intriguing talk at my sports club: former FedResve employee
beginning to believe this club has connected people
first the JPMorgan fraud rumor, now this guy
I had just finished a nice 3-mile run, entering a hot tub
one man sat in the large soothing tub, my reward
I usually start up even some chatty conversation
after talk of our workouts, this time I used some lame line like
"strange times at work these days, things are slowing down"
the guy sounded unusually bright and informed
I mentioned signs of deflation and inflation at the same time
he bit, confirming
I talked about goony CPI data, questionable USGovt data generally
he said something like
"most treated govt data is very suspect"
I told him I used to do Staples forecasting, being in charge of seasonality, which I know to be a main source of deception, if used dishonestly
he nodded
I mentioned something deeper, citing the Median CPI put out by the Cleveland Fed is a much more reliable and accurate measure of price inflation, but might serve as a future indicator rather than a current reading
he agreed, acknowledging awareness
I showed enthusiasm, then asked his line of work
he said
my name is RayH, and I work in a Forensic Financial Investigation unit
we work in investigations of white collar crime to reveal evidence hidden in databases and email, for instance
I used to work as an analyst in the Cleveland Federal Reserve for 20 years
it was a valuable experience for me, one I would not trade
now I am enjoying this forensic work much more, and it pays better
I was indeed impressed, nodded, and introduced myself
I said I have been watching the Fed from both a monetary/economic view, and a statistical view, having some friends in the past who were in Bureau Labor Stats, and now one in Office Mgmt Budget
I mentioned that I find a great deal of fallacious reliance upon heretical assumptions for economic policy, echoed by Fed statements
like inflation producing levels of economic growth that fails to factor in Mexican labor
he agreed completely
I told him about how the USGovt comes out with productivity numbers that defy all logic, due to absurd multipliers
he said
let me tell you something about the Fed
the Cleveland Fed has ALL of the quantitative analysis expertise inside the Federal Reserve system with 68 PhD's in all
the Fed Board has almost zero understanding of technology, nor its consequent productivity influence
an intense rivalry exists internally, between the Cleveland Fed and the others, especially the Board Chairman
they hardly ever yield to Cleveland on anything, and offer poorer analysis as a result
the lead analysts throughout the Fed dont even employ emails
ANYTHING GREENSPAN OR THE FED SAYS ABOUT PRODUCTIVITY IS TOTAL NONSENSE, BASED UPON NO UNDERSTANDING, MAINLY SPOKEN FOR POLITICAL REASONS
THEIR PRODUCTIVITY DATA IS TO BE TOTALLY DISMISSED
I said I read of their use of 18x multipliers to adjust for faster PC processors, faster computer servers, faster access of stored data, faster response of internet requests
he agreed it was total crapp
I cited economist Roach who alerted me to the 18x multiplier
he said "Roach is real real good people"
I told him I didnt trust seasonal adjustments of Durable Goods, Jobs, or much else
then I turned to JPMorgan
I told him of the rumor I heard from a friend who had a college chum in NYCity FannyMae, who claims a large-scale fraud investigation is underway against JPMorgan by US and NY Attorneys General
the fraud amount could be between $20 and $50 billion
he said "I would not be surprised, they are into all kinds of shady stuff"
I asked if he were aware personally of the investigation
he said no, but did say this
JPMorgan would very easily commit fraud to hide their past deeper crimes, involvement with Enron and Anderson... so failing to set aside $20-50 Billion into loan loss reserves would fit right in... let me say this clearly, JPMorgan is not bigger than the system... if they warrant destruction, then nothing will prevent it
I told him of my following gold and currency and JPM's involvement with large short gold futures and derivative contracts
I told him of my expectation of a serious dollar crisis, and possibly a banking system crisis
he said "you should short JPM shares"
I told him I would rather deal with the gold shares
he said "that will work also, clearly something very serious is underway, and will not resolve itself quickly or easily"
I asked him if he thought a blur existed between JPM and the Federal Reserve itself, such as assumption of derivative books or foreign sovereign debt exposure
he said "no, that is not possible, take my word"
I asked if the "too big to fail" argument were real, or whether the "too big to bail" argument were more appropriate
he said "JPM will live or die according to their decisions and management of risk, but be sure to know that their mgmt know precise details of those Argentina, Russia, WorldCom loans and their performance"
I said that JPMorgan may not be bigger than the system, but I wonder what you regard the system to be?
he said the "US Government"
I said I believe a system was larger than the USGovt
he asked what
I said "the Foreign Currency Exchange -- the FOREX"
he nodded in agreement
I said I thought the USGovt and US System might receive a repudiation and slap across the face soon in the FOREX markets
he said "we just might"
I said we have abused the monetary system for a long long time
he said "yes we have, unfortunately"
I hope to bump into this guy again
he said he had belonged to my club for 30 yrs
I will run and soak in the hottub next week, same time
/ jim |
