Deutsche Bank On Central Bank Intervention: "We Are Flying Blind"

Tyler Durden's picture

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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Racer's picture

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

Croesus's picture

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?


sunnydays's picture

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.   

AlaricBalth's picture

"It's like tryin to drive a toaster through a car wash" Apollo 13
Only this time the heat shield fails upon re-entry...

GetZeeGold's picture



Spending $5000 an ounce on gold to keep it from $2000 an ounce. It's free newly printed money.....why the hell not?

Pinto Currency's picture


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."

JeffB's picture

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.

Pinto Currency's picture


Turn off the warning systems and loot the economy as opposed to solve the core problem.

Croesus's picture

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....

Super Broccoli's picture

run out of fuel ? you don't as yourself that kind of questions when you're HIGH !

thisandthat's picture

Yep, flying blind and high as kite, which means toasted and soon to be toast.

TheFourthStooge-ing's picture

Croesus said:

Well, the fact that you are FLYING is scary enough.

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?

Croesus's picture


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".







Supernova Born's picture


Like Thelma and Louise.

Peter Pan's picture

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.

Iam Yue2's picture

Frankie says relax.

new game's picture

as the song goes; grind it home! shaved pussy?

nmewn's picture

The pilots are blind?

Oh thats very reassuring.

HD's picture

Blind, deaf and dumb.  No plan "B" either.

Temporalist's picture

Plan B: Brace Yourselves We're Going Down!

HD's picture

The faster the better mate.

new game's picture

long chutes and padded backpacks(pm caches), add paratroopers milita wares(jungle carbine-303 brit)...

landing in stride!

its financial war bitchez

thisandthat's picture

There's no Plan B because this is plan B; plan A was ignore and pretend everything's fine.

Temporalist's picture

"One quadrillion dollars!" -Dr. Evil

StychoKiller's picture

Cause of crash:  Controlled descent into terrain.

Fatalities:  Sure, but WHO knows how many?

spanish inquisition's picture

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.

Croesus's picture

You cannot confiscate that which has been lost in boating accidents...

q99x2's picture

Al-Qaeda's in the cockpit. RUN

Monedas's picture

Flying blind .... then bring in Madeline Albright .... she brought her feminine intuition .... to bear .... on the Norks !

Mototard at Large's picture

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.

Fiat Envy's picture

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.

EscapeKey's picture

Carney and the BoE vs the BoJ. Which one will be the one land the terminal punch... onto himself?

smacker's picture


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.

The Paucity of Hope's picture

I'm definitely not totally awake this morning. At first glance I thought you wrote "castrating" instead of "contrasting".

NoDebt's picture


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>

EscapeKey's picture

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.

gasmiinder's picture

I'm thinking Kyle Bass & his investors are feeling comfy this am ?

falak pema's picture

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! 


firstdivision's picture

If Central Bank intervention is such a problem for Deutche Bank, why don't they just refuse any aid from the ECB or Bundes?

blindman's picture

@" flying blind..."
George Jones and Tammy Hee Haw " We're Not The Jet Set"

Boeing Boy's picture

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.

blindman's picture

"The difference between stupidity and genius is that genius has its limits."
albert einstein

new game's picture

the limits are the delusion of contol..

infamous words of alcoholic: I'll quite tomarrow.

Paper CRUSHer's picture

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!.

sharky2003's picture

So...who leaked the jobs numbers?

LongSilverJohn's picture

I'm gonna need more gold....

GetZeeGold's picture



Could also use some .22 long rifle....but I can't find that crap anywhere.