#clueless

Justin Trudeau explains his plastics ban

Canadian PM Justin Trudeau put forward his case for cutting down on plastics with such eloquence. How could one not be sold?

Note CM has discussed the stupidity of plastic bag bans here.

Ocasio-Cortez took bank bashing to new levels

Congresswoman Alexandria Ocasio-Cortez took bank bashing to new heights yesterday. While questioning Wells Fargo CEO Timothy Sloan she suggested that the banks that financed fossil fuel companies which cause environmental damage should pay for cleanups. Sloan correctly said WF doesn’t “operate” the pipelines of their customers.

She also accused Sloan of Wells Fargo lending to publicly listed corrections companies which operate ICE detention centers which detain children.

So basic is her level of understanding of how banks work, perhaps she might understand the ridiculousness of her own attacks better if she is told she has to accept financial punishment for any failures that are a result of implementing the Green New Deal.

The Democratic leaders really need to rein her in before she damages the brand any further. Left to her own devices she’ll provide hours of video gaffes come election time. Attacking Sloan had no basis let alone substance.

Meanwhile serial social justice warrior Trudeau hits new poll lows

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Meanwhile, as the supposedly most hated and despised bully of the West is likely to see his approval move sharply higher over North Korea, serial appeaser and social justice warrior Prime Minsiter Trudeau of Canada saw his approval rating sink to 33%, his lowest number ever recorded.  A Forum poll also noted a majority of the voters surveyed (43%) said they would support the Conservatives while 30% believe they would back Trudeau’s Liberal party.

Based on the poll results, Forum Research predicts a Conservative majority government taking 207 seats. The Liberals would take 110 seats, while the NDP would likely garner 23 seats. The Bloc Quebecois would end up with six seats and the Greens with two.

It is surprising to see Trudeau’s slump when he has the full support of people like his Environment Minister Catherine “Climate Barbie” McKenna who said recently not only will she refuse to debate with those that disagree with her on climate change but that Canadians have a $30 trillion (yes you read right) opportunity by 2020 because of the Liberal’s carbon tax and associated environmental policies. Who wouldn’t vote for a party that can 20-bag an economy in 2 years?

If it does go pear-shaped with mathematics like that she can always sign up for the Greens leadership.

Funniest thing I’ve heard all week if it wasn’t so serious

unemp“The FOMC is not a body that suffers from group think” – Fed Chair Janet Yellen. Normally I have to wait to read the FOMC Minutes some 3 weeks after the FOMC meeting to be stunned at the ridiculous language used to cover up the fact they have no idea. I reported last time that the Fed said “The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that both monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones.”

In the press conference Yellen said “Why didn’t we raise”? It does not reflect a lack of confidence in the economy…let me try to set out again…we are generally pleased with how the US economy is doing… evidence is that the economy is expanding more strongly…we don’t see the economy as overheating now…we continue to progress toward our objectives”.” The last sentence beggars belief. If the FOMC keeps lowering forecasts I would argue the objectives are progressing toward you. That’s right you have to cut forecasts to make it sound as though you have credibility.

If things are so peachy why has the Fed lowered its 2016 and  long term GDP growth target to 1.8%? One reporter sensibly asked “if you’re cutting growth predictions, where is the inflation coming from?”  Yellen suggested that the risk of labour market tightness with a healthy hiring outlook but lower productivity.

I thought the use of the word “overheat” by Yellen several times was mind boggling. If the US economy is at risk of overheating on 0.37% rates and you’ve just cut forecasts to 1.8% long term growth, what does that suggest for a normal operating GDP level? There is no way anyone can take central bankers seriously. The language she used in the press conference was a total fiction.

I updated the following chart on US unemployed persons which shows ominous signs of picking turning points of economic weakness over the last 60+ years. Since May 2016, the number is up over 400,000. It will be interesting to see if the September labour stats due in early October show unemployed rising north of 8mn. We’ll know soon enough.

If the Fed were surgeons you’d never want them operating on you

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In Fed Chairman Janet Yellen’s speech at  Jackson Hole she said the following:

“The shaded region, which is based on the historical accuracy of private and government forecasters, shows a 70 percent probability that the federal funds rate will be between 0 and 3-1/4 percent at the end of next year and between 0 and 4-1/2 percent at the end of 2018. 2 The reason for the wide range is that the economy is frequently buffeted by shocks and thus rarely evolves as predicted. When shocks occur and the economic outlook changes, monetary policy needs to adjust. What we do know, however, is that we want a policy toolkit that will allow us to respond to a wide range of possible conditions.”

It seems Yellen is trying to suggest a consensus of “private and government” forecasts. Does the Fed not trust its own research that it needs to justify a gap wide enough to fit a 747 through? It’s concerning. It’s group think. 70% confidence in statistical terms is effectively zero. Statisticians usually talk of 95% and 99% confidence intervals. 70% is a joke and basing it on a consensus makes it even more ridiculous. If I gave such forecasts as a financial analyst I’d be fired. If the Fed were surgeons you’d never get them to operate on you.

How could anyone possibly think the Fed has the first clue what it is doing? Japan has been going through typhoons recently and the Fed chart must have taken its inspiration from the Japanese Buteau of Meteorology.

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The Fed’s number one role is to drive confidence in business and consumer behaviour. The US economy is at stall speed. The last three quarters have nose dived. Business investment is rock bottom. as l’ve mentioned before, businesses invest because they see a cycle, not because rates are low.

Yellen’s went on:

“The Global Financial Crisis and Great Recession posed daunting new challenges for central banks around the world and spurred innovations in the design, implementation, and communication of monetary policy.”

So again Yellen only proved central banks have colluded in their group think. “Challenges”? “Innovations in communication”? That almost topped  the comment from the FOMC minutes in July where it said “monetary and fiscal policy is far better prepared for large positive shocks than negative ones”

Then there was this cry for help:

“As I will argue, one lesson from the crisis is that our pre-crisis toolkit was inadequate to address the range of economic circumstances that we faced. Looking ahead, we will likely need to retain many of the monetary policy tools that were developed to promote recovery from the crisis. In addition, policymakers inside and outside the Fed may wish at some point to consider additional options to secure a strong and resilient economy.”

I’d argue the policy tool kit is more inadequate now than in 2008.  Moreover even the Fed thinks it might be too optimistic

“Of course, this analysis could be too optimistic. For one, the FRB/US simulations may overstate the effectiveness of forward guidance and asset purchases…Finally, the simulation analysis certainly overstates the FOMC’s current ability to respond to a recession, given that there is little scope to cut the federal funds rate at the moment”

In closing perhaps we should be worried that the group thinking central banks are likely to depend on each other for more clueless guidance such as broadening the types of toxic waste it can shove on its balance sheet:

“On the monetary policy side, future policymakers might choose to consider some additional tools that have been employed by other central banks, though adding them to our toolkit would require a very careful weighing of costs and benefits and, in some cases, could require legislation. For example, future policymakers may wish to explore the possibility of purchasing a broader range of assets.”

We should be gravely concerned when we read between the lines. Zero confidence and it is being more widely understood by the day.