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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".

 

...

 

"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

 

...

 

"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."

 

...

 

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
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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
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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.

 

Wed, 06/12/2013 - 21:07 | 3652334 22winmag
22winmag's picture

When you are a the kind of position this guy is in, that level of truthfulness will get your airplane flown into the side of a mountain.

Wed, 06/12/2013 - 21:08 | 3652336 Dr. Engali
Dr. Engali's picture

Yes you intentionally blew the biggest bubble in history, and when it pops you'll roll out a new world currency in response to 'cure all of our problems'. Which you and your ilk created by the way.

Wed, 06/12/2013 - 21:15 | 3652377 otto skorzeny
otto skorzeny's picture

He'll just have to gas up the Gulfstream in the NWO currency instead of Pounds.

Wed, 06/12/2013 - 21:14 | 3652367 hairball48
hairball48's picture

"We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted."

Anybody with an oz. of sense knows that the selloff, when it begins in earnest...will NOT be orderly.

Who wants to be last out, etc. 

The sheep who have their life savings/retirement in Uncle Sam's bonds will be slaughtered. Serves them right for paying so much attention to the Kardashians.

Wed, 06/12/2013 - 21:18 | 3652392 otto skorzeny
otto skorzeny's picture

And then after the big boys are bailed out the sheep's 401k money will be forced to hold a (high) % in T-bills.

Wed, 06/12/2013 - 22:44 | 3652770 andrewp111
andrewp111's picture

People who put their life savings in Treasury Bonds will NOT be slaughtered unless they sell the bonds before maturity. Virtually all ordinary savers hold all bonds to maturity, usually on Treasury Direct. Only bond speculators buy and sell bonds when the price wiggles up and down.

Wed, 06/12/2013 - 23:46 | 3652995 fuckitall
fuckitall's picture

"The sheep who have their life savings/retirement in Uncle Sam's bonds will be slaughtered."

Well, yea, but not from any bubble bust, more like currency bust.

Wed, 06/12/2013 - 21:18 | 3652387 gwar5
gwar5's picture

You can smell these fuckers getting ready to blame the politicians for the coming collapse. Maybe that's why the worm has turned for Obama.  Only banks are too big to fail.

Thu, 06/13/2013 - 01:35 | 3653217 Aurora Ex Machina
Aurora Ex Machina's picture

Smart comment. According to your theory, with Mitt it would have been a lot smoother, and would have been a lot easier, but the outcome would have been the same.

 

I've been waiting a while for someone to say it though. I can imagine that 9% popularity is going to sting a little.

Wed, 06/12/2013 - 21:39 | 3652471 Fuku Ben
Fuku Ben's picture

Sounds like a messenger for his masters

Gotta love the all seeing eye logo

http://www.youtube.com/watch?v=7rloOWtNeRc

 

Thu, 06/13/2013 - 01:38 | 3653222 Aurora Ex Machina
Aurora Ex Machina's picture

You'd think the Illuminati could have afforded new upholstery since the 1970's.

Wed, 06/12/2013 - 21:43 | 3652481 kragsquest
kragsquest's picture

Is thiis guy related to the noted evolutionist/atheist JBS Haldane?  Interesting; maybe we should consider giving the USA  back to the Brits.....

Wed, 06/12/2013 - 21:54 | 3652529 ebworthen
ebworthen's picture

2008 Part Two.

If you haven't sold your house yet you missed the Spring rush and the low rates.

Next Spring might be too late, but if you don't want to get it on the market this Summer, you'd better sell by next Spring.

Wed, 06/12/2013 - 23:24 | 3652923 fuckitall
fuckitall's picture

Yep, you might be right, and I suspect Ocare might be the hammer, lots of folks will feel hammered certainly.

Wed, 06/12/2013 - 22:01 | 3652551 Mark123
Mark123's picture

This is all just theater....I could care less if the banker-owned governments lower rates to zero and borrow to keep the system going...BUT...NOT A SINGLE BANKER, POLITICIAN, WALL STREET WHORE ETC ETC WAS SENT TO JAIL since this all started back in 2008. 

 

Totally sickening....and the creeps never lost a bonus through it all.  Bonus....for what?  For tearing apart an entire civilization???  I wonder why NSA even bothers spying on the people - they are just a sad lot of lazy, timid losers.

 

My poor kids.  A very bleak future for them.

Wed, 06/12/2013 - 22:51 | 3652700 fuckitall
fuckitall's picture

Well well well, seems this comment has been corroborated by a central banker no less.  Biggest damn sovereign bond bubble in human fucking history (you don't abbreviate sovereign, it would be sov, i.e. soviet, and they're not blowing any huge fucking bond bubbles).

Of course he never says WHY they did it.  No problem, we know why.  And since we know why we also know the future of it, and no, there won't be any sudden deflating (sharply rising yield), so no worries there Mr Haldane.

And like every other central banker he ignores the real negative impact, that taboo subject called printing and currency debasement, which everybody else ignores too by the way.  Ok, maybe not those rioting mobs in various places watching their savings and paychecks vaporize, but those useless eaters don't matter anyway, certainly not to any central banker (nor their bosses).

Wed, 06/12/2013 - 22:39 | 3652738 andrewp111
andrewp111's picture

Central banks have unlimited power to print money for the purchase of government bonds. Unlimited means umlimited. There is only one way the government bond bubble can burst - if the Central Banks let it burst. And they will only do that if the consequences of doing otherwise are even worse.

Thu, 06/13/2013 - 04:35 | 3653378 giggler123
giggler123's picture

Since they never tell the entire truth, it's probably worse than hes admitting.  I mean if they admit to blowing up a bubble, wonder what it is they won't admit to?

Thu, 06/13/2013 - 05:54 | 3653430 THE DORK OF CORK
THE DORK OF CORK's picture

Money is the most political of symbolic units.

What a absurd statement

 

The elites political organizations such as CBs are not called political by them offically but they very much are of course.

It is simply a question of inner sanctum politics vs exterior parish pump politics.

But its all fucking politics.

Thu, 06/13/2013 - 05:57 | 3653432 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

And for his next trick Andy will show you how he is going to let the air out of his bond balloon very slowly with a very sharp pin.

"A pin lies in wait for every bubble and when the two eventually meet, a new wave of investors learns some very old lessons."

 

Thu, 06/13/2013 - 06:55 | 3653457 PaperBear
PaperBear's picture

Can it get any more unequivocal than this ? Of course, every bubble eventually finds the pin that bursts them and this bubble will be no different.

Thu, 06/13/2013 - 10:23 | 3653951 NoTTD
NoTTD's picture

And Carney fires him in 3...2...

Thu, 06/13/2013 - 13:52 | 3654665 mcgoverntm
mcgoverntm's picture

There is an unmatched quotation mark in the first paragraph which, of course, makes the paragraph harder to parse.  It also indicates particularly sloppy ediiting when such an error occurs in the first paragraph.  Zero Hedge generally has excellent prose and this mistake stands out like the cliched "sore thumb."

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