Federal Reserve | timiacono.com - Part 4

China Acts

China’s relatively modest currency devaluation appears to be the top news story of the day and, so far, equity markets are not taking it well – here’s why they did it.

Precious metals investors, on the other hand, have embraced the news since, like the Swiss bank action to remove the euro-peg from the franc some time ago, it comes across as one more sign that the global currency regime has an expiration date.

The Yellen Term at 18 Months

The body-less images at about the 30-second mark notwithstanding, this is a pretty good recap from the folks at Marketwatch of how the current and former Federal Reserve Chairs have fared during their first year-and-a-half on the job.

Interestingly, there’s the potential for the Presidential election cycle, Fed chairman cycle, and financial crisis cycle to line up again at the eight year mark. Recall that Bernanke was appointed in 2006 and had smooth sailing for a while, then the election cycled heated up in 2007, and then the wheels fell off of nearly everything in 2008.

Interregnums are particularly good times for financial crises…

Stocks, the Fed, Mr. Creosote, and a Mint

As the Federal Reserve brain trust gathers in Washington, Art Cashin talks about what a wacky year it’s been so far on Wall Street with what are, historically, the most volatile few months for equity markets yet to come.

I’m sure others have already pointed out how a rate hike this fall might be like “a thin mint” for Mr. Creosote in Monty Python’s classic The Meaning of Life, but, here are a couple of links just in case – Youtube, Wikipedia.

Unsound Banking

Lots of banking news today, such as this Bloomberg story on Wall Street’s Wild West and word from Zero Hedge that auto loan rejection rates just hit record lows.

In this overview of contemporary banking, the problems are neatly summarized thusly, a point that may seem quite obvious but that, increasingly, seems to be forgotten now that U.S. home prices and stock prices appear to have reached a permanently high plateau:

The main problem with banks nowadays is that a lot of them have abandoned their traditional role as providers of long-term financial products in favor of short-term gains that carry much higher risks.

Also see:

Ron Paul vs. the Fed

It’s kind of weird seeing Ron Paul doing commercials for Stansberry Research that appear to be running at high volume on selected cable networks while his son is running for president, presently attracting a boatload of criticism for a flat tax plan.

In the interview below, the elder Paul found time to talk to CNBC about the Fed.

According to the accompanying CNBC story, he offers good news for investors:

I think the Fed is very efficient and the Plunge Protection Team is very efficient and they have gained a competence in the market, that the Fed won’t allow this market to drop

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