Guest Post: Are Central Bankers Losing Control?

Tyler Durden's picture

Authored by Detlev Schlichter via DetlevSchichter.com,

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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BoNeSxxx's picture

They lost control in 1971

ghandi's picture

The superrich are much more resilient.

Silver Bug's picture

They lost control a long long time ago.

 

http://schiffblog.blogspot.ca/

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.

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 because...well...it 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.

Quinvarius's picture

Anyone scratching their head is not an expert. 

BoNeSxxx's picture

Good to see you back TIS.

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

 

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. 

 

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.

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.

 

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.

OneTinSoldier66's picture

@Ham-bone

 

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.

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.

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.

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.

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 else...so 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.

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.

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.

 

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? http://tinyurl.com/n8hmfya

westboundnup's picture

What's your return policy on doves?

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.

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.

http://confoundedinterest.wordpress.com/2013/06/06/growth-in-non-fixed-rate-notes-implications-for-mortgage-markets/

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 detlev............game on!!!.....................

fonzannoon's picture

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

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 legs......no chance Almighty Dow doesnt keep climbing that wall of no worry..............................................

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.

kito's picture

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

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.

kito's picture

hahaha.....nice............i am frustrated!!! who isnt on this site???!?!?!?!?!?!?......no tomato on my sandwich!!!!!!!

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.

kito's picture

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

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.

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?

 

 

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.

kito's picture

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

fonzannoon's picture

he does not take cash.....

kito's picture

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

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?

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.................

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.

 

kito's picture

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

kito's picture

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

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.

 

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.

Unpopular Truth's picture

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

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.

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."

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?

q99x2's picture

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