Yay, I bet the holders of mortgage junk bonds were also thrilled with higher rates until they found out why they were higher. Because they were junk. Real estate laden investments 6+ years into a recovery are seldom great bets folks.

Yes derivatives are the whale in the coal mine. When the mess is discovered it is going to be very ugly, very smelly, and very toxic. I suppose that's one reason the Federal Reserve is insistent on not even allowing a mild recession from happening. Sadly that only increases the change for a bigger one later.

It's gotten to the point where the first participant to start cashing out to hoard wins. China is already doing so with gold. The sad fact, and everyone knows it, is if the economy and productivity slow any more and rates go to zero everywhere, although you'd think borrowers would win (that's what they want you to think), the obvious fact is debtors are the eternal losers. There is not enough money in the world to cover the debt and everyone knows it. Although governments will survive, although horribly, people will not.

Zero percent interest rates make it obvious to all that we are entering a no growth zero sum game where debt it bad no matter how low a rate you offer it at.

A central planned economy is the backbone and the Achilles heel of socialist countries which inhibits free market signalling, confuses market participants, often unfairly biases those with close ties to the central monetary authority and government, and thus leads to corruption. So far I see all of these effects coming from the US Central Bank under Yellen. One may debate whether she is or isn't a true socialist, or whether her ties to socialists and Berkeley are strong or not, however, one needs not look beyond how she has steered the Federal Reserve which by its nature is more planned economy socialist than it ever has been and makes no bones about disrupting the free market.

There are serious economic ramifications that she is implementing in the US that can not be countermanded without severe consequences, and thus locks the US into dependence on central bank manipulation and a planned economy until the US decides that it is worth throwing it away in hopes of actually pursuing a free market with its hopes of growth and prosperity instead of a slow, dying corpse of an economy we are living in under Yellen. Unfortunately, in the near future we will have to face the first of disastrously bad downturns when this cycle ends. Given the solution will be much like Japan, more QE and zirp, I'd seriously think about buying stock in commodity companies before it hits. Undoubtedly the economy won't grow nor will demand, but I assure you, inflation will rear its ugly head as growth slows as Yellen starts throwing "liquidity" around. For some reason she hates it if people call it money. Sadly like all socialist economies the only one who sees the free money is those well connected enough to get it. The rest can starve like North Korea.

Or another way to put it, everyone is getting as far away from Europe as they can get. Sadly, even before Brexit, investors should have been fleeing this trouble prone union and especially its worst participants. Blaming the weakening of Europe on the UK is like blaming a person who won't gamble all his life savings into a pool to buy lottery tickets for the collapse of the lottery ticket pool when it goes bankrupt.

"When the all in costs of QE and ZIRP are fully analyzed these policies are detrimental to long term growth fulfillment, healthy functioning financial markets, and capitalism in general.", hmmm we should think twice next time we choose a a Federal Reserve head that supports planned and managed economies and heralds towards socialism more than capitalism. So far besides making the rich richer and the middle class poorer, she hasn't done much besides somewhat successfully planning the destruction of our economy that now can't grow, has no interest rate safety net, has a angry middle class, and is more indebted than ever and is told that there is no value in having money or saving, that the problem is not spending. I find the ask for negative rates and getting rid of the hundred dollar bill as good evidence that the economy is far from wonderful and that the Federal Reserve has anything good to share with the average citizen going forward besides maybe Yellen's dream of making America a managed economy communist/socialist haven once everyone is hopelessly in debt and TBTF banks own everything after the next set of big crashes.

As for inflation, the real inflation is cost of homes which has been nerfed out of the readings because it would show the opposite of what they want and cause them to have to end the thing eating at capitalism, the maligned and biased give away of free liquidity to the undeserving.

The main issue with Tesla is really Solar City that needed Space X to fund them and now needs something bigger because it's business model is taken right out of GE's don't do book. Solar City finances customer's installations and runs cash flow negative for every panel they sell and install until the contract starts paying off, hopefully. Failure to do so gives them nothing but old panels and removal cost which is not worth the cost and is why some might opt to terminate it save the penalties. Thus, most defaults would probably come from housing crisis' bankruptcies which would make it harder to sell the house because the new buyers would have the solar contract liability on top of the purchase price.

The whole issue is, don't try to be a bank when you aren't one and are cash flow negtive. Also don't do this business when you are expected to grow which makes you loose more cash flow for every installation you sell. And last, don't sell your stuff so low you require a financing deal to make a profit, because in reality you are selling not solar but a housing debt contract with solar as a kicker.

Hmmm, I wonder if they will do this with cars now. If so, I'd sell because you usually only do this if the product you sell can't be sold otherwise which is the big issue Solar City should be asking. If it is yes, then it needs major reform, not a bigger sugar daddy.

I think the odds favor a new high and then a pullback to the trading range much like what happened with the new lows that led back to the trading range. For there to be considerable moves higher a major reason should be the cause. Sadly, if we move up from here the only major reason will be due to the Federal Reserve giving up on raising rates this year which adds another reason for them to consider it again, lol.

The derivatives issue with banks goes far beyond DB. In reality, all TBTF banks or banks insured by taxpayers should be restricted from all but the most basic derivative contracts. Instead, if they want them they can finance non-taxpayer backed institutions to write and take derivatives risk much like the way they under fund derivatives insurers to make it look like the derivatives are safe when they know if derivatives melt down there is no way the backers will be able to pay and no way the insurers won't go bankrupt and thus also won't pay.

Sadly the only ones who make money in the long term on these are those running them which often happens to be the same people shorting the commodity. Paper commodities seem to be created to take away demand for the real thing and that hasn't been lost on the issuers.