Time for a cocktail ...

OPEC Presents: QE4 and Deflation

Thinking plummeting oil prices are good for the economy is a mistake. They instead, as I said only yesterday in The Price Of Oil Exposes The True State Of The Economy, point out how bad the global economy is doing. QE has been able to inflate stock prices way beyond anything remotely looking fundamental, but energy prices have now deflated instead of stocks. Something had to give at some point. Turns out, central banks weren’t able to inflate oil prices on top of everything else. Stocks and bonds are much easier to artificially inflate than commodities are.

The Fed and ECB and BOJ and PBoC may of course yet try to invest in oil, they’re easily crazy enough to try, but it will be too late even if they did. In that sense, one might argue that OPEC – or rather Saudi Arabia – has gifted us QE4, but the blessings of the ‘low oil price stimulus’ will of necessity be both mixed and short-lived. Because while the lower prices may free some money for consumers, not nearly all of the freed up ‘spending space’ will end up actually being spent. So in the end that’s a net loss as far as spending goes.

The ‘OPEC Q4? may also keep some companies from going belly up for a while longer due to falling energy costs, but the flipside is many other companies will go bust because of the lower prices, first among them energy industry firms. Moreover, as we’re already seeing, those firms’ market values are certain to plummet. And, see yesterday’s essay linked above, many of eth really large investors, banks, equity funds et al are heavily invested in oil and gas and all that comes with it. And they are about to take some major hits as well. OPEC may have gifted us QE4, but it gave us another present at the same time: deflation in overdrive.

You can’t force people to spend, not if you’re a government, not if you’re a central bank. And if you try regardless, chances are you wind up scaring people into even less spending. That’s the perfect picture of Japan right there. There’s no such thing as central bank omnipotence, and this is where that shows maybe more than anywhere else. And if you can’t force people to spend, you can’t create growth either, so that myth is thrown out with the same bathwater in one fell swoop.

http://www.theautomaticearth.com/opec-presents-q4-and-deflation/

U.S. auction of Silk Road bitcoins draws 27 bids

(Reuters) - The U.S. Marshals Service on Thursday received more than two dozen bids for 50,000 bitcoins seized from the alleged owner of Silk Road, an Internet black-market bazaar on which authorities say drugs and other illegal goods could be bought.

Lynzey Donahue, a Marshals Service spokeswoman, said the government had 11 registered bidders and 27 resulting bids. Winning bidders for the bitcoins, valued at $18.6 million, will be notified on Friday.

It was the Marshals Service's second such auction following one in June for almost 30,000 bitcoins seized during a raid on Silk Road in 2013.

To date, the government has recovered 173,991 bitcoins while pursuing the case, including 144,336 from computer hardware belonging to Ross Ulbricht, the alleged creator of the underground website.

http://www.reuters.com/article/2014/12/04/us-bitcoin-auction-idUSKCN0JI1FB20141204

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Great investment, bid on something that lost half its value in the last year ...

Right to Work is WRONG for EVERYONE ...