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Duck And Cover - The Lull Is Breaking, The Storm Is Nigh
Submitted by David Stockman via Contra Corner blog,
September 15, 2008 is the day that Lehman died and the moment that the world’s central banks led by the Fed went all-in. As it has turned out, that was an epochal leap into the most dangerous monetary deformation that the world has ever known.
It needn’t have been. What was really happening at this pregnant moment was that the remnants of honest capital markets were begging for a purge and liquidation of the speculative rot that had built up during the Greenspan era. But the phony depression scholar running the Fed, Ben Bernanke, would have none of it. So he falsely whooped-up a warning that Great Depression 2.0 was at hand—-sending Washington, Wall Street and the rest of the world into an all-out panic.
The next day’s AIG crisis quickly became ground zero—the place where the entire fraudulent narrative of systemic “contagion” was confected. Yet that needn’t have been, either. In truth, AIG was not the bearer of a mysterious financial contagion that had purportedly arrived on a comet from deep space.
As subsequent history has now proven, AIG’s $800 billion globe spanning balance sheet at the time was perfectly solvent at the subsidiary level. Not a single life insurance contract, P&C cover or retirement annuity anywhere in the world was in jeopardy on the morning of September 16th.
The only thing gone awry was that the London-based CDS (credit default swap) operation of AIG’s holding company was monumentally illiquid. Joseph Cassano and the other latter-day geniuses who were running it had spent two decades picking up nickels (CDS premium) in front of a steamroller, while booking nearly the entirety of these winnings as profits—all to the greater good of their fabulous bonuses.
But now, as the underlying securitized mortgage market imploded, they needed to meet huge margin calls on insurance contracts they had written against mortgage CDOs. In truth, however, the whole mountain of CDS was bogus insurance because AIG’s holding company did not have a legal call on the hundreds of billions of cash and liquid assets ensconced in dozens of its major subsidiaries.
From a legal and cash flow point of view, Hank Greenberg’s mighty insurance empire was essentially a mutual fund. Cassano and his posse had been implicitly pledging assets (via AIG’s corporate or consolidated AAA rating) that belonged to someone else—-namely, the insurance subsidiaries and the state insurance commissioners who effectively controlled them.
Yet this scandalous fact was not a world crisis, nor really any crisis at all. Yes, the several hundred billions of CDS contracts sold by the Cassano London operation were bogus and could not be paid off—–since the holding company had no available liquid capital. Nevertheless, they had been purchased almost entirely by a dozen or so of the largest banks in the world, including Deutsche Bank, Barclays, Societe Generale, Bank of America/Merrill Lynch and Goldman Sachs, to name a few of the usual suspects. And as I documented in The Great Deformation, these banks could have readily afforded the hit on the underlying CDOs—– and they deserved it,too.
As to the former point, the combined balance sheet of the impacted big banks was about $20 trillion at the time, and the potential loss on the CDS contracts that AIG’s holding company could not fund was perhaps $80 billion at the outside. After all, most of the CDO paper which these mega-banks had purchased and then magically transformed into AAA credits (and thereby could hold without posting a dime of capital) consisted of the so-called “super-senior” tranches. The really nasty crud at the bottom of the CDO capital structures—which did generate deep losses—- had been pawned off to institutional investors and trust funds for Norwegian fishing villages and the like.
So the day of reckoning for AIG’s CDS fraud presented no danger to the world’s banking system. The loss might have amounted to 0.5% of their combined footings—–a one-time hit that Wall Street brokers would have counseled to ignore and which might have zapped banker bonuses for the next year or even less.
And those foolish bankers did need to be punished for negligence, stupidity and unseemly greed. In point of fact, Cassano was never indicted for his bulging book of bogus CDS insurance because it amounted to fraud in plain sight. Any one who read AIG’s 10K could have seen that the consolidated balance sheet of AIG was riddled with dividend stoppers and capital conservation limits imposed by the insurance regulators at the subsidiary level. Cassano never, ever had the cash to meet margin calls or pay-off the supposedly remote risk of actual claims; his policies had been purchased all along by the proverbial greater fools.
But this calamity of stupidity and negligence has turned out to be a really big thing in the history of the modern financial era; it was indeed the Rubicon. By falsely transforming a negligible hit to the balance sheet of the world’s mega-banks—-most of which were quasi-socialist institutions in Europe and would have been bailed out by their governments anyway—-into the alleged collapse of the mighty AIG, Secretary Paulson, Bernanke and their cabal of Wall Street henchman opened the door in one fell swoop to the present global monetary madness.
At that fraught moment in time, AIG was the financial gold standard—–the massive AAA balance sheet that anchored the entire financial market. So when out of the blue—literally without even a few days notice to even the attentive public—–it had apparently descended into a $180 billion black hole, the myth of systemic breakdown and all-consuming financial “contagion” was not only born; it gained instant resonance throughout Wall Street and Washington.
The rest is history, as they say. And what a fantastic, but lamentable history it was. Owing to the cursed recency bias that now animates the mainstream narrative, it has already been forgotten that today’s elephantine central bank balance sheets did not remotely exist just six years ago. Indeed, they could not have been imagined back then—not even by Bernanke himself.
But upon the eruption of the AIG catalyst, the mad money printing dash was on. As shown below, it had taken the first 94 years of the Fed’s existence to grow its balance sheet footings to $900 billion—-something achieved by steadily plucking new credits out of thin air over the years and decades. But within six weeks of the so-called AIG meltdown, Bernanke had replicated what had taken his predecessors nigh on to a century to accomplish.
And then he didn’t stop. Fighting the fabricated enemy of “contagion” and thereby thwarting Wall Street’s desperate need for a cleansing financial enema, he had nearly tripled the Fed’s historic balance sheet by year-end 2008, and on it went from there.

And of course it was not just the Fed running the printing presses red hot. Owing to both Keynesian ideology and defensive necessity, the other major central banks of the world followed suit. At the time of the crisis, the combined balance sheet of the Fed, ECB and BOJ was $3.5 trillion or about 11% of GDP. In short order that number will reach $11 trillion and 30% of the combined GDP of the so-called G-3.
Throw in the BOE, the People’s Printing Press of China, the bloated central banks of the oil exporters and Russia and assorted others like the reserve banks of India and Australia and you have total central banks footings in excess of $16 trillion or roughly triple the pre-crisis level.
tsunami of central bank credit did little for the real economy in places where the private sector was already at “peak debt” such as the US and Europe; and it did fuel one final blast of the malinvestment boom in places that still had balance sheet runway available like China, Brazil and much of the rest of the EM world.
But what it did do universally and thunderously was to fuel a financial asset inflation the likes of which the world had never before seen.
Prior to their recent stumble, the combined equity markets of the world had reached a capitalization of nearly $75 trillion compared to barely $25 trillion at the dark bottom in March 2009. And, yes, $50 trillion of gain in a comparative historical heartbeat did wonders for the net worth of the global 1%.
But it also did something else; it destroyed the remaining vestiges of financial market stability and honest price discovery. After 6-years of the central bank tsunami, two-way markets were gone; the shorts were dead; skeptics were out of business; greybeard investors had retired; speculators regularly bought downside “protection” (i.e. puts on the S&P 500) for chump change; and the law of “buy the dips” became unassailable.
Even more crucially, capital markets were transformed into rank casinos that were virtually devoid of all economic information……except, except the word clouds, leaks and sound bites of central bank speakers and their tools in the press and monitors in the banks, brokerage houses and hedge funds. At length, this meant that the only reason to buy was that virtually every risk asset class was rising; and it also meant that the only risk worth worrying about in a day-trading market was from the verbal emissions of central bankers and their Wall Street accomplices and stooges.
So as long as the central bank con job lasted, there was no reason not to buy, buy, buy. The financial world’s greatest clown, Jim Cramer of CNBC, became a prophet in his own time. Indeed, the man’s stupendous insouciance became embedded in the casino itself.
And the VIX is the smoking gun of proof. Over the span of approximately 72 months, the world’s raging central bankers simply drove risk right out of the casino.
Except they didn’t actually banish financial risk; they just drove it underground. When every financial asset is rising, the casino creates its own marginable collateral. Yesterday’s gain becomes tomorrow’s repo and re-hypothecated security against the next day’s round of buying. And as long as asset values are inflating, the inherent risk in these daisy chains is muffled and discounted.
Yet that’s exactly why the present mother of all financial bubbles is so dangerous and palpably unstable. The marginal “bid” is dependent upon wildly inflated collateral which is tucked away in the warp and woof of the entire global financial system. When the Chinese stock market hit a 5.5% air pocket within a few minutes two nights ago, for example, it was because the financial authorities there said icksnay to the repo of bonds issued by essentially bankrupt local development agencies.
Stated differently, there are financial time bombs planted everywhere in the world economy because central bank financial repression has caused drastic mispricing of nearly every class of financial asset, which is to say, every layer of collateral which has ratcheted-up the entire edifice.
As the redoubtable Ambrose Evans-Prichard so cogently noted, central bank ZIRP has radically compressed the debt markets of the world. This means that cap rates—-the basis for valuation of tens of trillions of fixed income securities and real estate around the world—are now so aberrantly low as to be downright stupid:
What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.
Needless to say, this drastic central bank driven financial repression has unleashed a mindless pursuit of “yield” or short-term trading gains that give the concept of “irrational exuberance” an entirely new definition. Consider for example, the hapless mutual fund investors or institutional managers who have been buying energy sector CLOs. What is the collateral for the 5% yields advertised by these fly-by-night funds—–often issued and managed by the same folks who sold housing sector CLOs and CDOs last time around?
Why its the leveraged loans issued by E&P operators in the shale patches. The collateral for these leveraged loans, in turn, is shale rocks 4,000-9,000 feet down under that have been worthless until approximately 2005 and would be worthless today without dramatically over-priced crude oil and drastically underpriced debt capital.
That is to say, the vaunted collateral in the shale patch craps out after about two-years unless new money is poured down the well bore and oil prices are above $75-$80 per barrel on the WTI marker price to cushion the sharp discounts back to the wellhead. But with marker price now plunging into the $50s, the drilling will soon stop, the production will crap-out, the shale rock collateral value will regress toward the zero bound, the E&P borrowers will default, the energy CLO’s will implode and the hapless yield chasers will be left high, dry and panicked.
Cannot the same thing be said of Italian bonds at 2%? As reminded below, the Italian economy has not grown for six years, its debt-to-GDP ratio has gone critical and its political system is disintegrating.


So from whence did the “bid” arise after Draghi’s “whatever it takes” ukase, which in just 24 months drove the yield on this sovereign junk from 7% to 2%?
Well, it came from its own bootstraps, that’s what. The front-running speculators who backed up their trucks to Draghi’s pronouncement where not sitting on a pile of cash looking for “value”. Instead, they bought a pile of Italian bonds and then margined their purchases in the repo market. Yes, central bank ZIRP means essentially zero cost of carry; its the source of the bid that never asks whether 2% is enough. When bonds are held by the day or even hour, its far more than enough as long as the repo can be rolled and bond prices keep inflating.
Until the don’t. Are the international dollar bonds of Turkish banks—one example of the $9 trillion EM debt market—– issued against their loan books any different? Just consider the daisy chain of collateral there. Istanbul is comprised of miles of empty apartment and commercial buildings which are collateral for the Turkish bank loans. Yet what is the equity of the real estate developer borrowers of these generously leveraged loans—-other than their “investments” in the Erdogan regime? More often than not its the down-payments on newly built space made by speculators who borrowed the money from the very same banks.
Indeed, in a ZIRP world the collateral chains extend so deep into the netherworld of speculation that no one can possibly trace them. That is, until after they erupt. Then we will learn all about the “risk” that was driven below the surface during the great bubble of the past 6 years just like we did in September 2008.
In short, what is happening now is that risk is coming out of hiding; the collateral chains are buckling; the financial time bombs are beginning to explode.
There is nothing especially new about this development—its the third occurrence this century. But there is possibly something different this time around the block.
This time the carnage could be much worse because the most recent tsunami of central bank credit was orders of magnitude larger and more virulent than during the run-up to the Lehman event or the dotcom implosion.
Moreover, the central banks are now out of dry powder—– impaled on the zero-bound. That means any resort to a massive new round of money printing can not be disguised as an effort to “stimulate” the macro-economy by temporarily driving interest rates to “extraordinarily” low levels. They are already there.
Instead, a Bernanke style balance sheet explosion like that which stopped the financial meltdown in the fall and winter of 2008-2009 will be seen for exactly what it is—-an exercise in pure monetary desperation and quackery.
So duck and cover. This storm could be a monster.
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Yellen is a felon.
QE wasn't disguised money printing, regardless of what the "economists" said. Everyone understood it was money printing, and still stuck with the dollar. The next round will be the same.
It will continue until individuals finally walk away from the paper dollar and re-learn what money really is. That is the only method to take power away from these people, to walk away from the false money from which they derive all their power and influence. It is a leason people have learned before and will re-learn again, someday.
Next, er, last stop Keynesland. All passengers must exit. It's been a pleasure.
The really cool part of this is nobody knows what will happen. Throughout history we have never been here before. Never has a deflationary cycle been encountered with the entire world on fiat currencies. There is no precedent, it's freakin' awesome.
storm pineapple express is already here.
California is flooded
Covered.
After the tech meltdown in 2001 I waited for RE to meltdown. I knew there was going to be a 2 to 3 year recession. My plan was to pick up some rental units at favorable prices, so all I had to do was get my timing right. But Greenspan dropped interest rates thru the floor and RE boomed instead. By 2008 I had given up on RE. I was getting older and didn’t want to bother with it any more. Instead I used 2X inverse ETFs to short the market. These ETFs had worked well mirroring the performance of their indices. I owned the ETFs from August 2008 to March 9, 2009. I should have made upwards of 200%, but instead I barely broke even. The ETFs had been manipulated, and did not perform as expected to say the least. Then Bernanke started printing money and instead of the deep recession that should have taken place, the “markets” were manipulated up, right up to this day. During this period I turned my back on the “markets” and built a physical and financial “bunker”. I was not coerced back into the stock or RE markets. Now in 2015 when, if, I come up out of my “bunker” all I want to smell is napalm. I don’t want to see one goddamned dink body. Let it burn.
Alright Old Yellen....you owe me for this one, but ZH can have all the credit.
In a post-NIRP world you still have ammo.
Start timestamping all electronic money with an expiration date. It gets used from your bank account in a First In First Out (FIFO) basis. Any cash that doesn't not go into the stock market, housing, or otherwise spent will expire at 0 value after 10 months.
This will cause the world to flood to actual fiat paper...so you must timestamp all cash with an expiration date also.
This will stimulate spending like nothing we've ever seen. Thank us later.
Your proposal will also boost inflation to unseen Weimar-like levels AND renders savings worthless. Good idea to make retired people get their guns.
Somewhere, Paul Krugman just jizzed.
We could also do the whole red money idea to get that velocity up off the ground.
Of course, what Stockman left unsaid was, if the banks could've easily taken the hit, then why did we get this disaster instead?
If I recall, JPM pulled the rug out from under Lehman. I also recall Bernanke and Paulson in the press earlier in the Summer talking about "not being afraid to let an entity fail," upon questioning whether or not the Bear Stearns "rescue" was now official policy.
Solvency issues or not, this was a premeditated take-down.
Another secret controlled implosion in NYC......
SHOCKING,
Misses out the part about how the shadow banking system rejected any collateral for
repos, and TBTJ had trillions(13) in lousy RMBS they couldn't unload on a geater fool, at any price,
let alone a profit.
Thats why the FedRes lent out that ammount secretly ,and started Maidan Lane.
$80 billion my arse.
It's OK to let an entity fail just as long as its not Goldman Squid.
You don't remember Paulson's end of the world speech?
Why take any hit at all if you got a coerced blank check from the taxpayers?
All you have to do is sucker the rubes holding the purse-strings.
They are all fellons I bet berney madoff is pissed. He no more guilty than the rest of these peeps but he is in jail for 150 years and they are using his scheme. I think this is hilarious and am ready for the collapse. Inlive for today
Say what you want...Stockman makes a whole lot of sense
After all the manipulation and fakery, a monster storm is necessary. In reality, actions have consequences. Until we go through the consequences of 100 years of monetary and financial market manipulation is accounted for we can't move on to whatever comes next.
execellent writting about the past and what is staring all of us in the face. It will take 100 years for the dust from this monstery to settle, if even then.
We will all pay, no escape. Making sure these bastards pay is impossibe and that too, we all know. They have their islands, mountain tops and hired militaries to protect them.
Can't wait for next week's short squeeze in Oil. $65? BUT EVERYONE KNOWS OIL IS GOING TO 40.
All this week was about was intimidating the Fed into not dropping the considerable time language from next week's FOMC statement. We'll see if it worked. Knowing the kinds of spineless jerk-offs who currently populate the Fed, I would bet it did.
Fun question: say Sep 2008 happened again next week. What are the Fed's policy options? Anyone? Me, I'm hiring a few hookers and buying a ton of blow and calling it a career (and I'm 29)
You can't get into pimping at 29, union applications start in high school.
Also well-written on this topic, even if it's at Daily F'ing Kos
http://www.dailykos.com/story/2014/12/02/1348933/-There-is-an-Economic-D...
Well-written with the exception of the idiocy that the Fed is not a part of Wall St., that is.
It's almost as if he wrote it that way on purpose, so that the usual readership on the site will reject the idea entirely because the article is a defense of Wall St.
Provocateur? Or clueless picker of nits? You make the call.
Having "the right person say the wrong thing" is as valuable as having "the wrong person say the right thing" in the world of disinfo.
the Fed is not part of wall street nor the Federal Government. Doesn't mean they are not in bed with them.
huh? the fed is not part of wall street? the honorable (in some circles) mr. william dudley was chief economist partner at goldman sachs. for a long time. the list goes on. and one. globally.
i know it's ONLY the treasury department - but this other guy that helped start the current mess - hank paulson? ceo of goldman sachs. but - the treasury doesn't have anything to do with the fed? huh?
Freakin' Bitch.
are you done trashing people's lives yet yellen?? you asshole!!!!!
No says the SheDevil prop up doll. i have only just begun. I need to prove that I am equally as criminal as my male c0-workers.
No glass ceiling here. See Look? I can bring down the world not a problem.
"We felt for some folks"
Seriously...consider this...
When the shit hits the fan, there will be a half-black in the White House and a half-woman in charge of the Fed. It just seems like TPTB have a wicked sense of humor.
If you still have a roof over your head and clothes on your back, then his job isn't done. Fire up the bullshit machine again Mrs Debtfire!
Mrs. Debtfire! Fucking BRILLIANT!
"There ain't nuthin uglier than an old white woman." Fred Sanford, Sanford & Son
Hunker in your Bunker !!
Yup. Had that discussion with my partner. Said we need to have 5 years of liquid assets parked outside the system. Plus gardens and a very frugal lifestyle.
Neither one of us will BUY one single thing this December. Not one dime will be spent in any store beyond food. Not one dime will go to this "consumer" ad. WE need none of it.
LOL, Zimbabwe and bust!
Japan's doing it first followed by the US Fed.
Money printing desperation.
Desperation and quackery in the casino!
"Put it all on double-sixes at 30 to 1! The taxpayers are good for it!"
More scathing truth from David Stockman; well done, again.
but, but,........on NPR radio they said, 2015 was looking rosy'.
Roses LOVE bullshit!
I can almost hear their lisping sanctimony.
AKA "thorny"
NPR salaries paid from your $20 donations:
Steve Inskeep, co-host of NPR’s “Morning Edition.” 2010-2011 total pay: $373,097, base salary of $334,560.
Renee Montagne, co-host of NPR’s “Morning Edition.” 2010-2011 total pay: $369,552, base salary of $321,919.
Michele Norris, former co-host of “All Things Considered.” 2009-2010 total pay: $298,360, base salary of $264,9009.
Robert Siegel, cohost of “All Things Considered.” 2010-2011 total pay: $375,652, with a base salary of $321,860.
Terry Gross, host of WHYY’s “Fresh Air,” broadcast on hundreds of NPR affiliates. 2010-2011 total pay: $256,611, base salary of $233,483.
Get DONATING, peoples!!!! We have WEALTHY NPR employees to pay... </s>
We dropped our cable and now get broadcast TV. Of the 9 stations we get, 4 of them are PBS. I would personally like to thank all the hard-working, tax-paying Americans for providing all of this free programming. Like you have a choice.
...some day I'll never have a job that pays that much.... must be nice to be a progressive liberal democrap to get paid that much.... fukim
"What we need is good jobs at good wages"
Mike Dukakis.
Done.
Criticizing the FR is sexiss, rayciss and homophonic. But most of all, on account of its dual citizens, it is xenophobic and antisemantic to question the Fed. Get with the program, serfs.
Speaking of which, where's Tony Wilson? Sharing a ZH maximum security cell with Francis Sawyer?
Invaded some folks, murdered some folks, false flagged some folks, tortured some folks, pissed off some Russian folks, fucked the global financial system over and forced Myley Cyrus' naked saggy ass on us.
Hell of a year America, a hell of a year.
Can't wait to find out what rambunctious carryings-on are in store for us in 2015!
2014 isn't over yet.
Remember Lagardes mystical warning.
That passed off several months ago, didn't it?
Get ya hot fresh rising rates hot out the oven we promise they'll be ready and served any minute now! lulz
So no wonder why the Great Depression historian bailed out on us in the middle of the Greater Depression.
Who's that guy that picks up pennies? I might start doing the same.
I'm guessing this is the end of the petrol dollar. The end to the reserve currency of the world. The end to pensions as we were promised. The end to low health care. Oh why don't we just call this the end.
So with all this going on, why is gold and silver flat today?
Central banks are not impaled on zerobound.
Longer maturies can still rise in price, so become more 'money'.
The 'assets' of central banks are already junk, so bidding longer maturies higher won't make any difference. It will just inflate the 'markets' further.
2008 was a planned event to help get dear leader elected
Bullshit. The storm has been 'nigh' since 2008, still waiting. Glad I didn't hide out in that fucking bunker for 7 years.
Me too. I agree with the rationale of this and all of the earlier writings as the whole system is a Ponzi scheme. But for 7 years it was always 'she's just about to blow'. I'm still hiding under the table but getting very stiff.
..... yadda yadda yadda, gloomndoom, gloomndoom.... yet the uberwealthy get more and more obscenely wealthy and the freeloaders and illegal aliens get more and more free sh*t and amnesty...
all this while tax paying U.S. citizen serfs and peasants suck hind a dried out, withered old teat and get the privilege to support the incompetent, divisive, arrogant narcissistic illegal Indonesian kenyan alien muslim sociopathic pathological liar in chief fudgepacker's opulent, over privileged celebrity grand imperial golf life style...... ain't it all grand....
BTW - the people sent them a message by giving the republicants both the House and Senate and the republicants go to sleep slapping the voters square in the face.... go figure....
Q: How many republicants does it take to change a light bulb?
A: Nobody knows because no one has seen one since Reagan died....
Wait! Walmart says they are closing stores because food stamps are being cut. Somethings wrong. Go down to the reactor room and see what that noise is, Scotty.
Thank Gawd Awlmighty that the Republicans voted tonight to FUND OBAMACARE...AGAIN!!!
The voters did send a message very LOUD AND CLEAR. They just requested MOAR of the SAME and that is what they will receive.
Yeah, true.
They can kick this can longer than we can talk about it.
Disagree... something is going to trip them up.
We just don't know yet what it will be. And I doubt they do either.
It pays to own a small, productive, farm in a very low property tax, conservative, county.
Ya got a tip on a county that looks especially good?
Sussex County, DE. Lowest property taxes in the country. As long as the liberal state leaves them alone that is.
You're better off with a small farm close to a city with a market.
Let me correct that for you...
"It pays to own a small, productive, farm in a very low property tax, conservative, country."
Costa Rica
My property taxes on 14 acres with a house and orchard.... ~$350/year.
The Fed will raise rates a little during 2015. The economy will continue to grow on relatively cheap energy. We might even see a budget surplus in a couple of years.
they used the mortgage market as an excuse to implement the entire crash ! hank paulson entered stage right with a single piece of paper in his hand and black mailed congress into a multi trillion dollar spending spree to cover up their criminal banking enterprises ! then guilt tripped the american public and blamed the whole thing on them !
OFF WITH THEIR HEADS !
"When every financial asset is rising, the casino creates its own marginable collateral. Yesterday’s gain becomes tomorrow’s repo and re-hypothecated security against the next day’s round of buying. And as long as asset values are inflating, the inherent risk in these daisy chains is muffled and discounted. Yet that’s exactly why the present mother of all financial bubbles is so dangerous and palpably unstable. The marginal “bid” is dependent upon wildly inflated collateral which is tucked away in the warp and woof of the entire global financial system."
This is the money shot right here. This, ladies and gentlemen, is exactly why the Fed, ESF, et al cannot let the markets even fall 10%, as the whole thing goes 'POOF'.
In other words, no one sneeze, or the market gets it big time. But I'm pretty sure the CBs are already starting to sneeze, on purpose, in order to usher in the new monetary system.
To use an arcane analogy from Die Hard, the hostage-takers are forcing every hostage (investor) to the roof (into equities), only to blow the roof (by simply raising interest rates, ignoring the market such as the BIS chastisement of Bullard, etc.) while they ride away in vans with everyone's loot during the distraction. Oh wait! That already partly happened in 2008. The sequel in 2015 or so will simply finish the job.
We have been lulled into complacency by the extraordinary actions taken by central banks and governments over the last six years. Have these actions really worked or merely masked over major flaws and problems? I contend that by not demanding the right kind of growth and by throwing money at problems we have only delayed and added to festering issues that face us in the future.
Modern Monetary Theory often referred to as MMT by its many believers is to remove much of the risk ahead and guarantee that we will always be able to muddle forward. This is a economic theory that turns to newly acquired tools like derivatives and currency swaps that are suppose to allow us to print and manipulate away problems. This has created an "almost surreal" feeling of indifference towards reality. More on why debt does matter and the system is about to fail in the article below.
http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complacency.html
I find your blog pimping very tiresome and boorish.
I find it rather telling that the domain moveyourmoneyproject.org (to which moveyourmoney.info redirects) has expired and is pending renewal...
Jail Fed + Soros, impeach Wall St Ponzi, 535 + ICiC for treason, fraud
The central banks are impaled? That would be a good start.
.
It can't be said too many times, it's a giant bubble and it is bursting...
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
and it was caused by the greatest inflationary expansion in history.
http://www.globaldeflationnews.com/inflation-vs-deflation-part-1which-on...