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Deutsche Bank: If The Fed Is Concerned About Popping Its Asset Bubbles, It Is 15 Years Too Late
Some refreshingly objective commentary from DB's Jim Reid, on why the Fed's latest "Tapering" distraction is naive at best, and will end in lots of tears at worst:
It would take a very confident and brave Fed to remove stimulus in such an environment in our opinion. That's not to say they won't but given how unpredictable the data has been in this recovery (mostly all to the downside vs forecasts), can they really be sure that nominal activity is going to bounce back as expected in 2014? Would it not be prudent to see some of this materialise first? If they were removing stimulus because of a desire to reduce the risk of asset bubbles then we'd have sympathy but we would argue that maybe the time to do this was around 15 years ago. To start conducting policy in this manner in 2013 after years of rolling bubbles and an extremely high global debt burden is quite dangerous.
Said otherwise, "dangerous" because the world is already nearly two decades past the point of no return. And the recent market swoon on merely the threat that the Fed will "derail" its monetization course from this (black arrow) to this (red dotted arrow)...
... proves that an actual exit by the Fed and the world's central banks is now impossible, and that the "discounting" market as described in Finance 101 textbooks, is now long dead.
Or, said even simpler, the best everyone can do, is stick their heads in the sand and pray to St. Bernanke.
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Fuck DB. Why didn't they write this article 15 years ago?
Because they didn't need to urgently distract attention from their own balance-sheet 15 years ago?
Deutche Bank, a Primary Dealer, commenting on the FED blowing/popping bubbles.
I have seen everything.
They've just gone up in my estimation, from outright total fucking wankers to total fucking wankers.
and that's being polite...
This is an interesting but flawed article. True, removing stimulus is a terrible idea, and I am horrified that Bernanke has not supported our economy during these trying times. But to suggest that the Federal Reserve alone is somehow responsible for Asset bubbles is to be comletely ignorant of modern economic theory and flies against the consensus among economists that an unregulated free market was the cause of irrational investment decisions.
Ah, welcome back old stick, I can see you've been off on another planet for the last 50 years or so..
or was it 100?
They’re basically telling Bernanke to wind his neck in or they’ll be forced to take the German derivative jack boot off the neck of my golden phoenix…
I, like they, can feel a hatching coming on…
Punking the FED.....will not get your gold back any faster.
i'm wondering when the dust settles if the feral dogs will turn up their noses at the flesh and bones of these bankers...
This market is so forgetful. I think Tyler needs to repost the testimony from just last week when the Savior of the Financial World was embarassed and revealed as clueless by some Q&A and ran out with his tail between his leg. Maybe that was his final appearance and he could care less and his new replacement will be revealed at Jackson Hole. I am putting my money that its another Jew so basically nothing changes and massive ongoing wealth transfer continues.
"another Jew"
Really going out on a limb here!
I am pretty sure NO ONE would be stupid enough to take the other side of a bet on that! Ya hear that, Intrade!
MDB you're trolling is going down in quality lately: spelling mistakes, partially agreeing with articles and so forth. What happened to the middle finger approach to the Tylers and you professing your love of Krugman, central bankers and their Zionist masters?
Come on, they can't all be masterpieces.
"ivy league" [economists] was missing... He's slipping... Even MDB is getting fat & bored eating the papal cheesewheels...
'Ya missed a "p". Check your knickers.
Regards.
The fact that said suggestion flies against the consensus among economists can be regarded as a very strong indication that it is mostly correct!
Circular statement MDB as usual. Fed is supposed to be the chief regulator.
Speaking of irrational investment decisions....how's the Herbalife distributorship??
Huh?
I'm not even gonna try to read that comment a second time...
The FED dropped the rate to 3% then doubled it to 6%, crashing the bond market and Orange county CA, which had bet heavily on low rates. In 1998 the FED then dropped the rate from 5.25 to 4.75 and thr top of the Nasdaq blew off. with the economy deteriorating in 2000, Greenspan held the rate at 6.5%, then dropped it to 1%, then raised it 1/4 point per meeting.
So how was the market uregulated, when the FED artificially manipulated the FED rate, instead of the free market determining where the FED rate should be?
It was Greenspan that wanted a housing bubble and he got what he wanted trough his own manipulation of the market.
Deutche Bank, Primary Dealer, begging/threatening the FED not to stop blowing bubbles.
don't forget libor, drug money laundering to add to their resume...
Say no fucking more...
How about 99.5 years ago on a dark december day; huh, citizens should have asked, why do we need a federal reserve bank that is privately owned by the wealthist people on the planet?
"Citizens" weren't consulted. The bill was passed in the dead of night on Christmas eve. Or was it New Year's eve? Anyways. Talk about getting coal in your stocking!
forgot about democracy-thx. yea just like tarp, homeland complex, o-care and about 5 other 70 percent unpopular enactments of law.
Many in the Senate were gone for vacation at the time, but miraculously, the bill passed the majority that was there and the House conference was accomplished in record time on the same day. Bada bing bada bam. The knife was jammed in and twisted as it was already a done deal with that [explicative] Democrat Wilson in the White House.
Wilson and the Fed, followed by FDR and the demise of the Commerce Clause, etc., etc., etc.
No I'm not blaming any one party, but it ain't coincidence, either, is it?
PS You have to pass the bill to find out what's in it.
:)
and they weren't the bloated transnational derivatives monstrosity they are now, 15 years ago
http://www.tshirthell.com/funny-shirts/what-the-fuck-did-you-call-me-pot...
yep so basically DB is telling the fed to fuck off while asking for moar....ala bill gross
one guy is based in NY, the other in London, both work for a financial institution that is nominally German... is it possible that both are addicted to moar?
again I don't think this program is being properly understood "even by the people who implemented it." I still think the reaction to QE implementation has been by and large pure luck...having said that the USA is as pro growth an economy as there is on the planet (all capital cities are financial/commercial in nature) so simply "putting the shades on, dropping down low in the seat and downshifting for pure speed" (as QE has done) need not be the end of the world. and indeed it hasn't as inflation has moderated and paper assets have soared. still "biggest beneficiary has been the tax man." recovery still sucks...move along.
I was thinking the same thing- sounds like Bill Gross.
So let's take a moment to think about this..... we now have two very large organizations openly critical of the Fed's policies, despite the fact that their existance is sustained by those same policies.
Why do children, in moments of frustration, sometimes say "I wish you weren't my father!" or "I hate you!"?
Answer: they know there is literally NO chance of the parents' love and support being withdrawn, no matter how extreme the comment. No chance a parent will say "well, if that's how your feel about it, pack up your stuff and get out." They are merely looking to affect the parents and make them change their mind about some decision.
I read this criticism in that manner. What they're really saying is "we hate you, now give us more free money and we'll love you again."
Not only that, how many billions did they recieve as a result of fed stimulus?
I'd be pissed to...
they were busy setting up the 9/11 hijackers with debit cards and checking accounts
yes it is too late. We have already falling off the cliff so there is no turning back now.. just have to wait to hit the ground. In the meantime all one can do is pray. http://tinyurl.com/mem7o7x
!5 years ?
85 years short, trust a bank to rip you.
DB giving advice about shitty banking...Like pot calling kettle back...like Obama and hope and change...Like Osama Bin Laden running a daycare..you get the picture!
When debt bubble implodes problems like Immigration and Obesity will take care of themselves. http://tinyurl.com/mem7o7x
All the big banks are continuing criminal enterprises...
Fuck them by taking your money out now...
NO SHIT SHERLOCK !!!
Thanks Douche Bank, no one here ever noticed
Er', scuse me?, I bet you said the same thing when you hit Benny up for all those BILLIONS he handed your insolvent asses.Hypocritical morons.
Yeah, Deutsche, and that euro currency idea you heavily promoted 15 years ago isn't a spectacular clusterfuck in its own right...right ?
whatthefuckever.
A bank does not want to see the end of free money? I'm shocked. Shocked i tell you.
I love how we are all playing this game of thinking the free money will ever stop flowing....as I see the dow up 130 points and yields dropping in the backround. It's as if the markets know something we don't.
Especially coming from the likes of douchebank.
I am starting to think I can't rely on Mr. Reid's objectivity every morning.
Still think that they need to drop stocks to get yields down Fonz? I'm telling you, bond and stock market are riding the same wave. I hope it crashes soon, but who knows, the fuckers have reasserted control in an impressive (and infuriating) manner.
I see a headline that Bill Dudley said QE will increase if the labor market does not improve.
I thought if rates kept pushing higher they would wreck stocks in a second, and I still think that.
I should have went with the simplier path, that these guys would just talk yields down, thus...moar qe....thus allowing stocks to rise.
I still see 2.5% But I am no longer concerned. Yields may even push up a bit, but it's all good. I am buying some stocks here and there. It's QE 4eva.
Their whole game plan since mid April was to take gold and silver down, prop the USD and jawbone on QE.
And here we are, listening to the same old dogshit, and exact same policy. They will almost certainly cut nothing and most likely increase QE in the future.
ha ha. Made me laugh Fonz. No shit.
So, the takeaway here is what? That we are utterly fucked, so we might as well just keep on trucking? lol.
pretty much Centerline.
Hear that Greenspan? Still your fault.
There will be no tappering ever! They are locked in a box and nothing will change until the world as a whole rejects the Benny buck.
fub
Short term greed has always dominated fed policy.
When the Fed's bubble ends it will be an epic. Bernanke, Lacker, Evans, Dudley keep appearing to boost stocks.
One day it won't work. Their not prepared.
if they gonna taper it will be after german election, not allot but my bet is MBS
FUCK U Deutschebag Bank! I didn't see you complaining when billions in bailouts were trickling down to you from the Fed! Now suddenly everyone wants to get on the other side of it all....yea whatever I hope you all die of anal cancer.
Fed: more than a day late
Deutsch Bank: a few hundred billion more than a dollar short
I hope this article is in Bold just so that we can Rail on DB.
15 years ago was 1998- the height of "irrational exuberance". Fer fuck's sake gas was 98 cents a gallon! The dot-com bubble was going to create a "new economy" in which Americans did nothing but "manage information", while 3rd world slaves produced everything we wanted on a salary of rancid dog food.
Ah, those were the days of innocence... Chuck Keating was a bad-dream/one-off mistake, not the harbinger of things to come.
Putting the brakes on in 1998 would have menat that at the height of American power and hubris, we could have said, "You know, maybe this is all just a temporary, and not very healthy situation. As a nation we will do the prudent thing, and voluntarily cut back on our fantasies of greed and power, quit while we're ahead, and walk away from the table."
Yeah, fucking right.
Fifteen years ago was too late. We're going to pay for it now bitchez.
+1 very well put
There will always be a bubble.
When one pops, TPTB will gas up another one.
An honest buck can't feed the monkey.
An honest buck won't get you a house in the Hamptons.
The Fed bacame the bank of last resort, and then that allowed the global economy to go way off course in the name of recovery. Capital misallocation is now rampant, as massive liquidity sloshes around seeking return. The longer they wait, the worse it gets because the economy has learned these new "rules", but none of it is real. But like physics, the real economic rules will re-assert themselves in time. For example, I can simulate low gravity in a gravitational field by putting a plane into a dive at altitude with engine thrust just matching drag. BUT, I can only do that for so long. The Fed's QE is thrust matching drag, but someone seems to have forgotten that the nose is pointed toward the ground. Pull up guys.
Interesting analogy.
+1
"For example, I can simulate low gravity in a gravitational field by putting a plane into a dive at altitude with engine thrust just matching drag. BUT, I can only do that for so long. The Fed's QE is thrust matching drag, but someone seems to have forgotten that the nose is pointed toward the ground. Pull up guys."
+1. Well said. I think this is exactly what we are seeing.
A quote from a famous movie: "This is how is with people, no one cares how it works as long as it works". ( The Matrix II )
"Capital misallocation is now rampant" - as long as the river flows and the players making decisions can diverge little streams for themselves, this is how it will be. It does not matter if the river (finally) flows into a shitwhole ( misallication ).
But of course, this can not continue for a log time, the more divergence from the physical realty we indulge( $ as resurvey currency is allowing all this ) the harder the comeback will be, and it will definitely be an epic one, (worth for the history books).
"If they were removing stimulus because of a desire to reduce the risk of asset bubbles then we'd have sympathy but we would argue that maybe the time to do this was around 100 years ago."
Fix'd it for ya DB.
The world is so drunk on CB liquidity that the only 'solution' is to keep drinking because if we ever 'sober up', the hangover will kill us. The drinking will too - but at least we'll be drunk as we financially die.
A good analogy. Except this is a mean drunk. It won't be enjoyable, and then the organs will start to give out before the end. Too late for cold turkey?
The end of Leaving Las Vegas was just plain sad and depressing. The current paradigm's monetary end game won't be any better.
Elizabeth Shue was so hot!
the broad who was riding the Karate Kid's pole?
I would argue that the "point of no return" happened at the moment when we adopted a monetary system where credit/debt is supposed to be money. When virtually all money is loaned into existence with interest attached, the drive towards ever increasing debt loads is a given. Who takes on that debt, how it's packaged and how we spin it is unimportant.... the need for it to constantly expand is what is critical.
Any serious "point of no return" occurred on August 15, 1971. There was an opportunity at that moment to seriously contemplate what kind of monetary system we would like to have and what that would mean for the US dollar. It's been "over" ever since... we just didn't know it.
Fractional banking had a large part in it. Probabilistic banking hoping for normally distributed actions among a customer base of sheep is pretty stupid. Also removing the need for Fiscal Discipline by going off the Gold Standard is also up there. Indeed even creating the FED is pretty much guaranteeing that humans will screw it up....
I agree with both of your points... 1. Fractional Reserve Banking and 2. The Fed... I'm just going for a "Point of no return" moment. It was clear by 1971 that the system was broken. But at least there was a mechanism in place that made it clear (convertibility of dollar into the gold reserves that were meant to back the dollar... even if this was a bit of a facade). We said "fuck it" and went all in on a horrific experiment that will end very badly. The time for us to have considered what this would mean to humanity ended right there, I think. It wasn't 15 years ago... the ship had long since sailed.
1971 was just another deal with the Devil. One of many made over the last 150 years. Someone may be coming for his due. Do I smell sulfur? Or is that just George Soros? Is there a difference?
DB is what I like to call To Big To Bail, say what now? You're going to try to give it say nearly 25 trillion dollars if 1/3 of its derivatives contracts go bad? Attempt that and you will have major currency devaluations everywhere, particularly the dollar and the euro.
Hence my expression To Big To Bail, save the bank destroy the system as its 'value' reduces to nothing. Of course CBs may have worked out a way of printing money whilst minimizing inflation, though I suspect CBs are continuing to rely on a deflating shadow banking system to mop up excess inflation. That and inflation figures are always under-reported, because as we all know inflation is the number one enemy against any fiat currency.
Deutsche bank run <ANAGRAM> Duh, Bernanke cuts.
Come on uncle Ben just a little taste man, just gotta get right!!!
I find it ironic, and rather amusing, that the tools the US used to "win" the Cold War finally transitioned its governance of economic systems into fully dependent, state run, centrally planned bodies that are far removed from market driven capitalist forces. Arguably the US has devised a more effective model of communism than the USSR ever had, certainly insofar as the econmic systems are concerned at least.
You make so many assumptions in so few words. Some of those assumptions might be correct, some might be wrong, and some might be somewhere in the middle. Did we win the Cold War? What was the score? Who was the judge? Was the Cold War even real... or was it merely a prop used by each government to extend the control they had over their subjects and the tool used to prop up our respective MIC's. "Our Nazi's are better than your Nazi's" is what the space race was based on, for example. Who benefited from those dollars spent? Effective model of Communism? Where is that exactly? We have a uniquely American Form of finance fascism that is about to collapse. There is nothing "effective" that I can see anywhere around me.
"Was the Cold War even real..."
Exactly. You do get the idea the West had high-ranking spies within the USSR, and that there was occasional information sharing. And of course like you said, both sides were host to some of the more notorious Nazis.
I've long held the view that WWII didn't end with "the good guys winning". Good guys don't drop secret Doomsday weapons on civilians, ending wars with tremendous shows of force (which BTW set the table for the Cold War).
Down votes for you already... people don't like it when you mess with their mythology. But I think the problem that people have is based mostly on their perception that all things have to be Good vs. Evil. What if it's Evil vs. Evil? Why are our minds mostly incapable of recognizing this?
The scientists involved w/ the Manhattan Project pleaded that the Doomsday Weapon be demonstrated to the Japanese publicly. Once they knew of the Doomsday weapon they would know that continuing fighting means inviting the use of the Doomsday weapon on their civilian populace.
They weren't given that chance. I think the scientists realized at that moment who they had been working for.
The reference was to relative levels of effectiveness insofar as state controlled economic models used by the USSR and the US are concerned. It was not a reference to absolute levels of effectiveness, as you suggest.
Now if one looks at the current financial system, the US today and Russia are arguably a lot closer in real terms regarding how, or who, drives their relative financial systems. The main difference being that Russia doesn't try to hide its oligarchs, whereas the US does, and very much needs to in order to continue the charade for its populace.
rick santelli had a great analogy today.
all u here from these fucking douchbag asshole cocksuckers, i can go on and on and vent my anger at these worthless piece of shits, but anyways, all they basically say all the time is how they can not remove qe until econmic questions are ideal.
well santellis analogy was basically, when he first got married, him and his wife did not want to have kids right away because things were not 100 percent ideal yet for kids, but then he said if they would have waited for things to be 100 percent ideal, he still would never have had kids as the same thing can be said for basically everyone with kids. bottom line is things are never going to be 100 percent perfect, or even 90 percent perfect , or even 70 percent perfect. we do not live in an ideal world.
so to all u fucking douchebag cocksuckers fucker fed members who should fucking all be burnt to death. if u guys are waiting for 100 percent perfect conditions, it will never happen. so get the fuck out and let the economy run its course.
its been 5 fucking years and u have done nothing but create massive bubbles and a ton of debt.
and to u bill dudley who is speaking as i write this, i hope u fucking suffer in ur life u bastard.
thismarketisrigged
Would you please stop beating around the bush,and say exactly what you mean?/LOL
Nice comment.........I often think about ''All in the Family'' and Meathead who did not want to have kids due to the sorry state of the world, and that was in the 1970's.....and we are still here......
are we all Mike Stivik's???
Its not their fault. They are economists and as such completely unaware of their actions.economics is a religion, not a science. And their Jesus is some loser who was cleaned out losing piles of money in the stock market:Keynes. I kid you not. The economist of economists couldn't invest worth a damn. Be kind to them, they are a bit retarded at the Fed
Hope everyone BTFD. FED/globalist traitors have no options left. Whole fucking population of the world hates them. They are out of gold. bonds are about to implode but they have their monetary system plugged directly into the stock indexes so steady as she goes until she don't. I'm not moving to Pittsburgh yet.
Achtung DB; collapse already. Danke
This post is 15 years too late.
DB, a steaming pile of leverage and derivative schlecht.
LOL ... DB obviously Lobbying ZeroHedge for the FED not to ignite their rockets.
With asset prices stuck or falling, and defaults theres no way Ben can stop buying bonds...no way. Exploding money supply and getting everyone levered up to the eyeballs is the same as blowing up a nuke. Once you start, there it goes. The Taper...hahahahahahaha!
several things IMHO may be in the works ------ look for a return of MtM GAAP, the reason being that prices have risen to the point that although there will be losses there will not be a total crash. Look for taper --the reason being that with less market manipulation there will be more confidence in markets and business can make decisions based on actual market conditions therefore a boost in acivity in the business and manufacturing sectors. Look for the NSA/IRS/etc scandals to cause many incumbants to be unseated in the next several state and federal elections --with the result of a very significant lowering of the benifits packages for the welfare crowd-AG/MIC/HES/HUD/the banks/etc including corp tax reform. ---The upshot is taper and rules may not sink the country after all---people are resiliant and seem to shine when things are at the low point. just sayin--
Deutsche Bank? More like Deuchebag Bank.
I think we can all agree that economic bubbles are preferrable to the lack of economic bubbles.
Your lights are on, but you're not home
Your mind is not your own
Your heart sweats, your body shakes
Another kiss is what it takes
You can't sleep, you can't eat
There's no doubt, you're in deep
Your throat is tight, you can't breathe
Another kiss is all you need
Whoa, you like to think that you're immune to the stuff, oh yeah
It's closer to the truth to say you can't get enough
You know you're gonna have to face it, you're addicted to Bernanke love...
That's an amazing chart. The y-axis is even on zero. Yikes.
You are running with predators. You must think and act as they to survive.
If you waste time dwelling on everything being someone else's fault, you will continue to suffer a lot.
Bare your teeth and good luck.
MOAR Toilet Papers
Translated Deutsche Bank is jawboning since they are toast if the FED pulls back on the liquid monetary heroin being a primary dealer.
Somebody's derivative pile has gone critical.
lol
http://t.co/8DAU1p5xS9
You need to provide the source link, I wanna send it to martin wolf at teh ft and krugman
But the Fed can't stop. It took loads of QE ex-lax.No matter what BS comes out of their mouth.
Does really nobody recognize what this DB-rant really is about?
It's nothing more than a message to the FED. Don't taper, or the financial system will implode.
Isn't it funny, how the DB is a conspiracy-nut and prooves ZH right, although we have such a grrreat recovery?
It's obvious DB and the other Powers That Be have to have stimulus to protect themselves, because the majority of the world's population don't own stocks, bonds, or any equities, and don't get shit in return for this "stimulus". These people will never do what's right because it would harm the .01% who own everything, the very people who also happen to own the military.
dangerous, schmangerous, what's the alternative?
Bernanke knew once you start manipulating, propping, bubble blowing and monetizing on such a massive scale, that's it.
you can never stop, ever, the markets are dependent, the "green shoots economic recovery" is dependent. look what happened when even the slightest hint of some kind of reduction in the amount of hopeium injections was raised.
everything collapsed, not just stocks or bonds or commodities, but everything, everywhere all at once.
and that was just a baby tremor, a fore-shock, a small hint of what we all know would happen if the fed were to pull the rug out...or at least roll it back a bit.
anybody who wasn't paying attention would suddenly find there really is no floor underneath.
so the spice must flow QE must continue forever or the house of paper burns, yet they created the ultimate no win scenario cause it can't go on indefinitely, eventually economic gravity always wins. the only real choice is one of lose massive now or lose catastrophic later. if that choice even still exists at all, we may be to the point of scorched earth no matter what happens or when it happens.
I'm of the opinion that the PTB's knew all this back in 08', that there was no way to "fix" this' I remember several first term senators saying as much. the last five years have been nothing more than just the PTB's extending (for as long as possible) and insulating (at our expense) for the complete collapse to come. the one that should have been allowed to happen organically back in 08' in which case we might now be on our way to a real, genuine recovery.
apparently the PTB's would have found that to be to uncomfortable and in their avarice, greed, arrogance and insane lust for control and power over everything decided to manipulate the laws of economic nature, consequences be damned.
we all get to reap the consequences...
lucky us.
Quote : "To start conducting policy in this manner in 2013 after years of rolling bubbles and an extremely high global debt burden is quite dangerous."
Yup , and judging from the cartoons it was also pretty dangerous for Wile E. Coyote to look down when that far beyond the edge of the cliff . . . but in the final analysis there's not much difference in outcomes.
No way out ... EOS