Fed Bubble is Now Common Knowledge: A John Galt Moment?

May 3, 2012

Feldstein smiles at one of his star pupils


One of the “elite,” conomist Martin Feldstein was once considered one of the finalists for Greenspan’s spot, before a true sycophant, the Bernank, was appointed.  The rest is history but seems Feldstein is having an Atlas Shrugged, John Galt moment about what has transpired.

“The stock market is, I think, responding to the Fed. I think the real danger is that this is a bubble in the stock market created by low long-term interest rates that the Fed has engineered….The danger is, like all bubbles, they burst at some point”

Other John Galt moments include the veteran investor space as another hedge fund titan,  John Arnold closes shop in the energy arena.  Rejection of the liquidity only theorem at work here? How long would any entity, let alone the balls to the walls moral hazard types survive in even a slightly more normalized world?

Another sign that John Galt Investor has about had it with central planned ‘conomies and markets combined with Ministry of Truth black propaganda are CNBC’s ratings. They are falling off a cliff. Some point the finger at Andrew Soskin, but he is merely a symptom. I see it as more disgust and disinterest in Fed Bubbles, TBTF rigged, manipulated markets.   Another -$1.6 billion outflow from domestic equities, marking 10th consecutive weeks.   This results in more vaccum tube trading, no depth,  algo addled markets,  with the few remaining participants drinking heavily of the spiked Kool Aid.

Tuesday ISM release and subsequent vacuum tube rally took the cake. It was an contradiction among a half dozen other data points pointing to ‘conomic rollover.  We see a repeat of katie bar the door run ups, followed by reversals, wash, rinse, repeats.

Frankly how does anybody plan or do forecasts in a central bank bubble world. Clearly the quick buck artists aren’t even trying, but are merely gambling away. Memories about Worldcom, Enron, LTCM, and Lehman Brothers seem short. The Chesapeake Energy story shows that there are land mines out there galore. One has to ask, how long would some of these entities last without ZIRP, and the too big the fail crackpot theory?  Only days would be my prediction. These implosions will take their governments with them.

10 Responses to Fed Bubble is Now Common Knowledge: A John Galt Moment?

  1. Russ Winter on May 3, 2012 at 9:04 am

    GMCR down 40% on shady accounting, and so so results.

  2. Russ Winter on May 3, 2012 at 9:54 am

    Over half of retailers miss, significant given MoT management of expectations.

  3. Russ Winter on May 3, 2012 at 12:42 pm

    Another John Galt moment as David Einhorn rips Fed jelly donuts policies.

  4. Gerald Owens on May 3, 2012 at 1:51 pm


    What do you think of this.
    Ticker symbol PNSN.


  5. Russ Winter on May 3, 2012 at 2:12 pm

    Ron Paul knocks the Fed Bubble out of the park with this essay.

  6. Russ Winter on May 3, 2012 at 5:33 pm

    Open season on Fed continues apace, James Grant:

    “The Federal Reserve is the giant squid of squids, it is the vampire squid of vampire squids.”

  7. Russ Winter on May 4, 2012 at 9:35 am

    Today’s pulling back the curtain John Galt moment, bond king Bill Gross says fiscal and monetary policy isn’t working.

  8. crimson ghost on May 3, 2012 at 9:15 am

    With the DBA broad ag fund down over 20% from its high and consumer food prices still climbing rapidly for many items, the middlemen are making out like bandits.

  9. Russ Winter on May 3, 2012 at 11:42 am

    This is what Austrian economists call “malinvestment”. The Fed bubble has now created enough of this to take down an entire generation. Wonder if someone used leverage on the painting too?

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