Juggling Dynamite

The Fed’s latest assurance that the world’s leading central bank is poised to raise rates cited corporate fixed investment “increasing at solid rates in recent months” as a key metric giving them a green light. For those that are interested in reality here is picture of that “increasing” trend.  If only the facts would do what Yellen and company theorize.

The Economic Cycle Research Institute explains:

“…the squeeze in profit margins has weighed on investment, as year-over-year fixed investment growth slowed to a five-year low in Q3…If the Fed is counting on investment growth holding up, it may well be disappointed, making their plans for a rate hike cycle look increasingly ambitious.”

Few people grasp the scope and scale of control fraud as a key business model today. Without understanding and admitting, there is no hope for meaningful reform and recovery. Bill Black is an expert on connecting the dots.

Bill Black, expert on Wall Street control fraud, returns to discuss the gross abuses of power rampant in our financial, political and judicial systems. In his estimation, regulation and enforcement of financial crimes have been completely gutted and de-fanged — intentionally by corrupt politicians, and unintentionally by inept ones. All while the Justice Department turns a blind eye.  Here is a direct video link.

Hedge funds [and mainstream asset management services] extract huge fees in exchange for the promise of sophisticated investment strategies to capture above market returns that are uncorrelated with broad market declines.  In practice nearly all of them fail to deliver on both. You might think people would stop believing the sales puff and stop handing them funds to mangle.  You might think that pension trustees, at least, would sober up.  You would be wrong.  Read  A Hedge Fund Sales Pitch casts a spell on public pensions:

One reason pensions turn to hedge fund managers is to try to close the expansive gap between what the pensions owe their beneficiaries and the amount of funds that they have to meet those obligations.  According to a report by the Pew Charitable Trusts, that gap was around $1 trillion in 2013, the most recent year available.

To stop believing in the highly improbable promises of financial magicians, demands that one acknowledge capital shortfalls and funding deficits head on in order to formulate practical plans.  Apparently it is easier to believe in fairies.

Unfortunately the costs of these misguided beliefs are frequently devastating for individuals.  And in the case of pensions, for we the taxpayers, who are then pledged to make up funding deficits through increased capital contributions to both public pensions and social programs.