Mish's Global Economic Trend Analysis

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Yellen It Is; Gold Soars; Summers Drops Out; Yellen 100% Assured to Make a Mess Posted: 15 Sep 2013 07:31 PM PDT Anyone smart enough to withdraw from the race to replace Ben Bernanke as next Fed chairman must have something on the ball, at least temporarily. The Larry Summers' haters got their wish today as Summers withdrew his name from consideration. Summers called president Obama, then issued a a formal withdrawal letter stating "I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery." In response, the White House issued a statement "Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve. Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today. I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future." Barry Ritholtz at the Big Picture mocked the withdrawal with a spoof Translated into Truth: On Summers Withdrawing Name "Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve. Larry was a critical contributor to the radical deregulation that was one of many causes of the worst economic crisis since the Great Depression. It was in no small part because of his lack of expertise, false wisdom, and inept leadership that the economy crashed and burned and even today is still failing to be to back to its full growth potential. As Treasury Secretary, he helped to pass the Commodity Futures Modernization Act. This turned derivatives into a unique financial instrument with no oversight, reserve requirements, mandated disclosures, or listing minimums. The CFMA all but guaranteed that Derivatives would eventually implode. Summers further contributed to the crisis by Summers by overseeing the repeal of Glass Steagall. With this firebreak between Wall Street and Main Street effectively removed, the financial conflagration of 2008 spread from Wall Street to every corner of the economy. Further, his terrible advice and lack of insight is in large part the reason we see so little progress being made today — the lack of economic growth, the concentrated bank power, the still dangerous financial system and of course, the sub par job creation. I will always blame Larry for the way he damaged my presidency. To anyone who to seek his guidance and counsel in the future, please don't make the same naive errors I did. Will Yellen Be Any Better? The criticism of Summers is justified, but will Yellen be any better? I suggest the answer is a resounding no. She is more dovish than Bernanke, and that is saying quite a lot. Let's compare ... Tweedle Dum vs. Tweedle Dee; Does Janet Yellen Have What It Takes? In Tweedle Dum vs. Tweedle Dee; Does Janet Yellen Have What It Takes? I stated ... The Detractors Win The detractors win both sides. Neither Yellen nor Summers is qualified. In fact, there is not a single person who would take the job that is qualified. There should not be a Fed at all. The idea that a group of economic wonks can sit down and micromanage the economy to health is preposterous. Central bank clowns have proven time and time again they have no idea what the interest rate should be. A massive bubble in dotcom stocks followed by a massive bubble in housing is proof enough. And this Fed on which Yellen sits has triggered asset bubbles in stocks and bonds and she cannot even see it. Crisis Management Needed Curiously, lots of analysis suggest we do not need Larry Summers because there is not going to be another crisis. Rest assured there will be another crisis, and much sooner than most think. But that does not make Summers qualified. His role is to help create crises, not stop them. Tweedle Dum vs. Tweedle Dee The only candidate that makes sense is the candidate who will set a target date to end the Fed. Unfortunately, no such candidate is on the short list. The choice is between Tweedle-Dee who rates to slosh money around even more than Bernanke in a futile effort to create jobs, and Tweedle-Dum who will do whatever Wall Street wants. Practically speaking, is there really a difference? Yellen 100% Assured to Make a Mess Yellen is 100% assured to make a mess of things. So would Summers. But Summers has one thing over Yellen: He is smart enough to not want the job. I might point out there was some small chance that Summers would be more fiscally responsible than Yellen. We will never know because "Yellen it is". Market Response The market loves the news (at least right now). S&P futures are up 18 points (1% on the news). Gold is up $21 to $1330. Things might get interesting in a hurry. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

8,500 Sq Ft Home Faces Wrecking Ball to Build 9,095 Sq Ft Home; 22,000 Sq Ft House Next on Tear-Down List Posted: 15 Sep 2013 11:35 AM PDT When you have more money than you know what to do with, you tear down your 8,500 square foot home to build a slightly larger 9,095 square foot home. The Star Tribune notes $10M house ready for wrecker. Here is an image. The house is damn ugly, at least in my opinion. Citizens want to save the house. Why? And what site would be big enough to take it? Saving the house is ridiculous, but so was building it in the first place, unless of course you have more money than you know what to do with. "Teardown of All Teardowns" Back in June, the above house was billed as "the teardown of all teardowns in the Twin Cities". It's not even close if this next wonder meets the fate I expect. Also courtesy of the Star Tribune, meet the House that Jimmy Jam Built. One of the most famous houses on Lake Minnetonka, a 22,000-square-foot mansion built by the record producer who made Janet Jackson famous, has fallen into foreclosure and the bank is looking for a buyer who will either spiff it up or tear it down. The house features a master suite with its own wing of offices and a 12-car garage. Gee who wouldn't want that? History Built by Jimmy Jan in 1991 Listed for $11 million in June 2005 Sold for $7 million Foreclosed Owned by JPMorgan Chase Torn Down??? Incredible. But this is what happens when Fed policies benefit the wealthy at the expense of everyone else. For further discussion, please see ... Top 1% Received 121% of Income Gains During the Recovery, Bottom 99% Lose .4%; How, Why, Solutions Reader Asks Me to Prove "Inflation Benefits the Wealthy" (At the Expense of Everyone Else)   Near-Record 20% of Americans Struggle to Afford Food and Basic Necessities; Who's to Blame? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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