Bank Of England's Haldane: "We've Intentionally Blown The Biggest Bond Bubble In History"

Tyler Durden's picture




 

The Bank of England's Andrew Haldane is not a man to mince his words (see here and here) but perhaps the excess truthiness in his latest testimony to British MPs may have many questioning his ability as a central-banker (unable to lie when it is required). "Let's be clear. We've intentionally blown the biggest government bond bubble in history," Haldane said. "We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted." As Canadian Carney steps into the BoE head shoes, it seems Haldane has some (indirect) advice there also, as The Guardian reports his comments that the committee had not been "entirely free" of political interference during the crisis; and that he hoped to "improve decision-making," in a less hierarchical, more diverse, somewhat humbler organization." The "biggest risk to global financial stability... would be a disorderly reversion in the yields of government bonds globally." he said, adding that there had been "shades of that" in recent weeks.

 

Via The Guardian,

A key Bank of England policymaker has warned of the risks to global financial stability when "the biggest bond bubble in history" bursts.

 

In a wide-ranging testimony to MPs, Andy Haldane, Bank of England director of financial stability, admitted the central bank's new financial policy committee is taking too long to force banks to hold more capital and appeared to criticise the bank's culture under outgoing governor Sir Mervyn King.Haldane told the Treasury select committee that the bursting of the bond bubble – created by central banks forcing down bond yields by pumping electronic money into the economy – was a risk "I feel acutely right now".

 

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"If I were to single out what for me would be biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally." he said. There had been "shades of that" in recent weeks

 

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"Let's be clear. We've intentionally blown the biggest government bond bubble in history," Haldane said. "We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted."

 

...

 

Haldane said the FPC was on alert to any bubbles created by the help to buy mortgage guarantee scheme for first-time buyers and house movers, stressing the scheme should be temporary. Referring to the US, he said: "Fannie Mae and Freddie Mac were temporary schemes and 75 years later they were still in place and blowing the world up."

 

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Bank of England to spot the next financial crisis, had not been "entirely free" of political interference

 

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Wed, 06/12/2013 - 20:42 | 3652257 CitizenLame
CitizenLame's picture

SEEING THE REVELATION!

Wed, 06/12/2013 - 20:49 | 3652282 fightthepower
fightthepower's picture

Very bombastic.

Wed, 06/12/2013 - 21:02 | 3652301 espirit
espirit's picture

Yeah, we know.  Your collateral ain't worth shit.

I'll loan you a few frn's on the crown jewels, but I get to hold them.

Wed, 06/12/2013 - 21:29 | 3652437 forexskin
forexskin's picture

oh, those family jewels.

that's funny as hell....

Wed, 06/12/2013 - 21:44 | 3652487 philipat
philipat's picture

How long will this guy survive after Carney takes over? My guess is he will be out by the end of 2013. Central, Banker and Truth are mutually exclusive.

Wed, 06/12/2013 - 22:06 | 3652570 DeadFred
DeadFred's picture

He may be delusional enough to make the grade. He's worried that a bubble in bonds will deflate more rapidly than they would want.

How many bubbles have you seen deflate in an orderly fashion?

Wed, 06/12/2013 - 22:48 | 3652787 andrewp111
andrewp111's picture

Deflate?? Junk bonds perhaps will deflate. But what Central Bank will let the Treasury Bond bubble deflate?

Wed, 06/12/2013 - 23:49 | 3652935 fuckitall
fuckitall's picture

"How many bubbles have you seen deflate in an orderly fashion?"

Does very quickly reflated with gazillions of printed dollars count?

(Or is it gOzillions, you know, like Forest Gump would say?)

Thu, 06/13/2013 - 00:43 | 3653135 Anusocracy
Anusocracy's picture

Coincidental to the biggest bond bubble, Mother Nature is blowing the biggest moron bubble.

Thu, 06/13/2013 - 09:18 | 3653735 Hedgetard55
Hedgetard55's picture

+55 Fred.

 

Nikkei is deflating in an orderly manner, though. 6% a day, every day is quite orderly.

Wed, 06/12/2013 - 21:54 | 3652528 smlbizman
smlbizman's picture

its tough being a hedger.....we already know,....were just waiting for the fat lady to stop singing

Wed, 06/12/2013 - 22:07 | 3652575 prains
prains's picture

when are these pencil necks gonna learn, after you blow, it has to go somewhere!

 

cough

Wed, 06/12/2013 - 20:43 | 3652262 q99x2
q99x2's picture

NSA Haldane. Find out where he has placed his personal investments.

Wed, 06/12/2013 - 21:00 | 3652312 espirit
espirit's picture

Good for a +1 q.

Wed, 06/12/2013 - 21:01 | 3652317 max2205
max2205's picture

This article gets a big DUH AND A YEAH THINK

Wed, 06/12/2013 - 21:22 | 3652412 Midasking
Midasking's picture

What's the problem just make the pension funds buy the bonds and make it illegal for anyone to sell them. Confiscate all retirement account and give them an "annuity".... how is anyone expected to buy anything without low rates.  Anyone who sells or doesn't buy would be unpatriotic..  plus I got the big screen I'm looking to finance.  http://tinyurl.com/lq63ahd

Wed, 06/12/2013 - 20:44 | 3652265 Dareconomics
Dareconomics's picture

The mainstream media is a bit late to the party. The blogosphere has been calling a bond bubble for quite some time.

http://dareconomics.wordpress.com/2013/06/12/around-the-globe-06-12-2013/

Wed, 06/12/2013 - 20:45 | 3652268 Muppet Pimp
Muppet Pimp's picture

So....Now...when the bond markets turn the CB's will become black holes and be forced to buy every last one right? Or do we go no bid?

Wed, 06/12/2013 - 20:46 | 3652270 Clayton Bigsby
Clayton Bigsby's picture

(truthiness) ^ 2

Wed, 06/12/2013 - 20:47 | 3652272 buzzsaw99
buzzsaw99's picture

Another scare monger. OMG the crap is constant now. Show me mother fucker. Show me. Show me double digits on the 10y. Stop flapping your gums and show me mother fucker! Fear monger, oh yeah, sell your bonds cheap to gollum sachs people. The sky is falling! The sky is falling. hahahahahahah!!! http://www.youtube.com/watch?v=pC_XT-HdBvE

Wed, 06/12/2013 - 20:51 | 3652286 fonzannoon
fonzannoon's picture

Japan is having quite the session....

Wed, 06/12/2013 - 20:54 | 3652293 buzzsaw99
buzzsaw99's picture

Wasn't it just the other day they tried to get their pension funds to sell bonds and buy stocks? Oh yeah, they care so much about the sheep. Just another pump and dump. Always the pump and dump.

Wed, 06/12/2013 - 20:56 | 3652300 fonzannoon
fonzannoon's picture

All these countries claim to desperately want inflation. Print that money and send out checks to everyone. They will have an inflationary wet dream. Yet they just keep giving it to the banks....

Wed, 06/12/2013 - 21:30 | 3652444 forexskin
forexskin's picture

*shhh* its actually a coup d'etat in paper form. no blood, good slaves

Wed, 06/12/2013 - 20:54 | 3652294 Mine Is Bigger
Mine Is Bigger's picture

Yes!!!!  The Nikkei index is down ONLY about 4%!

Wed, 06/12/2013 - 20:58 | 3652307 The Shootist
The Shootist's picture

Hitting GS stop probably

Wed, 06/12/2013 - 21:07 | 3652333 syntaxterror
syntaxterror's picture

But, but, but the US just added another 42,000 jobs this week.

Wed, 06/12/2013 - 21:34 | 3652325 Dr. Engali
Dr. Engali's picture

It was funny as hell today. We had a wholesaler in and his firm was pushing the Japanese markets. I asked him " you mean you would put money to work in Japan today even though they seem to be backtracking and drew the line at USD/JPY 101 and that their bond market trades limit down if they cross that threshold ?" And his response was " yeah the BOJ has been authorized to buy more than just JGBs. They can go into reits yada yada yada blah blah blah."

Oh well the free lunch was good anyway.

Wed, 06/12/2013 - 20:47 | 3652278 Nue
Nue's picture

****POP****

Wed, 06/12/2013 - 20:48 | 3652279 lolmao500
lolmao500's picture

The "biggest risk to global financial stability... would be a disorderly reversion in the yields of government bonds globally." he said, adding that there had been "shades of that" in recent weeks.

Too bad it's gonna happen... which was the goal to begin with.

Wed, 06/12/2013 - 20:48 | 3652280 Whoa Dammit
Whoa Dammit's picture

Woman's bank accounts debted $300 million by Ga Dept of Revnue:

"It was when Wiley saw the 'See Cashier' read out at the gas pump that she decided to check her bank account on her phone and that's when she got the first bit of bad news. 

She was in the red about $100 million dollars. Her computer at home confirmed that and more. 

"Yes. $100 million from my savings and $100 million from my checking," said Wiley. 

And overnight, like a nightmare, things got worse. 

"I wake up the next morning, check again. Maybe this is a bad dream. It's another $100 million, so it's $300 million I'm having a problem with right now," she said.

Sun Trust Bank told Wiley the problem was with the Department of Revenue. The DOR, per law, cannot comment on any individual taxpayer, but did say it has no documents showing the department is in the wrong."

It turns out a used car Wiley bought back in 2004 may be coming back to haunt her. 

"They're telling me it's the remaining balance of a sale. A $274 sales tax," Wiley said.

But how $274.62 becomes nearly $300 million is anyone's guess."

http://www.wsbtv.com/news/news/local/woman-says-bank-problem-showing-her-300-million-de/nYJ6C/

Wed, 06/12/2013 - 20:57 | 3652305 Dr. Engali
Dr. Engali's picture

Okay that's fucked up. Too bad it wasn't hundreds of millions in the other direction.

Wed, 06/12/2013 - 21:00 | 3652314 The Shootist
The Shootist's picture

How did the gubbermint get her bank no.'s?

Wed, 06/12/2013 - 21:03 | 3652322 nmewn
nmewn's picture

Probably donated to a Tea Party at some point.

Wed, 06/12/2013 - 21:10 | 3652341 Dr. Engali
Dr. Engali's picture

Either the NSA troll or the IRS troll is junking you..... Or it could be your perma-junker.

Wed, 06/12/2013 - 21:13 | 3652363 nmewn
nmewn's picture

Its my perma-junker Bringin It...he's very dependable ;-)

Wed, 06/12/2013 - 21:00 | 3652315 fonzannoon
fonzannoon's picture

I think at first you gotta be thinking "Ok, calm down....it's a hundred million, I can work this out". But the second hundred million is probably when you start to get overwhelmed.

Wed, 06/12/2013 - 21:21 | 3652404 gwar5
gwar5's picture

War on women. Maybe it was her bumper sticker that had a picture of Obama and said: "Does this ass make my car look too big?"

 

 

Wed, 06/12/2013 - 23:36 | 3652965 fuckitall
fuckitall's picture

Lol, humor award of the day (week?) for that one.

Wed, 06/12/2013 - 20:49 | 3652281 alphamentalist
alphamentalist's picture

<- UST 10yr above 4% by end of year

<- UST 10yr below 4% by end of year

Wed, 06/12/2013 - 21:05 | 3652331 syntaxterror
syntaxterror's picture

Shalom will shoot a load of fed jizz to manipulate it down.

Wed, 06/12/2013 - 21:11 | 3652352 nmewn
nmewn's picture

They can't let it go up with half of wage earners paying no tax.

Hey!...(Krugman says)...lets give a tax credit to those who buy bonds!!! ;-)

Wed, 06/12/2013 - 20:55 | 3652296 otto skorzeny
otto skorzeny's picture

Sounds like its "cover you ass" time. 

Wed, 06/12/2013 - 20:55 | 3652297 criticalreason
criticalreason's picture

omg this doesnt look good. deflating the bubble will b bad for all assets classes (including gold)

the real economy is irrelevent the banks must b feeling rescued and secure.

finally cash will b king.

Wed, 06/12/2013 - 21:12 | 3652358 Bay of Pigs
Bay of Pigs's picture

Gold has been the Canary in the Coal Mine for the last 12 years...and has already dropped sigificantly. It should outperform everything when it all goes bust.

 

Wed, 06/12/2013 - 20:57 | 3652304 Burr's 2nd Shot
Burr&#039;s 2nd Shot's picture

We fucked it up, it is clear we fucked it up, and now, you know that we fucked it up.

Here's how we're going to fix it...

Wed, 06/12/2013 - 21:01 | 3652316 Not My Real Name
Not My Real Name's picture

He's just now figuring this out?

Wed, 06/12/2013 - 21:03 | 3652323 syntaxterror
syntaxterror's picture

Relax little sheep. Everyone always gets a bailout. You too, Pimco.

Wed, 06/12/2013 - 21:03 | 3652324 max2205
max2205's picture

I am thinking of a rubber band that has been pulled to the max for 4 years.  Boing 

Wed, 06/12/2013 - 21:04 | 3652329 q99x2
q99x2's picture

Nikkei -422

What the hell did they forget to do over there, import their raw materials before lowering the yen. Maybe they'll get right this time round.

 

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