Luongo Takes A Victory Lap

And why not? So far the Fed’s interest rate hike program is playing out in accordance with his predictions. Here are two tweets from earlier in the week, following the latest hike:

Tom Luongo (Give Deflation a Chance!) @TFL1728

Hmmm.... You don't say?

zerohedge.comFOMC Hikes By 50bps, Hawkishly Signals Rates Will Go Higher-For-LongerThe Fed’s new dotplot signals a median forecast of 5.1% in 2023 (more hawkish than expected)...

Of course the usual Wall St. suspects are squealing that Powell is ignoring their data:

Tom Luongo (Give Deflation a Chance!) @TFL1728

Cry MOAR Nublets... This isn't about saving your job at UBS, or fighting inflation that the Fed can't cure. You can smell the fear, folks. When this finally sinks in that's when the fun really begins.

zerohedge.comFed Veteran: Powell Ignored The Latest CPI Data, Latest FOMC Forecast Is Bogus“Very few of them would have probably gone ahead and updated their submissions and really worked out what it would’ve taken in December to hit that target.”

But the key here is that Powell is not talking pivot. He’s still talking like a hawk. Rates are already nearing the range Luongo has been predicting—and may approach 6% very soon.

Here’s the link to Luongo’s long form victory lap:

Tom Luongo (Give Deflation a Chance!) @TFL1728

Rate Hikes, Recessions and the Death of Spiritual Boomerism

tomluongo.meRate Hikes, Recessions and the Death of Spiritual Boomerism - Gold Goats ’n GunsJay Powell finally got Christine Lagarde to capitulate. Now the Spiritual Boomers in the Financial Press will have to face reality.

What Luongo means by “Spiritual Boomerism” is the childish belief that we can somehow build a world without risk—that’s the fantasy that Davos uses to delude the masses. Here are just a few excerpts, which revolve around Luongo’s views of Powell as a person—because, at this level, policy is personnel:

[Powell’s] a private equity guy with a real background in deal-making and assessing risk when his money or his client’s is on the line.

So, expecting him to run the Fed the way Yellen and Bernanke did is a simply a bad assumption.

Powell’s statement on Wednesday was no less hawkish at 4.5% than his statement at Jackson Hole in August before he raised rates by 75 basis points to 3.25% in September. And yet, in the days leading up to Wednesday’s announcement and even afterwards the talk was still all about how he can’t go much higher; this is the last hike before he stops.

…

It’s all been a massive leveraged loan bubble built on trillions in the most egregious spending of future seed corn in the history of the planet. No wonder Climate Change and ‘sustainable growth’ are such an easy sell to the Millennials, they’ve never really known anything other than the debt casino.

Here, Luongo takes on the Powell bashers, like CTH, who argue that Powell is deliberately crashing the economy to set us up for a Davos takeover. Luongo has long argued that it’s the exact opposite that Powell is doing—crashing the EU. For those who ask, Where was Powell a year ago, Luongo replies that Powell had to lay low to get reappointed so he could embark on this adventure:

To bitch now about Powell being behind the inflation curve is just churlish back seat driving.

As I pointed out time and again, Powell’s reappointment was the subject of intense political struggle on Capitol Hill. He was only reconfirmed 6 months after he should have been and was under direct fire before that.

The policy differences between “Biden” and Powell placed “Private Equity Jay” behind the curve not because he was too chickenshit to start sooner but because “Biden” needed an excuse to not re-nominate him as FOMC chair. Raising rates in anticipation of incoming inflation while wrangling over “Build Back Better” and its $6+ trillion in spending would have given us Lael Brainard, MMT and UBI to eternity.

…

We had the chance in 2008 to flush this system and chose not to. We papered everything over and created the most perverse version of an economy in 2000 years.

In this next bit Luongo is essentially arguing that Powell is attempting a repudiation of the entire history of central bank managed economies since WW2:

Powell didn’t embark on this path to salvage his personal credibility. He’s worth nine figures, FFS. This is something fundamentally different that that.

My best guess is that it is exactly what I’ve said it was from the beginning, a fight for the future of capital formation. Either we return somewhat to it being handled by private capital markets or we reach the end state the past 80 years and the apotheosis of central banking.

…

Powell’s not coming to our rescue. The Fed isn’t our friend. The Fed Put was only a slightly dumber than Climate Change being caused by anthropogenic CO2.

The quicker these bad ideas die the quicker we can face our future, bleak though it may be, honestly. And maybe we can put away the childishness of thinking a world without risk is in anyone’s best interests.

There’s lots, lots more. However …

Rather than rehash Luongo’s Theory of Everything in the context of the latest rate hike, I want to do something different.

Earlier this evening commenter Ploinus Almoinus brought to my attention a lengthy comment at CTH that reads like it was written by a Luongo acolyte. I’m going to paste that comment in here because it discusses Luongo’s thinking (without naming him) in the context of the Trump/DeSantis divide. CTH, of course, has been sounding alarms over DeSantis being bought by Wall St. CTH refuses to acknowledge the possibility that Wall St. and the Fed—Powell and the big banks in his corner (especially JPMorgan Chase)—have split. We already have seen strong hints from Jamie Dimon that he’s backing DeSantis because he doesn’t believe Trump is part of the solution. Dimon is also backing Powell. Dimon’s JPMorgan is the most powerful private commercial bank in the world, and Dimon clearly views Davos as an existential threat.

Here we go. Read this as a contribution to the past day or so’s discussions on Trump and the future of American politics, but from a strictly monetary point of view. First, however, a word of caution. The author speaks of “Wall St.” as if it is monolithically opposed to Davos. That is not the case, and Luongo certainly doesn’t suggest that. Rather, there is a split in the financial sector, and what the commenter refers to as Wall St. is more properly the Fed and its influential backers who are in an existential struggle with Davos.

Pew-Anon

 December 15, 2022 12:48 am

Let’s be completely honest about our situation.
 
We essentially have a choice between a seemingly on-point but owned DeSantis and a seemingly unowned but failed Trump, who proved himself not up to the task of his own MAGA agenda.
 
And, because of where I’m writing, I must clarify that by “failed”, I mean no personal disparagement on Trump. I give him full benefit of the doubt that he was sincere about his original campaign message and all the credit in the world for daring to try.
 
But the sad reality is that, apart from three SCOTUS justices and a handful of legislative victories (oh, and keeping Hillary out of office), there was nothing of significance accomplished in his administration that has not been completely dismantled and undone by the coup d’etat of 2020. Though sincere in his goals, he lacked sufficient knowledge of how to operate the levers of power in his control and sufficient knowledge of his true enemies. In the end, he got played “six-ways-from-Sunday” just like Chuckie said. Though he cannot be faulted for trying, and we likewise cannot be faulted for wanting him to succeed, in hindsight he was not up to the task and we were mistaken in believing he, or any one person, might be. The person who is both willing and able to deliver the MAGA agenda solely from the office of President probably does not exist.
 
That’s no slight on Trump. It’s just reality; a reality that will no doubt be unpopular here, but reality no less.
 
So that leaves us in the situation stated above. In other words, we don’t have a good choice. Again, reality. And speaking of so much reality, we would do well here to remind ourselves this is how the world “really” works. We don’t get good choices, or any choice at all, ever, except in extremely rare historical circumstances like 1776, where that choice was obtained with the sacrifice of life, fortune, and sacred honor of all involved. And unless we approach each and every election with the same mindset and the same willingness to make the same sacrifice if necessary, we can have no real expectation of maintaining that choice.
 
In coming to terms with our lack of choice going forward, it might be helpful to perhaps update our map of the current world. This web site has, for many years, done exemplary work in chronicling the depredations of the Wall Street class and their war on Main Street. Righty so. And during that whole time, the interests of the various factions comprising the Globalization project, of which Wall Street was a key member, were all aligned. This Globalism project was to be the framework for a new world order that would be “built back better” after the inevitable and controlled collapse of the of the old order.
 
Well, it would seem we are at the functional end of the old order, and upon arriving at this point, it would further seem that the once aligned interests of certain key members of the Globalization project have now actually diverged, and existentially so. The key diverging member is of course Wall Street, and from whom they diverge is Davos. For having reached the end, the Euro-centric interests of Davos have determined they want the monetary system of the new globalized order to be a digital currency issued direct to the public, and to the entire global economy, from a single central bank — the IMF — under their exclusive control. This, among other radical revisions, would eliminate the entire global private banking industry, which would of course eliminate the private commercial banks of Wall Street. Hence the existential divergence of Wall Street interests.
 
In the past it was straightforward to chronicle Globalism as a monolithic movement. Now, it is no longer monolithic. This divergence, and properly mapping it onto the current world is, I believe, crucial to our understanding of the upcoming 2024 election.
 
In short, DeSantis is likely the selected candidate of the diverging Wall Street interests. Yes, the same Wall Street that a decade ago apparently had no problem with the extinction of the American middle class for the cause of Globalism, but now finds itself in the extinction crosshairs of Davos, again for the cause of Globalism. The irony. But regardless, it would appear, through the yeoman’s work of this site, that DeSantis is their guy to represent their interests.
 
In the prior world map of monolithic Globalism, this would of course be a bad thing. But remember, Wall Street is now in an existential fight, essentially the same sort of existential fight of the American middle class, the upshot being that in 2024 the interests of Wall Street and Main Street might, if only vaguely, be aligned.
 
Concerning this existential fight, it will be a veritable battle of the gods, a “hurricane” as Jamie Dimon put it. This is an immensely precarious situation. It is no time for anyone who lacks knowledge of how to operate the levers of power. This is not to suggest DeSantis has such knowledge over and above Trump. But it is to suggest that the owners of DeSantis do have such knowledge, and they are confident DeSantis will follow orders in a way that Trump will not.
 
To put it in big picture terms, one wrong move going forward and we could find ourselves in a world of The Great Reset of the WEF and Davos. No one wants that, including Wall Street. But if Wall Street wins this “battle of the gods”, whatever comes out on the other side will, if nothing else, at least have the advantage of not being The Great Reset. Which brings us back to where the interests of Wall Street and Main Street may come into paradoxical alignment in 2024. Put another way, if Wall Street loses this fight, then Main Street loses. If Wall Street wins…well…at least Main Street doesn’t lose again, or lose so fatally.
 
And we cannot afford any more fatal mistakes, like Covid, which was a Davos-aligned operation. Another such event and Davos likely wins. And it is precisely Covid, and more particularly his ongoing stubborn adherence to the wrong side of this issue, where I have lost confidence in Trump. Again, I think he means well, but the preponderance of his shortcomings has demonstrated to me he is not up to the immensely precarious task at hand. There would have been room for his shortcomings in 2012 when he thought about running, but not now. Now, we find ourselves in a situation where, for the sake of Main Street and the rest of the burgeoning global middle class, Wall Street must not lose this existential fight against Davos. And for this fight, Wall Street has rejected Trump and chosen DeSantis.
 
Having said all this, none of it makes me happy. Rather is crushes my soul, like sacrificing life, fortune, and sacred honor. I of course would love for Trump to have succeeded. But the reality is he did not, and short of what seems an insurmountable correction of his current course, he will not. And it was probably unrealistic of us to expect any one man could thus succeed. So we find ourselves strange bedfellows with the giants on Wall Street at this precarious inflection point in world history. And if we survive along with Wall Street, we can perhaps on the other side slay them as well, as they ultimately deserve, if we are willing to make the same sacrifices as our Founders, which until now we have failed to make.
 
So I will be watching here as closely as anyone for the unique perspective on the Wall Street takeover of DeSantis, which honestly can be found nowhere else, though not for the simplistic conclusion of Trump-good-DeSantis-bad, but rather for a proper, sober, and indeed soul-crushing understanding of the hurricane that lies ahead, and the precarious path through.