Gold/Oil Ratio Ends Week at 11.966, Advantage Gold

Gold is 1292.90 and WTI crude 108.05 (nearly at parity with Brent!). Gold remains a technical buy with the ratio 20% below 15, but that may be an illusion with the increase in the price of oil on unrest in Egypt and Syria.

Tonight's Balance Sheet Of The Federal Reserve: $1.2 Trillion In Shitty Mortgages

Look for yourself, here.

$1.2 trillion is the "remaining principal balance of the underlying mortgages". That's one third of the total balance sheet.

Acquired at the pace of $40 billion a month, it would take the Fed 2.5 years to acquire all that crappy mortgage paper, but of course the latest iteration of MBS acquisition at $40 billion a month has been going on only since last September. That means just $440 billion of the $1,200 billion has been acquired recently.

There's a whole lotta crummy paper out there, folks. And Ben Bernanke and the US Federal Reserve Bank have been buying it . . . just for you!

QE Is For The Banks, Nothing Else

Quantitative easing is for the banks and nothing else, despite the long-standing professorial deflections to the contrary by Ben Bernanke.

Oh, he can say it's to help housing recover, or employment, or whatever else happens to be languishing depending on the exigencies of the moment. But God forbid Ben should say what everyone ought to have understood from the beginning, that there's a huge pile of non-performing loans on the banks' books. Ben's various iterations of QE have kept him busy systematically transfering to the books of the Federal Reserve Bank of the United States significant tranches of those bad loans, and it won't be until those transfers end decisively that you can be sure that the banks are finally in the clear.

Meanwhile, have you considered that when Keynes said markets can stay irrational longer than you can remain solvent that Keynes never imagined how un-free markets were to become in the Western world? Five years out from the troubles of 2008, that the purchases of MBS continue apace should at once frighten everyone and galvanize support to reform the banking system and prioritize the commitment of its central bank to the integrity of the US dollar.

The voices warning us are out there. You just won't hear them on your television, which you should turn off at a minimum, and preferably execute loudly in your backyard with a shotgun, or drop on your driveway from a second story window. Please send film.

Consider this from Manuel Hinds, former finance minister of El Salvador and 2010 winner of the Hayek Prize, here:

"[H]igher interest rates would burst the bubbles in asset prices that monetary printing has created, bringing to the surface the losses that banks have accumulated by years of lending to unsustainable activities. Thus, the Fed is between a rock and a hard place. If it does not increase the rates of interest, excess demand will explode leading to high inflation, large current account deficits or both. If it increases interest rates, the activities that are profitable only with very low interest rates will collapse, including the equity and commodity markets. This would expose the banks to very large losses, which would trigger a serious crisis because the banks have accumulated bad assets for over a decade now and have cleansed them only partially because they trust that the government will save them without having to take painful write-offs. As a snowball going down a slope, the problem gets worse with time. ... The coming breakdown is likely to be much worse than that of 2008."

Or this from Joseph Calhoun of Alhambra Investment Partners, here, who doesn't consider that QE is so negative for present GDP growth because it is "financing" past growth now ensconced as bad debt:

"There are any number of reasons why QE might be negatively impacting growth, from high oil prices to the diversion of capital to speculative purposes to its effects through exchange rates on other countries with which we trade. I do not claim to know the full extent of the effects of QE but most importantly, neither does Ben Bernanke. That being the case and considering the evidence to date, why does Bernanke persist in pursuing the policy? Is there some other reason for the policy other than the stated one of spurring economic growth? If so, Bernanke sure isn't telling anyone what it is."

Or this from the ever-wise John Hussman, here:

"Meanwhile, with a monetary base of $3.27 trillion and an estimated duration of at least 7 years on present Fed holdings, the recent 100 basis point move in bond yields has created a loss of over $200 billion for the Fed. The Fed reports capital of only $55 billion on its consolidated balance sheet. but then, just like major banks, the Fed does not mark its assets to market. Most likely, the Fed is now technically insolvent. Moreover, the Fed is levered more than 59-to-1 even against its stated capital. The benefits of QE seem vastly overpriced and excessively trusted, particularly in an environment where the internal debate even within the Fed is becoming more pointed. Two members already want the Fed to taper in order “to prevent the potential negative consequences of the program from exceeding its anticipated benefits.” ... We don’t observe any material economic impact from quantitative easing, and continue to believe that the key event in the recent credit crisis was the FASB move to abandon the requirement for mark-to-market accounting among financial institutions (the Fed’s zero interest policy has merely allowed banks to recapitalize themselves on the backs of savers and the elderly on fixed incomes)."

QE is financial repression of the American taxpayer for the benefit of institutions which should be wound down and broken up. How long are you going to put up with it? Can you last another five years?

If Obama Had A City, It Would Look Like Detroit

h/t Steyn

Obama And Holder WANT The Country Divided Over Race Relations

It's one key to maintaining their power:

"What has been already mentioned is as conducive as anything can be to preserve a tyranny; namely, to . . . endeavour that the whole community should mutually accuse and come to blows with each other, friend with friend, the commons with the nobles, and the rich with each other."

-- Aristotle, On Tyranny

A Third Federal Court Strikes Down Obama's Recess Appointments As Unconstitutional

Reported here:

A third federal appeals court ruled Wednesday that President Obama violated the Constitution last year when he made recess appointments to the National Labor Relations Board, adding more weight to the case as it goes before the Supreme Court in the justices’ next session.

Rep. Paul Ryan Hasn't Been Conservative On Immigration Since 1994

From Boston.com, here:

Ryan is hardly a newcomer to the issue. In 1994, when he worked with Kemp, he wrote a 4,000-word rebuttal to proponents of Proposition 187, the California ballot initiative that denied benefits to immigrants in the country illegally. He backed the immigration overhaul bill crafted by McCain and the late Sen. Edward M. Kennedy, D-Mass., that nearly became law in 2007.

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The demographic problem of Baby Boomer retirement didn't yet exist in 1994 as it does now but Ryan was still in favor of cheap illegal labor for American business at the expense of legal citizen labor then. Paul Ryan is not a conservative and never has been. If he were, he would stand for the rule of law against the ineluctable fact of illegality.

That betrayal of the rule of law, now enshrined in the Senate immigration bill which gives legal status to law-breakers, is no different from Obama's selective enforcement of American law, which means his deliberate breaking of the law himself, from deportation rules to his own ObamaCare law and the now defunct DOMA.

They are all, Republican and Democrat alike, unfit to serve in their present positions, let alone in any future position. They are traitors to their own country and what it stood for but no longer does.

Spineless Republicans Cave On Cordray Nomination, CFPB Spying On Citizens

Republican Sens. Saxby Chambliss (Ga.), Tom Coburn (Okla.), Susan Collins (Maine), Jeff Flake (Ariz.), Lindsey Graham (S.C.), Johnny Isakson (Ga.), John McCain (Ariz.), Rob Portman (Ohio), Roger Wicker (Miss.), Orrin Hatch (Utah), Bob Corker (Tenn.) and Lisa Murkowski (Alaska) voted with Democrats to confirm Cordray. ... Sen. Mike Crapo (R-Idaho), ranking member on the Senate Banking Committee ... pointed out that Republicans want to replace Cordray's director position with a bipartisan “board of directors with staggered terms.” He also expressed concern over recent reports that the bureau is conducting “unprecedented data collection.” “The CFPB [Consumer Protection Financial Bureau] is collecting credit card data, bank account data, mortgage data and student loan data,” Crapo said ahead of the vote. “This ultimately allows the CFPB to monitor a consumer’s monthly spending habits.”

More here, if you need to puke.

Sen. Harry Reid wins.

So, George Zimmerman Was The Victim Of A Hate Crime . . .

. . . because Trayvon Martin picked a fight with what he thought was a homosexual rapist.

Video here.

There's Your Regular Run Of The Mill Cracker . . .

Jimmy Savile

. . . and then there's your pedophile cracker, affectionately known as the Crazy Ass Cracker.

Black Teens Assault Hispanic Man Shouting "This Is For Trayvon"

We're ALL Creepy Ass Crackers To Them

The Baltimore Sun reports here:

"They were just yelling and calling him names as they ran after him, but once they were hitting him and after that they started yelling, 'This is for Trayvon, [expletive],'" said Dudley, who heard the chant repeated multiple times.

Do Nothing Congress Increases Revenue, Spends Less

So says Molly Ball, here:

But the ironic thing is that, by virtue of its very do-nothingness, the do-nothing Congress got a big thing done. First, in the fiscal-cliff deal struck around the new year, wealthy Americans’ income-tax rates went up, a policy change long sought by the president and his party. Then, in March, the budget ax known as sequestration fell, chopping $1 trillion from federal spending over the next decade—a cherished goal for fiscal conservatives. More revenue plus less spending equals a lower deficit. A much lower one. Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities, estimates that these changes, combined with the domestic-spending caps imposed by the 2011 debt-ceiling deal (and counting savings on interest), will reduce the deficit by $3.99 trillion through 2023. That’s enough to stabilize the U.S. debt-to-GDP ratio, meaning that the debt will no longer be growing faster than the U.S. economy. In short, the deficit has been tamed.

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She doesn't mention that both ideas were Obama's. Funny, Obama doesn't mention it either.

"House Republicans are doing the people’s business by obstructing"

So says Jerry Shenk for PennLive.com here:

Reacting to Democratic overreach, American voters chose gridlock over “productivity” by awarding Republicans the House of Representatives following the 2010 mid-term tsunami and preserving their majority in 2012. House Republicans are doing the people’s business by obstructing the ambitions of President Obama and Washington Democrats.

Just 6% Think Immigration Reform Is Our Number One Issue

"barking up the wrong tree"

So reported Bloomberg a week ago, here:

In a June 1-4 Gallup poll, 43 percent of Americans named either the economy or employment and jobs as the No. 1 issue facing the U.S., while 6 percent said immigration topped their list of concerns.

The Swiss Overwhelmingly Want To Be Home Owners But Aren't

And the famous Robert Shiller really doesn't care, here:

Consider Switzerland, which by several accounts has had one of the lowest rates of homeownership in the developed world. In 2010, only 36.8 percent of Swiss homes housed an owner-occupant; in the United States that same year, the rate was 66.5 percent. Yet Switzerland is doing just fine, with a gross domestic product that is 4 percent higher, per capita, than that of the United States, according to 2011 figures produced at the University of Pennsylvania. It’s not that the Swiss inherently prefer renting. A 1996 survey asked a sample of Swiss whether, if they could freely choose, they would rather be homeowners or renters. Eighty-three percent said homeowners.

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To hell with what people want, right? Just keep property values so high only the likes of David Niven, William F. Buckley, Jr. and Tina Turner can afford to own there.

Krauthammer On Big Sis' Resignation: "Her Record Was The Underwear Didn't Explode"

Here.

The Price Of Gas Is 147% Higher Than It Was 11 Years Ago

The price of gasoline today is 147% higher than it was eleven years ago, but the CPI is up just 29.15%, May on May, 2002 to 2013 (latest available figures). So gasoline in Grand Rapids in July 2002 at $1.51 per gallon adjusted for inflation measured on "all items" arguably should be just $2.13/gallon today.

Instead gasoline's cheapest price today in GR is $3.73/gallon, 147% higher than in 2002.

What, oil companies weren't making a profit eleven years ago?

How A Good Central Banker Is Supposed To Behave

not like this under Greenspan and Bernanke

David Merkel, here:

A good central bank fights the politics of the nation of which it is a part and tries to preserve purchasing power, ignoring labor unemployment. It tries to be a paper "gold standard." That has not been the Fed for 25+ years.

Bernanke Contradicts Himself

So says Jeffrey Snider, here:

Chairman Bernanke stole the show yesterday, certainly by his accommodative and now contradictory stand. I suppose that is the danger in trying to talk “markets” toward “targets”, much like Greenspan in the late 1990’s. Toward that end, he made at least one prediction that will likely come true (in sharp contrast to the Fed’s history), namely that the unemployment rate understates the weakness in the jobs market. ... As to the potential for tapering, that has always been about the rock and the hard place; the rock being asset bubbles in housing, credit and, yes, stocks vs. the hard place of lackluster, at best, economic performance. Given the problems of real time economic tracking and the dubious record of ferbus and other econometric models in use it would make sense that the FOMC appears to subscribe to each and every possible outcome concurrently. The committee both backs the accommodative approach (employment might be weaker than indicated) and the taper approach (things are getting much better) all at the same time.

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Still, it's an odd way to behave if you are being shown the door in a few months.

Rep. Cantor Divines New Founding Principle Which Just Happens To Lead To Dream Act

Here:

"One of the great founding principles of our country was that children would not be punished for the mistakes of their parents."

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Well, if anyone should know about founding principles, it's Eric Cantor:

"Thou shalt not bow down thyself to them, nor serve them: for I the LORD thy God am a jealous God, visiting the iniquity of the fathers upon the children unto the third and fourth generation of them that hate me." -- Exodus 20:5