Tuesday, February 18, 2014


No, not the markets.  It got to 43 F. today with sunny skies and you can't believe the amount of water that is sloshing around, so the next thing you will probably be hearing about is flooding in the fly-over zone.  I can deal with warm.

It being a swamp out there I sat in today and did a bit of reading and thinking.  I usually watch CNBC in the morning and one of the old timers that has been featured just about from the git-go is the floor manager for UBS, Art Cashin.  Art has been around the market since you-know-who was a corporal and has reached the status and age in life when he can say pretty much anything he wishes. This morning was kind of a fun discussion rambling about credit, stimulus spending and tapering.  One of the gorgeous young things which CNBC seems to attract in abundance had this exchange:

GYT: "Art, why do you thing the Fed is signaling that the taper is going to continue?"

ART:  "Because it (the bond buying) doesn't work."

Well, that caused me to spill my Corn Flakes.  Now I've been saying that for three years but I'm not Art Cashin.  The other difference is I believed that the taper wasn't a 2014 event.  I was pretty sure that in an election year, with all the intellectual investment that went into the bond buying program, it would be impossible for Yellen to essentially admit what Art figured out (and me) that it doesn't work.  I learned a lesson: when a fact is so clearly evident it will be recognized as being such despite all the emotion and reputation that may be involved it declaring it not to be the case.  If Cashin can say that out loud on CNBC, the taper is for real and why then certainly I was wrong.  I'll try to learn from this.  Oh, in case you missed it, a couple of days ago was the 5th anniversary of the Great Stimulus of 2009.  That didn't work either.

Of course, one questions one's self when  this occurs.  Right now I'm asking myself why is the Euro trading like all is well Over There, the Pound is going through the roof with seeming no effect from the Loony Tunes up in the land of THE PEOPLE who are determined to follow the specter of Robert the Bruce right over the cliff and the Japanese who having witnessed the waste of a stimulus and print money schemes, are prepared to double down on all the stuff they  have tried without success. My new found wisdom tells me that before I announce the answers to all these questions I damn well better have the answers myself.  Right now I don't.  It's also caused me to thing again about my comments about Chinese bubbles but I still think I have that one right.  In the mean time, there is Italian politics, a cause of constant amusement…and no little concern…with Massimo somewhere in the flesh pots of Europe with his skis (and who know what else) AWOL when needed the most.  We're working on that one.

One interesting little note was that the Troika is returning to Greece to discover what everyone knows, that the Greeks need a bundle to stay out of default and to figure out I suppose what new piece of legerdemain will be needed to get past this latest mess.  The Greeks of course are quite convinced the current account surplus they've recently rung up is proof positive of they're sound condition setting aside for the moment that the surplus is a couple of million Euros and that they owe about a gazillion.  It's going to be fun to watch but I've learned my lesson: I am not going to pre-judge it.  Yeah, right.

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