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2012: The Year Of Hyperactive Central Banks

Tyler Durden's picture





 

Back in January 2010, when in complete disgust of the farce that the market has become, and where fundamentals were completely trumped by central bank intervention, we said, that "Zero Hedge long ago gave up discussing corporate fundamentals due to our long-held tenet that currently the only relevant pieces of financial information are contained in the Fed's H.4.1, H.3 statements." This capitulation in light of the advent of the Central Planner of Last Resort juggernaut was predicated by our belief that ever since 2008, the only thing that would keep the world from keeling over and succumbing to the $20+ trillion in excess debt (excess to a global debt/GDP ratio of 180%, not like even that is sustainable!) would be relentless central bank dilution of monetary intermediaries, read, legacy currencies, all to the benefit of hard currencies such as gold. Needless to say gold back then was just over $1000. Slowly but surely, following several additional central bank intervention attempts, the world is once again starting to realize that everything else is noise, and the only thing that matters is what the Fed, the ECB, the BOE, the SNB, the PBOC and the BOJ will do. Which brings us to today's George Glynos, head of research at Tradition, who basically comes to the same conclusion that we reached 2 years ago, and which the market is slowly understand is the only way out today (not the relentless bid under financial names). The note's title? "If 2011 was the year of the eurozone crisis, 2012 will be the year of the central banks." George is spot on. And it is this why we are virtually certain that by the end of the year, gold will once again be if not the best performing assets, then certainly well north of $2000 as the 2009-2011 playbook is refreshed. Cutting to the chase, here are Glynos' conclusions.

  • 2012 will be characterised by strong central bank activity and interventions
  • Major central banks will continue to support governments through quantitative easing type policies [so much for 'not political']
  • Boom/Bust economic cycles will be fostered which are shorter in duration and could hold greater amplitude
  • Central Bank activity will not necessarily improve core economic fundamentals [contrary to what CNBC will tell you every single day]
  • Financial markets will impress in H1 despite weak underlying economic fundamentals [contrary to what CNBC will tell you every single day]
  • Sovereign bond markets will in the main be supported and yields will be driven lower at least through H1 2012
  • Equity markets will enjoy the support of investors on account of valuations relative to money markets and bonds
  • Commodity prices will rise in US Dollar terms as currency debasement policies are followed
  • Asset price reflation will be a central theme for the year

Translation: inflationary concerns be damned - after all it is precisely inflation that central banks need. And to get it they will risk much more inflation. Yes, the dreaded hyper word as well. Because unfortunately, the only real backstop to the threat of global hyperinflation, Germany, recently threw in the towel as we described in the appropriately titled "Das Kapitulation" [sic]....And people wonder why China is buying gold hand over fist.

More from (the appropriately titled) Tradition:

Introduction

Since the crash of 2008, central banks have been called on to do extraordinary things. The policy stances that they have adopted would never be adopted in any normally functioning economy. Yet given the length of time required to reform a fiscus and the inclination to utilise government as a vehicle to spend an economy back into shape (under pretence of investing) has meant that central banks have been left in the undesirable position of having to use monetary means with which to intervene in order to prevent a repeat of a massive and deep recession if not depression. Using those terms now may sound melodramatic but they unfortunately still apply.

Monetary policy has become increasingly important and so too has the need to understand it. Following the money that is printed up has become an arduous but important task and helps one understand the consequences of this central bank intervention. Increased money supply matters and the injection of such funding cannot be ignored. To ignore such factors would also translate into investors misinterpreting the financial environment in which they operate and how it is possible that weak economic fundamentals notwithstanding, financial markets can still post record highs and perform better than expected in 2012. It is this very dynamic which was largely ignored in 2009 and 2010 and which led many investors to believe that markets would not perform as well as they did.

Central bank behaviour in 2011

What was remarkable about 2011 was the lack of outright monetary intervention by the central banks. Some may argue that the effects of policies implemented in the past were still exerting influence. However if they were, they were not overtly obvious in the behaviour of sovereign debt markets. US banks may have had large quantities of excess reserves, but the Fed resisted the temptation to embark on Fresh QE, the BoE indicated that another round of quantitative easing would be initiated, but this only became official towards the end of the year and the effects of those actions would ultimately only become evident in 2012. The ECB was prevented from entering the sovereign bond market through EU Treaties and chose instead to persist with the line that ECB President Trichet adopted, namely that the crisis in the eurozone was driven by sovereigns and that only sovereigns had the power to resolve these issues. This changed in December when the ECB did an about-turn and began to intervene more significantly in the eurozone economy. Again the effects of this policy reversal would only become evident in the final weeks of 2011 and would set the stage for an impressive start to 2012 for many eurozone sovereign debt markets.

Further afield, 2011 was also characterised by the Chinese monetary authorities trying to deflate a property bubble whilst India also underwent some monetary tightening. Even emerging markets such as Brazil and Turkey that were used to some fairly strong growth in credit extension and money supply chose to adopt a tighter approach to monetary policy. All in all, 2011 can be characterised by less active central banks that chose to allow the economies to unravel some of the excesses of the past. Had they persisted with such a stance, the start of 2012 could have looked very different. The reality however is that they have not. Quite the contrary.

Central banks have learned that taking to the side lines holds consequences. Given the massive and rapidly growing indebtedness of most of the world’s largest economies (read governments), it was became clear that the markets most vulnerable to this fiscal dynamic, namely the sovereign debt markets, reflected the effects of a wholesale rotation back to safety and the shunning of debt markets which held the highest risk. The absence of central bank demand for sovereign debt was palpable. Those economies without central bank assistance, namely the eurozone economies became the most vulnerable were pushed to the margin and began to fail. Bond yields of many major eurozone economies started to reflect risk aversion. The highly indebted periphery began to suffer the indignity of speculation against their governments and their bond yields soared. With each passing day of inaction on the part of the central banks, sovereign debt yields progressively marched higher to even more uncomfortable levels with speculation in the market mounting that economies such as Spain, Italy and even the likes of Austria and France were on the path of bankruptcy.

As it became increasingly clear that central bank demand for sovereign debt was absolutely vital in buying governments the time they need to restructure themselves, so the central banks began to change their approach back to something more accommodative and supportive of the global economy. The BoE was the first to indicate that they would be embarking on a fresh round of quantitative easing, the ECB then eventually found a way to circumvent EU treaty restrictions by engineering an environment whereby the commercial banks would do all the sovereign debt buying, the Fed has hinted increasingly that it would step back in to the economy on the grounds that the current economic upswing might not be sustainable, whilst a host of emerging market central banks including China, India, Brazil and Turkey are now adopting a far more accommodative stance to ensure soft landings in those economies.

Central Banks in 2012

Whether we believe that the reasons behind the central bank interventions are a fresh effort to boost growth directly or whether one believes that the central banks have adopted an ultra-accommodative stance in order to boost demand for sovereign debt and reduce the risk of a major sovereign collapse, the result is the same. Namely, that the central banks have chosen to prioritise growth and investor confidence above inflation. Increasingly one gets the sense that inflation is being seen as a welcome distraction given the current economic backdrop where the underlying imperative is for asset prices to deflate.

Whereas in 2011 we noted that the lack of Fed, BoE and ECB bond purchases resulted in a crowding out of the debt markets of economies with worrying debt fundamentals, 2012 will be the year when that view is given added credence. In just two short months when the BoE and ECB openly announced their monetary efforts, sovereign debt markets of highly indebted markets or those of emerging markets have begun to rally and rally extremely strongly. With those major central banks confirming that they will be more active in 2012 and given the coincidence or not, that they are acting together, the reality is that the dearth of monetary intervention in 2011 will be replaced by a flood of capital and funding.

Consequences:

In assessing the consequences of such actions we would need to look back to 2009 and 2010 to understand the impact of strong monetary interventions on the financial markets. We understand now that quantitative easing whether it be through the Fed’s methods or those of the ECB can have very strong asset price inflationary effects. We have already enjoyed a taste of this in recent weeks. Markets that have rallied include:

1. Equity markets
2. Sovereign debt markets
3. Commodity prices
4. Emerging market assets
5. And as a consequence EM currencies

In the event that the Fed does indeed introduce another round of QE in the order of a further USD500bn, and the BoE continues to build its balance sheet to levels approaching GBP400bn from the current GBP275bn at a time when the ECB partakes in more of the same kind of monetary policy aimed at engineering an attractive internal carry trade to help banks and sovereign debt, asset prices in general hold the potential to rally significantly further on account of the monetary stimulation and the boost to sentiment which will follow.

 


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Tue, 01/31/2012 - 14:06 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

Why an Easy Fed Isn’t Good for Stocks

"The knee-jerk reaction in the stock market, of course, has been to believe that low interest rates forever = high stock prices. The theory is that financial repression forces investors to move money to riskier investments, such as stocks. However, Barry Knapp at Barclays Capital has been arguing for several months now that history suggests financial repression isn’t necessarily a good thing for stocks, particularly from the vantage point of price to earnings multiples...."

"...If Knapp’s correct, this is bad news for stock investors. It seems that the forward momentum in earnings growth is stalling, and without an expansion in multiples, it’s going to be tough for stocks to find a catalyst for a sustained significant rise – with or without the Fed’s help."

http://blogs.wsj.com/marketbeat/2012/01/31/why-an-easy-fed-isnt-good-for...

Tue, 01/31/2012 - 14:09 | Link to Comment knight99
knight99's picture

an easy fed isnt good for anyone. these fkers need to crawl back in the hole they came from. everytime i see BB on tv it just looks like he is about to cry for all the lives he has destroyed.

Tue, 01/31/2012 - 14:13 | Link to Comment resurger
resurger's picture

Yup!

Fuck Bloomberg

Tue, 01/31/2012 - 14:47 | Link to Comment Ahmeexnal
Ahmeexnal's picture

http://www.marketwatch.com/story/former-rbs-chief-to-be-stripped-of-knig...

CHICAGO (MarketWatch) -- Fred Goodwin, the former head of the Royal Bank of Scotland, is about to lose his knighthood for his role in running the institution into the ground so far that it required a huge taxpayer bailout, the U.K.'s Cabinet Office said Tuesday. The honor, bestowed in 2004, has been "cancelled and annulled," for bringing the system "into disrepute."

OK, so when do they strip Ogolfer from his Nobel "Peas" Prize?

Tue, 01/31/2012 - 15:06 | Link to Comment nope-1004
nope-1004's picture

Someone sure didn't want silver to pass $34 today.  LOL.

The waterfall effect shortly thereafter is sooooo central bank-ish.  The manipulation is even timely, not to mention obvious!!

 

Tue, 01/31/2012 - 15:10 | Link to Comment Silver Bug
Silver Bug's picture

Sadly it is true. The only that matter now is QE to infinity.

 

http://ericsprott.blogspot.com/

Tue, 01/31/2012 - 14:52 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Stocks do look like they will pull back, but the Fed/Tres Working Groups not only do not want that, they can't have that.

With inflation way above Bernanke's targetted 2%, people need their IRAs to meet the cost of living.  The further down the road we get, the higher gas and food goes.  Then toss on the fact that the largest investment Americns have made is their houses, and Americans are losing wealth in every single on of their asset classes.

So stocks need to stay up.

Then you get to bonds.  Bonds need to stay up.  The ed needs to sell them at a premium to furnish their debt and this keeps rates low.  Rates need to be low to keep the interest on said debt low.

So here lies the rub:  how will the CBs keep this game going?

They won't.  When it stops is anyone's guess.  I have one more year chalked up for my guess, but how they make it last that long, who knows.

Tue, 01/31/2012 - 14:58 | Link to Comment JW n FL
JW n FL's picture

 

 

http://www.youtube.com/watch?v=92OV3RbU3ek&list=FLbRZZAixeFXZfqszvKisEdQ&index=2&feature=plpp_video

Ron Paul - Watch this presentation to see why so many people are endorsing Ron Paul for President

Uploaded by on Dec 21, 2011

Please endorse Ron Paul (http://www.endorseliberty.com/ronpaul) and donate to Endorse Liberty (http://www.endorseliberty.com/donate.php) so we can buy advertising and make more videos like this. Endorse Liberty is not authorized by any candidate or candidate's committee.

Tue, 01/31/2012 - 15:00 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Oh come on.  History shows us very clearly how this all turns out in the end. Capital controls (some already in place with more coming), hypothication and re-hypotication (already happening), price controls (now things get interesting as even gravity and plate tectonics will be outlawed), social unrest, mob rule and eventually nationalization and/or war (the local government official will simply ask you whether or not you are a team player).

when PMs are finally outlawed for use as money, then you will know that the bottom is in.

Hedge accordingly

Tue, 01/31/2012 - 17:44 | Link to Comment blindfaith
blindfaith's picture

I have to agree.

While there is NO FIAT currency that has ever endured, there is no currency based on PM's that has either.  Think about that and ask why.

Everyone boasting about their hord should keep very quite, it is easy enough to track you without advertising.

Tue, 01/31/2012 - 16:22 | Link to Comment resurger
resurger's picture

The stocks must come down Lennon, ill tell you why, because they can not justify another QE at those current levels...

I was short on stocks and i was ready to close out before the FOMC in case of Qeasy3 is going to come out, but it did not?! Fuck it i kept my shorts and they made money..

The high DOW, S&P gave a nice cushion to any stocks which will underperfom, so that vultures like me dont come and fuck them up. Especially the Oil companies which are protected through the Iran-War Propaganda..

Check Face book's IPO at 75bn..

sometime between April and June.

http://www.forbes.com/sites/petercohan/2012/01/30/four-reasons-why-faceb...

So facebook must be introduced when the market is heading lower or at mid-low levels DOW 11K or so...

We have not yet seen bad news regarding Greece from the suckers media yet, once that pop's expect blood.

And when they announce QEasy3, i will meet you back in in July to short all your gains till October End...

 

 

 

 

 

 

 

 

 

 

Tue, 01/31/2012 - 14:18 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Why 2012 is the year you will really need to understand real versus nominal returns...

http://www.zerohedge.com/news/here-what-bernanke-has-been-secretely-ordering-heidelberg

Tue, 01/31/2012 - 18:29 | Link to Comment akak
akak's picture

Somebody might want to try teaching that difference to RobotTarder --- but somebody would probably fail.

Tue, 01/31/2012 - 14:18 | Link to Comment Confused
Confused's picture

He certainly doesn't look like he is going to cry over the lives destroyed, but rather how much money his "friends" will lose when the average person figures out the game and its rules.

Tue, 01/31/2012 - 17:50 | Link to Comment blindfaith
blindfaith's picture

 

 

Narsists don't cry over anything, it is never their fault.

Tue, 01/31/2012 - 18:32 | Link to Comment akak
akak's picture

Narsist = one who narses?

Tue, 01/31/2012 - 14:31 | Link to Comment Dr. Engali
Dr. Engali's picture

Shit he isn't crying because of the lives he is destroying. He is crying because he is not very good at being a fucking liar.

Tue, 01/31/2012 - 14:46 | Link to Comment Hobbleknee
Hobbleknee's picture

BB has no remorse.  Those are tears from all the ink fumes.

Tue, 01/31/2012 - 14:12 | Link to Comment resurger
resurger's picture

Nice link Sir,

I have been telling the same to the Bulls, but they are under IUI (Investing Under the Influence) of Qeasy!

"Take off is optional, Landing is a Must"

 

 

Tue, 01/31/2012 - 14:18 | Link to Comment scatterbrains
scatterbrains's picture

Speaking of landing, looks like XOM wants to lead the charge..

 

http://fiatflaws.blogspot.com/

Tue, 01/31/2012 - 14:24 | Link to Comment Alex Kintner
Alex Kintner's picture

Remember the Tech Stock Bubble (late '90s). Abby Joseph Cohen preaching, "PEs don't matter anymore. The new paradigm is Price to Revenue." Where is Abby when we need a good laugh.

Tue, 01/31/2012 - 14:10 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

N O T H I N G else matters except keeping the powerful in money and power and kicking the financial can down the road so that we remain asleep at the wheel.

N O T H I N G else matters.

As long as we allow ourselves to be duped into believing that our best interest is tied to the 1%er's best interest, more of the same ole same old is all we can expect.

Cue the bullshit propaganda factory in 3.......2.......1.....

Tue, 01/31/2012 - 14:16 | Link to Comment Confused
Confused's picture

As long as we allow ourselves to be duped into believing that our best interest is tied to the 1%er's best interest, more of the same ole same old is all we can expect.

 

This is all that really needs to be said on the matter.

Tue, 01/31/2012 - 14:08 | Link to Comment Snakeeyes
Snakeeyes's picture

And what has it gotten us? Housing continues to tank despite the trillions in liquidity. Bernanke can't even generate inflation in housing, the most oversubsidized of all industries.

http://confoundedinterest.wordpress.com/2012/01/31/wintertime-blues-case-shiller-20-city-index-down-3-67-yoy-and-0-7-mom-in-november-housing-still-in-the-red-zone/

Tue, 01/31/2012 - 14:20 | Link to Comment Howdan
Howdan's picture

One of the most salient and prescient points I've heard in a long time! Exactly what I was thinking too......

Even with the disgusting market manipulation, Plunge Protection Team, Ponzi Printing Scams, Never-Ending CB "liquidity" programmes, TARPS, TALFS, LSAPs, LTRO's and god knows what other lunacy they STILL can't produce any real growth or positive economic effects.

These Central Bankers mostly seem to be academic, totally out of touch morons who only care about keeping the banking cartels up and running to scam everyone else.

Tue, 01/31/2012 - 14:27 | Link to Comment Confused
Confused's picture

Not morons or out of touch. This is the real area of class warfare/wealth transfer. The wealth travels up the pyramid, and these CB's are the agents that allow it to happen.

Tue, 01/31/2012 - 14:35 | Link to Comment Alex Kintner
Alex Kintner's picture

Exactly!! +1000.
They are Looters not Leaders.
The CBs have NOT fallen on bad luck due to 'failed' policies. All has unfolded exactly as they (and TPTB) have forseen.

Tue, 01/31/2012 - 14:10 | Link to Comment evolutionx
evolutionx's picture

2012: The year of the world’s great geopolitical swing

2012 will in fact be the year of the world’s great geopolitical swing: a phenomenon which will without any doubt be the bearer of serious difficulties for most of the planet but which will also allow the emergence of geopolitical conditions favourable to an improvement of the situation in the years to come.

Hoped for by some, dreaded by others, QE3 is generally presented as the ultimate weapon to save the US economy and financial system which, contrary to the dominating chatter of these last weeks, continues to deteriorate . Whether the FED launches out with QE3 or not, QE3 will be without any doubt the major financial event of 2012 whose consequences will mark the world financial and monetary system definitively.

And QE3 will play a determining role in the world’s great geopolitical swing in 2012 because this year will, in particular, see the last attempts of the world’s dominant powers of before-the-crisis to maintain their global power, whether it be in strategic, economic or financial matters. When we use the term “last” we want to stress that after 2012 their power will be weakened too much to still be able to claim maintaining this privileged situation.

 

More:

http://www.webcompact.net/index.php/news/9243-the-year-of-the-worlds-great-geopolitical-swing-

Tue, 01/31/2012 - 14:55 | Link to Comment Amish Hacker
Amish Hacker's picture

Part of the great geopolitical swing, imo, will be what can be thought of as the Great Unmasking. So far, financial repression has worn a happy face, but 2012 will be the year when the mask comes off. As gov/TBTF sees the end game approaching, their increasing desperation will drive them to discard any pretense of being people-friendly. Less and less effort will be expended trying to convince the little guy that gov't policies are for his benefit. ("But we must all support the job creators!") No more apologies for robosigning, or for rehypothecation, or for the essential dishonesty of the whole shebang. Laws will be written or amended to "legalize" whatever actions seem necessary to perpetuate the current power structure, public opinion be damned. More and more, TBTF banks will dictate the terms of the public's relationship to them, and politicians won't beg for your vote, they will demand your obedience.

Tue, 01/31/2012 - 14:13 | Link to Comment NotApplicable
NotApplicable's picture

All your everything are belong to us.

CB balance sheets? To infinity, and beyond!

Resistance is not only futile, but transitory as directed history resigns the masses to their fate.

Oh, and I almost forgot...

ZIRP4EVA, bitchez!

Tue, 01/31/2012 - 14:11 | Link to Comment Alex Kintner
Alex Kintner's picture

I thought it was the Chinese Year of the Piigs?

Tue, 01/31/2012 - 14:13 | Link to Comment FubarNation
FubarNation's picture

I mean really WTF are responsible people supposed to do to plan for the future anymore?

The 'markets' are so fucking bassackwards.

 

 

Tue, 01/31/2012 - 21:39 | Link to Comment JPM Hater001
JPM Hater001's picture

Responsible people are suppose to vote for Ron Paul. After that I would say pray.
No place is safe.

Tue, 01/31/2012 - 14:13 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Fed & BoE move in lock step. All the CBs will be active though no doubt. BoJ will probably need to step in soon as well.

Tue, 01/31/2012 - 15:10 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

BoJ is next in line.

Tue, 01/31/2012 - 14:16 | Link to Comment AC_Doctor
AC_Doctor's picture

The Central Banks of Pigs is running out of gold to lease (and then to sell upon the market and never be returned)  and all hell is going to break loose.

Tue, 01/31/2012 - 14:17 | Link to Comment yogibear
yogibear's picture

The Fed rates are at zero all  they can do now is debase the currency (Print).  With global wage arbitration they distroy those on fixed income and J6P.

The protesting  forces will get stronger  more people will not be able to afford to live without assistance. This is what the Federal Reserve and Bernake fail to see.

 

The cries to end the Federal Reserve will grow louder and stronger.

Tue, 01/31/2012 - 14:24 | Link to Comment Corn1945
Corn1945's picture

Agreed. 2% inflation combined with stagnant wages means a lower standard of living for the majority of Americans.

Also, I'm not sure how we are "chipping away" at the debt when it's rising at a rate of $1 trillion per year. Financial repression doesn't "work" when you are still increasing your debt exponentially.

They made a total joke of the market. Unemployment is several times what it was before the blow-up, tens of millions are on foodstamps, the deficit is spiralling out of control......and the market is only off by 10% or so?

It has no connection to reality anymore.

Tue, 01/31/2012 - 14:33 | Link to Comment Chump
Chump's picture

I disagree.  The result you see coming assumes that 1.) people will somehow discover the goings-on at the Fed and how they relate to the economy and 2.) people will unite and work towards the common goal of ending the Fed and returning sanity to our country, both economically and politically.

I think the opposite will happen.  As people become ever more beaten down they will lash out at the "others."  You know, the people from the "other team."  Those damn Dems/Repubs.  Those damn rich/poor people up the road.  Those damn [fill in the blank].

Maybe I'm wrong.  I hope I am.

Tue, 01/31/2012 - 14:39 | Link to Comment battle axe
battle axe's picture

Your not, and that is the scary thing...

Tue, 01/31/2012 - 14:47 | Link to Comment ATM
ATM's picture

You are not wrong. Austerity really pisses people off. so much so that they riot and steal and morals and the rule of law decay to a point of chaos.

But in my ay of thinking that is exctly the point of all this. Create the chaos, the anger and the "crisis" so that TPTB can take total control and they can get rid of this nasty, distasteful personal liberty idea once and for all.

They have to save the planet afterall from us and for us and onnly they have the knowledge, the training and the smartsto get us cattle to live like they need us to. It's much easier to do when the "people" are starving, are debt peons and need to look elsewhere for the essentials of life because they cannot begin to fathom where to begin to provide for themselves.

Under those conditions assuming total power is going to be a cakewalk only they got one little problem. Too many fuckers like me who are armed and dangerous and don't like to be told what to do.

Tue, 01/31/2012 - 16:01 | Link to Comment resurger
resurger's picture

 

Imagine your boss comes and tells you, "Look, we are not giving you a raise, because of the current economic crises" WHaT the FUCK do you do?

Tue, 01/31/2012 - 23:55 | Link to Comment Milestones
Milestones's picture

And if you are making less than a fair wage what the fuck does the boss do? The knife has two edges and it cuts both ways. He could destroy his business--everyone loses.          Milestones

Tue, 01/31/2012 - 15:28 | Link to Comment Confused
Confused's picture

You might NOT be wrong.

But I will challenge what seems like an assumption that people cannot work together towards a common goal. History is full of examples. And the idea that we have societies proves that people can/will work together. To believe other wise is to be without hope. If so, why bother?

Tue, 01/31/2012 - 15:44 | Link to Comment Chump
Chump's picture

Sure, absolutely.  I just draw the line at such a meta goal of actually ending our economic and political insanity.  I don't see it happening, simply because there will be such rampant nihilism and destruction as we circle the drain.  I do see society emerging on the other side, because people will work together, locally.  You're right: if I didn't have that hope I wouldn't bother even reading ZH.  All would be meaningless.

Tue, 01/31/2012 - 14:44 | Link to Comment Alpha Monkey
Alpha Monkey's picture

I don't think the fed fails to see much.  If anything, that institution probably has more of the real information than any organization in america.  They just add their tweaks to the data before releasing it for general consumption.  They know full well what they are doing.

Recommended viewing: Inside Job

Tue, 01/31/2012 - 15:57 | Link to Comment resurger
resurger's picture

I have the movie but i never watch it ...

Tue, 01/31/2012 - 14:26 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

"How Long (Can This Keep This Going On)?" is the new article at my blog.  I also write about gold, review Barron's, and other material I hope will entertain my readers.  Would you like a look?  Gmail me at my name and assure me you will behave.  I make people jump through this hoop to keep out spammers & bots.

Tue, 01/31/2012 - 14:22 | Link to Comment Dr. Engali
Dr. Engali's picture

2012 will be the year when the world says no more to the U.S. dollar and the abuses that come with it. 2012 will also be the year when the U.S will have taken on one war too many.

Tue, 01/31/2012 - 14:43 | Link to Comment battle axe
battle axe's picture

I agree with you on the US getting involved with one war too many, Iran here we come. But the world going off the dollar, what would they use, the Yuan? It will never happen. 

Tue, 01/31/2012 - 15:23 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You are a little late to recess.  The teams have been picked. 

Asia is no longer trading in dollars with one another, and USTs have been getting dumped for months on end at a records pace.

When Celente et al said "they are all going to dump the dollar" he didn't mean there would be a morning when ChinaTV had Hu on saying "We dumped the dollar".  He meant that over a period of time the dollar would be dumped along with USTs. 

It is happening now.

And for you tech artists out there, ask why fiat is showing such strength.  Sunday opened with the DXY/EUR/JPY up.  These are the worst of the worst.  How was this happening?  As The currencie gets dumped, the CBs are orced to buy on the open market (same with USTs).  And here is the kicker....it is killing the volacity of the investments, thus strengthening their prices.

Tue, 01/31/2012 - 15:35 | Link to Comment battle axe
battle axe's picture

 You might be right about me being late to recess, it has happen before and will happen again. But even though everyone talks about going off the dollar it is stilled considered the worlds premier reserved currency and Treas's are still considered the top flight safety play, because of the magic word, "liquidity". You know more about currency, and A guy in my office is saying that you are pointing to the future while I am pointing to the past. My only question would be what then would be the currency that would take the place of the dollar? The Yuan? A basket of currencies like Russia suggested? What do you think it would be? 

Tue, 01/31/2012 - 15:51 | Link to Comment Dr. Engali
Dr. Engali's picture

A basket of currencies is the most likely scenario.:

 

http://money.cnn.com/2011/02/10/markets/dollar/index.htm

Tue, 01/31/2012 - 21:47 | Link to Comment akak
akak's picture

A basket full of different turds is still a pile of shit.

Tue, 01/31/2012 - 14:24 | Link to Comment peekcrackers
peekcrackers's picture

It seems like a slow motion death seen .. just year after year of a choking and falling system.

Tue, 01/31/2012 - 14:27 | Link to Comment Sandmann
Sandmann's picture

I certainly feels like it. No way to move forward when you have corporate interests pumping more oil into a beached and holed tanker pretending to re-float it and you swim into oil slicks each time you want to swim. That is how they have wrecked the economic future - but they are also building a new economic superstructure on this trashed economic base with their guaranteed bonuses and cartelised system. It is like being trapped under the ice watching them skating over your heads

Tue, 01/31/2012 - 14:30 | Link to Comment Vincent Vega
Vincent Vega's picture

Hyperactive, reflation, rehypothecation, and vaporization all ending in a gargantuan collapse. (Bitchez)

Tue, 01/31/2012 - 14:29 | Link to Comment RazorForex
RazorForex's picture

Gold is a good buy longterm, but the technicals are suggesting there may be a reversal in the short term. I think it is a good idea to wait for a pullback before going long. A good buy zone is the $1675 area.

Gold and Crude Oil Overview

http://www.youtube.com/watch?v=l9GhlfcjqFY

 

Tue, 01/31/2012 - 14:48 | Link to Comment ATM
ATM's picture

If it is a longterm buy does it really matter if I buy it for $1730 or $1675? I don't think so.

Tue, 01/31/2012 - 14:42 | Link to Comment lemosbrasil
lemosbrasil's picture

kkkkk....

 

 Greece's private sector creditors could take a loss of more than 70 percent in a planned debt swap, Finance Minister Evangelos Venizelos said on Tuesday.

 

See Reuters now !http://www.reuters.com/article/2012/01/31/us-greece-finmin-idUSTRE80U1RW20120131

Tue, 01/31/2012 - 14:46 | Link to Comment kito
kito's picture

no wonder novartis, the maker of ritalin, , is up 50% since 2009!!! it all makes sense!! i guess the dosage is not strong enough for the central bankers...

Tue, 01/31/2012 - 14:47 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Central banks create inflation.

Hyperactive central banks create hyperinflation.

Ergo, 2012 is the year of hyperinflation.

Tue, 01/31/2012 - 14:49 | Link to Comment ATM
ATM's picture

and it fulfills the Mayan end the debt age.  

Tue, 01/31/2012 - 15:06 | Link to Comment cdude
cdude's picture

Notional Inflation Targeting

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/12/18_Jim_Rickards__Part_II.html

 

Goldilocks Economics- Not too hot,not too cold. No deflation , no hyperinflation. no crashes, no hysteria.  Just the long slow bleed until (what used to be known as) the middle class functions at the standard of living once associated with the working poor. 

 DIE: Distraction,Incrementalization, Engineered consent 

 

Tue, 01/31/2012 - 14:57 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Central Bank activity will not necessarily improve core economic fundamentals [contrary to what CNBC will tell you every single day]

It's not intended to.

Central bank intervention is intended to keep the sovereign debt ponzi scheme going so governments can keep borrowing from banks (and banks can flip those bonds to the central bank).

It has no effect on the underlying economy

...except debasing the currency which causes prices to rise, making it tougher and tougher to make ends meet, especially on fixed income like social security and pensions.

Tue, 01/31/2012 - 15:08 | Link to Comment Cadavre
Cadavre's picture

On the threshold of a credit event.

Is a 50% Haircut a Default?

Greek bond holders are about to eat a 30 to 50 percent haircut. 5 of the largest US banks hold 97% of the CDS (wet paper?) insurance policies on sovereign debt.

According to this, the ISDA can adjust the insured value of bonds, despite any disclaimers or promises the buyer received when the bond was was settled, or so it seems. Forget par, the ISDA is about to claim that only 50% of of bond is insurable.

Yesterday Obama admitted on a Googlely Chatter session the US has been carrying out extra judicial murder in Pakistan.

Leona "Panhandler" Panetta says politicians can determine who is a terrorist, and, therefore an assassination target.

Global QE will fall from the sky like manna from heaven to save the token units per share of US promary banks.

Has anybody heard anything about the Ft Hood Shooting - was thinking - been a long time and the DC suits claimed to have an open and shut case against the alleged perp.

What's all the hush hush regarding that little event all about?

Old scrap iron sailing to the gulf - what kind of drama is the Reich preparing to unleash?

WTF is going on - when will NATO bombs save OWS from our authoritarian dictatorship?

Tue, 01/31/2012 - 15:28 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

Speaking of the manipulators,I see they had silver bitch slapped by noon before they went to lunch.

Fuck you's PPT.

You mostly Little Timmy,you fucking little weasel.

Tue, 01/31/2012 - 16:02 | Link to Comment Let The Wurlitz...
Let The Wurlitzer Play's picture

What are the central banks going to do???  Are they going to make whole the investers that have to take writedowns??? For example look at the Greek cituation - they are talking about a 70% hair cut to their creditors.  So when their creditirs(PSI) take a hit they will have to reduce those assets by 70% and reduce leverage accordingly.  So the ECB buying new public dept is going to help that writedown - Bull Shit!  Now muiltiply all these write downs accross the entire dept spectrum - Portugal, Spain, etc, etc.

The central banks are going to have to make investors whole if you are going to get inflation of assets.

 

Tue, 01/31/2012 - 16:08 | Link to Comment besnook
besnook's picture

i don't understand why anyone is surprised by the strategy the central bankers have implemented. the germans just needed assurances from a bunch of quants that printing money is fine when it matches the destruction of money and kept in house. ironically japan is the model. japan has been a success not a failure. faced with total destruction of their economy by the fiat myth and demographic obstacles they have managed pretty well with the sovereign debt printing press model. the key has been a virtual greenback yen. with germany as the likely bagholder for all euro debt with the ecb as underwriter the eurozone can feasibly achieve the same goal, unlimited cheap debt, a treading water economy with germany as the prime benefactor. 

if sovereign debt becomes truly fungible where there is a one debt world all the banks can print to infinity and beyond, paying old debt with new debt created by newly printed fiat priced at zirp for 30 years while the real world pays real world interest rates on investment and consumer purchases.

in any case, the central banks will decide the most expedient fix to the current problem is an intentional massive capacity destruction event. 2012 may be the eve of destruction.

Tue, 01/31/2012 - 16:32 | Link to Comment q99x2
q99x2's picture

Hyperactive Central Banks 

Basket-cases of currencies.

 

Tue, 01/31/2012 - 16:38 | Link to Comment theyenguy
theyenguy's picture

Please consider that Angela Merkel has been appointed by the Sovereign Lord God, Psalm 2:4-5, as dignitary and vessel to effect regional global goverance, as foretold in Daniel, 2:31-45, which is the same as the ten horns seen on the Beast of Revelation 13:1-4. Milton Friedman provided the Free To Choose floating currency regime, known as Neoliberalism, aka Capitalism, which featured inflationism. But,
investors sold out of currencies and stocks in July 2011, on fears that a debt union had formed in the EU, and now destructionism has commenced, where the Beast Regime of Neoauthoritarianism is rising to terminate all forms of economic and political life.  

The dynamos of profit and growth that empowered capitalism have been exhausted through US Central Bank and ECB monetary policy. The First Horseman of the Apocalypse, Revelation 6:1-2, is powering up the dynamos of regional security and prosperity, where public private partnerships led by monetary cardinals will manage the economy, and where fiscal commissioners will oversee government budgets, to implement strategic reforms and austerity measures, as they work together in regional global governance. Choice is an epitaph on the tombstone of a bygone era. Freedom, free enterprise, and a free monetary system, are Libertarian principles seen the Ron Paul agenda; yet they are mirages on the Neoauthoritarian Desert of the Real. The sovereign, junk, personal, and corporate credit boom that produced the debt economy, is history; the debt servitude experience will commence soon. Germany will take sovereign preeminence over other countries as Euroland rises to be a type of revived Roman Empire.

During the first week of February 2012, the Interest Rate on the 10 Year Note, ^TNX, will continue to fall, and Volatility, VIXY, VIXM, TVIX, will rise, as anticipation of debt debasement by LTRO 2 causes disinvestment of world stocks, ACWX, world small caps, VSS, emerging market small cap leaders, EWX, emerging market materials, EMMT, emerging market financials, EMFN, being led so by high inflation nations, INP, TUR, EWZ, ARGT, EGPT, as well as China Industrials, CHII, and China Materials, CHIM. Ongoing central bank stimulus will not inflate fiat assets; rather currency deflation will deflate, stocks and delever commodities. Wealth can only be preserved by dollar cost averaging into the possession of physical gold.  

Tue, 01/31/2012 - 18:57 | Link to Comment billsbest
billsbest's picture
Manifest Destiny Derailed: Treason from Within

[snippet]

"...the Federal Reserve has had no authority to be involved with the gold markets." - - Paul Volcker

Tue, 01/31/2012 - 20:48 | Link to Comment cdskiller
cdskiller's picture

"central banks (were not) left in (any) undesirable position of having to use (fiat) in order to prevent a deep recession if not depression." That would imply that central banks prevented something worse than what we have experienced, making them saviors. central banks are agents of the devil and nobody forces them to do anything.

"the ECB eventually found a way to circumvent EU treaty restrictions by (choosing fascism, and) engineering an environment whereby the commercial banks would do all the sovereign debt buying"

"asset prices in general hold the potential to rally significantly further on account of the monetary stimulation and the boost to sentiment which will follow"

drink this, brother, while i sharpen the blade.

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