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Deutsche Bank On Central Bank Intervention: "We Are Flying Blind"
Ordinarily in the first post we would recap any of the key overnight events, but in this case there was just one event of note ahead of today's non-farm payroll seasonally adjusted "noise": the halting of the Japanese Government Bond complex due to excessive volatility. Now, this is not some zero-liquidity penny stock or an algo fat binary finger: at last check there is one quadrillion yen in Japanese debt, which makes it the second biggest sovereign bond market in the world. Yet one glimpse at what transpired in overnight trading and one can see just why the Japanese regulators decided it is time to close all bond trading. The reason: the JGB's insane decision to literally reflate or bust, and with it the total loss of all signalling to various asset classes, because while the country is targeting 2% inflation, its bond curve is indicating the most epic deflation in history. The good news: the bond market reopened... eventually; the bad news: who knows if it will, the next time there is a 100% swing from low to high in the 10Y JGB bond yield in the span of hours. Which brings us to the point of this post, summarized best by Deutsche Bank's Jim Reid who overnight said it best: "we are now flying blind"... The central banks are now flying a plane that has lost all hydraulics and their only option is to add ever more power to the engines to pretend they are still in control.
From DB's Jim Reid:
The move by the BoJ plays into our 'Journey into the Unknown' thesis and its fair to say that there really is no precedent for what Central Banks are currently doing, or threatening to do, on a global scale. You'll be able to read chapter and verse from strategists trying to explain what's likely to result from such moves but the honest truth is that we are flying blind in terms of historical evidence even if we go back centuries. My guess is that medium-term global inflation is being locked in by these moves but that the first move is likely to be maintaining the low bond yield world for some time even if there are brief selloffs. For riskier assets, our simple models based on variables like the PMIs tell us that we may be due a set back soon. These models survived the liquidity burst of QE1 and QE2 but will they now be overpowered by the combined OMT potential, QE-infinity and the BoJ's new 'Carry-O-QE' (ok I know it won't catch on)? Our base case remains that we will eventually see a set back as we approach the end of H1 on weaker data (especially in Europe) but that outside of a shock, the downside will be perhaps limited by global Central Bank liquidity. Fascinating times and we can't help thinking that these moves are not without consequence. If it really is as easy as printing money then all Central Bank's would have done it a long time ago. That such a period for global CB's is unprecedented should serve as a warning to watch for unintended consequences.
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And DB, you are responsible, you hid a load of losses so you appeared better than you were, as well as, no doubt, other deeds that haven't seen the light as yet
Well, the fact that you are FLYING is scary enough.
What you bankster assholes should really be thinking about, is what happens when you run out of FUEL?
LONG TANGIBLE ASSETS ~
you would think that fuel would become gold for most people. It is still amazing how gold is not around the 2000 considering all the money printing happening everywhere.
"It's like tryin to drive a toaster through a car wash" Apollo 13
Only this time the heat shield fails upon re-entry...
Spending $5000 an ounce on gold to keep it from $2000 an ounce. It's free newly printed money.....why the hell not?
Deutsche Bank was one of the bullion banks at the core of the gold market price suppression leading to the debt bubble and now our current state.
So after effectively taking a hammer to the flight instruments they say "We are flying blind."
The Assault On Gold — Paul Craig Roberts
http://www.paulcraigroberts.org/2013/04/04/the-assault-on-gold-paul-crai...
.
Cyprus - a wake-up call: Rethinking money
http://www.goldmoney.com/video/cyprus-a-wake-up-call-rethinking-money.ht...
But they had to. Everyone looking at the flight instruments was freaking out thinking we were going to crash.
Gotta nip the panic in the bud.
Turn off the warning systems and loot the economy as opposed to solve the core problem.
You may not believe this actually happened, BUT:
I was watching CSPAN last night, and an organization called the "Society of American Business Editors and Writers" had some guest speakers talking. David Stockman was one of them, and some other guy, but they were followed by Janet Yellen......who at one point, had a slip of the tongue, and actually called "The American People", "The American Puppet".
I'm trying like hell to find this video, since it would be great ZH material....
run out of fuel ? you don't as yourself that kind of questions when you're HIGH !
Yep, flying blind and high as kite, which means toasted and soon to be toast.
Croesus said:
True enough, and we've come to expect such Junckerisms as, "please notice the remain seated light is now illuminated - we're starting to encounter a little turbulence and we ask that passengers remain in their seats until the light turns off."
When the situation has progressed from serious enough that you have to lie to so serious that you have to start telling the truth, how fucking bad has it gotten?
Exactly.....
I told my newsletter audience back in January, that "2013-2015 would be turbulent times". Recently, I've taken the position that the whole thing could crash by mid-year.
The basis for the conclusion was simple, namely that too many people from too many different professions and 'walks of life' are all saying the same thing.
That 200 year Dow-Gold chart that was posted on ZH last week was very telling. I'd seen similar charts before, but a fellow ZH'er spelled it out plainly in the comments, with regards to "positive feedback".
Flying?
Like Thelma and Louise.
And here I was, thinking that the story of Icarus flying too close to the sun was a myth. We now know how that ended when the sun melted the wax keeping his wings together.
Some distant generation will be shaking its collective head. At least the experiment/example of John Law in France won't seem as stupid as our current crop of central bank witch doctors.
Frankie says relax.
as the song goes; grind it home! shaved pussy?
The pilots are blind?
Oh thats very reassuring.
Blind, deaf and dumb. No plan "B" either.
Plan B: Brace Yourselves We're Going Down!
The faster the better mate.
long chutes and padded backpacks(pm caches), add paratroopers milita wares(jungle carbine-303 brit)...
landing in stride!
its financial war bitchez
http://www.youtube.com/watch?v=a5QBuJla5do
There's no Plan B because this is plan B; plan A was ignore and pretend everything's fine.
"One quadrillion dollars!" -Dr. Evil
Cause of crash: Controlled descent into terrain.
Fatalities: Sure, but WHO knows how many?
There is a plan B, it involves confiscating gold and a war to bury the bodies so the central bank ponzi is not understood by the little folk.
You cannot confiscate that which has been lost in boating accidents...
Al-Qaeda's in the cockpit. RUN
Flying blind .... then bring in Madeline Albright .... she brought her feminine intuition .... to bear .... on the Norks !
Mario Draghi vs Mark Carney? The incoming governor of the Bank of England - Mark Carney - has written extensively on why he thinks long term low interest rates are damaging and should be feared. This puts him in a contrasting position with Mario Draghi of the ECB and the current policy at BOE. What Carney does with interest rates when he gets to the Bank of England will be interesting to watch. There will be some interesting times ahead for the ECB as the crisis in Europe goes on (and on and on). We are going to have an all Goldman Sachs MMA cage match between Mark “Brutal Reckoning” Carney and Mairo “Whatever it Takes” Draghi as different ideas emerge on how to deal with fragile and fragmented economies. http://tinyurl.com/c4dlrdt
Well Carney held down interest rates in Canada and massively increased the money supply. I'd say his past actions suggest he will print and hold interest rates down and that would put him on the same page as Draghi. Maybe they could be a tag team.
Carney and the BoE vs the BoJ. Which one will be the one land the terminal punch... onto himself?
Carney has also already said that he wants to target "nominal GDP growth" instead of inflation.
George Osborne recently confirmed that new objective when Carney takes over at the BoE.
I'm definitely not totally awake this morning. At first glance I thought you wrote "castrating" instead of "contrasting".
Wow.
I seem to be saying that with increasing frequency. Remember just a few short weeks ago central banks had everything so under control that nothing could ever go wrong?
It's getting crowded on the brink. <stolen without attribution from another ZH member>
Yeh yeh and the euro crisis had definitely be solved before Cyprus stole from their captive population.
I predict more lies from our crony masters.
I'm thinking Kyle Bass & his investors are feeling comfy this am ?
To use a WW2 analogy; one banker who is on a mission to bomb Berlin and doesn't like it :
"Where is the cloud cover they promised us, we are sitting targets for ack ack?!!"
No fun being a banksta anymore and pretend you are saving the economy when you carpet bomb markets in fiat derivative plays. "We provide the lubes to the wheels of the real economy!" Remember what they sang in those halcyon days pre-2008?
Hahaha! Now Abe is doing it for Japan Inc. in do or die style!
NO PLAN B; JUST LIKE FOR DRAGHI...
If Central Bank intervention is such a problem for Deutche Bank, why don't they just refuse any aid from the ECB or Bundes?
@" flying blind..."
.
George Jones and Tammy Hee Haw " We're Not The Jet Set"
http://www.youtube.com/watch?v=2XZSzBa0aFU&NR=1&feature=endscreen
Flying blind is like crossing the ITCZ at night with no weather radar. If you lose your hydraulics adding power will simply make you crash quicker.
"The difference between stupidity and genius is that genius has its limits."
albert einstein
the limits are the delusion of contol..
infamous words of alcoholic: I'll quite tomarrow.
The BOJ & MOF officials are loyal to their forefathers and so abide by the Bushido Code, they're on a flight mission destined never to return.......KAMIKAZE BITCHEZ!.
So...who leaked the jobs numbers?
I'm gonna need more gold....
And a bigger boat.
Could also use some .22 long rifle....but I can't find that crap anywhere.
you need more dollars, gold is going to tank if japan blows up... going to be big halt on economic activity, which is deflationary, commodities and assets will depreciate, but hey gold bugs dont understand this basic fact. ill buy it on the dip, but probably buy more silver, as it will rebound harder. (just like I did when bought gold at 800 and silver at 10.50 and platinum at 1000)
sounds more like flying high on drugs eeh cheap money.
Since Economics is not real science, just a crystal ball prediction on expectations, this is nothin new or surprising in his statement
Since we all knew they were flying blind at least as far back as 2007, there's nothing new in his statement. It's surprising though, since when things get serious they usually lie.
I understand that this "when things get serious you have to lie" is commonly understood as applying only to eurozone finance ministers - Jim Reid is the Head of Global Fundamental Credit Strategy at Deutsche Bank and is based in Guildford, United Kingdom, so strictly speaking he is not even an eurozoner, besides not being a minister
The eurozone did not invent corruption an incomptence. They just made it fun to watch.
Definitely not restricted to Eurozone - "subprime is contained", "we will not monetize the debt", etc.
of course ;-) what I'm hinting at is that there is some chagrin for their admission to lies
We have sucked a flock of black swans into our port engine and taken a deer through windshield. We have had to switch to back-up power but Scotty reports the diLithium crystals canna take anymore!
But its all imaginary truth is we never left the ground that's just Krugman making engine noises.
Bored of this "unprecedented territory" bullshit line. Desperate governments, and their crony allies, have often printed out of control in the past.
Just because we this time have another layer or two of obfuscation doesn't mean this time is any different.
consider that there is a generation of senior bankers that are used to have a much, much easier job - Jim is moaning about that
I hugely agree that perspective is lacking - there is a superficial desire to freak people out. But that plays into the hands of the masters of the universe because they wish first to supress the truth and if they cannot do that they shove it down your throat to create headline fatigue - all they have to do is wheel Krugman out and people are paralyzed with pentup anger.
But...
Are you ok with the confiscation of deposits?
Are you ok with something like 25% unemployment in many developed contries - including us masked by manipulation.
Are you ok with medical and education costs sky-rocking partly because of freely given nondischargeable loans creating a new generation of criminal/debt slaves?
Are you OK with the lack of oversite by the SEC dept of porn watchers?
Are you OK with Ben paying for our governments incompetence?
Are you OK with legalized torture and incarceration without trial?
OK my blood is boiling
You are right, as you were watching your computer monitor.
And don't forget to vote red or blue in next election...its good to be American!
Then you are rigjt
These assholes running things know less then a freshmen at a community college taking an intro to finance class, could explain the situation to them on a final and they could not even come up with such a stupid solution. this shit is not nearly as complicated as these assholes pretend it is, its really this simple.... STOP SPENDING MONEY YOU DONT HAVE....
I am sure every below average freshmen would get that answer right on a final exam, even if it was not multiple choice.
(how long till Japan has its own Levy on savings? is only thing left for them to do when bonds rates pop)
Blind? No. People are just unwilling to accept they need to be in gold to survive this repeat of history.
Look out the left, the captain said. The lights down there - that's where we'll land ...
http://www.youtube.com/watch?v=4iEswLQudSU
And the landing will be a very hard one. Hold on to your hats!
More like driving on ice. Steer into the slide and under no condition step on the brakes.
Pedal to the metal.
"If it really is as easy as printing money then all Central Bank's would have done it a long time ago."
It really is that easy, and they did do it a long time ago.
Welcome to our world you bankster assholes. Now you know how it feels to be invested in a market that you can't rig and manipulate.
Guest Post: The Proper Use Of Credit
Tyler Durden's pictureSubmitted by Tyler Durden
http://www.zerohedge.com/news/2013-04-04/guest-post-proper-use-credit
What do you mean "we", Kemosabe?
yes and we know how that ends-- in a flying, flaming cartwheel with few survivors.
Funny really how irrelevant the People are in all this. They march about trivia, get voluble about issues, but when the whole foundation of their political system and economic life is hi-jacked by madmen and special interest groups they just stay home and watch TV.
It is so funny how ineffectual giving One Man One Vote really is.
Diving board experience - into an empty pool. Lots of kinetic energy (bouncing) makes you go sooo much higher... What did the falling diver say again, mid-air? So far so good...
Yes history often repeats (not just rhymes)...
Dr. Benjamin M. Anderson Jr., economist of the Chase National Bank of New York City Says Remedy for Business Slump is Only Temporary"
NYTimes- 1930
...
The Federal Reserve System and the central banks or Europe are under heavy pressure from advocates of the cheap money panacea, Dr. Anderson said. The matter is exceedingly simple in the minds of its advocates, he added.
"Cheap money makes good business, firm interest rates make bad business, and the whole thing is in the hands of the Federal Reserve System," Dr.Anderson said. "If the matter really were as simple as this, everybody could be an economist, and only the perversity of the central banks would keep us from being endlessly prosperous. But when we analyze the reasoning upon which this doctrine rests, difficulties present themselves."
Interest rates, Dr.Anderson said, are only one element and not a dominant one in merchants' and manufacturers' costs. The activity of the manufacturer is governed by the prospect of profits, namely, the difference between his receipts from the sale of his product and the total of his outlay. The interest rate on money borrowed from the banks is usually a relatively small factor in this.
Cheap money will not induce manufacturers and merchants to increase their borrowings in an unsatisfactory business situation, Dr.Anderson declared. He cited the figures for commercial loans as reported by member banks of the Federal Reserve System in support of this contention.
But if merchants and manufacturers will not use cheap money, he said, speculators will. They will use cheap money in buying stocks, for the prospect of capital appreciation. Security loans of the reporting member banks stood on April 2 at the highest point in history, with the exception of the stock slump period ended Nov. 13 last and the year-end week ended Dec.31.
"Cheap Money is a stimulant," Dr.Anderson said. "It is also an intoxicant. If the dose is large enough, a very substantial temporary effect can be brought about. But the headaches follow. It is no the sound way to do it.
...
--Published April 13, 1930 in a speical supplement to the NYTimes
https://en.wikipedia.org/wiki/Benjamin_Anderson
They'll continue to manipulate the gold/silver
http://www.paulcraigroberts.org/2013/04/04/the-assault-on-gold-paul-crai...
And we'll continue to hear that giant sucking sound...
I haven't seen many ZH'rs mention the importance of the Japanese mentality.
Extreme aversion to report to ones' superior that you have failed in your assigned objective.
Extreme reverence for ones' ancestors. Dishonor if one fails to become successful in life.
To succeed is honorable and good. To fail in your assigned objective is the opposite.
I can still remember watching the Nikkei traders pulling their hair out in bunches on that night in 1987. They thought the US Gov't would step in after the losses slid 5 or 10%.They were wrong by twenty years. So the losses of the zombie banks were absorbed and instead of unwinding their position,they kept the losses on the books as an asset.Now Europe and the USA are following their successful financial model?I would add that this is without a huge defense expenditure (the Japanese Self Defense Force). Also,it should be remembered for posterity that the origin of Japans' economic miracle was the ability of the peasantry in the boondocks to save in their post office savings accounts. This is where it all started.
Saving. A dirty word on Wall Street.
BoJ's new 'Carry-O-QE'
This guy's reading too much ZH.
Must have Tyleritis