The post-QECB euphoria in Greek asset markets was prognosticated by those who prefer to do such things as indicative that "the markets know something," positive about Sunday's (yesterday's) election... because markets are efficient and always 'price in' events (just like 1987, 2000, 2008 etc...). However, this morning ugliness in both Greek stock (especially banks) and bond markets suggests it was nothing more than algo-driven carry-inspired short-squeezes as both stocks and bonds plunged at the open. Stocks received the ubiquitous - well it's down so we better buy 'em treatment - but even that is fading as stocks catch back down to bonds' weakness, having unwound most of QECB's goodness...
Take from the 'redefined rich' and give to the who again?
So who pays? Someone has to, you can not just create money out of thin air. The answer is “we do, you and I”, in the form of a devalued: currency, diminished savings and devaluing pensions.
You are witness to possibly the greatest economic slight of hand ever perpetuated on a people, when the long gaze of history looks at this decision, deflation fears will not be part of the final analysis, arrogance, stupidity and theft will be.
“No stock-market crash announced bad times. The depression rather made its presence felt with the serial crashes of dozens of commodity markets. To the affected producers and consumers, the declines were immediate and newsworthy, but they failed to seize the national attention. Certainly, they made no deep impression at the Federal Reserve.” - 1921 or 2015?
Central bank policy is creating liquidity. Wrong --- the growth in broad money is slowing across the world.
Central bank policy is allowing a frictionless de-gearing. Wrong --- debt to GDP levels of almost every country in the world are rising.
Central bank policy is creating inflation. Wrong --- inflation in most jurisdictions is now back to, or below, the levels recorded in late 2009.
Central bank policy is fixing key exchange rates and securing growth. Wrong --- in numerous jurisdictions this exchange rate intervention is slowing the growth in liquidity and thus the growth in the economy.
Central bank policy is keeping real interest rates low and stimulating demand. Wrong --- the decline in inflation from peak levels in 2011 means that real rates of interest are rising.
Central bank policy is driving up asset prices and creating a positive wealth impact which is bolstering consumption. Wrong --- savings rates have not declined materially.
Central bank policy is creating greater financial stability. Wrong --- whatever positives impact central banks are having on bank capital etc they have failed to prevent the biggest emerging market debt boom in history.
The real concern for investors and individuals is the actual economy. There is clearly something amiss within the economic landscape, and the ongoing decline of inflationary pressures longer term is likely telling us just that. The big question for the Fed is how to get themselves out of the potential trap they have gotten themselves into without cratering the economy, and the financial markets, in the process. It is my expectation, unless these deflationary trends reverse course in very short order, the Fed will likely postpone raising interest rates until at least the end of the year if not potentially longer. However, the Fed understands clearly that we are closer to the next economic recession than not and that they can not be caught with rates at the "zero bound" when that occurs.
There is virtually nothing which is on the level in today’s financial markets. According to the Fed’s PR firm, Hilsenramp & Blackstone, one quarter of the $7 trillion in bonds issued by euro zone government are trading at negative yields. And this drastic financial repression prevails across the yield curve, not just on the short end. Yes, the juxtaposition is entirely reasonable that a state drifting toward insolvency and/or ruinous taxation should be able to borrow 10-year money at 0.70%. That is, when the fix is in, the central bank printing press is open to buy, the apparatchiks are terrified and one of history’s greatest monetary charlatans is in charge - the speculators have nothing to do but harvest their haul. So now begins the greatest heist since Bernanke bailed out Wall Street in September 2008.
More than six years after the last recession, deflation remains an imminent threat. The continued hope is that the next round of interventions will be the one that finally sparks the inflationary pressures needed to jump start the engine of economic recovery. Unfortunately, that has yet to be the case, and the rate of diminishing returns from each program continue to increase. The collapse in commodity prices, interest rates and the surge in dollar are all clear signs that money is seeking "safety" over "risk." Maybe you should be asking yourself what it is that they know that you don't? The answer could be extremely important.
Head of International Police Agency: Arming Citizens May Be the Best Way to Stop Terrorists
We are much closer to the end of the Central Bank-fueled $100 trillion bond bubble than ever before. This could be the beginning of the end.
We are so brainwashed by centralized models of state authority that few can even imagine a system where the solution is not one centralized monstrosity ruled by a political/financial Aristocracy. A good first step would be to admit to ourselves that we don't really want solutions; what we want is magic: financial magic that makes healthcare free and affordable, medical magic that fixes all our lifestyle ills without forcing any rigorous adult routines and limits on us, political magic that transforms our system from its current corrupt crony-capitalist paradise into a functioning, transparent democracy and economic magic that makes all the unpayable debt vanish so we can borrow another $50 trillion, or $100 trillion, with no restraints on our spending or cronyist corruption. We have no idea what it will take to jolt us from our preference for magic over realistic, difficult (i.e. adult) solutions, but we suspect a crisis that threatens to completely unravel the Status Quo will be part of the process.
Different elements are rapidly changing within the global monetary complex...
When President Obama ascends to the podium this evening to deliver his State of the Union address, he’ll undoubtedly shine a spotlight on the many strengths of America. The real issue, however, isn’t where the United States is today. The problem is where it’s going. And quickly...
Breaking the stranglehold of vested interests is the essential step to rebuilding an economy that isn't totally dependent on manipulated money and statistics.
In what Bloomberg's Richard Breslow calls "a sign of the times, and not a good one" the weekend has been dominated by politicians commenting on the ECB. Not only did Erdogan un-independently suggest Turkish policy action today (as we noted here), but now Merkel, Hollande, Noonan etc. are all telling you what the ECB should do or indeed will do and then telling you that, of course, the ECB is independent. Central Banks have essentially become enormous sovereign wealth funds manipulating the markets and very much in the thrall of geo-political events. This is a very problematic development which is an inevitable follow-on to the activism of central banks in their policy conduct.