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“Smooth Exit”

I couldn’t help but get a good chuckle at the couple of paragraphs below that appeared midway through this Bloomberg story that sung the praises of Federal Reserve Chair Janet Yellen who is rapidly approaching her one-year anniversary as central bank chief.

Granted, the phrase “smooth exit” is not Ms. Yellen’s and it only appear in bold type above as a result of Bloomberg’s slightly annoying practice of not allowing readers to take in more than a Twitter-size chunk of small text before getting to a few simple words in big text again (in itself, kind of a sad commentary on how things are evolving).

Nonetheless,  given the history of the nation’s central bank over the last couple decades, a history that has been replete with bursting asset bubbles (and Yellen is clearly cut from the same Greenspan/Bernanke cloth), it seems a “smooth exit” is setting the bar far too high.

Perhaps “No Calamity” or “No Apocalypse” would have been better.

What Could Go Wrong?

Via Deutsche Bank and this Business Insider item comes the graphic below that is only slightly out-of-date following geopolitical developments yesterday in Ukraine and Gaza.

It appears that markets are already getting over both of these stories as prices for safe haven investments such as Treasuries and gold are tumbling while stock market futures are up, though the latest data indicate only a portion of yesterday’s decline has been reversed.

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More evidence that the mainstream financial media often gets it wrong when reporting on precious metals in general and gold in particular when it comes to reporting on anything other than its price comes via this story at Reuters on Tuesday.

It seized on a few comments at the tail end of a World Gold Council report to craft the sensationally bearish China may have 1,000 tonnes of gold tied in financing – WGC which was not only misleading, but violated some very important rules about context.

Author A. Ananthalakshmi, who according to her page at Reuters has recently dealt exclusively with the mundane, day-to-day reporting on the gold market until this offering, exorcises all of the grey area out of the following paragraph found on page 56 of the World Gold Council’s 57 page report:

The use of gold for purely financial operations is a form of demand that represents a small part of the much wider growth in shadow banking, which while entirely legal, is considered a grey area. Not surprisingly, there is little hard data on the shadow banking sector but J.P. Morgan recently estimated it at RMB46tn (US$1.7tn), equal to about 84% of China’s GDP. No statistics are available on the outstanding amount of gold tied up in financial operations linked to shadow banking but Precious Metals Insights believes it is feasible that by the end of 2013 this could have reached a cumulative 1,000t, equal to a nominal value of nearly $40bn.

It is then offered up as simply this at Reuters:

[To continue reading this article, please visit Seeking Alpha.]

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McClatchy reports that Americans are as glum as ever about their prospects for getting ahead in the world, due in no small part to the increasing attention by politicians and the mainstream media on income/wealth inequality, the recent prosperity of the one percent, and the consensus view that the outlook is dim for the middle class.

Eight out of 10 Americans think it’s harder now than before, taking more effort to get ahead than it did for previous generations. Just 15 percent think it takes the same work as it did before, and a scant 5 percent think it’s easier now.

And Americans don’t think it will get better soon, with 78 percent thinking it also will be harder for the next generation to get ahead.

The findings underscore the landscape at a time when the economy and the country are being fundamentally changed by waves of globalization and new technology, and as Americans struggle to see a better path forward and their politicians grapple over how to help.

At this point, you’d think that things might improve maybe just a little bit if everyone stopped talking about this so much and stopped making so many people feel so lousy.

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