's as if someone gave Bernie Madoff a "print money/market up" button late last year when the walls started closing in on him. What do you think he would have done with that button? Would he have cared about this? Does Bernanke?

Oil is now closing in on $60. That's up from the low $30's earlier this year. If the Fed keeps this up, the stagflationary echo-bubbble will knock your eventually unaffordable socks off. In the process, we'll once again enrich Iran, Venezuela, and Russia, which are all giddily watching the effect of our printing presses on their national coffers.

Noticed the price of gas in recent weeks? Can you imagine what a return to $4 a gallon at the pump would do to this economy?


Anonymous Anonymous said...

Comments on the yield curve?

5/08/2009 9:48 AM  
Anonymous Inthon said...

With the bezzle and financial chicanery afoot, crude oil is the least of our problems, but yes, we're screwing oursevles...

5/08/2009 12:37 PM  
Anonymous Anonymous said...

Regular unleaded up about 25 cents/gal in the past few weeks. Ouch.

5/08/2009 1:16 PM  
Anonymous Rick "Fick" Soetoro said...

1) Also, Summer.

2) Supply, and also Demand.

3) Oil is a globally traded commodity, also.

4) Inflation is a monetary phenomenon. Petroleum use is a real phenomenon.

5a) Eliminating the Fed tomorrow, and allowing nature to annihilate insolvent banks, will change the economic hurt of legacy energy policy?

5b) Sad when gas is expensive and GDP is growing? Or happy when gas is cheap and GDP is contracting?

5/08/2009 2:22 PM  
Anonymous Anonymous said...

I think the powers that be will see fit to have a very healthy correction in oil. The rally was very well advertised so there are certainly plenty of weak longs in there now. $60 is just about right. Enough to hopefully prevent any more development destruction and not high enough to rile the peasants. High enough to keep the Saudis semi happy as well.

Those prices in the mid $30s were an anomaly and very little changed hands at those prices. Brent barely got under 40. That low price was WTI and it was being distorted by the oil ETN's. They were rolling the futures positions forward on a single day which was collapsing the front month near expiration. Everyone was spooked and started avoiding the front month. Huge contangos resulted. When he ETNs started to do the rollover over 4 days things got more normal.

WTI is not slightly higher than Brent where last Jan it was s much as $7 lower.

Anyway the wiff of CPI inflation is going to scare the crap out of them. The inflation in stocks is their dream come true. Any other will be suppressed.

5/08/2009 7:25 PM  
Anonymous am4 said...

What Bernanke has done is one of the reasons I think Obama will keep him on when his term expires. This gang of thieves will not turn on their own unless their self-preservation is at stake.

5/09/2009 1:20 PM  

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