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The Central Bank Backlash: First Hong Kong, Now Australia Gets Ugly Case Of Truthiness

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It seems the AsiaPac central bankers did not get the 'shut up and print' memo as today during another speech, an Australian central banker followed Hong Kong's lead and pronounced quantitative easing as potentially harmful and the volatility-dampening effects of excess monetary policy as "ultimately inimical to financial stability and hence macroeconomic stability." In the speech below Glenn Stevens (RBA Governor) provides some much-needed doses of sanity to the grossly addicted world desirous of moar money printing.

"Central banks can provide liquidity to shore up financial stability and they can buy time for borrowers to adjust, but they cannot, in the end, put government finances on a sustainable course... They can't shield people from the implications of having mis-assessed their own lifetime budget constraints and therefore having consumed too much."

Why are these AsiaPac bankers breaking ranks with the status quo? Perhaps they see a looming threat and prefer to front-run their governments' demands to "get to work".

Must Read:


Challenges Of Central Banking - Glenn Stevens (RBA Governor)

Monday marked the 70th anniversary of the commencement of operations of the Bank of Thailand, on 10 December 1942. Conceived under war-time occupation, the Bank has grown to be a key institution in Thailand. It is a pleasure and an honour to come to Bangkok to take part in one of a series of events to mark the anniversary, and I want to thank Governor Prasarn for the invitation.

The Reserve Bank of Australia has long enjoyed a strong relationship with the Bank of Thailand. In 1997, the RBA was among those central banks to enter a swap agreement with the Bank of Thailand shortly after the crisis broke. This was the first part of Australian assistance to the regional partners who were under pressure, which later extended to Korea and Indonesia. In fact, Australia and Japan were the only countries that offered direct financial support to all three countries.

It was a predecessor of mine, Bernie Fraser, who made the suggestion 17 years ago that cooperation in the Asian region might be improved by the establishment of a dedicated institution, along the lines of the Bank for International Settlements in Basel – the ‘Asian BIS’. Such a body has not come to pass – at least not yet! – but it is fair to say that this suggestion and others like it helped to spur the Basel BIS to reach out to Asia. 

The central banks of the region, taking the initiative through the Executives Meeting of East Asian and Pacific central banks – EMEAP (not the most attractive acronym) – have improved cooperation substantially over the years. Thanks to long-term efforts at building relationships, and the vision of key governors and deputy governors, including at the Bank of Thailand, EMEAP has developed into a mature forum for sharing information, and continues to develop its ability to find common positions on global issues and to promote crisis readiness.

Yet as the central banks have grown closer and become more effective in their cooperation, the challenges we face have only increased. Today I want to speak about three of them.

First, I will talk about the framework for monetary policy and the need to allow that to consider financial stability.

Secondly, I will make some observations about the more prominent role for central banks' own balance sheets that we are seeing in some countries.

Then, thirdly, I will offer some observations about international spillovers. In so doing, I am not seeking to deliver any particular messages about the near-term course of monetary policy in either Australia or Thailand.

Monetary Policy and Financial Stability

It is more than two decades since the framework of Inflation Targeting (IT) was pioneered in New Zealand and Canada. The United Kingdom was an enthusiastic early adopter from 1992. Australia adopted IT in 1993.

Among the early adopters, the move to IT was driven by a mixture of principle and pragmatism. The key principle was that monetary policy was, in the end, about anchoring the value of money – that is, about price stability. The pragmatism arose because one or more previous approaches designed to achieve that – monetary targeting, exchange-rate targeting, unconstrained discretion – had proved at best ineffective, and at worst destabilising, for the countries concerned. Hence many of the adopters shared a desire to strengthen the credibility of their policy frameworks. As the initial adopters came to have a measure of success in combining reasonable growth with low inflation, other countries were attracted to the model.

According to the IMF, more than 30 countries now profess to follow some form of IT. The euro area could also be counted among this group though it also professes adherence to the ‘second pillar’ of ‘monetary analysis’. Even the United States can, I think, be counted as a (fairly recent) IT adopter, since the Federal Open Market Committee is these days quite explicit about its desired inflation performance. 

The Bank of Thailand was one of a number of emerging economies that adopted IT around the turn of the century. Twelve years on, Thailand can boast an impressive record of price stability under this framework. A high level of transparency has ensured that financial market participants understand the framework, and view it as credible. Moreover, price stability has not come at the cost of subdued economic growth, with output expanding at a brisk pace in the 2000s.

While inflation targeting is not for everyone, the Thai experience illustrates that, when done well, it can enhance economic outcomes. I can endorse the favourable verdict offered on the Thai experience delivered by Grenville and Ito (2010). 

So I think that the adoption of IT, including in Thailand, can be seen as a success in terms of the straightforward objectives set for it. To make such a claim is not, however, to claim that controlling inflation is, alone, sufficient to underwrite stability in a broader sense. If there were any thought that controlling inflation over a two or three year horizon was ‘enough’, we have been well and truly disabused of that by experience over the past half decade. Price stability doesn't guarantee financial stability.

Indeed it could be argued that the ‘great moderation’ – an undoubted success on the inflation/output metric – fostered, or at least allowed, a leverage build-up that was ultimately inimical to financial stability and hence macroeconomic stability. The success in lessening volatility in economic activity, inflation and interest rates over quite a lengthy period made it feasible for firms and individuals to think that a degree of increased leverage was safe. But higher leverage exposed people to more distress if and when a large negative shock eventually came along. This explanation still leaves, of course, a big role in causing the crisis – the major role in fact – for poor lending standards, even fraud in some cases, fed by distorted incentives and compounded by supervisory weaknesses and inability to see through the complexity of various financial instruments.

That price stability was, in itself, not enough to guarantee overall stability, should hardly be surprising, actually. It has been understood for some time that it is very difficult to model the financial sector, and that in many of the standard macroeconomic models in use, including in many central banks, this area was under-developed. Mainstream macroeconomics was perhaps a bit slow to see the financial sector as it should be seen: that is, as having its own dynamic of innovation and risk taking; as being not only an amplification mechanism for shocks but a possible source of shocks in its own right, rather than just as passively accommodating the other sectors in the economy. 

Notwithstanding the evident analytical difficulties, the critique being offered in some quarters is that central banks paid too little attention in the 2000s to the build-up of credit and leverage and to the role that easy monetary policy played in that. It is hard to disagree, though I would observe that this is somewhat ironical, given that IT was a model to which central banks were attracted after the shortcomings of targets for money and credit quantities in the 1980s. It could be noted as well that the ECB always had the 2nd pillar, but the euro area still experienced the crisis – in part because of credit granted in or to peripheral countries, and in part because of exposures by banks in the core countries to excessive leverage in the US.

The upshot is that the relationship between monetary policy and financial stability is being re-evaluated. As this occurs, we seem to be moving on from the earlier, unhelpful, framing of this issue in terms of the question as to whether or not monetary policy should ‘prick bubbles’ and whether bubbles can even be identified. The issue is not whether something is, or is not, a bubble; that is always a subjective assessment anyway in real time. The issue is the potential for damaging financial instability when an economic expansion is accompanied by a cocktail of rising asset values, rising leverage and declining lending standards. One can remain agnostic on the bubble/non-bubble question but still have concerns about the potential for a reversal to cause problems. Perhaps more fundamentally, although the connections between monetary policy and financial excesses can be complex, in the end central banks set the price of short-term borrowing. It cannot be denied that this affects risk-taking behaviour. Indeed that is one of the intended effects of low interest rates globally at present (which is not to say that this is wrong in an environment of extreme risk aversion).

It follows that broader financial stability considerations have to be given due weight in monetary policy decisions. This is becoming fairly widely accepted. The challenge for central banks, though, is to incorporate into our frameworks all we have learned from the recent experience about financial stability, but without throwing away all that is good about those frameworks. We learned a lot about the importance of price stability, and how to achieve it, through the 1970s, 80s and 90s. We learned too about the importance of institutional design. We shouldn't discard those lessons in our desire to do more to assure financial stability. We shouldn't make the error of ignoring older lessons in the desire to heed new ones.

Rather, we have to keep both sets of objectives in mind. We will have to accept the occasional need to make a judgement about short-term trade-offs, but that is the nature of policymaking. And in any event, over the long run price stability and financial stability surely cannot be in conflict. To the extent that they have not managed to coexist properly within the frameworks in use, that has been, in my judgement, in no small measure because the policy time horizon was too short, and perhaps also because people became too ambitious about fine-tuning.

We also must, of course, heed the lesson that, whatever the framework, the practice of financial supervision matters a great deal. Speaking of supervisory tools, these days it is, of course, considered correct to mention that there are other means of ‘leaning against the wind’ of financial cycles, in the form of the grandly-labelled ‘macroprudential tools’. Such measures used to be more plainly labelled ‘regulation’. They may be useful in some instances when applied in a complementary way to monetary policy, where the interest rate that seems appropriate for overall macroeconomic circumstances is nonetheless associated with excessive borrowing in some sector or other. In such a case it may be sensible to implement a sector-specific measure – using a loan to value ratio constraint or a capital requirement. (This is entirely separate to the case for higher capital in lending institutions in general).

We need, however, to approach such measures with our eyes open. Macroprudential tools will have their place. But if the problem is fundamentally one of interest rates being too low for a protracted period, history suggests that the efforts of regulators to constrain balance-sheet growth will ultimately not work. If the incentive to borrow is powerful and persistent enough, people will find a way to do it, even if that means the associated activity migrating beyond the regulatory perimeter. So in the new-found, or perhaps re-learned, enthusiasm for such tools, let us be realists.

The Limits of Central Banking

That policy measures of any kind have their limitations is a theme with broader applications, especially for central banks. The central banks of major countries were certainly quite innovative in their responses to the unfolding crisis. Numerous programs to provide funding to private institutions, against vastly wider classes of collateral, were a key feature of the central bank response to the situation. In essence, when the private financial sector was suddenly under pressure to shrink its balance sheet, the central banks found themselves obliged to facilitate or slow the balance-sheet adjustment by changing the size of their own balance sheets. This is the appropriate response, as dictated by long traditions of central banking stretching back to Bagehot.

Conceptually, at least initially, these balance-sheet operations could be seen as distinct from the overall monetary policy stance of the central bank. But as the crisis has gone on such distinctions have inevitably become much less clear as ‘conventional’ monetary policy reached its limits.

It was fortuitous for some, perhaps, that the zero-lower bound on nominal interest rates – modern parlance for what we learned about as the ‘liquidity trap’ – had gone from being a text book curiosum to a real world problem in Japan in the 1990s. Japan subsequently pioneered the use of ‘quantitative easing’ in the modern era. This provided some experiential base for other central banks when the recession that unfolded from late 2008 was so deep that there was insufficient scope to cut interest rates in response. So in addition to programs to provide funding to intermediaries in order to prevent a collapse of the financial system when market funding dried up, there have been programs of ‘unconventional monetary policy’ in several major countries over recent years. These have been varyingly thought of as operating by one or more of:

  • reducing longer-term interest rates on sovereign or quasi-sovereign debt by ‘taking duration out of the market’ once the overnight rate was effectively zero
  • reducing credit spreads applying to private sector securities (‘credit easing’, operating via the ‘risk taking’ channel)
  • adding to the stock of monetary assets held by the private sector (the ‘money’ channel, appealing to quantity theory notions of the transmission of monetary policy)
  • in the euro area in particular, commitments to lower the spreads applying to certain sovereign borrowers in the currency union (described as reducing ‘re-denomination risk’).

As a result of such policy innovation, the balance sheets of central banks in the major countries have expanded very significantly, in some cases approaching or even surpassing their war-time peaks (Graph 1). Further expansion may yet occur.

Graph 1

Graph 1: Central Bank Balance Sheets

Click to view larger

It is no criticism of these actions – taken as they have been under the most pressing of circumstances – to observe that they raise some very important and difficult questions for central banks. There is discomfort in some quarters that central banks appear to be exercising an unprecedented degree of discretion, introducing new policies yielding uncertain benefits, and possible costs.

One obvious consideration is that central banks, in managing their own balance sheets, need to assess and manage risk across a wider and much larger pool of assets. Gone are the comfortable days of holding a modest portfolio of bonds issued by the home government that were seen as of undoubted credit quality. Central bank portfolios today have more risk. To date in the major countries, this has worked well in the sense that long-term yields on the core portfolios have come down to the lowest levels in half a century or more. Large profits have been remitted to governments. But at some point, those yields will surely have to rise.

Of course large central bank balance sheets carrying sizeable risk is hardly news around Asia. Once again, the Bank of Thailand has made an excellent contribution to the international discussion here, having recently held a joint conference with the BIS on central bank balance sheets and the challenges ahead. The difference is that in Asia the risks arise from holdings of foreign-currency assets which have been accumulated as a result of exchange-rate management. There is obviously valuation risk on such holdings. There is also often a negative carry on such assets since yields on the Asian domestic obligations which effectively fund foreign holdings are typically higher than those in the major countries. In effect the citizens of Asia continue to provide, through their official reserves, very large loans to major country governments at yields below those which could be earned by deploying that capital at home in the region.

For the major countries a further dimension to what is happening is the blurring of the distinction between monetary and fiscal policy. Granted, central banks are not directly purchasing government debt at issue. But the size of secondary market purchases, and the share of the debt stock held by some central banks, are sufficiently large that it can only be concluded that central bank purchases are materially alleviating the market constraint on government borrowing. At the very least this is lowering debt service costs, and it may also condition how quickly fiscal deficits need to be reduced. There is nothing necessarily wrong with that in circumstances of deficient private demand with low inflation or the threat of deflation. In fact it could be argued that fiscal and monetary policies might actually be jointly more effective in raising both short and long-term growth in those countries if central bank funding could be made to lead directly to actual public final spending – say directed towards infrastructure with a positive and long-lasting social return – as opposed to relying on indirect effects on private spending.

The problem will be the exit from these policies, and the restoration of the distinction between fiscal and monetary policy with the appropriate disciplines. The problem isn't a technical one: the central banks will be able to design appropriate technical modalities for reversing quantitative easing when needed. The real issue is more likely to be that ending a lengthy period of guaranteed cheap funding for governments may prove politically difficult. There is history to suggest so. It is no surprise that some worry that we are heading some way back towards the world of the 1920s to 1960s where central banks were ‘captured’ by the Government of the day. 

Most fundamentally, the question is whether people are fully understanding of the limits to central banks' abilities. It is, to repeat, not to be critical of actions to date to wonder whether private market participants, and perhaps more importantly governments, recognise what central banks cannot do. Central banks can provide liquidity to shore up financial stability and they can buy time for borrowers to adjust. But they cannot, in the end, put government finances on a sustainable course and they cannot create the real resources that need to be found from somewhere to strengthen bank capital. They cannot costlessly correct earlier misallocation of real capital investment. They cannot shield people from the implications of having mis-assessed their own life-time budget constraints and as a result having consumed too much. They cannot combat the effects of population aging or drive the innovation that raises productivity and creates new markets. Nor can they, or should they, put themselves in the position of deciding what real resource transfers should take place between countries in a currency union.

One fears, in short, that while the central banks have been centre stage – rightly in many ways – in the early responses to the crisis, and in buying time for other adjustments by taking bold initiatives over the past couple of years, the limits of what they can do may become more apparent in the years ahead. A key task for central banks is to try to communicate these limits, all the while doing what they can to sustain confidence that solutions can in fact be found and pointing out from where they might come.

Challenges with Spillovers

Talking about the challenges associated with large balance-sheet activities leads naturally into a discussion about international spillovers.

In one sense, this is not a new issue. It has been a cause of anxiety and disagreement since the latter days of the Bretton Woods agreement at least. The remark attributed to the then Secretary of the US Treasury in regard to European concerns about the weakness of the US dollar in the 1970s of ‘it's our currency, but your problem’ was perhaps emblematic of the spillovers of that time. There have been other episodes since. In a much earlier time there was, of course, the ‘beggar thy neighbour’ period of the 1930s – something which carries cogent lessons for current circumstances.

In recent years, as interest rates across a number of major jurisdictions have fallen towards zero and as central bank balance-sheet measures have increased, these developments have been seen as contributing to cross-border flows of capital in search of higher returns. The extent of such spillovers is still in dispute. And, to the extent that they are material, some argue that a world in which extraordinary measures have been taken to prevent crises may still be a better place for all than the counterfactual. 

The degree of disquiet in the global policymaking community does seem, however, to have grown of late. Perhaps one reason is the following. In past episodes expansionary policies in major countries, while having spillovers through capital flows, did demonstrably stimulate demand in the major countries. It is open to policymakers in those countries to claim that unconventional policies are having an expansionary effect in their own economies compared with what would otherwise have occurred. But the slowness of the recovery in the US, Europe and Japan, I suspect, leaves others wondering whether major countries are relying more on exporting their weaknesses than has been the case in most previous recoveries. One response to that can be efforts in emerging economies to make their financial systems more resilient to volatile capital flows, such as by developing local currency bond markets and currency hedging markets. This type of work is underway in various fora, such as the G-20 and EMEAP. But that takes time. Meanwhile people in the emerging economies, and for that matter several advanced economies, feel uncomfortable about the spillovers.

At the same time, it has to be said that spillovers go in more than one direction. While it was common for Asian (and European) policymakers to point the finger at the US for many years over the US current account deficit, with claims that the US was absorbing too great a proportion of the world's saving, the fact was that those regions were supplying excess savings into the global capital market because they did not want to use them at home. That surely had an impact on the marginal cost of capital, to which borrowers and financial institutions in parts of the advanced world responded. We may want to say, in hindsight, that policymakers in the US and elsewhere should have worried more about the financial risks that were building up by the mix of policies that they ran. But we would also have to concede that the US policymakers sought to maintain full employment in a world that was conditioned by policies pursued in parts of the emerging world and especially Asia.

Not only do spillovers go in more than one direction, but those which might arise from policies in this region are much more important now than once was the case. The rapid growth in Asia's economic weight means that policy incompatibilities which partly arise on this side of the Pacific have greater global significance. The traditional Asian strategy of export-driven growth assisted by a low exchange rate worked well when Asia was small. Asia isn't small anymore and so the rest of the world will not be able to absorb the growth in Asian production in the same way as it once did. More of that production will have to be used at home. This is understood by Asian policymakers and progress has been made in reorienting the strategy. I suspect more will be needed.

For central banks in particular, there has been talk about spillovers from monetary policy settings being ‘internalised’ into individual central banks' framework for decision making. Exactly how that might be done is not entirely clear, and discussion is in its infancy; a consensus is yet to emerge. The IMF does useful work on spillovers and the IMF offers, at least in principle, a forum where incompatibilities can be at least recognised and discussed. One more far reaching proposal is for there to be an ‘international monetary policy committee’. That seems a long way off at present.

For spillovers to be effectively internalised, mandates for central banks would need to allow for that. At the present time most central banks are created by national legislatures, with mandates prescribed in national terms. (The ECB of course is the exception, with a mandate given via an international treaty). It would be a very big step to change that and it certainly won't occur easily or soon, though national sovereignty over monetary policy within the euro area was given up as part of the single currency – so big changes can occur if the benefits are deemed to be sufficient.

Whether or not such a step eventually occurs, it is clear that spillovers are with us now. All countries share a collective interest in preserving key elements of the international system, even as individual central banks do what it takes to fulfil their current mandates. It is vital, then, that central banks continue to talk frankly with each other about how we perceive the interconnections of global finance to be operating. We may be limited at times by the national natures of our respective mandates, but those limitations need not preclude cooperative action altogether, as has been demonstrated at various key moments over the past five years. In this region, the EMEAP forum offers great potential to further our mutual understanding and ability to come to joint positions on at least some issues. Internationally, the BIS of course is also a key forum for ‘truth telling’ in a collegiate and confidential setting and one in which the central banks of this region are playing an increasingly prominent role. There will need to be much more of this in the future.


The Bank of Thailand and the Reserve Bank of Australia have, in our respective histories, faced challenges, some of them severe ones. We have learned much from those experiences. In recent years, we have had our own distinct challenges. Fortunately, we have not been directly at the centre of the almost unprecedented challenges faced by our colleagues in major countries, though we have all been affected in various ways.

The future in Asia is full of potential, but to realise that we have to continue our efforts to strengthen our own policy frameworks, learn the appropriate lessons from the problems of others, and continue our efforts to cooperate on key issues of mutual interest. As the Bank of Thailand moves into its eighth decade, I am sure you will rise to the challenge.

Thank you again for the invitation to be here, and Happy Birthday!


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Thu, 12/13/2012 - 00:09 | 3058380 fonzannoon
fonzannoon's picture

Am I really seeing gold down to $1700 right now LOL...

Thu, 12/13/2012 - 00:15 | 3058387 Dr Benway
Dr Benway's picture

Yeah I guess the world is desensitized to debasement.


Regarding Aussie bankers getting religious on their deathbed, it's such stunning fucking hypocrisy when the RBA preach against asset bubbles. Stevens just wants this shit in the papers so he can point to it afterwards.


Also, check out my newly updated presentation on fraud on the Australian stock market:

Thu, 12/13/2012 - 01:05 | 3058474 Dareconomics
Dareconomics's picture

The Aussies have kept rates artificially low for years creating a property bubble amid the usual asset price inflation.



Thu, 12/13/2012 - 01:08 | 3058477 Dareconomics
Thu, 12/13/2012 - 09:57 | 3058930 AlaricBalth
AlaricBalth's picture

" They can't shield people (irresponsible, cronyistic governments) from the implications of having mis-assessed (misallocated) their own lifetime (fiscal) budget constraints and therefore having consumed (stolen and wasted) too much."

Fixed it for him

Thu, 12/13/2012 - 01:48 | 3058515 nevket240
nevket240's picture

You, whatever else you are, are a fucking moron. Artificially low??? Only a Yank could be so fucked in the head.  (pardon the language but what a twat)


Thu, 12/13/2012 - 05:06 | 3058648 NidStyles
NidStyles's picture

It is artificially low, and housing prices are ridiculously high as well. I have a place in Blacktown, so I know this from experience.

Thu, 12/13/2012 - 06:52 | 3058696 ForTheWorld
ForTheWorld's picture

I work with a guy from Blacktown. He told me his house cost him $400,000 a few years ago. I almost fell of my chair. I would never want to pay that much to live so close to Mt Druitt.

Thu, 12/13/2012 - 09:53 | 3058923 LikeClockwork
LikeClockwork's picture

The new migrant middle classes are settling in Doonside estates (small block, stucco terraces by train line, presentable at the moment). Real assets are better than nothing is my only take.



Thu, 12/13/2012 - 04:05 | 3058601 Silver Bug
Silver Bug's picture

Central banks globally are in for a rude wake up call. This farce cannot continue much longer.


Avoid the five most common gold and silver mistakes.

Thu, 12/13/2012 - 01:09 | 3058481 kliguy38
kliguy38's picture

Yup somebody decided it would be beneficial to dump a lot of contracts in one minute in a thinly traded market. I'm sure they suddenly decided after the QE announcement that gold was a terrible investment. Of course anyone aquiring physical gold (hint hint) benefits from these type of manipulations and may even be aiding them.

Thu, 12/13/2012 - 05:14 | 3058658 Poor Grogman
Poor Grogman's picture

"Yet as the central banks have grown closer and become more effective in their cooperation"

Now let me ponder the difference between what these central banks are doing, and the definition of a ...


Thu, 12/13/2012 - 06:36 | 3058686 ohhhhhbaaaaahhh...
ohhhhhbaaaaahhhhhhhhhmaaaaaahhhhh's picture

I don't understand... why would gold and silver go down on news like these?

Thu, 12/13/2012 - 10:22 | 3059038 Orly
Orly's picture

All risk assets are a-fitt'na get slammed.


Thu, 12/13/2012 - 07:57 | 3058715 jekyll island
jekyll island's picture

They can't shield people from the implications of having mis-assessed their own lifetime budget constraints and therefore having consumed too much.  

Uhhh, isn't this what the central banks do for their respective governments?   This is the pot calling the kettle black.  

Thu, 12/13/2012 - 08:50 | 3058771 Cursive
Cursive's picture

@jekyll island

Exactly.  And then, if we needed any proof that this guy is an inverterate Keynesian, he writes this lovely passage:

In fact it could be argued that fiscal and monetary policies might actually be jointly more effective in raising both short and long-term growth in those countries if central bank funding could be made to lead directly to actual public final spending – say directed towards infrastructure with a positive and long-lasting social return – as opposed to relying on indirect effects on private spending.

He may have slipped and and let some truthiness spill out inadvertantly, but he's part of the problem and, given the way these members of the banking cabal think, there is no way that they could ever be part of the solution.

Thu, 12/13/2012 - 10:02 | 3058953 new game
new game's picture

another exactly-zero respect for stephens. now he gets it?

they all think alike and that is the challenge for change...

Thu, 12/13/2012 - 00:10 | 3058381 ApollyonDestroy
ApollyonDestroy's picture

Enough with the hoopla and declare "NO MORE YANKEE DOLLARS" already!

Thu, 12/13/2012 - 00:40 | 3058433 Bindar Dundat
Bindar Dundat's picture

TPTB have been dealt a great hand!  I have an idea about what's coming next.

The cash is building up in the banking system and it is going nowhere -- zero velocity or just about.

 They will let deflation of assets continue and push food prices up.  We sell our assets to survive and they then move over to inflation .  We will have everything stolen from us and then be faced with raging inflation leaving us -- gutted.

No science here but that is what I would do if I was dealt this hand and had no morals...and guess has no morality.


Thu, 12/13/2012 - 00:49 | 3058444 ApollyonDestroy
ApollyonDestroy's picture

Should have been a farmer.

Thu, 12/13/2012 - 09:47 | 3058902 JPM Hater001
JPM Hater001's picture

What if you were dealt the hand and had no clubs?  Do you go 4 spades?

Thu, 12/13/2012 - 11:28 | 3059353 blunderdog
blunderdog's picture

In the US, clubs are typically used to beat spades.

Thu, 12/13/2012 - 01:02 | 3058467 VATICANT
VATICANT's picture


Thu, 12/13/2012 - 00:11 | 3058384 fiftybagger
fiftybagger's picture

They are getting ready to crater stocks tomorrow methinks.

Thu, 12/13/2012 - 00:38 | 3058430 TPTB_r_TBTF
TPTB_r_TBTF's picture

If they wait til next Friday, then ...

they can blame it on the Mayans.

Thu, 12/13/2012 - 00:17 | 3058389 Jim in MN
Jim in MN's picture

Living so close to Japan, whom the US used to ridicule and chastize for their timid/corrupt/insane financial policies, it may just drive the Aussies and Hong Kongistas batshit crazy to watch the world's most previously dynamic economies doing the EXACT SAME THING and sinking into a depraved mire of psychotic lies and criminality.

Or blame 12-12-12.  Whatever.

Thu, 12/13/2012 - 00:38 | 3058424 scatterbrains
scatterbrains's picture

ha!  nigga spoke on 12/12/12 at around 12:12 marking the acme in the transition from digital back to physical..  you should expect, with the world as we know it hanging in the balance,  enormous volatility in the markets while they struggle to regain control of their fiat empire. Strap in bitchezz !!

Thu, 12/13/2012 - 07:36 | 3058706 Al Gorerhythm
Al Gorerhythm's picture


Thu, 12/13/2012 - 00:17 | 3058391 Ineverslice
Ineverslice's picture


drunken Nikkei is sTill flyin'...

somebody short it befor ten K.

Thu, 12/13/2012 - 00:18 | 3058393 knukles
knukles's picture

As an alcoholic might describe, "a moment of clarity."

Thu, 12/13/2012 - 05:09 | 3058651 NidStyles
NidStyles's picture

I had one of those once, then I went back to denying that I was an alcoholic.

Thu, 12/13/2012 - 00:21 | 3058399 valkir
valkir's picture

This wont end well.There will be blood.I am tired to dead.Not phisicaly,mentaly.I simply stop trying to give info and trying to educate people.Apathy everywhere.

Thu, 12/13/2012 - 00:32 | 3058415 Jim in MN
Jim in MN's picture


Thu, 12/13/2012 - 00:34 | 3058418 HalinCA
HalinCA's picture

The problem with trying to teach pigs how to dance isn't that you are wasting your time - you are annoying the pigs.

Thu, 12/13/2012 - 08:36 | 3058753 Acet
Acet's picture

Yupes, colorfull expression aside, most people just feel unconfortable if one talks about the state of the economy, the slippery slope of money printing and the peak of the debt cycle.

I think it's a mix of fear (as in, they don't want to believe in it because it's frightening), normalicy bias, having been trained to believe authority and just being overwelmed and unable to understand the complex subject which is the economic crisis.

In my experience people might see and feel the small localized pain but they have trouble grasping the whole, gigantic problem that's behind it and countless other small pains (or, as I said with regards to a person that was trying to help save her local school from cuts in the UK, "It's like trying to save a sand castle in the face of a tsunami").


Thu, 12/13/2012 - 11:04 | 3059234 madcows
madcows's picture

Well, all animals are equal dancer-esque.  Some are just more equal dancer-esque than others.

Thu, 12/13/2012 - 05:10 | 3058652 NidStyles
NidStyles's picture

Do the smart thing, cut your losses. You can not save those that are unwilling to be saved.

Thu, 12/13/2012 - 05:12 | 3058653 Dugald
Dugald's picture

Where ignorance it bliss, tis folly to be wise......

Thu, 12/13/2012 - 09:51 | 3058915 JPM Hater001
JPM Hater001's picture

Apathy everywhere?

Oh, I think it's much broader than that.

Thu, 12/13/2012 - 00:44 | 3058440 Jim in MN
Jim in MN's picture

So like, NCIS Los Angeles last night was all about a big heist of gold that was a US Treasury interest payment to the Chinese, and when the pretty agents found it it turned out to be tungsten (they drilled it) and then they found the dudes that did it by searching their cryptospy databases for smelters and tungsten purchases and it turned out to be the Iranians trying to destroy us. 

No seriously, prime time last night.  Hilarious. 

Thu, 12/13/2012 - 01:12 | 3058479 otto skorzeny
otto skorzeny's picture

I had some kid working at Staples the other day telling me how great "Revolution" was on NBC-and I was going to tell him how TV was as far from reality you could get and then I just realized I would be wasting my breath. and the Iranians hold way more phyzz than the US anyway so that is why-like Libya-they are ripe for some "freedom"

Thu, 12/13/2012 - 05:12 | 3058654 NidStyles
NidStyles's picture

He won't think it's amazing the first time he goes to sleep hungry. Nor the after the first week of not showering.

Thu, 12/13/2012 - 09:53 | 3058918 JPM Hater001
JPM Hater001's picture

Hilarious or Hilranious?

Thu, 12/13/2012 - 10:49 | 3059158 resurger
resurger's picture

You are fucking Epic JIM!

So when Finally the US Reserve is broke, and when push comes to shove, they will deliver tungstan impregnated bars to the World, and when the world discovers that its phony they will go and blame the smelters ...


Mother fucking Federal Reserve! Just die you fuckers

Thu, 12/13/2012 - 00:50 | 3058447 chump666
chump666's picture

HK CB just went large with a huge HKD sell off, screwed with the gold price (Asian session) and caused the USD to go bid.  Australia and Canada once the housing markets blow into oblivion will 100% print and buy government debt.

Central bankers are carved from the same BS.

Market looks sick as dog, as confusion will reign, FX war leading to trade war, trade war leading to...war.

Thu, 12/13/2012 - 01:15 | 3058490 Orly
Orly's picture

Werd, Chump.

Check out the U/J Weekly and notice the front-loaded Cup with Handle formation has formed the back part of the cup.

Expect a retracement of a handle to the nearest Fibo @~82.73 before a retest to the high point of the cup.  Time-frame, about three weeks to a month.


Thu, 12/13/2012 - 01:26 | 3058499 chump666
chump666's picture

Will do.

And the FX primer for Asia, the JPY/KRW which dropped to new lows.  All on the Feds arrogance, point is, FX war is in effect as the DXY begins it's descend.  Which, I agree will be short, curious what China will do, as I think that a billion Chinese are all saving in USDs.  Just a hunch, which could explain why their market is skirting off 2000 lows.

Strange days.

Do you think that volatility will start to pick up in the FX market and spread to stocks?

Thu, 12/13/2012 - 01:39 | 3058504 Orly
Orly's picture

If the way the British man-handled the JPY vs. the USD and GBP will be any indication, then yes, vol is going to rocket.  I've never seen anything like the ramp last night.

And if you looked at the Daily chart of the USDJPY you would swear it had everything to do with the Fed announcement.  But upon closer examination, you can see that the Brits rode that thing higher all morning and the pair pretty much reached its highs before the announcement. Strange days, indeed.  Most peculiar, momma.

To me, it could be the typical British ploy of ramping something up and selling the other end of the trade.  That's the feeling I was getting from it.

Of course, one never knows from day-to-day but it seems that from here, 4X is going to be trading as it was even before QE3, except this time on steroids.  Remember the Euro and AUD rising every day against the dollar on vapourous news, innuendo and rumours.  Remember the Japanese threatening every other day to have to intervene (much like Abe is nowadays?).  The USDJPY plunges as the AUDUSD double-tops at $1.10, all to keep the Euro and the Pound Sterling steady as she goes.  More of the same, only amped this time.

It's the only thing that makes sense...not from a fundamental or technical perspective- because we both know the name of that tune- but simply from a "what are they up to now?" perspective.  Pathetic way to trade, isn't it?


Thu, 12/13/2012 - 01:52 | 3058524 chump666
chump666's picture

Awful way to trade, but, looking at the HFTs that stabilize the MAs on stocks to get smart money to pile up longs, all under the auspiciousness of central bank liquidity -  is a fragile game. One that has nothing really to do with tech or fundamentals.  The S&P and NASDAQ struggling to gain real traction is an indication that the game could be ending (till all out QE).

But, fundamentals will hit hard in 2013 and 2012 wasn't a rosy year at all, so maybe an omen for the big one.  Notice how no one made a fuss over the Nth Korea rocket, esp Japan?  China.

Thu, 12/13/2012 - 06:21 | 3058681 negative rates
negative rates's picture

You guys have completely lost your minds, and its shows to. You are a glutteny of numbers, Which is actually a deadly sin. Tip of the day, live every day and spend every dime, as if it were your last.

Thu, 12/13/2012 - 09:06 | 3058799 unrulian
unrulian's picture

i wish i knew what the fuck you were talking about :)

Thu, 12/13/2012 - 10:27 | 3059055 Orly
Orly's picture

By all means, ask away!


Thu, 12/13/2012 - 00:53 | 3058453 Marco
Marco's picture

They are about 4 decades too late to complain about government deficits ...

Thu, 12/13/2012 - 00:58 | 3058461 q99x2
q99x2's picture

What war did the US fund to drive up the deficit like it is. Oh maybe the NWO War against America. Prick M'Fers no good gosh darn vermin central banksters.

Thu, 12/13/2012 - 01:04 | 3058471 ZFiNX
ZFiNX's picture

New Zealand seems the spot to move to, if there were any.

Thu, 12/13/2012 - 01:11 | 3058483 otto skorzeny
otto skorzeny's picture

after that whole Kim Dot Com raid that the FBI orchestrated it is obvious NZ is just as much a part of the NWO as anywhere else-you might as well stay and fight it out

Thu, 12/13/2012 - 01:43 | 3058512 CunnyFunt
CunnyFunt's picture

In addition, it's the hip relocation spot for Cali trendies.

Kiwis, beware!

Thu, 12/13/2012 - 01:50 | 3058518 otto skorzeny
otto skorzeny's picture

that's the kiss of death-plus the Mexs won't be far behind

Thu, 12/13/2012 - 02:12 | 3058539 Rogue Trooper
Rogue Trooper's picture

None of you are wrong.  My part of the world and the same imbecilic denial that we are not subject to this.  Our property market is still going nuts in the main city, Auckland.  The reset is coming but not until Aussie gets hit first - 2013.

The only saving grace for NZ is that we have fuck all people (look it up if you are interested) and can feed ourselves and folks need to eat so we shouldn have a market for that.  Frankly, it's a better place than Aussie  They completely rely on that iron ore.  Everything else they price themselves out of the market with excessive wages (Unions completely dominate) and subsidise what manufacturing they have via tariffs.

Good luck to you all out there and hunker down.

Thu, 12/13/2012 - 02:44 | 3058563 MaxPower
MaxPower's picture

You are also not wrong! As a recently-relocated Yank now living in an Auckland suburb, I was shocked, SHOCKED!, to see a repeat performance of everything that went wrong vis a vis property in the US now playing out here in NZ. Every time I drive past a newly-listed property, and witness the dozens of Chinese crawling all over it whilst simultaneously foaming all over themselves to bid as much as possible for a ramshackle, uninsulated fixer-upper at auction, I feel like Bill Murray in Groundhog Day.

It's at once fascinating and depressing to listen to the locals tell me "it won't happen here" and "our market is different." Oh well, as with so many other things, education comes slowly, and then all at once. For us, our one saving grace is that we have probably a dozen different fruit trees, and all manner of vegetables, encircling our (rented) abode and sustaining us cheaply. What's more, no effort's required to get them to produce. They just grow. Must have something to do with all this rich volcanic soil and all the rain.

Thu, 12/13/2012 - 03:09 | 3058583 Rogue Trooper
Rogue Trooper's picture

Welcome brother!

BTW get your gun licence quick.  No issue here and we have pretty sane laws unlike our fellow ANZAC's across the tasman sea.

I feel safer already ;)

Thu, 12/13/2012 - 03:30 | 3058591 MaxPower
MaxPower's picture

Thanks for the welcome. We love it here precisely because it's so sparsely populated (outside Auckland, natch), and if it weren't so bloody expensive it would be just about perfect. I try to justify it by calling all the high prices a scenery tax...

As for the gun license, already looked into it! I've got some, ahem, experience with weapons, so no worries for me in that regard. ;-)

We should start an NZ ZH roundtable or something. Wonder how many Kiwis are lurking here?

Thu, 12/13/2012 - 03:44 | 3058597 Rogue Trooper
Rogue Trooper's picture

Cool idea.  There are a few I have seen whi could be ( One called Haka springs to mind).  Had to be of Kiwi extraction but he may have be in the UK.  No idea.

Excellent idea on the 'firearms' side - focus on the important stuff first.  BTW you cannot call them weapons here though it's not PC!

A cat is no sweat (Security do the Mountain safety course etc), B cat for pistols more trouble and time, E cat for restricted (ie, a nice AR-15 platform)  is more to to you have to right for permission and also submit an old crapper that they then scrape - its all possible as no doubt you have discovered.  The prices are nuts compared to what you will be used to.

BTW there are over 200 thousand licenced gun owners out of the total population.  It's a pretty large group a lot of kiwi's grew up with a rifle and outside the main cities eeryone has one (well I exaggerate but you get the drift).  The farmers of course.

All the best, I'll look out for you, I check in everyday  - for sanity!


Thu, 12/13/2012 - 04:24 | 3058614 spdrdr
spdrdr's picture

You guys have got it wrong - I'd happily live in the South Island.

Take care!


Thu, 12/13/2012 - 04:27 | 3058618 MaxPower
MaxPower's picture

It's stunning there, but too cold in winter and too hot in summer! I'm more of a 'temperate' person... 


Thu, 12/13/2012 - 04:32 | 3058621 Rogue Trooper
Rogue Trooper's picture

The beer sucks as does the weather and DO NOT buy in Wanaka.  Makes Auckland look cheap!

I think the Doug Casey types keep buyin' up lots of LAND!

Nice scenary though and almost no people :)

Thu, 12/13/2012 - 04:25 | 3058615 MaxPower
MaxPower's picture

Yeah, I've seen Haka before on here as well. Thanks for the info re "firearms." Good to know!

As for me, I'm on here every single day but I rarely post. Not much to add, as I don't hail from a finance background. Been here for a few years, and have learned A LOT (sometimes more than I wanted to know). Funny enough, sometimes I have to step away from ZH - for sanity! Sweet as, eh?

Cheers mate!

Thu, 12/13/2012 - 04:42 | 3058629 Rogue Trooper
Rogue Trooper's picture

I get what you are saying MAX.  A couple of years ago you could keep up with the articles on ZH and if they got 500 reads I am sure the Tyler(s) where happy.  Now it's a nightmare to keep up with all the articles! It's almost mainstream.

What puzzels me is the inflation vs deflation argument.  It's almost a conundrum.  I like Mish's argument that the credit will be de-levered first, the CBs will react with the one tool they have left, and hyperinflation eventually occurs later has they will not be able to react and reverse there balance sheets quickly enough.  They cannot use interest rates like Volker did in the 80's.

I leave that to others who are much more knowledble than I will ever be.

Stay safe, and will no doubt we will catch up some time.

Cheers, Rogue.

Thu, 12/13/2012 - 09:03 | 3058790 groundedkiwi
groundedkiwi's picture

Lurking is illegal.

Thu, 12/13/2012 - 15:07 | 3060329 MaxPower
MaxPower's picture

I'm picking up your sarcasm... ;-)

Thu, 12/13/2012 - 10:10 | 3058984 Kayman
Kayman's picture

"dozens of Chinese crawling all over"

It's all part of the Chinese policy of infiltration.  What better way to promote "Don't criticize China" than to have your own plants ready to claim you are a rascist whenever the totalitarian Chinese government strongarms the rest of the world.

Thu, 12/13/2012 - 04:33 | 3058622 MaxPower
MaxPower's picture

Keep an eye on the Kim Dotcom saga, it's not over with yet. It's caused a huge uproar here, and I'm pleasantly surprised to say that most folks here seem to support his efforts to resist the tyranny of the MPAA and the US. What's more, it seems that the judges here are more inclined to counter what former FRBNY employee Key has done.

Saw an article today that opined the entire case may just be thrown out here because the local cops, intel agency, and government bungled it so badly. Something like 6,000 man-hours of government legal fees have already accrued just to piece together who knew what, and when, which isn't making the average taxpayer here very happy either. The more they dig, the more comical the whole thing becomes and the worse Key, the FBI, MPAA, and the USA look. It's quite the three-ring circus.

Last night, Kim Dotcom played Santa Claus in a local stage production. He was there by popular request.

Strange times!

Thu, 12/13/2012 - 01:17 | 3058492 suteibu
suteibu's picture

An Asian BIS?  Them's fightin' words!!

Thu, 12/13/2012 - 01:44 | 3058510 Bastiat
Bastiat's picture

Central banks can provide infinite liquidity to the largest financial institutions who have mis-assessed the risk in their portfolios.

Thu, 12/13/2012 - 01:44 | 3058513 SWIFT 760
SWIFT 760's picture

Go where the growth is organic...SE Asia. Millions of people buying their first toasters, upscale fashion, motorbikes, cars, bicycles, etc. The Asian consumer is not fond of personal debt so purchase are paid in cash or quickly paid off.

Burma gaining momentum as well. Get there quick before the fucking kikes ruin the place.

Jewbux suck !!!

Thu, 12/13/2012 - 01:56 | 3058525 otto skorzeny
otto skorzeny's picture

I though it was Myanmar now? if the yids figure out the weather is similar to FL and the cost of living is dirt cheap then they're on the next (cheap) flight. they're not fond of banker credit? that means they're in line for a healthy dose of " US freedom" Libyan style.

Thu, 12/13/2012 - 01:57 | 3058530 nevket240
nevket240's picture

Not so fast laddie. The Asiana are quickly getting a taste of Credit card debt. Aeon springs to mind. they are everywhere. 10 years loans on HiLux's are popular. I live in Thailand and China. See it everyday. A nurse of 4K pa and hubbie on the same have to borrow to buy the goodies they see everynight on shitbox Thai and Chinese soaps. The worst TV you will EVER watch is Thai.

The Asian consumer is not a big salary earner so has to borrow to have something that an advertising agency says they must have. Hence the rise in credit, on or off sheet.

regards from Surin. 


Thu, 12/13/2012 - 01:52 | 3058517 Rogue Trooper
Rogue Trooper's picture

Glenn, that was very interesting and the best of luck with keeping that Inflation Trageting Mandate.

The "Lucky Country" has so far escaped the GFC in 2008 completely they say.  Well 2013 is approaching and we all know the Mining Sector is already in terminal decline as China starts to reset.  Perhaps with this rant Glenn is trying to pre-empt Julia Gillard's pending request for, when TSHTF, around 1 Trillion AUD to ball out one or more of the Big 4 TBTF Banks along with and a healthy dose of QE4EVA, Aussie Style! Julia is a pretty are hard nosed Aussie Chick so I would put money on Julia over Glenn any day.  No offense Glenn but you're not THAT strong.

Well my Aussie friends welcome to the great reckoning - 2013?

Another clue is surely when Goldman makes a play and is shorting the AUD with around 4 billion.  Remember how they played the sub-prime?

Let's see how those housing 'investments'(Sarc), which have already surpassed any excesses the US FED could engineer, and also the 1.4 Triilion locked up in the famed superannuation schemes effect that ANZAC spirit.  NZ will closely follow you demise.  So my friends prepare accordingly and be careful you don't loose any of those Perth Mint 1oz kookaburras while out in the bay fishing.  Let me tell you boating accidents do happen, long term readers of this site can assert to this phenomena, just by reading the comments. I am sure the Tylers' are analyzing the data and working on an ALGO to prove this beyond doubt.

On the other hand I'm sure the diggers will continue to listen and believe what Gillard and Swan say.  Afterall, you are different and the party will never stop.

Australia the NEW Spain around 2014.

.. good luck with that ;)

Thu, 12/13/2012 - 02:11 | 3058541 Marco
Marco's picture

Australia's external debt is similar to Spain ... but it's trade balance even with the hit to the mining sector is closer to Ireland and Iceland. Spain doesn't really have a choice, their economy sucks and they have to play ball for external loans.

Australia has a choice, it can martyr itself for the international financial system ... but be rewarded with a near limitless credit line for as long as the status quo lasts as long as they have token attempts at austerity ala Ireland.

Or it can pull an Iceland, although given their size that would probably be the harbinger of the collapse of the status quo.

Thu, 12/13/2012 - 02:33 | 3058549 Rogue Trooper
Rogue Trooper's picture

Great point Marco.  I just do not think the politicians will make that choice when faced with the conundrum.  Both NZ and Australia are dominated by a needy 'please sir can I have some more?' electorate that both our respective 'Red' and 'Blue' parties have made promises that they need to keep.  They want re-election so I see this playing out in a way not too disimilar to what we see in the US. Both Governments will try to keep the housing market alive has this is the only wealth that so-called middle class has.  Australia has complicated matters with the amount they have in personal retirement accounts  - it was not a bad solution to the retirement problem but folks are already tapping into this wealth and have started retiring at age 55 which they can.  Both countries got rid of defined benefits pensions which plage the US and UK.  However, the great returns have been partly funded by the Chinese boom.  Both countries have terrible saving rates and the housing boom was funded from offshore cheap money (US?).

Time will tell.

Best, Rogue

Thu, 12/13/2012 - 04:07 | 3058606 fnord88
fnord88's picture

What Australia has, is more gold in the ground per capita than every other country, by a factor of several hundered. Our esteemed Central Banker actually stated ( when he sold most of our gold at rock bottom prices), that if needed the RBA could simply "seize gold in the ground". Which is what they will do, because the Aus property crash and financial breakdown will coincide with golds massive upward price movement. 

Thu, 12/13/2012 - 04:27 | 3058619 Rogue Trooper
Rogue Trooper's picture

Glenn obviously took wise council from Gordon Brown ;)

Also the Federal Gov still has an old law on the books that they can confiscate all of that 'barbarous relic' above the ground as well. The CB wankers should face the Guillotine.

Be careful brother.. but I am sure you are aware.

Best, Rogue.

Thu, 12/13/2012 - 06:30 | 3058685 Bazza McKenzie
Bazza McKenzie's picture

No one in Australia believes a thing said by Gillard and Swan.  They'll be gone within a year.

By the way, is "hard nosed" a euphemism for big nose?  Have you got a euphemism for big bum?

Thu, 12/13/2012 - 07:26 | 3058704 Rogue Trooper
Rogue Trooper's picture

LOL, Bazza, your 'hot' PM reminds me of our former NZ PM Helen Clark.  Unfortunately, socialist chicks are never the most pleasing on the 'eye. Would FAT ARSE do?

Many years ago at some ASEAN conference all they had was a photoshopped picture of Helen that they used for the 2000 election.  The lads where ever hopeful and when she showed up somewhat disappointed.

Still true to her socialiist roots Helen managed to scored a $500 K tax free (plus all expenses) job to continue working for a better world at the UN.  Go figure? Perhaps Julia can join her they would be quite a team.

Good luck with the next crowd after Labors demise....

Thu, 12/13/2012 - 08:46 | 3058766 Bazza McKenzie
Bazza McKenzie's picture

"Fat arse", it's acceptability seems to depend on who says it.  Some time ago Germain Greer (you know, the free spirit of the 60s, or was it the 50s?) happened to comment on Gillard's abundant posterior, as well as her dress sense.

Later the media braced Abbott on the comment by Greer (who has absolutely nothing to do with Abbott's Liberal Party).  He made some vague comment to try not to comment but got pilloried by the media for his supposed sexism in commenting on Gillard's attire, while Greer waltzed away scott-free despite commenting on not just Gillard's attire but her fat arse.

Thu, 12/13/2012 - 02:07 | 3058538 chump666
chump666's picture

Some humor to offset the madness:

Praise the dark lord for Ricky

Thu, 12/13/2012 - 04:35 | 3058624 AnAnonymous
AnAnonymous's picture

Some humor to offset the madness:

There is no madness in that in an 'american' world. Only 'americanism'.

Thu, 12/13/2012 - 10:20 | 3059032 Kayman
Kayman's picture

"dozens of Chinese crawling all over the internet."

Paid for by Chicom Inc.

Now, that's humor.

Thu, 12/13/2012 - 02:30 | 3058555 Bastiat009
Bastiat009's picture

This morning, outside of the US, where most of the world lives and works, the euro is shooting up against the US$ and mostly against gold which is crashing fast, while stocks are rising and rising, or as someone here would say "stocks massively outperform PM."

Thu, 12/13/2012 - 02:37 | 3058559 Rogue Trooper
Rogue Trooper's picture

Skynet never sleeps!

HFT ALGOS working for you 24/7 ;)



Thu, 12/13/2012 - 02:39 | 3058561 Hangfire
Hangfire's picture

"Pacific Rim", these guys understand how much it's going to cost to fight giant monsters from the sea!

Thu, 12/13/2012 - 03:05 | 3058580 Rogue Trooper
Rogue Trooper's picture

Nice Hangfire, remember to fight the "squid" and skynet, once it becomes self-aware, will take more than courage. No your true enemy.

If you are on this site "you are the resistance".

/John Connor

Thu, 12/13/2012 - 03:44 | 3058595 Floodmaster
Floodmaster's picture


Thu, 12/13/2012 - 03:13 | 3058584 Jugdish
Jugdish's picture

The rise of the eastern dragon as foretold in Sisquo's famous album - Unleash the Dragon.


Thu, 12/13/2012 - 03:36 | 3058585 Floodmaster
Floodmaster's picture

Aussie/Canada print money like crazy with their housing bubble, the U.S. try to.

Thu, 12/13/2012 - 03:14 | 3058586 Sparkey
Sparkey's picture

When did, 'More', morph into Moar? Moar is the prefered spelling at ZH!

"Moar" is a family name around here!

Thu, 12/13/2012 - 03:51 | 3058598 Catullus
Catullus's picture

Love how "The Great Moderation" was a period of high leverage that ultimately led to a financial crisis. What was moderation about it? These people live in modeled fantasy land.

Mainstream macroeconomics was perhaps a bit slow to see the financial sector as it should be seen: that is, as having its own dynamic of innovation and risk taking; as being not only an amplification mechanism for shocks but a possible source of shocks in its own right, rather than just as passively accommodating the other sectors in the economy. 

That is to say mainstream macroeconomics does not describe real world action and policy implications. And so a period of "price stability" is anything but. Because macro doesn't explain the world as it is, it's invalidated. It's meaningless.

The other whopper is the "success of the inflation/output metric" which has obviously shown itself to be a fraud.

This is not truthfulness. It's setting up the scapegoat for collapse. It's to make it seem like the CBs are passive policy observers and not enablers for gamblers. It reads like "we weren't right then because we didn't understand anything about the financial markets, we're all printing a lot of money, it's pretty obviously not working the way we modeled it, internationally people are beginning to notice the 'export inflation' dynamic going on here, there doesn't seem to be an exit strategy."

At least he says an international monetary policy group is a long way off. Meaning the global central bank and global government idea is being discussed, but not something that's about to be formed or even close to being formed.

Thu, 12/13/2012 - 03:56 | 3058599 Rogue Trooper
Rogue Trooper's picture

Brother Catullus, I salute you!  A superb post and perhaps a postscript on the central banking cartel already trying to re-write history on the sordid part in generating this collapse.

They are gulity, plain and simple, perhaps they (CBs) are privy to this and can also see the inevitable end?

Do they have a real "get out of dodge" plan or do they expect the Guillotine? That would explain Glenn's attempt to defend himself and his CB brethren.

I for one, declare them all, Guilty!


Thu, 12/13/2012 - 04:06 | 3058604 ak_khanna
ak_khanna's picture

Countries around the world are taking on more debt without any fruitful attempts to curb their expenditures. This has resulted in a much more fragile and artificially held up financial system which is on a much shaky ground than it was in 2008. In 2008 companies failed due to excessive leverage and debt and now countries are likely to default because they took on the same bad debt on themselves. 

There is no economic recovery because all the efforts of politicians, government, central banks etc are focused on saving banks instead of targeting job creation which is the only way economy can recover.

Thu, 12/13/2012 - 05:15 | 3058660 Peterus
Peterus's picture

Debts and accounting tricks are one thing, there is still reality beneath all of it. You can write "10 tons of bricks lent for costruction of a house", stamp a nice stamp, sign it and give it to 20 companies. But if you have only 10 physical tons of bricks reality will catch up to this really fast.

Global economy is huge complex system and it has (had?) large reserves and lots of accumulated capital to burn through. However these bricks will run out just the same and massive readjustment will fallow.

BTW How do you "target job creation"? Isn't lowering taxes and additional costs to wages the only way to have long-term sustainable "job creation"?

Thu, 12/13/2012 - 11:59 | 3059530 blunderdog
blunderdog's picture

    long-term sustainable "job creation"

There's really no such thing.  Markets are a constant push/pull, rather like tides.

Thu, 12/13/2012 - 04:18 | 3058611 groundedkiwi
groundedkiwi's picture

Its like follow the money, do not listen to what they say, but what they do.

Thu, 12/13/2012 - 04:25 | 3058616 nathan1234
nathan1234's picture

They are trying to save their asses and their necks from lynching.

Thu, 12/13/2012 - 04:32 | 3058620 AnAnonymous
AnAnonymous's picture

and therefore having consumed too much.

Ah, holy cow, an overconsumption problem.

The 'american' solution to it is known:
-blame/get rid of non consumers, low consumers. It creates new incentives to consume even more.

-In the meantime, keep overconsuming as much as you can up to depletion of resources.

Apparently, 'american' australians are feeling the heat. They might have thought that being part of the indo european great tribe would protect them.

Bad news for them, they are on the wrong side of the 'american' overconsumption problem. Some consume, others get consumed.
Some overconsume, others get overconsumed.

A cheerful game that knows no prisoners. And yes, now it is the time the usual suspects are hitting their resiliency point. So some 'americans' have to step in and stand for the usual suspects to play the part of the overconsumed.

'Americans' vs 'americans', that is the way of the future.

Thu, 12/13/2012 - 05:03 | 3058634 Rogue Trooper
Rogue Trooper's picture

ANooNEEMOaSEE how many posts promoting the virtues of Chinee CItIXZENSZIMS do you need to post before you get to sell you sister and borrow 1,000,000 YUAN from Bank of China to apply for the the first membership ladder within the GREAT Communist Party of China.

Honest, I am genuinely interested.

Plus lots of your folks will pay ten times the market price for a peace of shit crack shack in my hometown? What gives?

Sincerely, Rogue

Thu, 12/13/2012 - 05:05 | 3058646 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

[more of the same old blather]

You're in a bit of a rut, George Dishwashington. You're just rehashing the same old stuff. The crustiest bits have gone soggy and the matteringest things have become matterless. A little bird tells me that your writingness abilitation has flown the chicken coop.

It'd probably time again for you to go off your prescribed antipsychotics in order to recover your je ne sais quackery.

Thu, 12/13/2012 - 05:36 | 3058664 Rogue Trooper
Rogue Trooper's picture

Hey Stooge, I think he's got a new gig doing a 12 hour shift shoveling buffalo shit off the Beijing to Greatwall Peoples Prosperity highway.  Theres no fwee why FY out there plus no cars so hard to keep up with postings for Greater China. Still it pays well, not actually in Yuan, but by way of an understanding with his employer the famous "FUKK YU MOST DEVELOPEE COMPANEE LTD" that he can take all of the dead dogs that he can carry on his glorious brand new "Flying Pigoen" bicycle.

He's clearly living the Chinese dream.




Thu, 12/13/2012 - 09:54 | 3058925 semperfi
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Dear AnAnon,

When China stops forcing the murder of baby girls, give me a call.

Thu, 12/13/2012 - 04:39 | 3058627 syntaxterror
syntaxterror's picture

I'm thinking Bernanke gets the next Nobel Peace Prize, no?

Thu, 12/13/2012 - 05:04 | 3058645 Peterus
Peterus's picture

I'd say he'll have to split it with Goldman Sachs.

Thu, 12/13/2012 - 05:43 | 3058666 Rogue Trooper
Rogue Trooper's picture

It's a hard call as to who deserves this prize the most....?

Still, I am reminded of the scene in Pulp Fiction when Zed introduces THE GIMP.  I can visualise the Benark right there now, somewhat compromised, and a little unsure of what will actuall happen next..... nice :)

Thu, 12/13/2012 - 08:28 | 3058741 Howdan
Howdan's picture

"Bring in the giiiiiiiimp" (Enter Bernanke in gimp mask)

Thu, 12/13/2012 - 11:00 | 3059210 madcows
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I'd rather see him get the Nobel Prize for Alchemy.  He has magically turned debt into money and prosperity.  And Chemistry for the discovery of Hopium.

Thu, 12/13/2012 - 06:59 | 3058679 slackrabbit
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“Why are these AsiaPac bankers breaking ranks with the status quo?” 

Money printing in the west was eventually going to annoy the east; and also forcing everyone else to follow US / EU foreign policy by using the swift system as a financial weapon pissed off a whole lot of countries that had no issue with Iran and / or didn't like that their sovereignty was being impinged by the US/EU, who could turn off the trade settlement system to particular countries whenever they felt like it.

With Australia and New Zealand are joining in the new Asian trade block as well as supporting the new peer-to-peer trade and banking system that Germany, Russia and China  are working on (and eventually dropping swift) it was inevitable that eastern / pacific central banks would begin to say publically what they had previously said privately to western countries.

Clearly the full anger against western money printing now means more announcements will follow from other eastern and african nations. 

When you export your inflation to them,  and then bully them using swift don't expect them to be happy about it.


Thu, 12/13/2012 - 07:15 | 3058703 smacker
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Glenn Stevens claims that Inflation Targeting (IT) sine the late 1990s has achieved great success in Thailand and elsewhere across Asia, but it alone has not been able to maintain economic stability...see events since 2007.

Well, he's sort-of right. But that is almost certainly because the inflation target supposedly aimed at by central bankers was - and remains - a fake measurement of consumer inflation. Presumably it was only ever intended to fool the financial markets and of course consumers, into believing that govt was serious about getting to grips with its own gross mismanagement of monetary policy.

Thus we see a situation today in developed nations whereby governments and central bankers claim to be achieving - or almost achieving - their CPI targets, but in reality, general consumer prices are rising at 2 or 3 times that level. Growing numbers of people in Britain are enduring inflation closer to 8-10% per annum but the BoE and their political masters produce monthly garbage claiming that CPI is ~2.5%.

The CPI clearly only applies to the iPod generation who spend their money on techy consumer goods that we know are falling in price each year as technology moves on. For millions of other people who mostly spend their money on food, housing, energy and many other government taxes/fees etc, inflation is much higher. These costs never get captured by the fake CPI.

If an accurate measurement of inflation were used since the late 1990s, interest rates would have been forced up way back and the financial crises of 2007+ would not have happened. Imagine that!

Thu, 12/13/2012 - 08:19 | 3058734 spanish inquisition
spanish inquisition's picture

To sum up - What Central Banking does is buy time for the financial owners of the central bank to readjust after the hangover of a liquidity party. Inflation Targeting is helpful because it increases financial economic outcomes for large international banks by creating large slow growing bubbles that are easy to cross leverage many times over international borders. Central banking has no positive effect on the real economy, the more the intervention, the more "spillover" as the real economy is burdened by the losses incurred by the financial owners shadow economy. (note spillover, nothing illegal happens in Central Banking land)

In conclusion, this is a message to Thailand that "spillover" time is getting short and to transfer more debt from banking interests to the people before the large countries start ending QE.

Thu, 12/13/2012 - 09:22 | 3058826 forwardho
forwardho's picture

EMEAP?  really,  EMEAP? Isn't this is the sound that Dr Benson Honeydoo's able bodied assistant makes when speaking?

They are making it up as they go along.

Thu, 12/13/2012 - 09:21 | 3058835 IamtheREALmario
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I am thinking that we need to go the Iceland route.

Thu, 12/13/2012 - 09:48 | 3058904 semperfi
semperfi's picture

Sun setting in the West.  Sun rising in the East. 

Thu, 12/13/2012 - 10:01 | 3058952 topspinslicer
topspinslicer's picture

Play it again Sam. You played it for her you can play it for me!

I call bullsheet on the banksters being truthful all of a sudden -- right after they get their few trillion!! No way -- let's go full tilt and send a few trillion in cash money direct to the people with jobs and paying taxes come hell or high water inflation! And while obama is at it with his voodoo that you do ghetto economics slash income taxes by 90% for everyone with a job if he is such a man of the people. Bunch of stinking back scratching central planning bitches!!! Where is a lone gunman when you really need one???!!!!

Thu, 12/13/2012 - 10:19 | 3058986 devo
devo's picture

Eat a cockmeat sandwich, Bernanke.

Thu, 12/13/2012 - 12:09 | 3059108 cranky-old-geezer
cranky-old-geezer's picture



The key principle was that monetary policy was, in the end, about anchoring the value of money – that is, about price stability.

There's so many ways I could rip this central bankster bullshit article to shreds, but I'll restrict my comments to this one point and rip it to shreds.

Value of money ...currency actually, not money... and price stability are two different things.  So he makes a glaring error right here, perhaps innocently out of brainwashing, perhaps deliberately out of fraud, who knows?

Housing in the US is a great example.  Housing here is in demand collapse (from collapsing job market and collapsing real wages), pulling prices down. But wild ass printing debases the currency, pushing prices up.  In housing we see those two opposing forces approaching equilibrium, with housing prices stabilizing somewhat, maybe edging slightly downward now.

Bernanke is using currency debasement to cover up a housing collapse.  If currency value was stable (no QE, bailouts, etc) we would see that collapse in its sad reality, prices dropping 50%, 60%.

So price stability is a ruse, a coverup, a fraud. You can debase the currency while collapsing the economy and prices remain stable more or less, hiding currency debasement from the public

...well... until they try to buy something in relatively steady demand like groceries and gasoline, where prices are rising fast ...whereupon they remove food and fuel from their "offical" inflation number.

This is Econ 101 stuff.  Basic laws of supply and demand, emphasis on laws, central banksters can't get around.  They can cover it up for a while, but they can't get around it.  And the longer they cover it up, the more vicious the eventual exposure is, and they run around crying "nobody could have seen this coming".

And yes printing and resulting currency debasement is just another example of laws of supply and demand working.

Perhaps by the time morally bankrupt central bankster pirates get those PhDs, they've forgotten these simple basic laws way back in 1st semester economics.

I often say Econ 101 and 102 is all anyone needs to understand what's happening.

All the econ stuff beyond that teaches people how to lie about, hide, cover up, obvuscate, and otherwise ignore what they learn in 101 and 102. the simple tactic of charting one debasing currency against an equally debasing currency making it appear there's no debasement at all.

And like I've also said before, articles like these are lots of words to cover up "looting spree".

Central banksters can't create wealth with their printing press.  They can only transfer wealth with it, and the last 4 years they've looted trillions of dollars of wealth from the population, giving it to government and banks ...which is why the economy is collapsing.

You can't believe anything these people say.  They're pathological liars, saying whatever fits the moment.

In 2002 Bernanke said printing must be kept to a minimun to preserve the value of the currency.  Now he spews all manner of justification to print like a madman.

In 2006 (I believe) Obama stood up in congress saying how awful and irresponsible raising the debt ceiling is.  Now he wants authority to raise it whenever he wants by executive order, bypassing congress.

Thu, 12/13/2012 - 12:09 | 3059572 blunderdog
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    But wild ass printing debases the currency, pushing prices up.  In housing we see those two opposing forces approaching equilibrium, with housing prices stabilizing somewhat, maybe edging slightly downward now.

It's not exactly "currency debasement" that's keeping the US housing market inflated--it's the fact that banks have no reason to clear those liabilities.

If banks weren't able to continue to use "free" dollars to gamble on investments, they'd have to dump the inventory of foreclosed houses.  That would tank prices.

If currency were really as debased as you'd expect in order to offset the price decrease from collapsing demand, teevees and refrigerators would be $3500 each, and fuel oil would be $12/gallon.  That's not the case.

Thu, 12/13/2012 - 21:14 | 3061451 Mediocritas
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Blah blah, this coming from a guy who oversees a banking sector in which the big four banks (WBC, ANZ, NAB and CBA), plus two miners (BHP & RIO) together account for almost 50% of the entire stock market. A financial sector in which the market capitalization of CBA exceeds the market capitalization of the entire German banking sector, yet Australia has only about a third the GDP of Germany. Oh, the resilience and sound management of Australian financial companies! (sarc) A nation in which banks have between 60-80% of their books exposed to massively overvalued domestic real estate. Where have we seen this plot before?

Glenn Stevens is a fine example of incompetent management. He only gets away with it because China buys Australian ore by the gigatonne, giving the banking sector something to lever up and look good. When China eventually backs off, the Australian collapse is going to be second to none, but by then Stevens will have moved on to the Bank of England and he'll wash his hands of the mess of course.

He's just another one of these asshats who thinks that aggregates are all that matter. The crowd that says you don't need to worry about enormous gross because it all nets away to a manageable sum. When he talks about inflation targeting, he only speaks of aggregate inflation and ignores the massive extremes of concentrated inflation (stocks, real estate, etc) and THOSE are the things that cause crises. Guys like him never see it coming because they don't comprehend how gross can become net. It's not the frequency of an oscillation that matters, that's not what kills you, it's the AMPLITUDE, but Stevens doesn't get that because all he looks at is the mean with very low resolution.

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