Behind the scenes lately I’ve had a bit of an exchange with a commenter regarding the views of Luke Gromen—a well known investment guru (I think that’s the title?)—as opposed to the views of Tom Luongo regarding the question, What is Jay Powell up to?
G'day Mark (Tom!) and my MIH friends! (Tom, I respect and enjoy your stuff, as with all here I ask you forgive the presumptive friendship-perhaps I should say kinship? But I appreciate you all).
The final line of your Post, Mark, is one all of we peons should pay heavy attention to. Inflation is the Tax upon which we get no vote; accountability is non-existent; those who've attempted to be personally responsible in their well being (finances, living circumstances, safety and etc.). We are THE folks who will pay for all the Gov't behaviors. You retired on fixed income or self-employed? Try giving yourself a raise to offset said Inflation. Result: we mortgage our future to try to maintain our standard of living.
My very best and kindest regards Mark. I am thrilled to see a broadening reach that is your dedication of sharing in MIH. Blessings all! (WrH)
Good writeup. To clarify my points about the confusing tweet:
""What Luke is suggesting, rightly, is that can we afford this at elevated rates, i.e. 7%. = [The question that Luke is really asking is, Can we afford this--i.e., entitlements and war--at elevated rates, like 7%?] No, clearly not with the current paradigm.""
Your interpretation is correct, in that is what I meant.
The end game here is one that Luke is simply not considering... throwing gold out on the yield curve post-fiscal reform to limit US dollar liabilities while encouraging investment in US Treasuries (i.e. a gold redemption clause).
This is an idea that goes back 20 years to Jim Sinclair. It's a real option. I didn't want to get into it with Luke on this point.
Thanks, Tom. I can't pretend to understand it all, but I'll be trying to write something up about a recent Dimon interview in which he cites our war on Russia as the biggest danger, bigger than recession. It seemed to me that, while treading carefully, he's telling DC: Hey, get this over with. And he surely knows that means, Accept that you screwed up and were defeated. We've gotta move on and clean up our own mess.
I watched that interview with Dimon this morning. My take is that Ukraine is something he wants over and done with. He didn't show much conviction when saying 'and I hope they win...' or however he phrased it.
It's obvious he wants to get on with the rebuilding.
Next headline: Worldwide Plaza to house migrants? Should be plenty of space soon.
Lisa Abramowicz
@lisaabramowicz1
Law firm Cravath, which pays more than 50% of the rent at Worldwide Plaza, will move to Hudson Yards when its lease expires next year. Nomura, which contributes almost 30% of the building’s rent, wants to downsize. The building has a $1.2 billion mortgage
I think all three (Mercouris, Gromen, Luongo) are seeing what they want to see.
Alexander wants to see Russia win and the war end. Luongo wants to see entitlements slashed. I don’t know Gromen very well but it sounds like he favors guns and/or butter as long as nothing really changes.
It’s not going to stop until something breaks. And once again we little people will be left holding the bag and picking up the pieces. What’s that old saying about trying to avoid being stomped on when elephants are fighting? That’s us.
Just for comparison, in 1983 we bought our first house at 14% interest rate. During subsequent years, including moving to a larger home, we were never below 7.5% until about 2011, if I remember correctly. The "covid" mortgage rates dropped us down around 3%. At those higher rates we had to work 3 jobs between us to keep up. So I guess the biggest factor now are the actual prices being triple what they were in the 1980"s. At those higher rates back in the 1980's we never made much progress on the actual principle, it was all interest.
Can totally identify. My wife and I were over the moon when we got 6-1/2% in the mid 80s. We felt like a huge weight had been taken off our backs. The difference is decades of increasing debt. Now we're in a debt trap and they're spending like there's no tomorrow.
Also at least for us, we can never get the mortgage paid off due to endless repairs of major systems that are a part of being a homeowner. Just as we get ahead, another component breaks down or needs replacing. Seems to happen monthly !😊
Chinese economic events will get a vote, and THAT Election Day is fast approaching. And it’s a credit bubble that’s been hissing it’s leak for a while, sorta like March of 2007, and this is now Their August of 2008.
I hear so many conflicting accounts that I'm not sure what to think. I've long maintained that for a variety of fundamental reasons China's rise will slow. Demographics is one--aging work force, little in the way of social security net, still very large and poorly educated rural population, problems allocating water, etc. I've never bought into the China scare--too much like the Japan Inc. scare of the late 20th. We need to take care of business at home instead of waging war abroad.
I saw Simplicius and heard Luongo speculating today on a video that Ukrainian/NATO provocations could lead to Russian escalation--to include exploding a nuke over Kiev. I don't buy it. No country in the world is in a position to start a war with Russia. That includes the US, as you note. I'll be writing more on this later today.
Speaking as a Pole, the many EU flags amongst the crowd was concerning. It was a source of pride for me that my homeland has for the past few years shown Brussels the proverbial bird re refugees and other matters.
As Ian Miles Cheong stated (in the TWTR comments), Tusk's party is the pro-EU, pro UA bunch. What I had seen/heard earler was that the OTHER party--anti EU/UA bunch was ascendant, even in a coalition with some lesser group.
Thanks, L. Jones, for the excellent summary. Gromen is right to be concerned about long duration Treasuries, of course. You are right: the foreign sector has stopped buying, banks have stopped buying, and the Fed is selling. The volatility and liquidity problems with them just MIGHT cause the Fed to go from QT to QE eventually. Who knows? However, it is pretty snarky of him to harp on the Ukraine war with Powell. In the sense that the war spending is part of the fiscal spending and deficits problem, it is pertinent. But it is just one part of that problem and not a part that would be solved by Fed actions alone.
We are really looking at a spiraling fiscal spending and debt problem that has for years also included a bloated federal government, ridiculous levels of defense spending, entitlements for an aging and more sick population, support of greater and greater numbers of illegals, and on and on.
Until Washington takes major steps to deal with ALL of these problems, to point a finger at the Fed and blame them for all the monetary problems is sort of ridiculous. The Fed is just (finally) bringing these problems to the fore by trying to bring back a "real" economy.
On this point (the foreign sector has stopped buying, banks have stopped buying, and the Fed is selling) this may be of interest - if not already posted elsewhere.
This reviews a proposal only made at Jackson Hole. But assumes the Fed steps in and buys directly from the Treasury! May be after Powell's term ends?
"he believes Powell's interest rate policy is just wrong-headed and is causing (or has already caused) irreversible economic damage."
"he sees as wasteful spending that seems in conflict with the pressing need to get the US debt under control."
In his tweet Gromen presents the dilemma we face as the usual Guns v. Butter, but doesn't argue for any pressing need to make a choice or offer any solution. To all appearances he is in favor of continuing a wrongheaded and disastrously failing war. Instead he "smears" Powell as potentially causing the US to "lose the war to Russia". It's a wrongheaded view from the start, since realistic assessment of this pure war of choice was that we couldn't win it. He also appears to accept levels of spending as they are.
Economics and politics are inevitably intertwined. As far as I can see, in practice Gromen favors a continuation of the status quo--which can't continue.
Thanks for the additional info. I am curious just what he wants the Fed to do. Could you provide a link to the interview? Thanks in advance if you can.
"He wants the govt to get it's fiscal house in order ..."
But as Luongo maintains, that will only happen under extreme compulsion. That's the lesson of history. De Tocqueville saw it coming long ago. Democracy in America would last until the politicians realized they could bribe the citizenry. Once the dollar achieved reserve currency status the sky was the limit. Wanting the government to get its fiscal house in order is the height of futile wishful thinking--unless you have a plan and the means for implementing it. As the old saw has it, If wishes were horses beggars would ride. This was the great evil of the SCOTUS line item veto ruling--it removed any government check or balance from the budget process. That left the only pressure in the hands of a non-government actor who had the guts to apply it. After a succession of globalist new monetary idiots, the Fed finally got a chair who was serious about MAGA.
Powell is certainly no dumber than Luongo. He knows coercion is needed, and he is applying the only coercion that has a chance of working. Jamie Dimon is certainly no dumber than Luongo. He's clearly backing Powell and the rate policy. And he also sees the real problem is the American imperial enterprise.
I think Powell also well realizes he (i.e., the Fed) cannot meet its policy objectives alone and he has stated that numerous times. It should not be a shock to anyone that part of his intention is to work to impose fiscal restraint on Washington..
G'day Mark (Tom!) and my MIH friends! (Tom, I respect and enjoy your stuff, as with all here I ask you forgive the presumptive friendship-perhaps I should say kinship? But I appreciate you all).
The final line of your Post, Mark, is one all of we peons should pay heavy attention to. Inflation is the Tax upon which we get no vote; accountability is non-existent; those who've attempted to be personally responsible in their well being (finances, living circumstances, safety and etc.). We are THE folks who will pay for all the Gov't behaviors. You retired on fixed income or self-employed? Try giving yourself a raise to offset said Inflation. Result: we mortgage our future to try to maintain our standard of living.
My very best and kindest regards Mark. I am thrilled to see a broadening reach that is your dedication of sharing in MIH. Blessings all! (WrH)
Mark,
Good writeup. To clarify my points about the confusing tweet:
""What Luke is suggesting, rightly, is that can we afford this at elevated rates, i.e. 7%. = [The question that Luke is really asking is, Can we afford this--i.e., entitlements and war--at elevated rates, like 7%?] No, clearly not with the current paradigm.""
Your interpretation is correct, in that is what I meant.
The end game here is one that Luke is simply not considering... throwing gold out on the yield curve post-fiscal reform to limit US dollar liabilities while encouraging investment in US Treasuries (i.e. a gold redemption clause).
This is an idea that goes back 20 years to Jim Sinclair. It's a real option. I didn't want to get into it with Luke on this point.
Thanks for helping the discussion along.
Thanks, Tom. I can't pretend to understand it all, but I'll be trying to write something up about a recent Dimon interview in which he cites our war on Russia as the biggest danger, bigger than recession. It seemed to me that, while treading carefully, he's telling DC: Hey, get this over with. And he surely knows that means, Accept that you screwed up and were defeated. We've gotta move on and clean up our own mess.
I watched that interview with Dimon this morning. My take is that Ukraine is something he wants over and done with. He didn't show much conviction when saying 'and I hope they win...' or however he phrased it.
It's obvious he wants to get on with the rebuilding.
Yeah, I took that to be pure boilerplate. He wasn't going to go out on the Russia Hoax/Putin's poodle limb. But as for rebuilding, Putin gets a say!
Next headline: Worldwide Plaza to house migrants? Should be plenty of space soon.
Lisa Abramowicz
@lisaabramowicz1
Law firm Cravath, which pays more than 50% of the rent at Worldwide Plaza, will move to Hudson Yards when its lease expires next year. Nomura, which contributes almost 30% of the building’s rent, wants to downsize. The building has a $1.2 billion mortgage
crainsnewyork.com
Worldwide Plaza faces 'outsized losses' as a big law firm and brokerage house depart
The tower’s majority owner is a landlord in liquidation; SL Green and RXR Realty also own stakes.
2:15 PM · Oct 2, 2023
I think all three (Mercouris, Gromen, Luongo) are seeing what they want to see.
Alexander wants to see Russia win and the war end. Luongo wants to see entitlements slashed. I don’t know Gromen very well but it sounds like he favors guns and/or butter as long as nothing really changes.
It’s not going to stop until something breaks. And once again we little people will be left holding the bag and picking up the pieces. What’s that old saying about trying to avoid being stomped on when elephants are fighting? That’s us.
Just for comparison, in 1983 we bought our first house at 14% interest rate. During subsequent years, including moving to a larger home, we were never below 7.5% until about 2011, if I remember correctly. The "covid" mortgage rates dropped us down around 3%. At those higher rates we had to work 3 jobs between us to keep up. So I guess the biggest factor now are the actual prices being triple what they were in the 1980"s. At those higher rates back in the 1980's we never made much progress on the actual principle, it was all interest.
Can totally identify. My wife and I were over the moon when we got 6-1/2% in the mid 80s. We felt like a huge weight had been taken off our backs. The difference is decades of increasing debt. Now we're in a debt trap and they're spending like there's no tomorrow.
Also at least for us, we can never get the mortgage paid off due to endless repairs of major systems that are a part of being a homeowner. Just as we get ahead, another component breaks down or needs replacing. Seems to happen monthly !😊
Chinese economic events will get a vote, and THAT Election Day is fast approaching. And it’s a credit bubble that’s been hissing it’s leak for a while, sorta like March of 2007, and this is now Their August of 2008.
It’s global deflation, in spades.
I hear so many conflicting accounts that I'm not sure what to think. I've long maintained that for a variety of fundamental reasons China's rise will slow. Demographics is one--aging work force, little in the way of social security net, still very large and poorly educated rural population, problems allocating water, etc. I've never bought into the China scare--too much like the Japan Inc. scare of the late 20th. We need to take care of business at home instead of waging war abroad.
I saw Simplicius and heard Luongo speculating today on a video that Ukrainian/NATO provocations could lead to Russian escalation--to include exploding a nuke over Kiev. I don't buy it. No country in the world is in a position to start a war with Russia. That includes the US, as you note. I'll be writing more on this later today.
May or may not be true. Police estimate is 100k.
Speaking as a Pole, the many EU flags amongst the crowd was concerning. It was a source of pride for me that my homeland has for the past few years shown Brussels the proverbial bird re refugees and other matters.
As Ian Miles Cheong stated (in the TWTR comments), Tusk's party is the pro-EU, pro UA bunch. What I had seen/heard earler was that the OTHER party--anti EU/UA bunch was ascendant, even in a coalition with some lesser group.
I need a scorecard for PL politics.
Thanks, L. Jones, for the excellent summary. Gromen is right to be concerned about long duration Treasuries, of course. You are right: the foreign sector has stopped buying, banks have stopped buying, and the Fed is selling. The volatility and liquidity problems with them just MIGHT cause the Fed to go from QT to QE eventually. Who knows? However, it is pretty snarky of him to harp on the Ukraine war with Powell. In the sense that the war spending is part of the fiscal spending and deficits problem, it is pertinent. But it is just one part of that problem and not a part that would be solved by Fed actions alone.
We are really looking at a spiraling fiscal spending and debt problem that has for years also included a bloated federal government, ridiculous levels of defense spending, entitlements for an aging and more sick population, support of greater and greater numbers of illegals, and on and on.
Until Washington takes major steps to deal with ALL of these problems, to point a finger at the Fed and blame them for all the monetary problems is sort of ridiculous. The Fed is just (finally) bringing these problems to the fore by trying to bring back a "real" economy.
On this point (the foreign sector has stopped buying, banks have stopped buying, and the Fed is selling) this may be of interest - if not already posted elsewhere.
This reviews a proposal only made at Jackson Hole. But assumes the Fed steps in and buys directly from the Treasury! May be after Powell's term ends?
https://rumble.com/v3m233g-presenting-the-feds-perfect-plan-for-u.s.-dollar-oblivion.html
"he believes Powell's interest rate policy is just wrong-headed and is causing (or has already caused) irreversible economic damage."
"he sees as wasteful spending that seems in conflict with the pressing need to get the US debt under control."
In his tweet Gromen presents the dilemma we face as the usual Guns v. Butter, but doesn't argue for any pressing need to make a choice or offer any solution. To all appearances he is in favor of continuing a wrongheaded and disastrously failing war. Instead he "smears" Powell as potentially causing the US to "lose the war to Russia". It's a wrongheaded view from the start, since realistic assessment of this pure war of choice was that we couldn't win it. He also appears to accept levels of spending as they are.
Economics and politics are inevitably intertwined. As far as I can see, in practice Gromen favors a continuation of the status quo--which can't continue.
Thanks for the additional info. I am curious just what he wants the Fed to do. Could you provide a link to the interview? Thanks in advance if you can.
Thanks!
"He wants the govt to get it's fiscal house in order ..."
But as Luongo maintains, that will only happen under extreme compulsion. That's the lesson of history. De Tocqueville saw it coming long ago. Democracy in America would last until the politicians realized they could bribe the citizenry. Once the dollar achieved reserve currency status the sky was the limit. Wanting the government to get its fiscal house in order is the height of futile wishful thinking--unless you have a plan and the means for implementing it. As the old saw has it, If wishes were horses beggars would ride. This was the great evil of the SCOTUS line item veto ruling--it removed any government check or balance from the budget process. That left the only pressure in the hands of a non-government actor who had the guts to apply it. After a succession of globalist new monetary idiots, the Fed finally got a chair who was serious about MAGA.
Powell is certainly no dumber than Luongo. He knows coercion is needed, and he is applying the only coercion that has a chance of working. Jamie Dimon is certainly no dumber than Luongo. He's clearly backing Powell and the rate policy. And he also sees the real problem is the American imperial enterprise.
I think Powell also well realizes he (i.e., the Fed) cannot meet its policy objectives alone and he has stated that numerous times. It should not be a shock to anyone that part of his intention is to work to impose fiscal restraint on Washington..