An Article of Faith: Ron Paul and the Tea Party Puppets have been going on and on about the inflationary damage that the Fed's continuous dumping of billions and billions of dollars into the economy every month is doing. Or will do soon. Or maybe a bit later. But this money-pumping has been going on for five years now, with no noticeable inflation in the economy (in some assets, yeah, but we're talking about the real economy where the folks who work at WalMart live) and with expectations by several Wall Street Too Big To Care banks that low or no inflation is to be expected for another decade or so. However, the fact that Mr. Paul ranks right up there with Chicken Little does not dim his position in the hearts of those who are impervious to evidence based reality.
A Nobel Question: Do people have rational expectations? Not always, no. Actually, not often. Really, hardly ever, especially if it interferes with their role as hero in their private dreams. Economists who base their theories on rational expectations are irrational.
First Things First: Kerry is running around Europe telling them they shouldn't let a little NSA spying jeopardize profitable trade agreements.
Traveler's Warning: Avoid Deming, New Mexico. Avoid all of Hidalgo County, NM. Avoid all of Southern New Mexico. Cops in Deming stopped a guy for rolling thru a stop sign, ordered him out of the car, didn't like his posture so they took him to the Gila Regional Medical Center in Silver City (also an place to avoid) where he was x-rayed, had two separate digital rectal 'exams', was given three enemas in front of officers, was X-rayed again, and then underwent a complete colonoscopy. All in a search for narcotics the arresting officers thought he had hidden in his rectum, based on his posture. Hell, just to be safe, go to Oregon.
Second Time 'Round: Fitch rating agency is warning that house prices have made an "unsustainable" jump and are currently 17% overvalued. Okay, so there's a bubble. But 17%? Exactly?
Kryptonite: In England, communications security officials are requiring top government officials to put their cell phones, tablets, iPads, etc. in specially designed lead lined boxes when discussing sensitive matters, to prevent hostile governments - like China, Russia, Iran, Pakistan, and the United States - from turning them into transmitters even when they are turned off. Takes one to know one.
Selfishness: Nobody's getting rich off Social Secuiry. Most of our elderly more or less manage to get by, barely. In a nation with the largest GDP there is no reason not to raise Social Security benefits – it is money that will immediately be spent into the economy, creating jobs. A third of our seniors rely on Social Security for virtually their entire income. More than half of our retirees depend on Social Security for significantly more than half their income. Cutting benefits is morally unacceptable. And don't talk to me about 401ks. They have been a disaster for everyone except the guys on Wall Street.
A Pause: Mortgage applications decreased 7.0 % w/w and refinance applications dropped 8% w/w, while the seasonally adjusted Purchase Index decreased 5% w/w to reach its lowest level this year. The housing boom is obviously gathering strength to surge to even higher highs, etc. etc.
Shut Up And Deal: The Trans-Pacific Partnership (TPP) being negotiated in secret by Wall Street and large multinational corporations is designed to further the upward redistribution of income. The agreement – like the other putative 'trade agreements' currently being crafted - is not about trade or tariffs or quotas, it is about dismantling regulations aimed at protecting things like the environment, local economies, or the health of the populace that that are might reduce the profitability of large companies.
Continental Divide: Euro zone retail sales fell 0.6% m/m in September. The EU's 12.2% unemployment (go, austerity!) may have had a negative effect, they said. May have.
Once Upon A Time: The Fed's QE has created an asset bubble bigger than the 2008 housing debacle and its eventual bursting will bring on a mammoth recession. The Fed is not likely to back off from QE any time soon, as market fears that it might is enough to slow the economy enough to insure that QE continues. But when (the sky is falling, the sky is falling) the US financial system “is emboldened to lend like before the 2008 crisis, inflation will surge... and stay high for a long time.” Or so it says here.
Gaming the System: UnitedHealth says it will chose not to participate in the first round of the ACA health insurance exchanges, letting others step in and write policies on all those sickos who needed but couldn't afford insurance before. Once these claims-intense customers are signed up, then UnitedHealth will enter the fray, signing up the healthy – which is good business and poor public policy.
The Parting Shot: