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The US is in a liquidity trap. There is no shortage of capital or lending capacity, but there is a shortage of  borrowers who are both creditworthy and willing. In such a situation those with cash know that others with cash will be putting money into the stock market, so they do also. This works until it doesn't.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun May 18th, 2014 at 05:20:32 PM EST
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See also: At big-ticket dinners, a blunt Bernanke sounds theme of low rates (May 17, 2014)
At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime, one source who had spoken to the guest said.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun May 18th, 2014 at 06:05:27 PM EST
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So the solution is to pump money to borrowers, so to disguise but make the apartheid between Financial PeopleTM and Working/Non-Working Poor deeper?

Piketty pinpointed the core capitalism predicament better than Keynes. On one hand, the QEs are there to provide usual big financial returns without bothering with productive economy circulation. On the other hand, the Financial Power is at its peak, and governments, institutions are working hard to maintain it. Or to converting it to ages-long social domination.

Be it with generally misguided interpretations, check the topics at Zero Hedge:

World's unsold cars stockpile in thousands

Meat and seafood becoming scarce, prices are to rise

Fukushima seawater radiation rises to new all time high

College graduates with debt "worth less" than high school grads, will get worse

There is no future as we know it.

by das monde on Mon May 19th, 2014 at 02:11:10 AM EST
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Jalopnik: That Zero Hedge Article On Unsold Cars Is Bullshit (May 18, 2014)
It is an admittedly appealing idea to think that automakers, unable to sell cars, are just wildly producing them and then dumping them around the world in an endless cycle of mass production hysteria. So much of the modern economy seems senseless and inexplicable, which is why an article like this seems to give some credence to the feeling many of us have inside that something is terribly wrong.

The visuals are strong, the headline is clear, and you almost don't have to read the article to viscerally understand the problem. I, more than anyone, get the appeal of this story because it seems to largely rip off an article I wrote -- including the images and headline -- more than five years ago (which itself was largely a rehash of a Guardian article).

...

There's even an update in the post where either the author, Vincent Lewis, or Tyler Durden -- ZH's mysterious author -- realized there was a fault in their knowledge and they say this:

UPDATE: Currently May 16th, 2014, all of these cars at the Nissan Sunderland test track have disappeared? Now I don't believe they have all suddenly been sold. I would guess they may have been taken away and recycled to make room for the next vast production run.
Well, if you don't want to believe that in five years they couldn't sell a few hundred cars at a price above the recycle rate then I can't help you, because you must be so paranoid you think that Fudgie The Whale is the secret symbol of the illuminati.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon May 19th, 2014 at 03:38:22 AM EST
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That Zero Hedge Article On Unsold Cars Is Bullshit
Bottom line: This is paranoid nonsense that has the tiniest bits of reality inside of it, like a giant turd sprinkled with truffles. My advice? Don't swallow it.

Very often the case with Zero Hedge.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon May 19th, 2014 at 03:53:59 AM EST
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(h/t Drew, BTW)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon May 19th, 2014 at 04:08:58 AM EST
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With the Fed buying what are probably CDOs and buying them at face value, or par, they are effectively trading new high powered money for trash at 50 cents on the dollar. So the TBTF entity gets cash for its illiquid asset. If, as likely, the operation is a repo the Fed, in theory, could demand that the recipient buy the 'asset' back. This probably doesn't constrain the recipient of QE because the exercise of that right by the Fed on any significant scale could bankrupt the bank, and, in any case, the whole point of the exercise was to help the financial sector.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 19th, 2014 at 12:33:14 PM EST
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Private lending isn't going into housing, in any case:

U.S. private lenders not ready to replace Fannie, Freddie: regulator | Reuters

(Reuters) - The regulator of government-controlled mortgage finance firms Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) said on Sunday he would not oppose them having a smaller presence in the market but private capital had to be ready to take over first.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon May 19th, 2014 at 02:30:21 AM EST
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Part of the free capital is creating a start-up bubble.  Such as this:

San Francisco-startup and bane of taxi drivers Uber is in talks for funding that would value the startup at an astronomical $10bn.

Uber's Business Plan is not only, frankly, insane it is illegal.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon May 19th, 2014 at 01:19:34 PM EST
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When the regulators turn a blind eye to the activities of the rich, only scams that are not big enough is illegal.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon May 19th, 2014 at 03:06:18 PM EST
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...They're a cab company with an app. That is a viable business model. It's not a billion dollar one.
by Thomas on Wed May 28th, 2014 at 01:43:42 AM EST
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