Now we can see the real tragedy of negative interest rates: they not only have the perverse effect of reversing the flow of time, but they demonstrate that borrowers are not acting with the good faith incentives normally associated with someone who needs money. Rather than paying forward, borrowers are paying backwards because they are effectively trying to return something they don’t want. Such an arrangement renders it impossible for an economy to grow. By destroying the temporal and moral structure of money, negative interest rates destroy the economy. When tomorrow cannot be paid, the current regime must fail. The only question to be determined is the form that failure will assume. This may sound like philosophy but it is cold, hard reality.
Gold In Fed Vault Drops Under 6,000 Tons For The First Time, After 10th Consecutive Month Of RedemptionsSubmitted by Tyler Durden on 03/31/2015 14:30 -0500
According to the most recent earmarked gold data reported by the Fed, in the month of February another 10 tons of gold departed the NY Fed, following 20 tons in the month before, which if one assumes is merely the delayed relocation of gold previously demanded for delivery, has crossed the Atlantic and is now to be found in Frankfurt. This means that for the first time in the 21st century, the total gold tonnage held at the NY Fed is now under 6000 tons, or 5,989.5 to be precise.
Regarding the major problem of the more domestic issue of economic recovery, unless we would agree, which we really shouldn’t, that making a small group of the population richer while the much larger rest is made poorer, is how we define ‘recovery’, we have no recovery. But it is still accepted and proclaimed like a gospel: our economies are in recovery. If you take a step back and watch things from a distance, it’s truly too silly to be true, but endless repetition of the same lines, be they true or not, has them accepted as being cast in stone. It’s like selling detergent. Of course it doesn’t hurt that people very much want to believe a recovery is here. The stories we are bombarded with 24/7 under the quite hilarious misnomer ‘News’ have been prepared, pre-cooked and pre-chewed for our smooth and painless digestion, and as such they contain only tiny little flakes of reality. They are designed to make us feel good, not understand the world around us. And, as Scott Minerd says, the economic future for your entire families will look utterly bleak. Because that recovery they talk about? It’s not for you.
- Setbacks and progress as Iran, six powers meet to end nuclear impasse (Reuters)
- Russia’s Foreign Minister Sergei Lavrov to Leave Iran Nuclear Talks (WSJ)
- Obama Ramps Up Lobbying on Iran as Deadline Looms (WSJ)
- Greek yields edge up as lenders scrutinise reform pledge (Reuters)
- Oil prices drop on possible Iran deal, dollar (Reuters)
- Yemen’s Houthis Battle for Aden as Saudi Strikes Hit Rebels (BBG)
- Iran nuclear deal to see $20 oil if Tehran floods crude market (Telegraph)
- China’s Zhou Says PBOC Has Room to Act on Growth Slowdown (BBG)
"The Risks Are Very High" Swiss Billionaire Warns "Global Financial Markets Have Never Been This Distorted Before"Submitted by Tyler Durden on 03/29/2015 19:15 -0500
"Global financial markets are more distorted than ever before and accordingly, the risks are very high... All equity and currency markets are pretty extended, at present; and many of the bond markets are as well... We know that the longer a distortion prevails, the more investors get used to it and it becomes the “new normal” to them. That’s where the problem lies! I see three potential threats..." - Felix Zulauf
“The new normal for the Chinese economy and banking sector includes sluggish growth and persistent credit deterioration,” one analyst tells Bloomberg. China's largest banks are seeing loans tied to manufacturing and other sectors sour which is cutting into profitability just as rate cuts squeeze NIM margins.
In a few minutes, Janet Yellen will address a lunch session in her native SF Fed (the same place that last week finally figured out what debt is) during a conference whose topic is The New Normal for Monetary Policy (the typo from "Paranormal" is easy to make). The informal agenda will be Yellen's explanation of how she plans on achieving the yield curve which we predicted back in 2010 is just a matter of time.
- Google's new CFO to make $70 million (WSJ)
- Senate passes Republican budget with deep safety net cuts (Reuters)
- With Yemen strikes, Saudis show growing independence from U.S. (Reuters)
- Banks Slash Dividends as Loans Sour From Beijing To Pearl River (BBG)
- North American Railroads Caught by Speed of Crude-Oil Collapse (BBG)
- Japan’s Zero Inflation a Setback for Abenomics (WSJ)
- Cooperman Says U.S. Seeks Information About Omega Trades (BBG)
Back on June 3, 2013, following what was merely the latest observation of how broken the market is thanks to central banks manipulation and HFT rigging, we wrote some snarky commentary. And as happens with nearly 100% regularity nowadays, our snarky commentary on what takes place behind the scenes was once again almost 100% accurate. Because earlier today we learned precisely what happened...
We hate to spoil the surprise, but the answer, as clearly shown by the first blue bar on the chart below, is "Energy"...
"This time a year ago, the oil industry's biggest problem was finding a way to deal with the “retirement tsunami” about to crash down on it as older oilfield workers hung up their cork boots to enjoy freedom. Now, with oil prices still in the doldrums, many of those same workers are lucky to be hanging onto their jobs, while others have been booted from the payroll as an ugly wave of layoffs takes hold."
The percentage of homeowners underwater in the US was flat from Q3 to Q4 which doesn’t sound all that terrible until you consider that this figure had fallen for 10 consecutive quarters. Things look particularly bad in Florida and the midwest where more than 25% of borrowers are sitting in a negative equity position. A new report from Zillow says negative equity will become a permanent fixture in the housing market.
"This is not investing," exclaims Ed Yardeni in this brief clip, "it is all about central bankers... these markets are all rigged." That is not a criticism he notes, "I just say that factually... I love these central bankers, they've been very good to the stock market." The clip is then followed by a defense of this pumping by central banks, because "we are a 401(k) society." Which apparently ignores the whole "massive inequality gap" issue that is staring America right in the eyes... But for now stocks are up so "shut up and enjoy it" as Larry Kudlow said yesterday.
The oil jobs nightmare is in fact spreading like a cancer. Last year there was much banter from the Wall Street shysters and Bakkan shale oil experts about the true breakeven price for shale oil not being $80 (which is the truth) but actually being as low as $58 a barrel. They were spreading this lie in order to keep idiot investors buying the stocks and bonds of these fly by night shale oil companies. Well, we are now six months further down the line and Bakkan shale oil this morning is selling for $37 per barrel.