News That Matters
To make people eat their seed corn, we need to add the essential element: a perverse incentive. There’s only one way to make everyone play a perverse game: force. Let’s look at monetary policy in this light.
And News That Matters
A non-bombastic discussion of market forces and what to expect next
Steep losses in the dollar, stocks and commodities, for sure, but does it really signal a systemic crisis?
"Time is now rapidly running out," warns The Telegraph's John Ficenec as the British paper takes a deep dive into the dark realities behind the mainstream media headlines continued faith in central planning. Sounding very "Zero Hedge", Ficenec warns that from China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.
A look at next week's data in the somewhat larger context, and a look at interest rate differentials
All of this raises an interesting question about the future of the US dollar. Because if an economy as large and powerful as China’s has had to concede defeat, does this mean that “King Dollar” will rule forever? No chance.
Imagine running a rink company at the end of the roller skating fad in the 1980's. You know it is not going to survive for long. How do you operate your business? You milk it. Well, that's now happening across the entire economy.
To help remind readers of what happens when the entire world engages in wholesale currency war, here is a complete list of all the recent FX interventions, courtesy of Stone McCarthy.
Almost exactly seven months ago, on January 15, the Swiss National Bank shocked the world when it admitted defeat in a long-standing war to keep the Swiss Franc artificially weak, and after a desperate 3 year-long gamble, which included loading up the SNB's balance sheet with enough EUR-denominated garbage to almost equal the Swiss GDP, it finally gave up and on one cold, shocking January morning the EURCHF imploded, crushing countless carry-trade surfers. Fast forward to the morning of August 11 when in a virtually identical stunner, the PBOC itself admitted defeat in the currency battle, only unlike the SNB, the Chinese central bank had struggled to keep the Yuan propped up, at the cost of nearly $1 billion in daily foreign reserve outflows, which as this website noted first months ago, also included the dumping of a record amount of US government treasurys.
"It is our natural right to reflect our interest in the libor fixing process."
"Yes, ok mate, I am heading out for a run, enjoy, talk tom, get those fixings down."
In 2012 we asked whether the fact that stigmatized LIBOR traders were accepted with open arms at various hedge funds after being "fired" from the bulge bracket meant that there may, just may have been, some quid pro quo in the past. Now we know the answer.