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Ignore the Rumors… Central Banks Are Pulling Back… Guess What Comes Next?
Talk of QE and rumors of coming Central Bank Intervention pushed stocks and Gold higher on Monday. It’s odd to hear these rumors when every major Central Bank has in fact been clearly stating NO new stimulus is coming any time soon.
Indeed, as the Fed has proved now for eight consecutive FOMC meetings, it is not going to announce more QE unless another systemic Crisis erupts. Instead the Fed continues to reiterate its talk of maintaining low interest rates, which is largely a symbolic gesture as it changes nothing
From the April 27 FOMC minutes
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
http://www.federalreserve.gov/newsevents/press/monetary/20120425a.htm
The Bank of Japan is joining this strategy of pulling back on its liquidity measures…
BOJ eased to ensure recovery, won't act "automatically"
Bank of Japan policymakers agreed to ease monetary policy in April to ensure the economy resumes a recovery, but signaled a pause by complaining of "misunderstanding" in markets that they will keep offering monetary stimulus automatically until 1 percent inflation was in sight, minutes of the meeting showed.
At the April 27 meeting, the BOJ boosted asset purchases by 10 trillion yen ($126 billion), offering its second stimulus in just over two months in a show of its determination to achieve its 1 percent inflation target set in February.
Central bank policymakers agreed that Japan's economy was gradually heading for a recovery with consumer prices expected to rise as a trend, minutes of the meeting showed on Monday.
But they decided to act to ensure that such positive momentum in the economy is sustained given various uncertainties over the outlook, such as the chance of tensions over Europe's sovereign debt crisis triggering a renewed yen rise, it showed.
http://www.reuters.com/article/2012/05/28/us-japan-economy-boj-minutes-idUSBRE84R01020120528
So has the ECB...
Nowotny Says ECB Not Discussing Reviving Bond Purchases
European Central Bank Governing Council member Ewald Nowotny said the bank isn’t considering restarting its bond-purchase program to stem rising borrowing costs for governments in the euro area.
“This for the time being is not a matter of discussion,” Nowotny told reporters in Belgrade today, when asked if bond purchases are something the ECB is contemplating. “The ECB has done a number of measures that were very helpful and efficient for the economy. We are now in a situation where we have to see how these measures have worked in the economy, especially in long-term operations.”
Stocks lose shine as ECB signals no new stimulus
Stocks turned lower on Thursday after the European Central Bank indicated it would not, for now, ease its monetary policies further to fight the debt crisis and a U.S. services survey disappointed expectations.
Though the ECB's decision to keep its main interest rate unchanged at 1 percent was expected, there was disappointment in the markets that the bank's president Mario Draghi gave no indication it might offer more long-term super-cheap loans to banks or that monetary policy could be made more accommodative.
http://www.businessweek.com/ap/2012-05/D9UHB7381.htm
Even China, which has shown itself to be one of the biggest proponents of economic intervention of the last four years is curbing its stimulus efforts and signaling a slowdown.
China Has No Plan For Large Stimulus To Counter Slowdown
China has no plan to introduce stimulus measures to support growth on the scale unleashed during the depths of the global credit crisis in 2008, according to the nation’s state-run Xinhua News Agency.
“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday in the seventh paragraph of an article on economic policy, without attributing the information. “Current efforts for stabilizing growth will not repeat the old way of three years ago.” In 2008, policy makers unveiled a fiscal stimulus of 4 trillion yuan ($586 billion at the time).
Thus we have the world’s three most important Central banks as well as the global economy’s “economic miracle” retreating from aggressive monetary intervention.
The reality is that Central Banks are all realizing that:
- Their interventions thus far (QE in the US and LTRO in the EU) have failed to solve the global banking crisis.
- The consequences of their interventions (namely inflation) are now outweighing the benefits (heck Bernanke was admitting this as far back as May 2011… and now even uber-dove New York Fed President Bill Dudley is admitting it).
This is an extremely dangerous environment: one in which the primary prop for the markets (central bank intervention) is becoming both less effective and politically toxic. Indeed, it’s clear at this point that the EU is beyond intervention since neither the ECB, IMF, nor the ESM have the firepower to hold things together.
Indeed, the one and only entity that might possibly hold up the EU would be Germany. However, if Germany were to go for this it would lose its AAA rating. The EU without a AAA rated Germany is not a pretty sight.
And it’s not even clear Germany could prop up the EU’s banking system. After all, when you include unfunded liabilities, Germany’s sporting a REAL debt to GDP north of 200%.
In plain terms, the EU is fast approaching its End Game. Germany and the other political leaders will stall for time and engage in verbal intervention, but in the end, there simply isn’t enough capital in the world to hold up the over leveraged (26 to 1) toxic sewer that is the EU banking system.
On that note, if you’re not preparing for the collapsing of the EU, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.
This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com
Good Investing!
Graham Summers
PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
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"""""""“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday in the seventh paragraph of an article on economic policy, without attributing the information. “Current efforts for stabilizing growth will not repeat the old way of three years ago.” In 2008, policy makers unveiled a fiscal stimulus of 4 trillion yuan ($586 billion at the time)."""""
China Stimulates by giving THE PEOPLE Wage Increases. more money in their pockets to spend...NOT give the money to the Bankers to assure the big boys get another year of multi-millions in bonuses. Sure makes sense but you won't read about this in our MSMedia
http://marketmontage.com/2012/02/09/china-to-raise-minimum-wage-13-annually-through-2015/
By: Mark Hanna
Posted on: February 9, 2012 at 10:30 am
Tags: China
I was originally going to write China "proposes" to hike the annual minimum wage 13% per year through 2015, but then I remembered this is China. Hence there is no Chinese GOP equivalent push back claiming raising the minimum hike will destroy tens of millions of jobs. So yesterday's announcement is essentially the end of the political back and forth on the subject – nice & efficient, eh?
On a more serious note, this is an important development that got little press.
( well sure, that's not something the MSM would want Americans knowing, or thinking about )
In 2011, 24 provinces and municipalities raised minimum wages by an average of 22 percent, according to the Ministry of Human Resources and Social Security. Shanghai’s rose by 14 percent.
result=
The nation created 12 million new jobs last year, 3 million more than the government’s target for 2011, according to the labor ministry. The urban registered jobless rate was 4.1 percent at the end of 2011, compared with the government target of keeping unemployment under 4.6 percent.
http://www.bloomberg.com/news/2012-02-28/shanghai-raises-minimum-wage-13-as-china-seeks-to-boost-consumer-demand.html
I'm sorry, did I miss the memo? When exactly did QE officially end?
The argument being that ZIRP isn't sugar enough, I guess. What, wait?
Coordinated central bank action (well, inaction). The ones with anemic gold reserves are buying gold like crazy, coordinated action. Money printing when the need is not obvious to everyone is politcally toxic. But are they keeping their powder dry for when (not "if") the EU comes apart? When the currency system is collapsing, nobody is going to complain about galactic levels of printing.
Are they anticipating currency collapses across the board? To be quickly replaced by some kind of international gold standard?
If the world money machine goes into the toilet, by far the most important thing is to keep the real economy functioning on some basic level. They will need to keep the core infrastructure of the modern world going: water, sewage, food distribution, electricity, gasoline and emergency medical care. Everything will be rationed, of course. Keeping TV going is probably critical to tell people where and how to get their essentials and to not panic. Of course the whole banking system will seize up, so no credit/debit cards, no ATMs, cash and barter only. Will we see prodigous PAPER money printing to keep up with demand? (Notice that paper money is NOT part of the banking system.)
Deflation will dominate, but most people will be able to survive. A new from scratch money system with new banks would have to startup almost immediately.
Is this the real message of CBs appearing to do nothing?
They will print in the end.
Also the EU banking system cannot collapse without collapsing the entire financial system. It is just too big.
QE is continuing from the standpoint that the Fed continues to monetize the debt. Beyond that, the central banks WILL intervene when the stock markets get bad enough. It's foolish to think they will sit back and let the stock markets die.
Think of finance as the software side of economics that controls physical resources (hardware). Peak oil, is causing a big disconnect between the interface.
FREE MONEEEZ yeayyy gimme da free moneeeeez!!
I'm Buying a thingamajig!
www.youtube.com/watch?v=DmiDvAoCF68
Central banks cannot stop dilluting the monetary base. If they quit, the derivative time bomb will explode resulting in cascading margin calls and ultimately debt destruction and a sudden popping of the debt bubble. 2008 without a bottom. Once it starts it will be impossible to stop and everyone knows it. Ergo, they will print andkick the can down the road. The underlying wealth destruction of rampant consumerism and foreign wars will continue... that is the raison d'etre of the current system.
What you say cant happen has to happen, its innevitable. 'Cantral banks cant stop diluting the monetary base'....well they have to stop, at some point, because you cant dilute past zero.
If they stop, they destroy themselves (their currency) by insolvency. Present and future government liabilities are real, to default means to end the dollar and the world petrodollar standard, rendering all the remaining dollar bills (treasury notes) worthless. The only choice is a "managed" inflation... the same policy that has been in force since the Reagan years. The only real alternative is a one time revaluation of the dollar to gold, a commodity basket or some combo of both, along with forced liquidation of derivatives.
Well what you say they wont let happen is like saying youre not going to let the Cat 5 hurricane reach shore...its beyond their control.
This. +1
AND YET
BERNANK ALSO MADE IT CLEAR HE WOULD INTERVENE SHOULD THE ECONOMY STALL.
Ben's got da FREE MONEEEEZ yeayyyyyyy!!! He gonna intervene it! Yipeee!!
Modern Economics is a Pseudo-Science.
"Modern Economics" = Fraud
bingo
Is all a matter of timing...if I was at a Central Bank, I would want to see this thing falling off the table again and then do a worldwide coordinated bazooka...a onesy twosy approach won't generate the "confidence" they want but you can't pull that out too quickly...must wait until you start seeing the 300 pt losses on the Dow
"And ALL of this is available for FREE under the OUR FREE REPORTS tab at:" http://www.gainspainscapital.com
In this case FREE is a four-letter word.
Pray
I've been with Graham so far and I still agree with him that QE is too political in the US now. The whole Europe asks for it though and would cheer at inflationist policies, except for Germans who are, unfortunately for the rest of Europe, those calling the shots...
Just curious, Graham, once it all deleverages, how do you see gold responding? Going down once QE expectations evaporate, or up since the collapse of the banks will jeopardize the fiat money system?
They'll just call it something else.
it's in the newletter ;)
Sorry folks - this is Global Chemotherapy - which is required to kill the cancer.
Ten or twenty years from now - the rot and inefficiency will be purched from the system and the world can return to a growth posture.
"Sorry folks - this is Global Chemotherapy"
Like most chemotherapy it will kill the patient long before the cancer would (but the death certificate will say that cancer was the cause of death).
My bet is on a shorter timeline. This thing is Spindletop just waiting to blow. 5 years max to reset.
Overvalued House prices in Australia plunging:
House prices fall to record low across Australian capital cities HOUSE prices have slid to a six-year low in capital cities despite RBA efforts to lift the housing market out of the doldrums with rate cuts. Read more: http://www.news.com.au/money/property/house-prices-fall-to-record-low/story-e6frfmd0-1226379751250#ixzz1wvNEaBcc xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx GLOBAL ratings agency Moody's says the Australian housing market is still significantly overvalued despite a 7 per cent price slide in the past two years. The agency has warned it is considering cutting its credit rating on three of the leading Australian businesses that provide insurance on mortgage debt.Read more: http://www.news.com.au/money/property/insurers-still-too-exposed-says-ratings-agency-moodys/story-e6frfmd0-1226378836417#ixzz1wvNybgpBI don't like the term "Printing Money". I like the term "Writing Bad Checks". The Federal Reserve has already written trillions in bad checks, I think they want to walk away from the table with the interest they have. Are they going to lend another couple trillion to Europe and another $5 trillion to thye U.S.? Geithner says we don't even want to hear the number it would take to fix things. The number he has in mind must be double or triple digit trillions. If their balance sheet goes from 1/2 trillion before the crisis, to 10 or 15 trillion, they'll be charged with fraud for lending funds they never had and won't be paid back. Austerity is coming soon.
Please, someone who attends back-door meetings of Bilderberg, World Bank, or the Fed Reserve, please speak up (not that we could necessarily believe you)!
Can the CBs be taken at their word?
Are other less obvious methods planned to fund the TBTFs?
Is the game plan now to short change and squeeze “sovereign” governments into “austerity”?
Is it a case of hoping to tread water until elections indicate what politicians the public will most trust to swindle them, and under which guise?
I junked ya for using the word 'elections' in a non-fictional sense.
I junked ya for failing to recognize the subtlety that elections are real, and do actually exist in the real world,
regardless whether the political choices are meaningful,
and regardless even whether the purpose may only be to "validate" which politician lies most effectively to the public.
'Elections are really real'....no theyre not....you get a choice of 1 of 2 banker pre-approved 'choices' and thats all. Only idiots fall for this utter nonsense puppet show.
yeah! And yea so too for any election that ever occured ever, and as they shall continue to be forever being forever and ever always everwhere universally in the universal universe without a shadow of a doubting Thomas just so. Amen. Peer not sideways at the Rothbardian Axiom of Truthiness, oh yea of little faithlessnessness. NNnnHyere Endeth the Lesson.
Granted, if the country of residence is using what seem to be, at least potentially, fully automated voting machines...do they still allow for 'write-in' candidates on some ballots?
( 'Course even some of the thickest voters could easily find that out right smartly> bother to show up.)
i think there's something else to this.
this article makes a lot of very valid and intersting points, none of them, however, were absent before any central bank initiatied this orgy of printing to predicate eerie low-volume floats interupted by sideway-stalls followed by carefully coreographed stimulus-effecting falls. yes, and you may add to the argument against printing silly things like, oh, say, moral hazard, commodity inflation, structural warps and public antipathy.
what is missing from the collective analysis is the recognition that central banks are now recognizing that retail is itself gaming the system. long horizon retail is taking their ball and heading home; and it has this coven of central brooders a little more than flummoxed. they've sold institutions on equities, assuring their minions that they'll be able to unload them on the hapless hordes at a time propitious for all concerned. well, it's clear to ole janus that the petulant lil fund managers at the initiated houses are throwing an all out tantrum for more qe, rather than making any sort of cogent case for it; and though they've in the past been pumped to prime with royal jelly, this time may be different. if they continue this less-than-virtuous cycle of printing, pumping, dumping...repeat, they will very soon trigger such a massive cash-swell before some scheduled announcement in the not too distant future that will, inevitably, fail to deliver. and when it does fail to deliver, and all that cash is sitting there stunned, looking around hopelessly as it starts to reckon with hasty back of the envelope calculations, we will at that point see the grand old cycle close its grim loop as a flood of caustic debt and vapors of 'liquidity' suffocate the planet. as money finds its bottom; as liquidity and capital resolve their fight is a horror show; as value finds is breathless bottom...and so the world turns.
http://www.youtube.com/watch?v=hVpJRmsyPho
janus
This was a factual, comprehensive report. I don't know what most of you are whining about.
They do have a choice. They can quit printing and let this burn down sooner than later and come back in and scoop up the assets for "pennies on the dollar". The only reason they would want to hold this together is for THEIR advantage. When there ceases to be an advantage for them, they will no longer hold it up. Seems like the last time we had a "great depression" there was a central bank with a printing press and how did that work out for you if you lived back then?
Some of you here are way to shallow and simple minded. You think money matters to people like Soros, Rothschild, Buffet, etc. the way it matters to you. There are people in this world that are way past money. Money is a tool used to reach an end. They don't have "bills". They don't buy food, clothes, transportation, entertainment. They live in a world of "control" not money. They want as much of the world under their thumb as possible and that is what money (better known as debt) is good for to those kinds of people. Do you really think that if the whole banking system melted down that their world would change? Do you think Rockefeller's life or Rothschild's life changed any during WWI or WWII? Wake up! Do you think the Rockefeller family "suffered" during the great depression? You need to quit seeing the world only through your limited view.
To print is to bring the end .........faster. They will hold off as long as possible because they realize this. They will use the pain to maneuver leaders, assets, whole countries, etc. to their advantage. In the end, you and me and our little pot of gold/silver are going to suffer just like everyone else. All of you who think your gold is somehow going to not only insulate you from the pain but even bring you gain are DREAMIN'. It will help and can't hurt but is not a personal silver bullet for what is about to happen.
Finally, the problem here is not LIQUIDITY. There is plenty of money/debt out there. The problem is SOLVENCY. All the assets in the world have been leveraged and re-leveraged so that there is no more asset against which to lend. Even central bankers with an "all powerful", unlimited printing press don't like to make loans without getting assets or leverage for their loan. There is nothing else to give the pawn brokers and they are tired of giving away money for nothing. So all you "they-got-to-print-ers" out there had better wake up and expand your vision a little. IF a banker knew that some business was "going down" no matter what, would he step back and let them go down or would he continue to pour money into it knowing it was going down anyway? See, you can't have it both ways. Is the economy going to fail, no matter what? "Yes." Then why pour more money into a sinking ship?
The quicker they destroy the dollar and the euro the quicker they can bring about a big enough disaster to bring about a one-world government. And don't worry. They won't waste a crisis like the one that's coming.
I agree with you in that The Bankster Cabal is in it for themselves and their Empire and that they will do the things necessary to maintain it, whatever those 'things' may be.
But I disagree with your thinking that 'no matter what' they will survive and prosper, be it a world war, or whatever. The Western Bankster Cabal is going down - who knows how low, but diminished. They may not survive this one.
Jim Willie - is that you?
Give credit to Phoenix.....he's called it pretty steady, and the SHTF stage of this 8 year depression really starts to kick in Jan 2013
Give credit to Phoenix.....he's called it pretty steady, and the SHTF stage of this 8 year depression really starts to kick in Jan 2013
Yes, and Obama has already warned Americans that 2013 is going to be a very BAD year.
Seems he's not planning on losing, IF their is an election.
Notice the extension of the zero rate? We're morphing into another Japan - zero rates, little growth, higher and higher debt, stagnation and eventual economic calamity. At least the US is blessed with an incredible climate, good land and natural resources unlike Japan.
LMFAO!! You mean those resources (land and resources) that are being sold to international corporations. The american people don't own shit idiot. That's a good sheep, now go back to sleep.
xtrabullish, what are some mining stocks you follow? like? what is your opinion on AUMN?
AUMN is high on my list. As are EXK, NG, ANV and SLW. Graham likes bullion. Harvey Organ posts his articles.
I've been arguing the same thing, that the CB's will not "prop" up the economies... they've done enough damage without being obvious and now they will unleash the next phase... precipitous collapse. I believe we've entered the tipping point of every asset class save perhaps metal declining sharply (waterfall)... JPM scam of losses was the signal... they will continue to "lose value" which will hurt the markets... MS's losses / Facepalm scams are added fuel to the downward spiral.
I could be very wrong, maybe the oligarchs need a bit more momentum before the decline, but it seems to me that they have enough already and have already started.
Besides, if they keep at the same strategy too long, more people might start putting the pieces together, and they definitely don't want that. I don't expect QE.
There is no grand plan at least in the sense that a group decides what events occur. This is all simply the logical outcome of a political system promoted a shortcut to prosperity by massive debt and money manipulation. This is the key to growth and the future success of third world nations; they emphasize products and services people want instead of spending their time trading debt.
Who's complicit? Central banks, financial institutions, politicians but mainly voters who reeleced folks who promised immediate goodies, something for nothing while stealing from future generations. And we still have not learned our lesson. In CA and IL voters keep electing the same fools who got them into this mess on the promise that they can fix it. How delusional can you get?
smb12321
Fail -
for continually trying to exonerate elite for their crimes, deceptions, and policies -
by attempting to shift responsibility to the average citizen for "demanding" the option slickly foisted upon them,
and for a minority percentage of eligible voters for choosing whichever of the mass media vetted and TPTB sponsored politicians they hoped would harm them the least.
I junked ya for using the word 'voters' in a non-fictional sense.