by Mish

Bove: The hoped-for cut in interest rates this month will do nothing to bring money back into the U.S. financial markets.
Mish: Agree

Bove: Lower interest rates will send the dollar into a tailspin and wreak havoc in the job market.
Mish: The jobs market is toast anyway.

Bove: Cutting rates will not lure investors back into troubled markets.
Mish: Agree

Bove: Investors and banks already have the cash to buy risky loans and investments, he said.
Mish: Disagree strongly. Banks and lending institutions are essentially “all in”. In fact, with leverage they are more than “all in” as a Duration Mismatch is Causing Severe Stress Everywhere Banks are very short of cash as what we are seeing is tantamount to margin calls in illiquid assets. But as Bove suggests, borrowing from the Fed at a marginally lower rates does not fix that problem.

Bove: “There is no liquidity problem, but a serious crisis of confidence.”
Mish: Disagree strongly. Liquidity (in the form of credit) and confidence are two sides of a double headed coin as well as two sides of a double tailed coin. Confidence and liquidity are both cowards that flee when problems arise. As long as there was confidence in housing there was plenty of credit for loans. Once confidence in housing dropped, liquidity did too. The same scenario is now playing out in junk bonds and LBOs. There is no liquidity without confidence and nor is there confidence without liquidity. Overconfidence and anything goes liquidity work hand in hand. One look at covenant lite deals, junk funding for stock buybacks, and enormous LBOs that make no economic sense should be proof enough. When confidence died, so did liquidity for the deals.

Bove: The Fed cannot reduce fear by stimulating inflation.
Mish: Agree

Bove: “It is illogical to assume that holders of cash will have a strong desire to lend money at low rates in a currency that is declining in value when they can take these same funds and lend them at high rates in a currency that is gaining in value.”
Mish: Agree

Bove: “By lowering interest rates the Federal Reserve will not stimulate economic growth or create jobs.”
Mish: Agree

Bove: The solution to this crisis is to allow people who cannot repay their debts to default and allow the companies that issued bad loans to fail.
Mish: Bingo. I could not possibly agree more.

Mike Shedlock / Mish/

Margin Debt Hits Record High Coinciding With Extreme Consumer Confidence: Analysts Say “Don’t Worry”

The Wall Street Journal reports Margin Debt Hit an All-Time High in February. Given that Margin debt has a history of peaking right before financial collapses this seems like a warning to me but analysts say it’s different this time.

Fed Minutes Show Reliance on Consumer Confidence, Sentiment, Soft Data: Balance Sheet Normalization

Schedule Set (It Won’t Be Met). The Fed released the Minutes of June 13-14 FOMC meeting today.

Grim Election Map for Trump? Fox Analyst vs. RCP vs. Mish

Juan Williams, political analyst for Fox News Channel says Electoral Map Looks Grim for Trump.

BitGold vs. SchiffGold: Facts vs. Fiction

In a recent article, Peter Schiff blasted Bitgold as being a “Secret Taxation Time Bomb“.

Do You Believe There is Food Price Deflation? Mish vs. Consensus

Here’s the question of the day: Do you believe there is food price deflation?

M1 Money Supply vs. Real GDP

Here are a few interesting charts of M1 money supply vs. Real GDP/10 from reader WendyBG.

France vs. Sydney Australia Property: What Will $600k to $1M Buy?

Here’s an article that came my way from reader Robert who lives in Australia.

Consumer Confidence: Decidedly Lagging Indicator

Consumers have not been this confident since October 2000. Hooray?

Housing Liquidity Crisis Coming: Debt Deflation Follows

A liquidity crisis in housing is on the way. Non-banks are at the center of the storm.