"My humble thesis tonight is that the entire 20th Century was a giant mistake. And that you can put the blame for this monumental error squarely on Thomas Woodrow Wilson - a megalomaniacal madman who was the very worst President in American history... well, except for the last two."
“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.
With NATO's top military commander, General Breedlove, proclaiming that fighting in Ukraine is worse than pre-truce levels (and noting he could not confirm Poroshenko's Russian force numbers accusations), the news overnight, as The Telegraph reports, that Ukrainian forces appeared to withdraw from Donetsk airport last night, ending an 8-month battle in a bitter blow for pro-Kiev forces and apparent triumph for the Russian-backed separatists they are fighting. While the Pro-Russian separatists' Pyrrhic victory over the completely destroyed (as we noted here) airport may be a blow, a Ukrainian military spokesman on Thursday played down the surrender of the terminal buildings, saying it was simply a tactical withdrawal. Additionally, Russia has denounced an attack on a bus in separatist-held Donetsk which killed civilians as a "monstrous crime."
As we noted last week, the Swiss National Bank's decision to un-peg from the Euro (thus strengthening the CHF dramatically) will have very significant repercussions - not the least of which is for Hungarian and Polish Swiss-Franc-denominated mortgage-holders. The 20% surge in Swiss Franc translates directly into a comparable jump in the zloty value of loan principles and and monthly payments for about 575,000 Polish families owing a total $35 billion in mortgages denominated in the Swiss currency which has prompted calls for Poland's government to bail them out. Never mind the FX risk, the low-rates were all anyone cared about and now yet another 'risk-free' trade has exploded, Deputy PM Piechocinski says, if the franc "remains above the 4 zloty level, the government may provide support" to debtors but Poland's Central Bank is not supportive of the bailout.
Everyone loves a good conspiracy theory debate. Regardless of whether you argue for it, or against, there are times when suddenly the ramifications for plausible truth are realized that overshadow the conspiracy. This is where the plot of truth can get far more sinister than the imagined conspiracy ever could.
While most Americans discount the possibility of a major conflict with Russia, Europeans who have seen two great wars in the last century know better. The country of Lithuania, much like its neighbors, is preparing for a full-out invasion by Russian forces and their government is issuing a survival manual to its citizens.
Spoiler alert: nothing good, because what until yesterday was, indicatively, a 1 million mortgage (in HUF or PLN terms) is suddenly a 1.2 million mortgage. But what about the details? Here they are, courtesy of Goldman Sachs.
In comparing pre-collapse USSR to Russia today, commentators and analysts showcase their ignorance. Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.
The possibility of the ECB announcing sovereign asset purchases on 22 January already led Switzerland’s SNB to move pre-emptively last month and introduce negative interest rates. As SocGen's FX Research group notes, as disinflationary pressures spill over from the eurozone to trading partners in the north and east of Europe, we parse over the central banks that stand ready to act should the ECB announce QE.
Following the adoption of its new military doctrine signed by President Vladimir Putin in December which identifies NATO expansion as an external risk, it is perhaps hardly surprising that, as Reuters reports, Russia's top general, Valery Garesimov stated that the "Defence Ministry will focus its efforts on increasing the combat capabilities of its units and increasing combat strength.. with special attention will be given to the groups in Crimea." Amid renewed heavy shelling in Donetsk, NATO's top military commander noted they will be stepping up exercises in the Baltic Sea region as Russian Deputy Foreign Minister Grigory Karasin warns, "the situation in eastern Ukraine is deteriorating."
Governments from Around the World ADMIT They Do It
- Global Debt Crisis II – Total Global Debt to GDP Ratio Over 300% - Risk of Bail-Ins in 2015 and Beyond - Currency and Gold Wars - $1 Quadrillion “Weapons of Mass Destruction” Derivatives - Cold War II and New World Order as China and Russia Flex Geopolitical Muscles - Enter The Dragon – Paradigm Shift of China Gold Demand - Forecast 2015: None. Forecast 2020: Gold $2,500/oz and Silver $150/oz
...over time, grand coalition governments may only serve to ossify the re-orientation of political allegiances along the mainstream vs. populist dimension. If economic malaise persists to the next election, support for populist parties is likely to build, as scepticism about the adjustments required to sustain Euro area membership rises. The Greek experience points in this direction. Were this experience to extend to larger and more systemically relevant countries (such as Italy or Germany), the implications for markets would be profound.
Gold will protect from currency devaluations – whether that be in the form of the euro itself being devalued or in the form of reversions to drachmas, escudos, pesetas and punts and subsequent devaluations.