Tuesday, September 28, 2010

Bravo Bob Marcin

I often get emails on what I read, or how I learned this, that, or the other and what I subscribe to for my information.  Everything I get is from free sources other than a long time subscription (decade+) at Realmoney.com - I'm talking since dot com era.  Mostly it helps me get a feel for what "Wall Street" think is so I can get a gauge of what is going out there in "consensus" land similar to watching Fast Money.  That said, there are a few outlier folks who I enjoy ... for the hour by hour "Rev Shark", for strategic multi week views Doug Kass, and for big picture views Bob Marcin.  I probably like Bob Marcin so much because we think almost identical on the economic policy, problems and 'solutions' this country has been through the past decade... I am sure the Wall Street crowd who only cares about making the next buck no matter the long term consequences views him as the old curmudgeon who yells at the speculators to get off his lawn!

Every so often Marcin says something so good I have to copy it over here - hot off the presses.  Bravo Bob...now go buy stocks cuz we're all gonna get rich in the new paradigm financial asset economy!

The clowns at the Fed are center ring of the circus and they have brought out their one trick pony named All-Ease-All-The-Time. The Fed insists this trick is panacea for the economy.

Certain bozos at the Fed, starting with the Lead Clown himself, Alan Greenspan, believed asset speculation creates wealth and economic prosperity. Current Ring Master Bernanke believes currency debasement will create jobs, reflate housing, spike financial assets, and cure cancer. And, it will accomplish this by only gently nudging inflation up to 2%. What a joke.

The next QE performance will create trillions of paper dollars and create no jobs and minimal GDP growth, inflate no home prices and not cure cancer. It might goose financial assets a bit temporarily, but that seems to be the Jokers end game.

QE2 however will crush the dollar, hurt pension funds and savers, spike inflation, especially in commodities and distort market pricing signals. And if it persists, will force investors out on the risk curve and may initiate bubbles in bonds, stocks, and commodities. Easy Al has relinquished the circus ring to Bubble Ben.

In an act of suspension of disbelief, the markets wants to applaud this pony trick. How foolish. Printing money and inflating asset prices creates no sustainable wealth or economic activity. It creates the illusion of wealth and fosters major economic imbalances. That's our problem today, yet the clowns running the circus don't understand that sentence.

We all know how sustaining debt imbalances and supporting uneconomic activity ends. Very badly. After the this circus gets driven out of town, a pile of horse manure will be the only thing their pony leaves. The Fed is short members, and I nominate Ronald McDonald. As far as clowns go, he comes with no pony and less harm.

When will investors understand that the Fed's one-trick pony is phony?

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