"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."
"The narrative about an improving economy, thriving jobs market, and glorious future is bullshit. I know it. You know it. And your establishment puppeteers know it. But only “fake news” sites would dare reveal these inconvenient truths."
The market was waiting for the DOJ to announce the long-awaited settlement with Deutsche Bank today. Instead, it got news of a surprise lawsuit filed by the DOJ which sued Barclays after failing to settle a long-running probe into the UK bank's involvement in pre-crisis mortgage fraud.
Gold is collateral of last resort as it is near-universally accepted. Repo fails indicate, very strongly, collateral shortage. Put the two together and you get yet more evidence that central bankers really don’t know what they are doing. And, also like in Bagehot’s day, the repercussions are global.
Suggesting that China’s Ministry of Finance is suddenly worried about failed bond auctions, overnight it announced it would offer a steeply downsized CNY16 billion of bonds at each of its 3- and 7-year debt sales on Wednesday, a more than 40% drop from 28 billion yuan announced earlier.
This is what it comes down to:There was a credit explosion to the benefit of banks and the wealthy once Nixon closed the gold window. At that point, governments could print at will, and they did. Central bank policy cannot fix structural problems, only the free market can. And that includes a truly free market in money as well.
China's central bank stepped in with record liquidity injections last week, and "urged" major commercial banks to lend to non-bank financial institutions after many suspended cross funding operations as interbank lending froze amid tight liquidity conditions.
The British Columbia government is repeating all the worst mistakes of the first bubble, and shortly after bursting the ultra high end housing bubble over the summer, is now offering to "help" first-time homebuyers to cover the cost of a mortgage down payment with an interest-free loan, a move that is certain to create another bubble, this time on the low end.