In a paper published this month, the IMF seeks to study the relationship between GDP and sovereign debt restructuring using data from 1970-2010. Its main conclusion may be shocking: “the central finding of this paper is that sovereign debt restructurings with external private creditors can affect per capita GDP growth performance in the years after debt restructuring.“ And these are the people in charge of advising nations on managing their economy…
Of all the developed countries, Japan is in the worst condition economically. Most others, including the United States, are following the same path to insanity though. Unlike Japan, other countries may have time to implement policy changes that will allow them to avoid Japan’s desperate circumstances.
"Watching Jon Snow’s epic “Battle of the Bastards” scene in the penultimate episode of this season’s Game of Thrones gives investors a sense of how it has felt to manage money during some periods over the past year. Surging enemies forming a seemingly impossible perimeter, a crush of fellow soldiers on the field, arrows coming in overhead..."
Due to the latest government intervention, differentiating between the signal of real market stress and the noise resulting from the shift due to 2a-7 reform, will now be impossible, and thus it will also be impossible to gauge if there is something truly broken with the market, at least until such a "breakage" becomes all too apparent for everyone to see.
A good, old-fashioned, pre-1929 depression (like the short-lived, eleven-month depression in 1920-1921, before the days of “modern” central banking and “enlightened” Keynesian intervention “cures”) is the only tonic that can clear out the malinvestment built up since the beginning of the fiat money era.
“...we are living in unprecedented times of geopolitical and social uncertainties. For investors, it is really hard to quantify those risks.. In this age of monetary policy uber alles, every setback somehow gets sold as a buying opportunity. There are no long-term ramifications ascribed to anything,” So what will it take for risk appetite to shift?
“Cash On The Sidelines.” is the age old excuse why the current “bull market” rally is set to continue into the indefinite future. The ongoing belief is that at any moment investors are suddenly going to empty bank accounts and pour it into the markets. However, the reality is if they haven’t done it by now after 3-consecutive rounds of Q.E. in the U.S., a 200% advance in the markets, and now global Q.E., exactly what will that catalyst be? However, Clifford Asness summed up the problem with this myth the best and is worth repeating...
The Cleveland Fed’s Loretta Mester is a clueless apparatchik and Fed lifer, who joined the system in 1985 fresh out of Barnard and Princeton and has imbibed in its Keynesian groupthink and institutional arrogance ever since. So it’s not surprising that she was out flogging - albeit downunder in Australia - the next step in the Fed’s rolling coup d’ etat...“So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative." It’s the ultimate in 'something for nothing' economics.
The global meltup continues with the S&P set to open at new all time highs, some 20 points higher from yesterday's close, however the driver for the latest rally is not so much the imminent BOE announcement which is expected to cut rates by 25 bps from 0.50%, but a dramatic surge in the USDJPY just after 1am Eastern when Bloomberg revealed more details about Ben Bernanke's masterplan for Japan's helicopter money.