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Guest Post: Are Central Bankers Losing Control?

Tyler Durden's picture


Authored by Detlev Schlichter via,

The last couple of weeks have been very interesting. Remember that, certain regional differences aside, Japan has, for the past two-plus decades, been the global trendsetter in terms of macroeconomic deterioration and monetary policy. It was the first to have a major housing and banking bubble, the first to see that bubble burst, to respond with years of 1 percent interest rates, then zero rates, then various rounds of quantitative easing. The West has been following Japan each step on the way – usually with a lag of about ten years or so, although it seems to be catching up of late. Now Japan is the first developed nation to go ‘all-in’, to implement a no-holds-barred money-printing regime to (supposedly) ‘stimulate’ the economy. This is called Abenomics, after Japan’s new prime minister, Shinzo Abe, the new poster-boy of policy hyper-activism. I expect the West to follow soon. In fact, the UK is my prime candidate. Wait for Mr. Carney to start his new job and embrace ‘monetary activism’. Carnenomics anybody?

But here is what is so interesting about recent events in Japan. At first, markets did exactly what the central bankers wanted them to do. They went up. But in May things took a remarkable and abrupt turn for the worse. In just eight trading days the Nikkei stock market index collapsed by 15%. And, importantly, all of this started with bonds selling off.

Are markets beginning to realize that all these bubbles have to pop sometime and that sometime may as well be now? Are markets beginning to refuse to dance to the tune of the central bankers and their printing presses? Are central bankers losing control?

 ‘Sell in May and go away’

Let’s turn back the clock for a moment, if only just a bit. Let’s revisit April 2013 for a moment. At the time I spoke of central bankers enjoying a kind of ‘policy sweet spot’: they were either pumping a lot of liquidity into markets or promising to do so if needed, and all of them were keeping rates near zero and promising to keep them there. Some started to consider ‘negative policy rates’. Yet, despite all this policy accommodation, official inflation readings remained remarkably tame – indeed, inflation marginally declined in some countries – while all asset markets were on fire: government bonds, junk bonds, equities, almost all traded at or near all-time highs, undeniably helped in large part by super-easy money everywhere. Even real estate in the US was coming back with a vengeance. And then, in early April, central bankers got an extra bonus: Their nemesis, the gold market, was going into a tailspin. I am sure Mr. Bernanke was sleeping well at the time: financial assets were roaring, happily playing to the tune of the monetary bureaucracy, seemingly falling in line with his plan to save the world with new bubbles, while the cynics and heretics in the gold market, the obnoxious nutters who question today’s enlightened policy pragmatism, were cut off at the knees.

But then came May and everything sold off.

However, that is not quite how the media presents it. Here, one prefers the phrase ‘volatility returned’, as that implies that everything could be fine again tomorrow. And it certainly can. Maybe this is just a blip. But what if it isn’t? And, more importantly, what is driving it?

A widely debated theory is that the prospect of the Fed ‘tapering’ its quantitative easing operation, of it oh-so carefully, ever-so slightly removing its unprecedentedly large and more than ever alcohol-filled punchbowl could end the party. There has for some time been concern about and even outright opposition to never-ending QE within the Fed. So there is, of course, a risk (a chance?) that the Fed may reduce or even halt its asset-buying program. (As a quick reminder, since the start of the year, the Fed has expanded the monetary base already by more than $340 billion, and at the present pace, the Fed is on course to create $1,000 billion by the end of the year.)

Ben Bernanke – tough guy?

However, I do not think that markets have a lot to fear from the Fed. Should a pause in QE lead to a sell-off in markets, to rising yields and rising risk premiums, then, I believe, the Fed will quickly revert course once more and switch on the printing press again. The critics inside the Fed will be silenced rather quickly. Remember that most of them seem to argue that additional QE is not needed; they do not appear to reject it on principle. Ultimately, nobody in policy circles is willing to sit on his or her hands when the markets seriously begin to liquidate. The ‘end’ to QE, if it is announced at all, is likely to be just an episode.

The last central banker who had the cojones to take on Wall Street was Paul Volcker. Ben Bernanke, as well as his predecessor Alan Greenspan, have been nothing but nice to the speculating and borrowing classes. Both subscribe to and have, on numerous occasions, articulated the notion that it is part of the central bank’s remit to bring good cheer to households and corporations by lifting their house prices and inflating their stock prices and executive option packages. What the country needs is optimism and what is more conducive to optimism than a rising stock market and happy faces on CNBC? Bernanke declared that boosting financial assets can kick-start a virtuous circle of borrowing, investing and self-sustained growth. David Stockman has aptly called this approach ‘prosperity management’ through ‘Wall Street coddling’. Of course, Greenspan tightened in 1994, and again very carefully in 2005, and yes, both times financial markets caved in. But this only serves to illustrated how unsustainably bloated and dislocated the financial system has become, and how addicted to cheap money from the Fed. I think the Fed will be very careful to reduce the dosage of its drug anytime soon.

Although he didn’t quite put it in those terms, global bond guru Bill Gross, founder and co-chief investment officer at asset management giant PIMCO, seems to see it similarly. In an interview with Bloomberg in the middle of May, he confirmed that he and his team saw “bubbles everywhere”, which certainly implied that everything could go pop at the same time. He also stated that the Fed would “not dare” to do anything drastic anytime soon as the system is so much more leveraged now than it was in 1994, when Greenspan briefly tried to play tough and tighten policy.

My conclusion is this: if market weakness is the result of concerns over an end to policy accommodation, then I don’t think markets have that much to fear. However, the largest sell-offs occurred in Japan, and in Japan there is not only no risk of policy tightening, there policy-makers are just at the beginning of the largest, most loudly advertised money-printing operation in history. Japanese government bonds and Japanese stocks are hardly nose-diving because they fear an end to QE. Have those who deal in these assets finally realized that they are sitting on gigantic bubbles and are they trying to exit before everybody else does? Have central bankers there lost control over markets?

After all, money printing must lead to higher inflation at some point. The combination in Japan of a gigantic pile of accumulated debt, high running budget deficits, an old and aging population, near-zero interest rates and the prospect of rising inflation (indeed, that is the official goal of Abenomics!) are a toxic mix for the bond market. It is absurd to assume that you can destroy your currency and dispossess your bond investors and at the same time expect them to reward you with low market yields. Rising yields, however, will derail Abenomics and the whole economy, for that matter.

It is, of course, too early to tell. The whole thing could end up being just a storm in a tea cup. It could be over soon and markets could fall back in line with what the central planners prescribe. But somehow I doubt that this is just a blip – and interestingly, so does Mohamed El-Erian, Bill Gross’ colleague at PIMCO and the firm’s other co-chief investment officer. In an interesting article on CNN Money yesterday, he contemplated the possibility that markets were beginning to lose confidence in central bankers.

If that is indeed the case it won’t be confined to Japan but will rapidly reverberate around the world. This is a much bigger story than a modest slowing of QE in the US. Could it be the beginning of the end?

I think the central bankers may not be sleeping so well now.


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Fri, 06/07/2013 - 21:07 | 3635979 BoNeSxxx
BoNeSxxx's picture

They lost control in 1971

Fri, 06/07/2013 - 21:23 | 3636023 ghandi
ghandi's picture

The superrich are much more resilient.

Sat, 06/08/2013 - 00:10 | 3636463 Silver Bug
Silver Bug's picture

They lost control a long long time ago.

Sat, 06/08/2013 - 08:58 | 3636831 spine001
spine001's picture

No guys loosing control in this context is what happened in. Japan, you turn the knob and the volume goes down instead of up, you turn the trebble knob and the system shuts down. At that point you lost control over the system you were manipulating. This can happen during the operation of any feedback system, even a linear one. When you have a non linear one like the economy with human beings as part of the loop, well things just got a lot more complicated. As they increase QE they increase the gain of the loops in the system, since there is more at stake if you miss the directional changes that are being triggered. Remember that the system can bifurcate between economic growth and hyperinflation, to economic depression and deflation, borrowing in Japan and investing in the US or viceversa. You are seeing both forces at play right now with the price evolution of the commodity complex. Through this simple, but infinitely diversed and interconnected mechanisms, you can make stable negative feedback looos become positive feedback ones, where the dog chases its tail in a never ending spin... That is exactly what happened in Japan due to causes explained in detail in the comments of another member (borrow in japan invest at higher interest, etc..,) is just one of the miriad loops that exist in the system, these loops will activate and deactivate in miliseconds as QE's distortions leak into the current balance in the system and HFTs get triggered to exploit arbitrage opportunities. The point here is that there will be more and more of this seemingly paradoxical behaviors as QE grows worldwide, CBs try to do one thing and another one happens... Another point is that there is nothing they can do at this point to prevent the mess that is coming short of completely restricting our liberties, including the financial ones. What they dont know is how to get the political leverage they need without creating panic if they told people of the real situation. So a catch 22 for them, thus they are doing it slowly as you can now read in the news thanks to the whistle blowers.

Sat, 06/08/2013 - 11:27 | 3637019 TruthInSunshine
TruthInSunshine's picture

Saturday, June 8, 2013 @ 10:49 am est:

In case anyone is wondering if this current central bank blown bubble is now officially one of the biggest in history, whereby there literally is no possible true price discovery, and whereby the CBs (and especially the Fed and BoJ) have now literally completely broken the proper function of all markets, check out this article from the very main stream and pro-Bernanke newspaper, The New York Times, which describes what just happened to some of the "safest" bond funds, and which has gotten extremely little mention in any of the financial and broader media:

A Bond Market Plunge That Baffles the Experts By Published: June 7, 2013

As if it wasn’t bad enough for the millions of Americans scraping by on paltry interest payments, now they face another threat: the loss of principal on their bonds and other fixed-income assets.

The month of May, and this first week of June, were terrible for many fixed-income investors who have spent the last few years reaching for higher yields.

If there was an index for fixed income with the status of the Dow Jones industrial average or Standard & Poor’s 500 index for stocks, the carnage in fixed-income markets would have been a big story and we’d all be talking about a bear market in bonds.

***Consider the damage: mutual funds that invest in long-term United States Treasury bonds lost an average 6.8 percent in May, according to Morningstar, with the loss in principal wiping out years of interest payments. But that’s not the worst-hit sector. Higher-yielding bonds and fixed-income securities, to which investors have turned in droves in recent years, have suffered even more, especially mortgage-backed securities and emerging market debt, as well as just about anything that uses borrowing to increase returns.***

[Let this preceding paragraph sink in just drives the point home as to how fantastically broken these "markets" are, and since historical reversion to the norm and basic arithmetic are so, so cruel at times.]

Many individual securities and funds were hit much harder than the averages.

Vanguard’s Extended Duration Treasury Index fund was down more than 6 percent in the last month. In the mortgage area, Annaly Capital Management, a popular real estate investment trust that invests in mortgages, fell 8.7 percent, and an iShares mortgage exchange-traded fund lost 10.4 percent. Pimco’s Corporate Opportunity Fund, which is managed by the star analyst Bill Gross and which invests in a mix of corporate bonds and mortgage-backed securities and uses some borrowing, lost nearly 13.4 percent. Annualized, such declines are off the charts.

“There are many closed-end bond funds and mortgage funds that were just annihilated in May,” said Anthony Baruffi, a senior portfolio manager at SNW Asset Management in Seattle, which specializes in fixed-income assets.

This week, the bond markets’ jitters spilled into the stock market, with major indexes gyrating around the globe. The Dow Jones industrial average dropped more than 200 points on Wednesday, only to bounce back Thursday and Friday.

High-dividend stocks, which many bond investors also looked to in their quest for income, were pummeled. Shares of Procter & Gamble dropped more than 6 percent the last week in May.

The severity of the market reaction shows how skittish investors have become about ultralow interest rates. Bond prices fall when interest rates rise, with longer-maturity, higher-yielding and riskier bonds the hardest hit — the very assets that the Federal Reserve’s ultralow interest rate policy has encouraged income-seeking investors to embrace.

Fixed-income funds are where investors have traditionally looked for safety and low volatility, unlike stocks, and such precipitous moves are rare. To put this in perspective, the recent plunge in prices of fixed-income securities had analysts reaching back to 1994, when the Fed began raising rates and 10-year Treasury rates rose two and a half percentage points. That year, Orange County, Calif., had to declare bankruptcy after its bond portfolio plunged in value.

The sudden recent moves in the markets have left many experts scratching their heads, because, on the face of things, not much has changed in the overall economic outlook...


LMAO. The experts are scratching their heads, are they? Gee, I wonder if the experts considered the fact that the big fork in the road, which Bernanke has magically delayed for a few years now, whereby he either gets to try and put a bid under "risk assets" or "safe assets," but absolutely not both simultaneously, is fast approaching?

We're on the cusp of a massive crash, rivaling or surpassing anything seen before. I've never been this bearish, and what's especially alarming is that precisely because Bernanke has literally and completely broken the normal relationship between how bonds and equities (as well as other higher beta asset classes) historically interact, coupled with the record leverage that now exists within the financial system, all the world's central banks won't be able to do a damn thing to stem the cascade of losses that will set in and mount extemely rapidly once the triggering event occurs.

If you you lived through the 2008 to 2009 period in an actively 'tuned in' way, especially if you had your own skin in the game during that period, you may be mentally prepared to witness yet again the fallout of what absolutely insane monetary policy ultimately and inevitably reaps.

If not, and you're new to the game or amongst the "new generation of investors/sheep," who hasn't yet had the luxury of witnessing stop loss protection not kicking in until the highest active bid is 50% less than ask, when margin calls are raining down like a great flood, you're about to face a real education, hard knocks school style.

Sat, 06/08/2013 - 11:47 | 3637086 Quinvarius
Quinvarius's picture

Anyone scratching their head is not an expert. 

Sat, 06/08/2013 - 16:56 | 3637743 BoNeSxxx
BoNeSxxx's picture

Good to see you back TIS.

These days extended absence could mean... well, ask Lennon Hendrix.


Fri, 06/07/2013 - 21:58 | 3636132 mick68
mick68's picture

The very fact that central bankers can't completely control the economy is evidence they don't have control. All we're discussing now is how much control they've lost. Right now western bankers desperately want to prove they fixed the economy, proven by the MSM continually pushing this propaganda onto the public. Yet, it isn't fixed, in fact it's getting worse.


There's your proof. 


Fri, 06/07/2013 - 22:26 | 3636198 Ham-bone
Ham-bone's picture

LOST CONTROL???  They are gaining more and more control by the day. 

They control what "money is".

They control the creation of "money".

Now the system is "soooo" vulnerable that they are the superheroes come to save the poor people from the collapsing reality.  And their solution?  Give us more power, more ability to create infinite "money", buy whatever we see fit, and make whatever rules feel good.   Bond vigilantes?  Please.  Goldbugs, splat...they just hit the CB window in the CB manipulation games.  FX, Libor, on and on.  They are running the game.

They are gaining greater control by the day.

Fri, 06/07/2013 - 22:36 | 3636230 Stuck on Zero
Stuck on Zero's picture

I agree.  Bankers are achieving exactly what they set out to do: transfer all the worlds wealth into the pockets of the elite and then assume full political control.


Sat, 06/08/2013 - 08:39 | 3636827 ATM
ATM's picture

They long for the good old days of feudalism when real men had castles, could order the death of anyone at any time, wore purple velvet and bathed twice per year.

Sat, 06/08/2013 - 09:58 | 3636912 OneTinSoldier66
OneTinSoldier66's picture



Sorry, but I disagree from my own individual persepctive. From my own perspective, I am not letting the banksters get away with all the loot. It may not be much but I have my own little pile of gold and silver. And while having a little pile of pm's is not some all-encompassing solution, it sure does help!


They will only get away with all the loot if you let them. Protect and defend yourself and your loved ones. Theres is nothing wrong with self-defense.

Sat, 06/08/2013 - 12:00 | 3637045 Ham-bone
Ham-bone's picture

OneTin - you and I are on the same page but somehow I feel it's more of a gesture than a true protection...more a vote of silent protest and unwillingness to use their fiat except where neccessary.  However, there was no true "protection" in 1935 Germany...and unfortunately the track record of the US government and it's populace is leaning towards other great turned failure societies.  I suppose the only modicum of protection is to emigrate but that isn't going to happen.  So here we sit ready to do our best but acknowledging our well intentioned actions may be futile in the face of what is likely to happen.

Sat, 06/08/2013 - 12:06 | 3637127 OneTinSoldier66
OneTinSoldier66's picture

Again, I hear you Ham-bone. I understand. I do not, nor will I ever, know everything, have all the answers, can solve all the worlds problems. Like you, I'm not going anywhere either.


What exactly is it that you believe is futile? After all, you're still here! You can't keep a good man down. As long as you're still draw breath you can withdrwal your consent. For instance, you don't have to go to a voting booth, to vote. You vote for things, with things, that you have control of. Your speach, and the fruits of your labor. I highly recommend you do not give your speach, the fruits of your labor, to anything that you do not truly believe in. I recommend that you do not give what should be your responsibility, your freedom, or your liberty, to politicians and government. I believe that people do so by voting for them(politicians) at a voting booth.

Sat, 06/08/2013 - 11:45 | 3637083 Jack Burton
Jack Burton's picture

ATM, +1,000. This is what this game has been all about. So many refuse to belive it, they watch and read too much Main Stream Media. Who owns this media? Yes the biggest supporters of a return to feudalism. Watch and read with this is mind and things become a whole hell of a lot clearer.

Just because the West escaped feudalism by centuries of struggle, that by no means implies that it CAN NOT return.

America's elites now look to China as a model society. A single political dictatorship party that loads the system totally against the majority. The USA has been on a fast track to this same system. Perhaps the USA Police State is even superior to China's. Don't believe me? Instead of typing comments, go out into the street abnd ask for change, you will be run over by the Cops and their thugs.

Sat, 06/08/2013 - 12:08 | 3637131 Ham-bone
Ham-bone's picture

go out into the street abnd ask for change, you will be run over by the Cops and their thugs

The cops and thugs aren't even neccessary as the American people by and large don't want change...they have been coopted by bribes from congress giving them EBT cards, welfare, social security, etc. etc.  There is a massive segment of poor and old that have nothing long as they get there gruel, they are willing to ffight to maintain this system every bit as much as the 1%.  So you have the bottom 40% + the top 10% against the remaining 50%...pretty fucked up.

Sat, 06/08/2013 - 13:38 | 3637283 Herd Redirectio...
Herd Redirection Committee's picture

The government has made way more promises than it can keep.  When they have to start breaking these promises, thats when you have to get to people, and 'turn' their opinion of the gov.  Tell them that not only did the gov make these promises, they NEVER intended to fulfill them.

Sat, 06/08/2013 - 11:44 | 3637076 caconhma
caconhma's picture

The world and US ruling banking oligarchy/mafia has a big problem:

- World economies are doing very badly

- The Middle East is a nightmare with Iran, Iraq, Syria, and Lebanon (with a combined population of over 150 millions) are about to create an iron axis putting the West domination of this region under huge pressure. The same is going for petro-dollars as a world reserve currency.

- China becomes more and more independent and powerful

- Russia is also playing its geopolitical independence

So, they might wish to have totalitarian regime in America and EU. For now, Obama is a puppet but he is also an extremist-socialist in a mold of Hitler or Mao and after gaining a dictatorial power can easily go out of control going in Hitler footsteps. Hitler too was a puppet before becoming a dictator and a deadly enemy for the zionist banking mafia.


Sat, 06/08/2013 - 12:34 | 3637169 Midasking
Midasking's picture

Yep been trying to hold it together with bubble gum and chicken wire ever since... how they any credibility is beyond me but at least they fulfilling their mandate. Price Stability and Full employment? or is the mandate buy up every financial asset in the world?

Fri, 06/07/2013 - 21:08 | 3635985 westboundnup
westboundnup's picture

What's your return policy on doves?

Fri, 06/07/2013 - 21:08 | 3635989 ACP
ACP's picture

Not sure if they lost control...probably letting bonds slide to prep for the coming stock swoon, when money will be rotated out of stock and back into bonds.

It's all part of Central Bank Criminal Market Management.

Fri, 06/07/2013 - 21:17 | 3636010 PiltdownMan
PiltdownMan's picture

Look at The Fed's holdings and Fannie and Freddie's asset (loan) base. Hence, Fed HAS lost control because there is too much to lose.

Fri, 06/07/2013 - 21:10 | 3635993 kito
kito's picture

It is, of course, too early to tell. The whole thing could end up being just a storm in a tea cup. It could be over soon and markets could fall back in line with what the central planners prescribe......

haha...its already back in line on!!!.....................

Fri, 06/07/2013 - 21:13 | 3636000 fonzannoon
fonzannoon's picture

be careful I remember u taking a victory lap early last time :)

Fri, 06/07/2013 - 21:29 | 3636036 kito
kito's picture

haha.......cant wait for that sandwich.....are you taking a beating with the plastic sword by your son????........................

fonz, im telling you.....the faith is still there....................the moneymen have no fear.......................they know ben will protect them...............the horse has plenty of chance Almighty Dow doesnt keep climbing that wall of no worry..............................................

Fri, 06/07/2013 - 21:44 | 3636082 fonzannoon
fonzannoon's picture

even with the faith still there, there's no reason we can't have the dow finish up 10% for the year at 14,750.

if we get armageddon that would just be bonus.

Fri, 06/07/2013 - 21:49 | 3636097 kito
kito's picture

nope..............its grinding higher.........and higher............and higher....................long live the bernank!!!!

Fri, 06/07/2013 - 21:56 | 3636126 fonzannoon
fonzannoon's picture

you honestly think we can continue parabolic like this, unencumbered, until 2015?

I think you are frustrated and i pounced on it because that is what I do. I am the hunter and tomato and fresh mozzerella on italian bread is my prey and you sir will finance my obesity problem. I may have you deliver it to wal mart where I ride around all day on my scooter store scooter while I check zh.

Fri, 06/07/2013 - 22:09 | 3636163 kito
kito's picture

hahaha.....nice............i am frustrated!!! who isnt on this site???!?!?!?!?!?!? tomato on my sandwich!!!!!!!

Fri, 06/07/2013 - 22:15 | 3636178 fonzannoon
fonzannoon's picture

i don't know what word is, but frustrated is such an understatement. this is more of bad sci fi movie at this point.

Fri, 06/07/2013 - 22:25 | 3636206 kito
kito's picture

speaking of bad sci fi movies, have you spotted any other ufos?????????

Sat, 06/08/2013 - 09:10 | 3636862 spine001
spine001's picture

Continnum. Guys/Gals I highly recommend the science fiction tv series Continuum, it is about a bunch of crooks in the political and financial system destroying social system starting  in 2012. Creating a future where a single corporation bought all others and took control of the system by restoring order and food supply and distribution. The plot starts when terrorists from the year 2177 travel back to the past accompanied by a corporate protector from the future... I couldnt believe that a US TV producer would dare touch into such politically sensitive topics, more ZH than MSM and then I realized that it is a Canadian production... gets better as it goes and actors embrace their characters.

Fri, 06/07/2013 - 21:31 | 3636040 NoDebt
NoDebt's picture

Guys, in all seriousness, you better HOPE they lose control.

What if they DON'T lose control?  What if they can keep it all running indefinitely?

Imagine the hell that would be unleashed if they were found, after all, the be INVINCIBLE.  What do you think they would do then?  What would logically follow?



Fri, 06/07/2013 - 21:46 | 3636087 fonzannoon
fonzannoon's picture

i'm in the investment racket. if they keep it together I will probably be better off than if they don't. Unlike Draghi I just want to have a plan B.

Fri, 06/07/2013 - 22:16 | 3636182 kito
kito's picture

our plan b is to take up residence at docs house in indiana....sounds like hes safe out there......he hunts in..............................

Fri, 06/07/2013 - 22:20 | 3636191 fonzannoon
fonzannoon's picture

he does not take cash.....

Fri, 06/07/2013 - 22:22 | 3636193 kito
kito's picture

oh he will when every asset, every asset, filled with e-benjamins goes kaput.............................

Fri, 06/07/2013 - 22:29 | 3636209 fonzannoon
fonzannoon's picture

i can't believe we still have these conversations. It was funny at first. Now it's become a groundhog day nightmare that I can't wake up from.

I think we are going on 3 years kito. Maybe 4?

Fri, 06/07/2013 - 22:47 | 3636258 kito
kito's picture

scary...i was just going to write that if we are having these friday night conversations in 3 years, just shoot me................................oh wait i just wrote it.................

Fri, 06/07/2013 - 22:54 | 3636276 fonzannoon
fonzannoon's picture

You know, maybe a few years ago when I was much more ignorant and I used to argue this shit with you, and I mean argue...I said on some post "I just hope it falls apart soon so that I still have time on the other side to pick up the pieces" You were the first to respond and said "amen brother".

That was probably 3 years ago. 3 fucking years ago.

Time flies while it is standing still.


Fri, 06/07/2013 - 23:07 | 3636305 kito
kito's picture

amen brother ;)....................

Fri, 06/07/2013 - 22:49 | 3636263 kito
kito's picture

im on my 3rd flying fish wild rice double ipa.......its a bit bitter.......apropos for my mood about all this.......................

Sat, 06/08/2013 - 04:48 | 3636679 RafterManFMJ
RafterManFMJ's picture

Get a room you two.

Fri, 06/07/2013 - 22:51 | 3636270 NoDebt
NoDebt's picture

"i'm in the investment racket. if they keep it together I will probably be better off than if they don't. Unlike Draghi I just want to have a plan B."

Yeah, me too. 

Just think it through.  One way, you and I have some tough times and then rebuild.  The other, we have no careers, eventually.


Fri, 06/07/2013 - 22:59 | 3636287 fonzannoon
fonzannoon's picture

Nodebt I have talked about that with Doc.

I have thought it through and I can't come up with the long term scenario where we have some tough times and rebuild and we still have a career.

They took it all nodebt, and they will light a match and burn it down on the way out.

Please tell me how the market gets away with some tough times and we rebuild from here. I am all ears.

Sat, 06/08/2013 - 14:18 | 3637392 Unpopular Truth
Unpopular Truth's picture

Yes, we hope they lose control. But not central bankers only: ALL BANKERS. Hello bitcoin.

Fri, 06/07/2013 - 21:18 | 3636004 sitenine
sitenine's picture

We need to understand that, in reality, the central bankers were never 'in control'. Yes, they 'managed' the ponzi as it grew, and as long as it keeps growing then the central banks DO have a great deal of monetary discretion (I still would never have called it 'control'). The point is not that they have lost control; the point is, succinctly, that all ponzi schemes must end. The ponzi (fiat) system of debt creation depends on larger and larger quantities of debt to create more money. Forever. Literally. The error is not the misunderstanding of the exponential function. The error (or crime depending on how you want to look at it), is contempt for the exponential function. Nothing more and nothing less. Paper cannot be turned into gold for very long because paper cheats where gold cannot.

Fri, 06/07/2013 - 21:51 | 3636108 disabledvet
disabledvet's picture

people cheat..."not the paper." that's why gold is so valuable as an asset. i happen to believe gold is going to get slammed in price here...already has actually...but this is the literal "tip of the iceberg" in the asset sell off. gold is an asset...PERIOD. what else is there that CLAIMS to be an asset but really isn't? DEBT obviously. and what are we getting for "speculating wildly in 18 billion in Apple paper"? you've already suffered a ten percent loss of principle in just under one month. stunning. Obviously WALL STREET is losing control...not the Central Banks...and this is because the only option open to the various Central Bankers of the world is to continue to flood the market with liquidity "since there is always another market downturn imminent." but where is the desired result? where is the economic growth? in Japan? no. In Europe? absolutely not. In the USA. hahahahahaha! you have to be kidding. Canada it would appear...and that's about it. this "thing" is going down not because it's unfixable but because nobody really cares about finding a solution in the first place. in short "no one is easy trying to even do little."

Fri, 06/07/2013 - 23:10 | 3636144 sitenine
sitenine's picture

"...because nobody really cares about finding a solution in the first place"

Bingo. Why try to fix what you know can't be fixed? I don't think we're quite as stupid as your assumption implies. If it could be fixed, then someone, somewhere, would be on it. Different view points - both interesting I suppose, but moot in the end, as the end surely cometh either way.

And for the cheating question, meh. People invented 'paper'. So to say either is more honest than the other may be a mistake, no?

Fri, 06/07/2013 - 21:16 | 3636006 q99x2
q99x2's picture

Yes. They have lost control and it is now time to lock them up.

Fri, 06/07/2013 - 21:20 | 3636007 knukles
knukles's picture

All I can tell ya is that everything seems to be coming unglued all at the very same moment in time.  Take a look at the veritable list of all the events bombarding the administration.  All of a sudden it all falls apart.  With a whole lotta supposedly secret, sensitive actions, orders, activities coming to the fore.
All at the very same time.
Even down to some seemingly obscure smallish stuff that is big time Charley elsewhere.  The first lady doesn't show for a meeting with the Chinese Premier when his first lady who traditionally doesn't travel with him comes all the way to...  That my fine fellows, is a massive slap across the face.  Not good.
Another faux pax... just at the wrong same time as....
It's almost as if it was planned. 
That or fate has been tempted terribly for the moment.  Fragility prevails.
And all the while the MSM's and Hollywood's agitprop keeps on full force, the sides reasonably well delineated excepting a few cracks to show some reality within the Kabuki theater.  The propaganda mechanism and perceptions management keep churning.
The financial manipulation rolls on.
Loosing control?  Everything at some point reaches diminishing returns, But that does not account for the "Next Efforts" the "Second Acts" or the Follow On Offerings.
But strangely, too much seems to be happening in such a compressed time frame.
What this means, I do not know.
Just that there ain't this many coincidences ....
What if this were an inside job to stop his programs in their tracks?  Something nefarious like the conspiracy theories about Kennedy or Watergate?
Lots happening...
Too much coincidence....

Fri, 06/07/2013 - 21:43 | 3636076 NoDebt
NoDebt's picture

You're right- it's not conincidence.  It's planned timing.  They're letting it out in big clumps and bunches so one scandal over-rides the next.  Net resultant political vector will be zero.  Nothing will happen on any front.  Then all that stuff is legitimized and considered "normal" henceforth. 

Fri, 06/07/2013 - 21:52 | 3636110 Zigs
Zigs's picture

It's called hubris.  Too many here are waiting for the collapse of the financial system when a much more critical collapse has already taken place: That is a social collapse resulting from the demise of trust and values.  We will not find our way back without tectonic change since the blind are now leading the blind.  How did prophets so often state it:  "Let he who has eyes to see and ears to hear."  But in the end, it didn't stop the ensuing calamity.

Sun, 06/09/2013 - 18:23 | 3640184 LooseLee
LooseLee's picture

Only truly 'religious action' by the few (not dogmatic conformance to a code or creed) can save us now....

Sat, 06/08/2013 - 08:19 | 3636805 andrewp111
andrewp111's picture

Things could be happening at the same time because there is a direct causal link.  What if confirmation of the IRS abuses of power set off a few Republican whistleblowers in the National Security apparatus, who then leaked  the surveilence stuff?  I could see the functionaries in the NSA being perfectly loyal until they are shown that the Obama Administration used the IRS, FBI, EPA, etc.. to go after ordinary political opponents. This IRS stuff is very corrosive, probably more than Obama realizes.

Sat, 06/08/2013 - 10:36 | 3636964 OneTinSoldier66
OneTinSoldier66's picture

Great post knuckles. Things that make you go hmmm.

Fri, 06/07/2013 - 21:29 | 3636038 logicalman
logicalman's picture

I don't think they've lost control.

I think they know they soon will, which is, I think, scaring the shit out of them.

The actions we are seeing (sheople not included here) have a very strong smell of desperation.

The danger is that desperate people are capable of almost anything, which is kinda scary.

We can only hope to get to lamp post ornaments before Armageddon.

WW3 will be the war to end all wars, as there will be no one left to start another one, if it happens.

Maybe this is why the banksters claim to be doing God's work.


Sat, 06/08/2013 - 10:53 | 3636982 thestarl
thestarl's picture

With whats going on in Syria and meanwhile the centriufges still cranking in Iran the WW3 option does not seem so far fetched.

Fri, 06/07/2013 - 21:35 | 3636054 Caviar Emptor
Caviar Emptor's picture

They lose control when they endorse totalitarian repression to shield their losing bets. Like in Nazi Germany after the hyperinflation. And in every single banana republic. Sooner or later it's no more Mr Nice Guy. The they can truly enforce the dual mandate: price control and total employment! 

Fri, 06/07/2013 - 21:57 | 3636128 Kirk2NCC1701
Kirk2NCC1701's picture

As a philosopher once said: "Before we debate, define your terms".

Define "control"

Sat, 06/08/2013 - 12:05 | 3637126 They trynna cat...
They trynna catch me ridin dirty's picture

That was Voltaire--one of many names you don't hear very often anymore as a result of their thoughts being too logical.

Also see Ezra Pound:

"[Economic] Liberalism and Bolshevism are in intimate agreement in their fundamental contempt for the human personality. Stalin ‘disposes’ of forty truckloads of human ‘material’ for work on a canal. We find the [economic] liberals talking about the export of ‘labour.’”

–Oro e Lavoro (Gold and Work), 1944

Fri, 06/07/2013 - 22:32 | 3636213 Yen Cross
Yen Cross's picture

     The UK is absolutely a prime candidate!  Carney has a nice level to start the devaluation from. The gbd/usd just ramped 600+ pips(over 1.5 weeks) on absolutely nothing. The pound is ramped up against the yen as well. That piker Carney has  lots of easing room for the BoE.

Fri, 06/07/2013 - 22:45 | 3636252 Paracelsus
Paracelsus's picture

I think it was LBJ that brought in FHA and Freddie during the Vietnam era along with huge defense buildup in (French) Indochina.

The French ask for physical redemption of their Dollars,exercising the Gold window written into the Bretton Woods treaty and the stuff starts flowing out the door.Nixon suspends convertability in '72,the Dollar goes off the gold standard and on fiat standard (Print). Dollar reserve status depends on retaining petrodollar peg for oil.OPEC inflation of oil prices screws the pooch for the Dollar.FDR banking honesty controls removed by Clinton (Glass Steagal) and the Wall Street financial orgy happens,fueled by ultra cheap money provided by the FED.Much like ancient Rome used to demand tribute from vassal states,the USA has depended upon being able to export inflation.That ability is now in doubt.Everyone is waiting for the black swan,Lehman II,or some such event.I tend agree with some of the bloggers here,things have changed in the last few months and I sense the WH is shit scared for some reason.....

Fort Knox reserve empty?

Sat, 06/08/2013 - 05:35 | 3636695 Disenchanted
Disenchanted's picture

FHA and 'Fannie Mae' were FDR's 'New Deal' babies.

'Freddie Mac' 1970 so Nixon.


Emergency Home Finance Act of 1970
Legislation in the United States that created Freddie Mac, a federally chartered company that guarantees mortgages granted to low- or middle-income households. The Act came about as a result of pressure to provide competition to Fannie Mae, which is another federally chartered company that does much the same thing. There was concern in the investment community that without this competition, government guaranteed mortgages would crowd out the market, which would be detrimental to non-guaranteed mortgages. Both Freddie Mac and Fannie Mae were put in federal receivership in 2008.
Fri, 06/07/2013 - 22:55 | 3636265 Aurora Ex Machina
Aurora Ex Machina's picture

No reference? Oh, and yes, of course they have.

Here's the trick: if 400 people own the world, but the world is now valued in meaningless paper, at what point does ownership end? The tighter you grasp...

It relies on owning the mechanisms of value, and it's essentially based on faith. If no-one believes you own X, and the enforcers (Police) run out of tear gas, man power and so on. You Don't Own It. Send more troops, send more bullets, send more drones, send more TV pictures selling the story, send more, more, more.


At some point, people will stop playing your fixed game, and go invent their own.


Welcome to the real world.

Fri, 06/07/2013 - 23:30 | 3636367 Aussiekiwi
Aussiekiwi's picture

They must keep printing, even the rumor that maybe, at some time in the future, if it is OK with you guys, I might consider the possibility that I might turn down the free money press a fraction of a percent causes the markets to panic. The Fed has noted this, the Fed IS the market and is here forever in its new role. 

Fri, 06/07/2013 - 23:57 | 3636431 Bindar Dundat
Bindar Dundat's picture

My worst nightmare is they could care less  if we panic.  Bit by bit the Fed is buying up everything , stock, bonds and maybe gold.  Who owns the Fed -- bankers and the 400 families....and the politicians work in the best interest of the economy and the economy is defined by " guess who" the bankers.  I hope this is not true but the spidy hairs on the back of my neck tell me something different.

Sat, 06/08/2013 - 08:53 | 3636840 economicmorphine
economicmorphine's picture

The Fed is not buying PM.  In fact, they're buying nothing but bonds.  Lots of bonds.  The objective isn't to raise equities, as so many think, but to keep bond yields low.  They buy bonds to keep bond prices high, which results in low yields.  It is hopefully obvious why they want to keep yields low.  Equities rise as a result of that effort.

Sat, 06/08/2013 - 04:14 | 3636673 Non Passaran
Non Passaran's picture

Sooner or later people will start jumping that ship...

Fri, 06/07/2013 - 23:37 | 3636384 TwoHoot
TwoHoot's picture

No way to know but it looks like to me that Japan is bringing its money home. Frist print yen, drive it down hard, then sell US bonds and buy yen (like this week). Do it again ... and again and again until the US bonds are all gone and Japanese savings are safely back in Japan.

The FED has a lot of bonds to buy if the practice spreads to other countries who hold US Treasuries.

China may need to float their currency before they can do it like Japan but they will figure a way. Count on it.

Repeating myself - The Fed has a lot of Treasuries to buy if the world cashes out. You ain't seen nothing yet.

Sat, 06/08/2013 - 04:12 | 3636671 Non Passaran
Non Passaran's picture

Why would someone in Japan buy yen when, as you say, the government is constantly fucking with it? And on top of that, you say US T's will be bid because of the Fed.
The theory doesn't make much sense to me, but WTF do I know, I'm just a simple PM hoarder.

Sat, 06/08/2013 - 00:27 | 3636488 kchrisc
kchrisc's picture

I once built a house of cards, a tower of cards, taller than myself.

As I built it higher and higher I had to continuously widen the base and tower because the weight of the upper levels would blow out the bottom ones and required exponentially more cards each iteration.

When I began to run out of cards (I had several decks) I stopped, but, as one can imagine, the resulting tower did not last long.

Sat, 06/08/2013 - 09:29 | 3636889 spine001
spine001's picture

What you just described in beautiful terms is called metastability. It can be quantified for any system. What the FOMC knows or should knownis that the stability of the system is at a metastable point right now and that stability will decrease as QEs worldwide grow in size...

Sat, 06/08/2013 - 01:59 | 3636589 terryfuckwit
terryfuckwit's picture

what people underistamate is the amount of elite that are going to be proper fucked by other elites. the leaders of this shit festival are almost eating their own tails. this is pure unadulterated stupidity manifested. The enlightenment comes when the game riggers really realise that removing the ref from the game hurts everyone including themselves...

Sat, 06/08/2013 - 02:16 | 3636602 newengland
newengland's picture

Lost control, therefore QE to infinity and bail-ins to come. Look out below.

Jolly nice to see Kissinger and his Clintons turn up at the Bilderberg Group in England today. All just following orders; good lil nazionists.

Sat, 06/08/2013 - 02:55 | 3636635 WTFUD
WTFUD's picture

The banksters have played all their cards and despite every market/ exchage being exposed as long term manipulated the returns have not been enough to offset the rehypothication ( as witness timmys blind eye to libor fixing ©$600 trillion racket ongoing for years just to steady the ship ) and yet the ship is on full tilt requiring bens $85 billion per month and more.

The french, uk and the ussa need a war in syria for what; maybe to buy more time as a distraction. OballsUp has his distraction, several.
No way the EU kills Cyprus €50 billion and Greece for €200 billion unless the tank is empty. France is fuucked bigtime sending soldiers to protect their energy (uranium) in niger while exports tank and unemployment rises and rises. Spanish banks/ economy broken.

Could go on and on but the Ponzi is Over. The summer riots will be final nail even if ben prints $200 billion per month to prop markets.

Sat, 06/08/2013 - 05:45 | 3636696 22winmag
22winmag's picture

Losing control? Of course they are... handcuffs and orange jumpsuits (or worse) await them and their politician apologists.

Sat, 06/08/2013 - 05:51 | 3636699 constantine
constantine's picture

Clearly Japan is losing control and this certainly could spill over into US markets which now require constant DIRECT intervention to remain levitated. Difference is that Japan does not have the reserve currency so commodity derivatives cannot help to temper the inflation that they create as it does in the USA.

Regarding precious metals, it's tough to get a read on what the central planners are thinking. On the one hand there is evodence all over the place that those marlets a frighteningly close to exploding on them; cash settlements, huge short positions, mine collapses and strikes, and regarding silver and platinum, prices that are now well below the all-in cash costs of production. However, they seem perfectly confident to hammer the market every single Friday like clockwork. ZSL is not the most blatantly obvious Thursday close trade to put on.

Sat, 06/08/2013 - 06:24 | 3636711 Julian
Julian's picture

Markets have got the central banks by the where else to front run now but short...followed by one last short squeeze then pop!

Sat, 06/08/2013 - 07:23 | 3636738 Withdrawn Sanction
Withdrawn Sanction's picture

A long time ago, my friend's dad was returning from garage where his car had been serviced.  Straight out of the garage's driveway and on to the access road, he needed to then take a left, which he proceeded to do.  He noticed out of the corner of his eye and then in the mirrors, a wheel/tire assembly whizzing off straight before coming to rest on the far right shoulder. His thoughts of "that was odd," and "where the hell did that come from" were interrupted abruptly by a sickening thud and the grinding of metal against asphalt.  It was his wheel/tire.  The shop had forgotten to put the lug nuts back on.

From alll outward appearances, my friend's dad looked in first.  But the fact is he never was.  Only the laws of physics were in control and when the dynamics shifted slightly (the left hand turn), physics was again in control but in a slightly different way, revealing plainly that he was not and in fact never was in control of the vehicle.

That the Fed (and BOJ) APPEAR to be/have been in control is just that:  an appearance an illusion.  Exactly when will the dynamics shift such that their manipulations fall apart, I cannot say (and neither can they), just like it would have been hard to predict exactly when the suspension components of my friend's dad's car would hit the pavement.  But I can say, like the wheel, the event will be abrupt.

Sat, 06/08/2013 - 08:02 | 3636786 geewhiz
geewhiz's picture

No one really knows whether just one wheel will come off or the whole car will fall apart suddenly, probably the latter, there are bubbles everywhere. Bad as it is, a really bad shooting war to follow would make it look mild.
Most living in the work world without big capital see the smoke rising from the bonnet already. Those with big capital will join ranks with them when the car falls apart and most assets have little utility. Something wicked this way comes.

Sat, 06/08/2013 - 07:51 | 3636771 Racer
Racer's picture

I absolutely can't wait for the loss of control, it will be horrible and messy but only then can the true green shoots of a new beginning start. Until then all we have are weeds

Sat, 06/08/2013 - 08:00 | 3636780 Notarocketscientist
Notarocketscientist's picture

"The last central banker who had the cojones to take on Wall Street was Paul Volcker."

Are you delusional - or just ignorant?  Do you know who the head of the Fed's bosses are?????   

Duh.... they are the heads of the biggest banks in America i.e. Wall Street.  Blankfein, Dimon etc... 

Sat, 06/08/2013 - 10:08 | 3636929 merizobeach
merizobeach's picture

I don't see that any power or control has been lost.  The cabal of international bankers has always been comprised of factions who work together out of parallel self-interests, not loyalty, all knowing that any who trips up along the way gets trampled and devoured.  So Japan hit the QE button 'too hard' and there is sell-off in bonds..  They'll just QE more to compensate for players leaving the game.  I have no doubt that parabolic debt accumulation is ultimately unsustainable with inevitable collapse, but I think we'll see the parabolas go quite a bit higher yet before it all gets obliterated.  I've said for a few months that if there were ever to be a reduction in Fed QE, it would be because there isn't enough MBS left to soak up, and it seems the bernank has already let up on that accelerator a bit.  Perhaps an announcement of 'tapering'--a reduction in QE3--would set the stage for the introduction of 'new' QE, which would be an expansion of QE4--bonds.  Somebody has to buy that debt; all this new QE to buy government debt, in America or Japan, is not particularly inflationary because all it does is keep the ponzi whirling for another round.  If government spending were to drop because there were no buyers of its debt, or for any reason, there would be a depression in the economy because "the economy" is increasingly comprised of government spending.  The 'real' economy got knee-capped several years ago and limps along since as per capita stats deteriorate.  And all this noise finally wakes up the old librarian in the back of my mind who reiterates the cooky old theory that economic collapses of wealthy nations--"bringing 'em down to par!"--are engineered by the same globalists and their progeny that first gave us banks like the Fed, all while they puppeteer from their vantages at the BIS, or from under whatever other rocks they may crawl out, to save the collapsing, foolish nations--alleviating them of their burdensome and troublesome sovereignty in exchange for the stability of their new global e-fiat... It's some super-tech shit, bitchez; you get a chip and an account: no more wallets/purses, paychecks, bills, car/house keys, ID cards, etc; it's all super fast and convenient; (just don't fuck up, 'cause they'll turn your chip off, and then you can't do shit like buy food or open your car or house). 

Sat, 06/08/2013 - 12:48 | 3637196 TrustWho
TrustWho's picture

The most insidious nature of central bankers' promises are starting to surface for all to see (i.e. markets are starting to show signs of strain). The real evil of QE, Draghi's promise, BOJ/BOE printing is the carry trade when all assets are thought to be risk-free, especially when everyone knows Spanish, Greek, Italian.....bonds are more risky without Draghi's promise.

Everyone knows Jon Corzine was Corzined (My term for a logically perfect trade that trusted the state too much.)Everyone knows they are all on the same side of the boat, everyone knows some will drown, maybe many, but all know they will get off before the boat rolls into a turbulent sea and they drown. Many people will be Corzined. The only question is the longer you continue the QE and zero-interest rate policies the worse the CRASH and the more the people will suffer.

I am speaking about the same Fed who never had a problem with fradulent MERS, triple A rated securities stacked with subprime loans of near junk rate status, zooming housing prices and much more, all driven hyper-speed with low interest rate Fed POLICY; thus never enacted a Fed policy to prevent the 2008/09 financial crisis. Why should I question if this Fed driven tragedy will end differently? 

I wll answer my question. I believED in Superman: "truth, justice and the American way", but have discovered America is just another Banana Republic. Success is only defined as having more money. In our chase, we will make the money worthless.

Sat, 06/08/2013 - 10:11 | 3636930 RaceToTheBottom
RaceToTheBottom's picture

The Central Banksters appear to have pretty good control over the PM market, gold and silver in particular.

Sat, 06/08/2013 - 10:16 | 3636938 U4 eee aaa
U4 eee aaa's picture

PMs on SALE! Get them while you still can!

Sat, 06/08/2013 - 12:00 | 3637118 Quinvarius
Quinvarius's picture

No they don't.  They are moving paper prices around.  The actual market is raping them.  Hong Exchange died.  ABN AMRO defaulted.  JPM lost all their inventory.  MF Global went under.  This is the free market breaking collectivist fantasies.  PMs are the one thing they can never control because anyone can store them at home indefinately.  They don't rot.  They don't go bankrupt.  They don't take up any space.  This is why the more bankers try to insist they are commodities and not money, the faster they will go out of business.  So bring on the sale.  Bankers will run out of metal before I run out of their paper to give back to them.

Sat, 06/08/2013 - 12:16 | 3637135 U4 eee aaa
U4 eee aaa's picture

This is very similar to the time Nixon was forced to close the gold window. Nations kept coming to the window and cashing out their gold. Finally, the US had to step in and close the gold window. Very soon after the price of gold took off from the $35 official rate and ended up peaking at $850

Sat, 06/08/2013 - 12:17 | 3637138 OneTinSoldier66
OneTinSoldier66's picture

I concur, and well said.

Sat, 06/08/2013 - 10:16 | 3636937 U4 eee aaa
U4 eee aaa's picture

I think the reason the Japanese experiment is failing is because people see them destroying the currency. That is why they are getting out of the stock and bond market. They want to get their cash out because they know the Yen is in peril. That is not the same case for the US buck. With it still being reserve currency, there is really nothing that the money markets can abandon it for. There is gold, and that is happening, but that is relatively a tiny market. Until there is a global currency option, the US is still the relatively (relative to *no other option*) safe bet. Europe and the Euro are sickly at best if not basket cases. Worse yet, who can put any confidence in the confiscatory nature of the European leaders and their bankster controllers.

Now, if someone like China were to open up the Yuan to global trading, then maybe the stakes would change a bit. They may not be healthy but they are growth friendly and they are not necessarily the worst date for the prom economically. China may not be ready but they soon could be and if they open their doors and free up their currency, they could send a serious shock wave to the US. I think then the CBs would start to lose control

Sat, 06/08/2013 - 11:03 | 3636999 thestarl
thestarl's picture

Reminds me of a stalled airliner falling out of the sky instead of pointing nose down and applying more thrust these central banker morons are pointing nose up applying air brakes and reducing speed....falling faster.

Sat, 06/08/2013 - 11:53 | 3637101 Quinvarius
Quinvarius's picture

They have lost control of the economy.  That is a fact.  When they stop trying to set prices, the economy will fix itself.  After a while of them staying away the economy will be strong enough to withstand CB stupidity, and they can start taking credit for what it does in spite of their actions.  Right now, it is just obvious they never had anything but the illusion of control and the ability to ruin things.

The economy is people transacting with people.  The economy is not the government transacting with people.  As soon as they go away, things will start to get better.

Sun, 06/09/2013 - 11:55 | 3639121 el Gallinazo
el Gallinazo's picture

I beg to differ.  "As soon as they go away," (or pretend to, but in any event "pull the pin") we are going to see a depression not seen since the collapse of the South Sea bubble.  Make the so-called "great depression" look like a walk in the park.  All this from decades of CB preplanned "mismanagement."  A desperate population will cry out for the gubmint to "fix" the problem, and that is when an Orwellian total command structure moves in in full force.  At least, that is their game plan.

Sat, 06/08/2013 - 12:23 | 3637148 moneybots
moneybots's picture

Central bankers have never been in control.  "It's contained to sub prime."  It wasn't.

Bernanke crows how he reinflated the stock market.  The market is now a parabolic bubble.  Bubbles burst, parabolics collapse.  bernanke could not prevent the parabolic and he can't prevent its collapse.  Math is in charge.

The FED has a dual mandate.  Stable (LOL) prices and full unemployment.  It can do one but not both.  The FED cannot maintain a +2 and a -2 at the same time.  Mathematically impossible.

Sun, 06/09/2013 - 11:46 | 3639101 el Gallinazo
el Gallinazo's picture

"The FED has a dual mandate.  Stable (LOL) prices and full unemployment."


IMO the Fed is doing pretty well with full unemployment.  Check out any tent city in the USSA.

Sat, 06/08/2013 - 12:40 | 3637179 moneybots
moneybots's picture

"Are markets beginning to realize that all these bubbles have to pop sometime and that sometime may as well be now? Are markets beginning to refuse to dance to the tune of the central bankers and their printing presses? Are central bankers losing control?"


Markets have known all along that bubbles pop.  As Chuck Prince said, we have to keep dancing while the music is playing.

In 2005, the home builder stocks stopped going up, Business Week wrote, "Why we're GAGA Over Housing" and the bankers got the bankruptcy laws changed, knowing what was coming. The housing bubble popped after Greenspan raised rates a 1/4 point at a time and the market just couldn't bear any more liar loans, that home buyers couldn't make the first mortgage payment on.

Are we there yet?

Sat, 06/08/2013 - 13:46 | 3637300 decentralizedsc...
decentralizedscutinizer's picture

By what logic does government policy dictate economic policy; or economic considerations dictate governmental policy? They're two entirely separate isssues, and any attempt by one to control the other is, by definition, corruption. There will be no rationality in a capitalistic, free-market, democratic republic until we recognize the distinct functions of both government and economy and firewall the one from the other. You say there is no such thing as "  capitalistic, free-market, democratic republic" and you're correct. But that's the goal, isn't it? If so, then this is the only way we're going to achieve it; a firewall between business and government: 

28th Amendment (The Constitutional Emergency Amendment)

    Corporations are not persons and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:
    1, prohibitions against any corporation;
    a, owning another corporation,
    b, becoming economically indispensable or monopolistic, or
    c, otherwise distorting the general economy;
    2, prohibitions against any form of intervention in the affairs of government by means of;
    a, congressional lobbying
    b, electoral sponsorship or advocacy
    c, educational sponsorship or publication
    d, media news reporting
    3, provisions for;
    a, the auditing of standardized, current, and transparent account books
    b, closing the FRB and the establishment of state-owned banks
    c, civil and criminal penalties to be suffered by corporate executives et al for violation of the terms of a corporate charter.

Optional: (or possible 29th amendment)

    The 16th Amendment to the United States Constitution is hereby repealed and Congress shall re-write the U.S. Code to reflect the changes embodied herein.

    (How about repealing the 17th amendment while we're at it?)


Sun, 06/09/2013 - 18:03 | 3640116 LooseLee
LooseLee's picture

Gee. We can only hope. It couldn't happen to a better bunchof guys....

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