Meltdown

"The growing size of the asset management industry may have increased the risk of liquidity illusion: market liquidity seems to be ample in normal times, but vanishes quickly during market stress. This liquidity may be artificial and less robust in the event of market turbulence." So what's the solution? Unfortunately there isn't one. Instead, fund managers are simply resorting to emergency liquidity lines with banks which is just another manifestation of using cheap cash to delay the Schumpeterian endgame scenario which, if ever allowed to play out, will finally purge capital markets, reset the system, and free the world from the nefarious clutches of central bankers gone mad with delusions of Keynesian grandeur.

The Fed's QE policies of recent years have, for all intents and purposes told the world that “the dollar is our currency and your problem.” And, in recent years, the dollar has been a genuine problem for a number of emerging countries. Following this traumatic event, and the change in the perception of US stability, China went around the world and invited the likes of Brazil, Indonesia, South Africa, Turkey and Korea to shift some of their China trade away from the dollar and into renminbi. China started doing this in 2011 and, as we see it, the renminbi’s attempt to become a trading currency is potentially one of the most important financial developments. Yet no-one seems to care.

Fukushima will likely go down in history as the biggest cover-up of the 21st Century. Governments and corporations are not leveling with citizens about the risks and dangers; similarly, truth itself, as an ethical standard, is at risk of going to shambles as the glue that holds together the trust and belief in society’s institutions. Ultimately, this is an example of how societies fail.

“There are three things that matter in the bond market these days: liquidity, liquidity and liquidity. When the unwind comes, like we’ve seen in the past few months, it comes abruptly and sharply as the exit door is tiny"...

The completion of this pattern will take time to unfold. But it predicts a MASSIVE collapse in stocks.

The 1960s visibly changed society in a few short years, and less visibly, the economy. Two books published in 1970, at the end of the tumultuous 1960s, attempted to weave a coherent narrative of what everyone was experiencing: Future Shock and The Greening of America. If Future Shock and Present Shock have any predictive value, then we must conclude the speeding up of change is eroding our ability to make sense of present-day trends, as the velocity of change is outrunning our ability to construct coherent narratives.

The troika is tightening the screws on Greece and its ailing banks. With deposit flight running above €1 billion per day, the ECB may look to tie future ELA cap increases to austerity concessions in a move that would appear to support Yanis Varoufakis' implicit suggestion that the troika is colluding to exploit deposit outflows to force political change in Athens.

"If the federal government were to try and do something like [confiscation], the reality is: There is a motto in the office of almost every state legislator in Texas, and it’s a flag that we have [from the Texas Revolution], it’s below a cannon and what the motto says is, 'Come and Take it.'"

“They are going to turn us into murderers. If they come to seize my house I’m ready to take the head of whoever is standing there—and I’m not the only one thinking this way.”

"They can take our money, but they cannot take our hearts and souls. We live for our dignity."

Syriza has stuck to what it said all along: negotiations are possible, but not about everything. Not about making a desperate people even more desperate. Not only is that useless and harmful to all parties involved in the talks, it’s also immoral. Granted, ‘immoral’ may be considered a subjective view too. Then again, it shouldn’t be. But let’s get real: What does any of this have to do with democracy anymore? And, more importantly, where does it leave the democratic rights of the Greek people? Do they need to be fed lies too to participate in this game?

While the benefits to banks and governments of banning physical cash are self-evident, there are downsides to the real economy and to household resilience. Why are governments suddenly acting as if cash money is a bad thing that must be severely limited or eliminated?

If I'm a fund manager, the idea that ETFs provide liquidity rests on the assumption that when I experience outflows, someone else will be experiencing inflows and thus I can sell ETFs and avoid offloading my bonds into an illiquid corporate credit market. Put another way: I am depending on new money coming into the market to fund redemptions from previous investors who are exiting the market, all so that I can avoid liquidating assets that are declining in value and that I believe will be difficult to sell. There's a term for that kind of business. It's called a ponzi scheme.

The world’s financial system is saturated with speculations fostered by nearly two-decades of central bank credit inflation. Just since 2006, the footings of central bank balance sheets have expanded from $6 trillion to upwards of $22 trillion. That’s all combustible monetary fuel that cannot be recalled; it can only be liquidated in the course of a monumental meltdown in the casino. So, yes, after the carnage of the past few days the global sovereign bond index has lost $625 billion since the bond bubble peak in late March. Call that spring training.

FTW (For Those Who Say I Just Don't Get It... Get This!) There seems a shift showing itself in dramatic fashion unseen since the 2008 financial meltdown. Not only are some key players, or institutions beginning to notice some troubling signs; but rather; those very signs that everyone was told 'won’t or shouldn’t happen', not only are, they’re starting to rear their ugly heads in much greater frequency.