• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over

Tyler Durden's picture




 

When a month ago the Central Banks' Central Bank, aka the Bank of International Settlements (or BIS) in Basel where the MIT central-planning braintrust meets every few months to decide the fate of the world, warned that the Fed-induced collateral shortage is distorting the markets, few paid attention. That the implication behind said warning was that QE can not continue at the current pace, was just as lost. A few short weeks later following the biggest plunge in markets since 2011 in the aftermath of Bernanke's taper tantrum, some are finally willing to listen.

However, they will certainly not like what the BIS just released as a follow up, both in the form of the BIS' 83rd Annual Report, and the speech by Jaime Caruana to commemorate said annual meeting. For the simple reason that it reads like a run of the mill Sunday morning Zero Hedge sermon, which says, almost verbatim, that the days of kicking the can via flawed monetary policy are now over, and that the time for central banks to end the monetary morphine drip has finally come.

The BIS message, as summarized by the FT, is that "central banks must head for the exit and stop trying to spur a global economic recovery... cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy’s return to health by delaying adjustments to governments’ and households’ balance sheets."

Here is a better summary of the BIS' unprecedented U-Turn on its 5 year long monetary strategy, in its own selected words:

Can central banks now really do “whatever it takes”? As each day goes by, it seems less and less likely... Six years have passed since the eruption of the global financial crisis, yet robust, self-sustaining, well balanced growth still eludes the global economy. If there were an easy path to that goal, we would have found it by now.

 

Monetary stimulus alone cannot provide the answer because the roots of the problem are not monetary. Hence, central banks must manage a return to their stabilisation role, allowing others to do the hard but essential work of adjustment.  

 

Many large corporations are using cheap bond funding to lengthen the duration of their liabilities instead of investing in new production capacity.  

 

Continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system.

 

Overindebtedness is one of the major barriers on the path to growth after a financial crisis. Borrowing more year after year is not the cure...in some places it may be difficult to avoid an overall reduction in accommodation because some policies have clearly hit their limits.

Of course, it would have been more useful for the BIS to reach this commonsensical conclusion some four years ago (or roughly when we started preaching to the choir, which now includes the BIS itself), instead of allowing the global private bank controlled syndicate known as "central banks" to inject $15 trillion into global capital markets in the past 4 years, and nearly $25 trillion (a #Ref! % increase!) since 2000.

Some of the "shocking" and painfully late observations on the chart above:

Since the beginning of the financial crisis almost six years ago, central banks and fiscal authorities have supported the global economy with unprecedented measures. Policy rates have been kept near zero in the largest advanced economies. Central bank balance sheets have doubled from $10 trillion to more than $20 trillion. And fiscal authorities almost everywhere have been piling up debt, which has risen by $23 trillion since 2007. In emerging market economies, public debt has grown more slowly than GDP; but in advanced economies, it has grown much faster, so that it now exceeds one year’s GDP.

Some of the other, just as "shocking" observations: a dramatic surge in artificially low bond yields will result in crippling, systemic losses, amounting to trillions of dollars for bond (and certainly stock) investors around the globe, to the tune of 8% of GDP losses in the US, and a mindblowing 35% of GDP in losses for Japanese investors:

Consider what would happen to holders of US Treasury securities (excluding the Federal Reserve) if yields were to rise by 3 percentage points across the maturity spectrum: they would lose more than $1 trillion, or almost 8% of US GDP (Graph I.3, right-hand panel). The losses for holders of debt issued by France, Italy, Japan and the United Kingdom would range from about 15 to 35% of GDP of the respective countries. Yields are not likely to jump by 300 basis points overnight; but the experience from 1994, when long-term bond yields in a number of advanced economies rose by around 200 basis points in the course of a year, shows that a big upward move can happen relatively fast.

 

And while sophisticated hedging strategies can protect individual investors, someone must ultimately hold the interest rate risk. Indeed, the potential loss in relation to GDP is at a record high in most advanced economies. As foreign and domestic banks would be among those experiencing the losses, interest rate increases pose risks to the stability of the financial system if not executed with great care.

 

All of which Japan's "sophisticated", yet joyously cartoonish, "leaders" recently found out when they almost lost all control of the bond (and stock) market.

What's the "wealth effect" solution: why buy stocks but don't sell bonds. Or if selling bonds, do so vewy, vewy quietly. Alas, not even the BIS is dumb enough to fall (or push) for this possibility any longer.

The BIS report goes on, doing all it can to distance itself from those central banks who merely implemented policy that the BIS supported (and encouraged) for the past 5 years, but which has suddenly turned a cold shoulder. It does so by dramatically and rhetorically blasting a litany of questions to which it fully-well knows the answers:

How can central banks encourage those responsible for structural adjustment to implement reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back from their expansionary policies? And in pulling back, how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions.

Regardless of the politics behind the shift in BIS sentiment, the days of Mario Draghi's "whatever it takes" shriek of desperation are over. Here are some more of the key soundbites from the BIS report:

Originally forged as a description of central bank actions to prevent financial collapse, the phrase “whatever it takes” has become a rallying cry for central banks to continue their extraordinary actions. But we are past the height of the crisis, and the goal of policy has changed – to return still-sluggish economies to strong and sustainable growth. Can central banks now really do “whatever it takes” to achieve that goal? As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect.

 

What central bank accommodation has done during the recovery is to borrow time – time for balance sheet repair, time for fiscal consolidation, and time for reforms to restore productivity growth. But the time has not been well used, as continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system. After all, cheap money makes it easier to borrow than to save, easier to spend than to tax, easier to remain the same than to change.

 

Yes, in some countries the household sector has made headway with the gruelling task of deleveraging. Some financial institutions are better capitalised. Some fiscal authorities have begun painful but essential consolidation. And yes, much of the difficult work of financial reform has been completed. But overall, progress has been slow, halting and uneven across countries. Households and firms continue to hope that if they wait, asset values and revenues will rise and their balance sheets improve. Governments hope that if they wait, the economy will grow, driving down the ratio of debt to GDP. And politicians hope that if they wait, incomes and profits will start to grow again, making the reform of labour and product markets less urgent. But waiting will not make things any easier, particularly as public support and patience erode.

 

Alas, central banks cannot do more without compounding the risks they have already created. Instead, they must re-emphasise their traditional focus – albeit expanded to include financial stability – and thereby encourage needed adjustments rather than retard them with near-zero interest rates and purchases of ever larger quantities of government securities. And they must urge authorities to speed up reforms in labour and product markets, reforms that will enhance productivity and encourage employment growth rather than provide the false comfort that it will be easier later.

* * *

As governments responded to the financial crisis with bank bailouts and fiscal stimulus, their indebtedness rose to new highs. And in countries that experienced a housing bubble in the run-up to the crisis, households had already accumulated large debts. In the half-decade since the peak of the crisis, the hope was that significant progress would be made in the necessary deleveraging process, thereby enabling a self-sustaining recovery.

However, that never happened.

Easy financial conditions can do only so much to revitalise long-term growth when balance sheets are impaired and resources are misallocated on a large scale. In many advanced economies, household debt remains very high, as does non-financial corporate debt. With households and firms focused on reducing their debt, a low price for new credit is not terribly relevant for spending. Indeed, many large corporations are using cheap bond funding to lengthen the duration of their liabilities instead of investing in new production capacity. It does not matter how attractive the authorities make it to lend and borrow – households and firms focused on balance sheet repair will not add to their debt, nor should they.

And, most of all, more stimulus cannot revive productivity growth or remove the impediments that block a worker from shifting into a promising sector. Debt-financed growth masked the downward trend in labour productivity and the large-scale distortion of resource allocation in many economies. Adding more debt will not strengthen the financial sector nor will it reallocate resources needed to return economies to the real growth that authorities and the public both want and expect.

* * *

Six years have passed since the eruption of the global financial crisis, yet robust, self-sustaining, well balanced growth still eludes the global economy. If there were an easy path to that goal, we would have found it by now. Monetary stimulus alone cannot provide the answer because the roots of the problem are not monetary. Hence, central banks must manage a return to their stabilisation role, allowing others to do the hard but essential work of adjustment.

 

Authorities need to hasten labour and product market reforms so that economic resources can shift more easily to high-productivity sectors. Households and firms have to complete the difficult job of repairing their balance sheets, and governments must intensify their efforts to ensure the sustainability of their finances. Regulators have to adapt the rules to a financial system that is becoming increasingly interconnected and complex and ensure that banks have sufficient capital and liquidity buffers to match the associated risks. Each country needs to tailor the reform agenda to maximise its chances of success without endangering the ongoing economic recovery. But, in the end, only a forceful programme of repair and reform will return economies to strong and sustainable real growth.

* * *

Ultimately, outsize public debt reduces sovereign creditworthiness and erodes confidence. By putting their fiscal house in order, governments can help restore the virtuous cycle between the financial system and the real economy. And, with low levels of debt, governments will again have the capacity to respond when the next financial or economic crisis inevitably hits. 

* * *

Continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system.

The BIS conclusion:

Is this a call for undifferentiated, simultaneous and comprehensive tightening of all policies? The short answer is no. Concrete measures need to be tailored to country-specific circumstances and needs. And the timing need not be simultaneous, although in some places it may be difficult to avoid an overall reduction in accommodation because some policies have clearly hit their limits.

 

Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road. And it is a call for recognising that returning to stability and prosperity is a shared responsibility. Monetary policy has done its part. Recovery now calls for a different policy mix – with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances.

 

Finally, today’s large flows of goods, services and capital across borders make economic and financial stability a shared international responsibility. Cross-border effects of domestic policy action are intrinsic to globalisation. Understanding spillovers and finding ways to avoid the unintended effects is central to the work of the BIS. And continued discussions among central banks and supervisors – discussions that the BIS facilitates and promotes – are essential for avoiding national biases in policymaking. Such national bias runs the risk of undermining globalisation and thus blocking the road to sustained growth for the global economy.

And yes, the central banks' central bank really did say all of the above. Unpossible the Keynesian Magic Money Tree growers will say: surely there is an error in the BIS excel model...

Those pressed for time, if unable to read the full 204 page annual report, should at least read the following stunning speech from Jaime Caruana, General Manager of the BIS, titled "Making the most of borrowed time." (only 9 pages - pdf here). Because, if nothing else, it validates everything Zero Hedge has said for the past 4 years.

 

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Sun, 06/23/2013 - 16:17 | 3684490 buzzsaw99
buzzsaw99's picture

The BIS comes across as childishly naive in this.

I'm shocked, shocked to find that gambling is going on in here! [cap'n renault]

Sun, 06/23/2013 - 16:26 | 3684508 cifo
cifo's picture

I skipped directly to the comments.

Sun, 06/23/2013 - 16:29 | 3684516 jbvtme
jbvtme's picture

Recovery now calls for a different policy mix – with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances.

I too had a fine settlement this morning. 

Sun, 06/23/2013 - 17:09 | 3684652 King_of_simpletons
King_of_simpletons's picture

Dr. Paul Krugman has won the debate. *NOT*

Sun, 06/23/2013 - 17:29 | 3684711 francis_sawyer
francis_sawyer's picture

So does this mean 'Hilary' gets the job?...

Sun, 06/23/2013 - 17:36 | 3684727 Pinto Currency
Pinto Currency's picture

 

So after coordinating a gold manipulation (and thus artificially low interest rate) campaign for two decades, the BIS now warns us of a credit bubble.

Thanks.

Sun, 06/23/2013 - 18:00 | 3684786 johngaltfla
johngaltfla's picture

There's a bigger problem the BIS and others have been aware of since Q4 2012; what happens when cross border financial activity ceases to expand and in fact contracts? Usually when money and trade stop flying across borders, bullets are exchanged instead.

 

The End of Global Banking or Worse?

Sun, 06/23/2013 - 21:54 | 3685365 Taku
Taku's picture

O/T: US politicians issue warning to Russia on Snowden.

http://www.guardian.co.uk/world/2013/jun/23/edward-snowden-us-politicians-react

I wonder if the same US politicians arrested anyone for the financial crisis.

Or the massive, record bonus payouts in 2009, 2010.

Or the spying on American citizens.

Or the...

Sun, 06/23/2013 - 22:30 | 3685441 Bringin It
Bringin It's picture

Chuck Schumer thinks Snowden is a traitor.  Oh the irony...

Traitor to what Chuck?  Your entity???

 

O/T - The Bank of Israel /Goldman /JPM thread just vanished.???

 

Sun, 06/23/2013 - 22:34 | 3685455 TwoShortPlanks
TwoShortPlanks's picture

"liquidate labour (sent to China, check!), liquidate stocks (phase 1, check!), liquidate farmers (years ago, check!), liquidate real estate (round 1, check!)... it will purge the rottenness out of the system (soon). High costs of living and high living will come down. People will work harder (soon), live a more moral life (soon). Values will be adjusted (soon), and enterprising people will pick up from less competent people"

Full circle.

Sun, 06/23/2013 - 22:59 | 3685493 zhandax
zhandax's picture

Can we get started tomorrow?

Mon, 06/24/2013 - 00:50 | 3685648 Oh regional Indian
Oh regional Indian's picture

We just might... on all counts.

This is the big signalling they always do, so no one can say they did nto see it coming. It's part of this weird mix of asking for permission 9and getting it) before the raping begins.

Very strange. The whole BIS/CB shitshow needs to come crashing down, but how?

Stop participating. Stop participating in TV, completely. Stop buyng their compromised newspapers. Stop eating their poisoned fast food. Stop shopping at companies that will willingly sell you poison lasquerading as food.

Active resistance by passive means and better health (mental and physical) to boot.

ori

http://aadivaahan.wordpress.com/2013/06/21/strange-days-especially-now-through-the-23rd/

Sun, 06/23/2013 - 23:31 | 3685545 Flagit
Flagit's picture

O/T - The Bank of Israel /Goldman /JPM thread just vanished.???

you mean this thread?

http://www.zerohedge.com/news/2013-06-23/jpmorgan-out-squids-goldman-fre...

Mon, 06/24/2013 - 01:21 | 3685678 TwoShortPlanks
TwoShortPlanks's picture

No, not that one...the conspiracy one...it looks very similar tho.

Sun, 06/23/2013 - 23:41 | 3685558 El Oregonian
El Oregonian's picture

Chuck Schumer is Anthony Weiner's peckerhead.

Mon, 06/24/2013 - 00:27 | 3685611 chindit13
chindit13's picture

You nailed it, johngaltfla.  And when that cross border activity contracts, or in some cases (within a monetary union) all goes in one direction, a whole lot of markets are left without liquidity.  Bid-asks widen out, which means a fair m-t-m accounting becomes more problematic, which means that in the event of forced liquidations, the weakest hands get hosed.  It is the global equivalent of Blue Mountain vs. Bruno Iksil.  It is a LTCM/Russian Bond deja vu.

Virtually all 'models' used in the economic sphere assume a certain degree of liquidity that may no longer be there.  Actually, it is not there.  Considering that, vol is damn cheap.

I can see the possibility of a massive dollar rally, not because it has great 'value', but because of its size and the size of the US debt market, which is essentially a large parking lot.  Of course, it will be the equivalent (here comes the Titanic yet again), everybody jumping in the same lifeboat.  It looks good for a while, but then that boat sinks, too.  (That is when I'll fall in love with 'barbarous relics' in addition to other "stuff".)

Sun, 06/23/2013 - 22:23 | 3685430 ziggy59
ziggy59's picture

Rewriting history and getting credit for it..

Sun, 06/23/2013 - 18:52 | 3684916 Go Tribe
Go Tribe's picture

I sure hope not. I don't like the thought of rolling out of bed and throwing up each morning for 1,460 days.

Sun, 06/23/2013 - 16:28 | 3684518 kliguy38
kliguy38's picture

what was your first clue to do so? hehehehe

Sun, 06/23/2013 - 17:18 | 3684585 xtop23
xtop23's picture

Monday bloodbath?

I guess we'll find out in short order whether the FED is a political entity or not. 

The market scrubbing in like Wile E. Coyote is going to cause a lot of pressure to be brought to bear. 

Set your stop watches on how long it takes them to cave in and boost overt QE to 150 b/m.

Sun, 06/23/2013 - 17:52 | 3684785 kahunabear
kahunabear's picture

I hope so. 1000 points down will do for a start. '09 feels like a distant memory after all the Bernanke brainwashing. Let the games begin!

Mostly, I want to see Krugman, Bernanke, Goldman, et al. eat their words.

Sun, 06/23/2013 - 18:58 | 3684928 flacon
flacon's picture

I want to see Krugman, Bernanke, Goldman, et al. eat molten gold mixed with molten silver; poured straight down their throat. 

Sun, 06/23/2013 - 20:42 | 3685184 saucy
saucy's picture

Ah, a Roman historian. Crassus in 88 BCE. I assume it was quite painful... but I'm all for a revival of this form of execution. :-) I suppose they weren't in the ground long either!

Sun, 06/23/2013 - 22:13 | 3685208 FEDbuster
FEDbuster's picture

Waste of silver and gold.

Sun, 06/23/2013 - 22:32 | 3685450 Bringin It
Bringin It's picture

Please -I'm sure they got it back.

Guy who assasinated William of Orange - molten silver in the ear.

Sun, 06/23/2013 - 22:22 | 3685427 starman
starman's picture

hm Nikkei is very quiet, did they get their QE shot already?  

Sun, 06/23/2013 - 22:33 | 3685452 Bringin It
Bringin It's picture

SOP - Awaiting herd direction.

Sun, 06/23/2013 - 16:56 | 3684612 Yardfarmer
Yardfarmer's picture

another pile of reeking hypocrisy and misdirection coming from an institution which brought you the Third Reich and serves as the main conduit of international drug money laundering. Google BIS + Nazis. bastards.

Sun, 06/23/2013 - 17:12 | 3684651 RockyRacoon
RockyRacoon's picture

Borrowed time... or wasted time?

"Sometimes to keep it together, we got to leave it alone."

Sun, 06/23/2013 - 18:15 | 3684834 CPL
CPL's picture

Exactly, all that capital, time and resource base pissed away for nothing.  

Sun, 06/23/2013 - 19:02 | 3684945 mademesmile
mademesmile's picture

Better yet, buy and read "Tower of Basel" by Adam Lebor. Someone with a higher intellect than I needs to write then post a book review.

"Tower of Basel is the first investigative history of the world’s most secretive global financial institution. Based on extensive archival research in Switzerland, Britain, and the United States, and in-depth interviews with key decision-makers—including Paul Volcker, the former chairman of the US Federal Reserve; Sir Mervyn King, governor of the Bank of England; and former senior Bank for International Settlements managers and officials—Tower of Basel tells the inside story of the Bank for International Settlements (BIS): the central bankers’ own bank.

Created by the governors of the Bank of England and the Reichsbank in 1930, and protected by an international treaty, the BIS and its assets are legally beyond the reach of any government or jurisdiction. The bank is untouchable. Swiss authorities have no jurisdiction over the bank or its premises. The BIS has just 140 customers but made tax-free profits of $1.17 billion in 2011–2012.

Since its creation, the bank has been at the heart of global events but has often gone unnoticed. Under Thomas McKittrick, the bank’s American president from 1940–1946, the BIS was open for business throughout the Second World War. The BIS accepted looted Nazi gold, conducted foreign exchange deals for the Reichsbank, and was used by both the Allies and the Axis powers as a secret contact point to keep the channels of international finance open."

After 1945 the BIS—still behind the scenes—for decades provided the necessary technical and administrative support for the trans-European currency project, from the first attempts to harmonize exchange rates in the late 1940s to the launch of the Euro in 2002. It now stands at the center of efforts to build a new global financial and regulatory architecture, once again proving that it has the power to shape the financial rules of our world. Yet despite its pivotal role in the financial and political history of the last century and during the economic current crisis, the BIS has remained largely unknown—until now."

Sun, 06/23/2013 - 17:57 | 3684803 GVB
GVB's picture

This is all so funny. The creature of Frankenstein now transcends its creator.Welcome to hell. And in hell, there'll be hell to pay.

 

This monetary model is irreversibly damaged and not fixable at all. REMEMBER, all these highly leveraged commercial banks have HUGE counterparty liabilities and as a depositor, you are a UNSECURED creditor to that bank. I say again LEVERAGED ! It's insane.

 

Too Big Too Fail will be remembered in history as the era of insanity.

 

Pulling the plug on the printing press = revolution

Sun, 06/23/2013 - 16:45 | 3684571 bank guy in Brussels
bank guy in Brussels's picture

Actually it is worse than naive, the BIS is doing downright brutal fascist stuff

That speech by Jaime Caruana, BIS General Manager, which Tyler links above, is pure shite propaganda, parroting the German Bundesbank position against the southern countries and the common people of Europe

Avoids one big elephant in the room, which is that the euro is a giant frigging fascist disaster

And avoids another big elephant, in that tho Caruana accepts this is a 'balance sheet recession' as defined by the great economist Richard Koo, Caruana does not even begin to confront what Koo - the master of that concept - says is the way to handle such a recession

Instead, this oligarch tool Caruana says what needs to be done, is cuts to the workers and common folk ... exactly the opposite of what Koo says. Caruana writes:

« Successful consolidations tend to focus on cuts, especially in government consumption and transfers »

Bullshite. Caruana is ignoring the fact that these policies have all of southern Europe economically collapsing and heading toward revolution.

Caruana wants common people impoverished and committing suicide, for the sake of 'price stabiliteee' and keeping alive the German wet dream of having a cheap currency to export, protecting their own crooked banks, and buying up control of the rest of Europe at fire-sale prices.

Unfortunately, sometimes the ZH 'excess debt' theme is twisted into a plan to let economic oligarchs monopolise and take control while they brutalise.

A revolution is needed, both on the streets and in avoiding simplistic knee-jerk categories.

Sun, 06/23/2013 - 16:54 | 3684599 buzzsaw99
buzzsaw99's picture

In light of this illuminating comment then they are childishly naive if they think the usa &/or fed will play the part they want them to play in this sweaty fascist wet dream of theirs. the bernankinator cannot be bargained with, he can't be reasoned with, he doesn't feel pity, or remorse, or fear...

Mon, 06/24/2013 - 03:16 | 3685752 Dr. Sandi
Dr. Sandi's picture

...he also can't feel his extremities.

But I can. And I'm tired of them.

Sun, 06/23/2013 - 17:00 | 3684625 jmc8888
jmc8888's picture

We need Glass-Steagall before the plug is pulled or else we'll all be Cyprus'd. 

Or Spain'd. Or Britain'd.

Because everywhere you look some form of bail-in is happening.

Guess the BIS is saying they need to sacrifice a few oligarchs so they can crush a few billion peasants.

ROFL ZH used the spilling kool aid pic I've used for years.

Glass-Steagall

Sun, 06/23/2013 - 17:14 | 3684662 RockyRacoon
RockyRacoon's picture

Glass-Steagall

That ain't gonna happen.   Got a Plan B?

Sun, 06/23/2013 - 17:41 | 3684748 Mentaliusanything
Mentaliusanything's picture

No there is no plan B... The separation of "Gambling Banks" from "Savings Bank" is it.

If not prepare to lose as an unsecured creditor

Sun, 06/23/2013 - 17:44 | 3684762 SILVERGEDDON
SILVERGEDDON's picture

What manner of butt fuckery is this anyway ?

Banks said " we are too big to fail, so give us money. "

Gooberment gave them money.

The banks pissed it all away on bonuses, and marjin high frequency trading.

Now, BIS says that all that was a bad thing, banks should circle the wagons after raping the world, and hold gooberment's feet to the fire - again ?

And, that it is the fault of all those lazy bastard debt holding ex - middle class folks in each country that things are such a mess ?

Well, fuck me running.

BIS - Big Idiotic Shit heads.

" WE'RE MAD AS HELL, AND WE'RE NOT GONNA TAKE IT ANYMORE !!! "

Time for torches and pitch forks.

The monster must be destroyed, before it exterminates all legitimate life on the planet. 

Sun, 06/23/2013 - 18:02 | 3684815 spinone
spinone's picture

Lather, rinse, repeat

Until the .01% has 99% of the wealth, unless they are stopped by popular resistance.

If you are reading this, then you are the resistance.

Sun, 06/23/2013 - 19:01 | 3684942 RockyRacoon
RockyRacoon's picture

You've miscalculated at the current rate of change in wealth retention.  It would be the .001% having 99.9% of the wealth.  They'll stop the money grabbing only when the armed hordes are at the gated community entrances.

Mon, 06/24/2013 - 00:08 | 3685599 Impoverished Ps...
Impoverished Psychologist's picture

Good point,

If 0.1% have 99% of the wealth that means that 99.9% of the people are getting by with 1% of the wealth.

What if the 99.9% were just to declare the 1% that they do possess to be the ONLY legitimate currency/negotiable instruments leaving the tainted 99% as void - like confederate dollars.

This of course would require the complete destruction of the corporate/banking system.....

 

Sun, 06/23/2013 - 18:18 | 3684838 NoDebt
NoDebt's picture

It's called suddenly realizing you're on the wrong side of history and back-pedaling your ass off in an attempt to realign yourself with what is now obvious to anyone with half a brain is going to go down.

Dr. Paul "whichever way the wind blows" Krugman is good at it, too.

Fire enough lead downrange and you'll eventually hit a bullseye.  Doesn't mean you're any good at it.

6 months from now, if it DOESN'T happen they'll be back to "clarify" their comments or, more likely, ignore the fact they ever made them, substituting new talking point bullshit instead.

And did they really predict the '08 crash?  I'm not so sure.  Seems like there are way too many people being adorned with the "08 crash prediction badge" lately.  In hindsight, everyone predicted it now.  Uh huh.  Sure they did.

Sun, 06/23/2013 - 20:48 | 3685205 centerline
centerline's picture

too late for most..

Sun, 06/23/2013 - 19:03 | 3684946 GVB
GVB's picture

Paging Mario. Paging Mario.

Sun, 06/23/2013 - 18:08 | 3684823 GVB
GVB's picture

Seriously, if they pull the plug on the printing press, we would all be cyprus'd. Actually we already are, but we aren't supposed to know it yet. They actually CANNOT stop printing for if they did, there would be revolution before tomorrow morning. EVERY depositor would lose his money. Remember, commercial banks are LEVERAGED to an extent no person can imagine. 

Mon, 06/24/2013 - 04:40 | 3685819 Debugas
Debugas's picture

there would be no revolution but slaughter and it is coming

Sun, 06/23/2013 - 18:44 | 3684893 dtwn
dtwn's picture

<« Successful consolidations tend to focus on cuts, especially in government consumption and transfers »>

"Bullshite. Caruana is ignoring the fact that these policies have all of southern Europe economically collapsing and heading toward revolution."

 

Isn't this what needs to happen though?  Governments need to cut spending.  The wealth transfers need to stop.  That is part of why we're here in the first place, excessive gov spending.  $17 trill us debt and $1 tril deficits?  That'll never be paid off.  Gov absolutely needs to cut spending and transfers.

Mon, 06/24/2013 - 09:41 | 3686446 BigJim
BigJim's picture

Exactly. The whole idea that a government is somehow entitled to borrow vast quantities of money 'on behalf' of its citizens, and then their children/grandchildren are somehow morally all on the hook for repaying it, is not only nonsense, but evil.

Greece et al should just declare bankruptcy and go back to their own national currencies (ideally with an eye to either move to a gold standard and no fractional reserve banking, a la Rothbard, or free banking with competing currencies, a la Selgin). Their Northern European creditors - who should never have lent them the money in the first place - can go bankrupt too. Their respective governments can make their depositors whole and the bondholders can take a hike.

This ridiculous notion of non-consenting 'mutual' debt has got to end before it gives our governments the excuse to completely take over our lives via monetary and tax systems. 

But no, the electorate is too stupified by generations of Statist brainwashing to even consider voting for anyone who proposes the above. They get what they deserve... it's just a shame the rest of us have to suffer along with them. Sartre* was right - hell really is other people. 

*Though apparently.. that's not what he meant:

http://rickontheater.blogspot.co.uk/2010/07/most-famous-thing-jean-paul-sartre.htmlhttp://rickontheater.blogspot.co.uk/2010/07/most-famous-thing-jean-paul-sartre.html

 

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