Wednesday, May 6, 2015

Another Monetary Policy Dunce-Fest Imploding. Right Now

Thirty year Treasuries with U.S. Real Estate (REITS) 

Monetary policy summarized:
Step 1: lower interest rates, tempting everyone to pull forward future consumption and take on massive amounts of debt.

Next, make-believe that the temporary pull forward in consumption constitutes a real economy, as economic indicators pause momentarily at "optimal" on their way to cratering. 

Next, based upon the illusory moment of "perfect alignment" raise interest rates obliterating everyone who took on too much debt. 

Pray this isn't the time with all of the rioting (even as riots are already underway).

Yes. It's all that fucking stupid.

No. I'm not kidding.

(Past and current dislocations...)

Subprime circa 2007

Entire developed world housing market, right now.

Spanish Ponzi bonds have erased 5 months of gains, due to the rise in yields (interest rates):