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Central Banks Upside Down
From Raúl Ilargi Meijer of The Automatic Earth
Central Banks Upside Down
The Swiss have unleashed a pretty wild storm in financial markets. All sorts of companies and people today are licking their wounds, and quite a few will simply have to fold. It’s no exception to be so leveraged in foreign exchange wagers that a move of a few percent can wipe you out, let alone one of 30%. Leverage makes sure that right off the bat a whole bunch of foreign exchange brokers, including FXCM, the biggest, are literally dead in the water – FXCM stock fell 90% -.
We’ll hear about the real losses in the days and weeks to come, but rest assured they’ll be very substantial. Banks like Goldman, Deutsche and Barclays were heavily short the franc, and therefor of course, so were their clients. Many private investors have lost everything and then some. As if the losses from oil’s jump off the cliff weren’t damaging enough yet to the realm of finance. But, you know, the CHF franc was pegged to the slumping euro, so what did everybody really expect? The timing may have been a surprise, but come on ..
There’s number of lessons in this, but I don’t feel confident that they will be learned. If only because we’ve gotten so used to living in an upside down world that it has become a solid new normal, especially for those who’ve made a killing off of it. But everything, says physics, tends back to equilibrium. And we were many miles removed from that.
The world of finance decries the fact that the Swiss central bank didn’t ‘telegraph’ beforehand that they were going to get rid of the euro peg. And that’s completely upside down, right there. Even apart from the fact that the SNB move wouldn’t have worked if it had indicated it beforehand, what’s the idea behind central banks having to tell you anything at all? Just look at this from Bloomberg:
SNB Officials Eating Words Risk Lasting Investor Aches
Switzerland’s central bank officials have just eaten their words, risking lingering indigestion in financial markets. Just three days after Swiss National Bank (SNBN) Vice President Jean-Pierre Danthine called the franc cap a “pillar” of monetary policy, the SNB yesterday dropped the minimum exchange rate of 1.20 per euro. The shock abandonment of the SNB’s primary policy of the past three years may now leave investors warier of taking officials’ words at face value, according to economists including Karsten Junius, chief economist at Bank J. Safra Sarasin. By scrapping one tool, the franc cap, SNB President Thomas Jordan risks blunting the effects of another. “The SNB’s credibility has suffered a bit,” said Junius, a former economist at the International Monetary Fund.
“Statements will get read in the future with a bit more caution. Verbal interventions will hardly work any more.” The central bank’s regular pledge to defend the franc cap with “utmost determination” had become part of the institution’s brand, not least because of the success of that policy in protecting the country’s domestic economy. “They’ve lost part of their credibility, I think, ”Han De Jong, chief economist at ABN Amro told Angie Lau on Bloomberg TV. “Whatever they will say, markets will not trust them very much.” George Buckley at Deutsche also argues the SNB’s words are hard to reconcile with the SNB’s new policy stance. “Their commentary now means nothing,” he said. “This is not utmost determination, is it?”
Bank of England Governor Mark Carney has suffered similar criticism. He was labeled an “unreliable boyfriend” by one U.K. lawmaker last year for giving conflicting messages on the possible timing of interest-rate increases in the U.K. SNB President Jordan yesterday defended his surprise move, saying that a tool like the cap would always need to be abandoned unexpectedly. Anatoli Annenkov at SocGen agrees. “It’s something we aren’t used to anymore because most central banks are talking about warning markets, improving communication, not surprising anymore,” Annenkov said by phone from London. “But in such circumstances, there’s basically no other way to do this. Markets would have speculated, positioned themselves beforehand.”
There’s this sense of entitlement seeping through from this that makes you want to, I don’t know, shout, puke? Traders and journalists that chide a central bank for not giving them what they want, when they want it? On what logical basis? That Greenspan and Bernanke did it for years, and so screwed up the entire US financial system? That information from central banks is now some god-given right for traders and bankers? Are you nuts? Are we all? We now know the Swiss are not, or let’s say that for whatever reason they did what they did, they’re not completely off their rockers.
So how about other central bankers? Everyone seems to be sure now that Draghi at the ECB has more reason than ever, after the SNB move, to launch full tilt QE. And I’m thinking, I don’t know kiddos, perhaps he has less reason now, because the markets’ faith in central banks has taken a jolt, because the effectiveness of that QE, which has been in the works forever, has already been priced in by those markets, and because the Germans are sure to contest it all throughout their court system(s). What use would a Draghi QE be at this point? Close to zero. He might still do it, but that would just expose him as a tool. And he can resign and become Italy’s new president right after. And it’s not just Draghi:
The Swiss Just Made Japan’s Job Harder
Haruhiko Kuroda’s monetary “bazooka” just got outgunned by the Swiss. Since April 2013, Japan’s central banker has been pumping trillions of dollars into the economy in an attempt to generate 2% inflation. But in a mature, aging economy like Japan’s, the effort is 95% about confidence. In order to “drastically convert the deflationary mindset,” as Kuroda puts it, the Bank of Japan must transform sentiment among households and businesses. Kuroda’s massive bond purchases mean little if the Japanese don’t trust that better days lay ahead. The Swiss National Bank’s move to abandon the franc’s cap against the euro may have blown a hole in Kuroda’s strategy.
By reneging on a promise made time and time again that he wouldn’t ditch the policy, SNB President Thomas Jordan “has undermined the credibility of central banks,” says Simon Grose-Hodge of LGT. Now, at central banks around the globe, he adds, “the unthinkable is entirely possible. You can’t rule anything out.” Even if the BOJ issues another blast of quantitative-easing after its two-day policy meeting next week, the question is how effective the move would be. Kuroda’s Oct. 31 shock-and-awe stimulus announcement worked for a time by bolstering perceptions that steady inflation was within reach. But this time, with even Economy Minister Akira Amari admitting “it will probably be difficult” for the BOJ to succeed, markets are likely to be more skeptical of the bank’s staying power.
It’s not really the Swiss, central bank credibility was already shot through the past decade, if not more. You have no credibility as a central banker if you serve the interests of one particular niche. Like traders. You need to serve the interests of the entire nation you ‘serve’, or your time will come. No matter how much Draghi, Kuroda or Bernanke were tempted by the omnipotence narrative, deep down they must have known it wouldn’t last.
And now they have to face a new world, one they’re not used to at all. One in which their credibility is shot. I’m guessing that means they understand their ‘normal’ course of action, QE up the wazoo, no longer works. So what then?
Look, Draghi may well come up with that QE of his, but it’ll be stillborn. It’ll only be yet another transfer of money from the public to the private sector. Let’s buy a trillion worth of bonds! Yeah, that worked great for everyone else… But can Draghi still do that? Yes, it’ll bring down the euro for a bit, but the euro is going down no matter what he does. This is turning into a game of whodunnit. And then, of course, there’s the Fed:
Yellen Signals She Won’t Babysit Markets in Turmoil
Janet Yellen is leaving the Greenspan “put” behind as she charts the first interest-rate increase since 2006 amid growing financial-market volatility. The Federal Reserve chair has signaled she wants to place the economic outlook at the center of policy making, while looking past short-term market fluctuations.
To succeed, she must wean investors from the notion, which gained currency under predecessor Alan Greenspan, that the Fed will bail them out if their bets go bad – just as a put option protects against a drop in stock prices. “The succession of Fed puts over the years has led to a wide range of distortions in financial markets,” said Lawrence Goodman at the Center for Financial Stability. “There have been swollen asset values followed by sharp declines. This is a very good time for the Fed to move away.”
We’re getting back to normal, and though normal’s going to hurt – and far more than you realize yet-, it’s hugely preferable to upside down; you hang uprise down long enough, it makes your brain explode. The price of oil was the first thing to go, central banks are the next. And then the whole edifice follows suit. The Fed has been setting up its yes-no narrative for months now, and that’s not without a reason.
But everyone’s still convinced there won’t be a rate hike until well into this new year. And the Swiss central bank said, a few days before it did, that it wouldn’t. And then it did anyway. The financial sectors’ trust in central banks is gone forever. And none too soon. Now they’ll have to cover their own bets. If anything spells deflation, it’s got to be that. But not even one man in a thousand understands what deflation is.
We have a ways to go before we solve this puzzle. But we are, at least and at last, on our way.
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The SNB had to cover their gold short position which they've had since the top in 2011.
https://www.bullionstar.com/blog/koos-jansen/guest-post-i-have-a-theory-...
Now the Swiss are going long.
Wow, great link. Can't believe I didn't know that the SNB instituted the peg on the exact day that gold topped out.
maybe they are smarter than we give credit. all a big front when they roll out a gold backed currency without a referendum...
ya fucking right-hehe
they are cb'ers...
That means the CHF-EUR peg exactly coincides with the 3+ year down-draft of the gold price. Hmmm....
http://goldprice.org/charts/history/gold_5_year_o_usd.png
And they removed the peg the same day gold broke it's 200dma to the upside - coincidence?
edit
My question is answered so well below. I learn more from the comments than the articles!! Thanks folks.
folks? i'm a dude...
Thank you and good job Latitude25.
This is a good part of why Zerohedge is part of my daily reading.
I kind of takes away some credibility if the gold charts only are inspected for the last 1.5 years when the CHF peg was in place a bit over 3 years, while not the slightest hint why the writer believes he can choose comparison periods in such a way.
Or did I miss something?
A national bank shorting paper gold? Bullshit imho. It's not a hedgefund.
A weakening currency and gold going down as a parallel chart is ehh.. kinda weird. It's something like the Yen gold carry trade, but i don't know what.
The SNB short paper gold? No.
A lot of bankers and brokers got bitch slapped in the back alley.. and thats a good thing...
We bitch-slapped some folks.
deflation, it's whats for dinner and i suppose it's prefferable to the rear assalt we've been accustomed to.
Look at what the pathological liars and incompetent bankers / advisors at a top Swiss bank are saying.
They cannot use the word deflation easily. They are saying inflation is -1.5%! :)
"At the same time, inflation could fall to around -1.5%."
http://perspectives.pictet.com/2015/01/16/switzerland-dangerous-move-by-...
But the rest of the article talks of gloom and doom...if EUR goes down further.
I'm more skeptical: How much you wanna bet that TPTB will alternative between bouts of Inflation and Deflation?
Just to keep the Ponzi and theft going longer.
I would always trade on the basis : "Always 'do' the opposite of what they say" ... except
... I don't trade !
... applies to Banksters ... and especially Politicians .
A friend of mine has developed a card game that shows how banking works.
When scored, at the end, the only way you don't lose is not to play the game!
Someone made a fortune. Having said that the SNB did indeed have to do it by surprise. Otherwise everyone in the club would have made money. Makes me smile to see some of these assholes lose a ton of money for a change. Herein lies the root of the problem, many feel they are now entitled to know every move a country makes so they can tell their buddies to become even more rich. We pleebs would never know the moves and still do not know them.
The markets now backed up by the CB's think nothing is going to happen to them anymore and this is more of a wake up call then anything else!
It's fine for CBs to lie to us, their general public marks, all year every year. No problem if they say one thing, or many contradictory things, and do another, and you must be a newbie if you do not accept and expect this. A CB rep, no matter how stupid or stinking corrupt s/he may be, can "move the markets" with their blathering, because "we" are so sophisticated and above such primitive ideas as right and wrong, and can't be bothered over the crime wave of fraud that's taken over what used to be "our" markets.
It's not "verbal intervention"; it's just a bunch of blather. Quit glorifying this in the language. It's just a bunch of lies and nonsense, a word salad mess for robots to sift through that moves "markets" now, rather than productivity that can be assessed by a forward-looking human. These racketeers and robots are what pass for normal in this disgusting confidence game. Then as a reward for ruining our productive economies, these criminals are wined dined and worshipped on sheeple teevee. Paid thousands of dollars to make speeches full of lies at dinners and commencements. Stupid sheeple raise their kids to grow up just like these goddamn evil liars, to aspire into that club. Fucking stockholm syndrome FTW.
But let a CB miss giving a wink and a nod to their cronies, ahead of time before the information is public for the rest of us poor suckers, and damned if it isn't tears and gnashing of teeth from sunup to sundown. This system runs on fraud, insider trading, front running, and all kinds of crime. And morons love it that way.
Could there be any more glaring evidence that central bankers are nothing but a bunch of racketeers, than their dismay over one not tipping the others off ahead of time? What, they can't use their awesome trading skills to anticipate problems and hedge, like the rest of us are supposed to do? So much for their reputation of being any "smarter" than the newest forex beginner.
Don't cry for them, Argentina. They deserve far more pain, to even begin to pay for what they've done to our lives and cultures, all over the world. Stupid sheeple no longer understand that "right" and "wrong" is not only about morality (I know, I know, so primitive), but these considerations are also about survival. Maybe when the sheep start starving, maybe then they'll get a clue exactly why "truth" and "lie" matters. THIS is why you don't let criminals overrun your government or banking systems. THIS is why you don't allow a central bank to issue YOUR money. And this is why you NEVER fall into the trap of trusting them, neither government nor banker.
Every central bank must be abolished. The era of central banking must be acknowledged as the earth-threatening crime wave it was and never, NEVER be attempted again. This global CB "experiment" must be aggressively exposed as a global crime racket and con game. Down with the red shield, and all their wise guy banker, accountant, journalist and lawyer enablers. Down with every one of these fraudsters and confidence men.
Enabling monopoly for the sake of "efficiency". What could possibly go wrong?
heh, I can think of a lot of words to describe monopoly. Or oligarchy even. But "efficient" is certainly not one of them!
I would have loved to eavesdrop on the conference call between all the various CB's right after this event... Probably could hear shouting and cursing in a dozen different languages...
Awesome post my friend.
Central banks are the scourge of humanity.
Few can remember life before the CB's that have gained increasing prominence, gradually spreading over the last few centuries like a slow growing spider web. This is your greatest enemy ZHrs of the USA (us in many other nations have been slower on the uptake but are now full on the rhetoric of CB's justified existence, independence and magnificence)... how does one fight against a rising tide?
I recall the Greatest Treasures On Earth (choke..) Paul Keating in the 80's in Australia, a 'revolutionary' treasurer further hammering the death nail in the Commonwealth Bank of Aust's coffin as a depositors bank, floating the dollar, swooning over the RBA & its glorious independence from sovereign citizens ...ermm now technically consumers... just days after Kissinger visited to give us the long slow kiss of death with much joy and pride - we were truly becoming global tools -pun intended...slang for unthinking idiot with a function chosen by the tool master ;)
http://www.webofdebt.com/articles/commonwealth_bank_aus.php
CBs are now viewed as legitimate even though they exceed the power & voting effects of an 'elected' govt...I guess, the SNB's actions is just a hint of what is to come, the masses will believe it is terrorism and sovereign battles, CBs globally will never be identified nor held accountable for their crimes. Hidden in plain view, perfectly.
"CBs globally will never be identified nor held accountable for their crimes" you never know how things will turn out when the pick forks come out. or what manner the pick forks manifest. when a depression hits things happen that we can not imagine. Success ( the Rich in this timeline ) can get pursecuted in horible fashion.
The focus on finance and money is what is concerning me. As numbers and beleifs can shift on a dime but the moral hazzards have there own timeline. The depression lasted as long as it did in the 30's cus of the Dust Bowl and misalocation of physical resources. not because of just numbers called economy. I wonder what the Dust Bowl will be this time. Fukashima? Global Warming? Ebola? Who knows but these are the real hurdles not how much $ you have others have, numbers are easy to change. Making everybody responsible takes alot of work.
Seriously read a few books. The focus on money and finance is the ENTIRE point - the parasitic system is designed to regulate & enslave our creativity, productivity and steal our earned & stored wealth. Some of the best researchers "focused on finance and money" are the most gracious people who have lost everything to warn and inform us.
Anthony Sutton
Eustace Mullins
Alan Watt
Ellen Brown
G Ed Griffan
to name a few - their genuine compassion for humanity led them to exposing the impact of finance and money games on average families and nations.
Yes meditate in your own faith system, its your right to do so - but please do not be gullible to the duality of theft game you and your family are living within. Unless you are dippy, you know this is not a good year to ignore finance and money -the pain for ignoring will last many years.
Yah in a society that put a dollar value on everthing, especialy money in politics. You had better get a level playing ground if you want any kids to play with.
All I am saying is that those in power realize that all the kids have gone home and they are now by themselves. and they are loney, with nailguns and hookers. poor things, now what?
I like you eater.
It is more efficient from an accounting perspective if the path forward is clearly discernible.
If however the forward path becomes foggy/fuzzy/ambiguous, real competition quickly turns out to be irreplaceable.
Yes, its now cute when one cannot estimate costs just 6 months forward...kinda happy the pain is being spread as we are getting various govt fees and licenses increasing at extreme random numbers some 150% some 1000% without notice.... regulation was recently 26% of drilling program costs (WTF?) and thats before the game the RBA & Oil price players started playing.
Now remind when we last had real competition? (Competition is a Sin.....nah, mate, she's all good)
Fantastic post! It is so good I will save it for future reference. Such is why reading the comments is so rewarding.+1000 to Renfield
Fucking eh, brother!
+1000 best rant of the year so far.
Renfield - That is quite impassioned and true commentary. Central Banking became an empire and conquered the globe. What is interesting is that they begin breaking down the moment the conquest is complete.
What sucks is the thrashing around of them in survival mode which translates into taxing the little guy into oblivion to stay in power and party down for years and years.
The taxing increasingly becomes more
hypocritical with armed collectors and endless regulation to criminalize the population as the biggest crooks run the place into the ground.
But reorganization is inevitable, it is evolution. It seems like the closer we get to our end of the evolutionay journey the faster things move and adjusting just a tad harder each wave.
In the Information Age, banking can become a public utility. The semantics are easy it is the kicking and screaming of those that have ownership that will bring more pain before the model changes.
"What is interesting is that they begin breaking down the moment the conquest is complete."
If you want to know why that is, you'll have to talk to Charles Ponzi. Something about pyramids and the end of endless growth.
Reinfield +100 for a well thought out post. Your another reason I come here daily!! SALUTE!
I am an ole guy and I am just sick to my stomach to see good people being just so fucking stupid. The criminals get away with this and people cheer them and worse the media sucks their asses to get thrm on their show for a fee of course. I may not live long enough to see it but some day soon people will wake up and it will all be gone and large metropolitan areas will be kill zones as gangs of people try to survive. I feel bad for my children and my grand daughter.
GCT, YOU NAILED IT TOO. This is disaster of biblical proportions that is unlikely to be peacefully settled because the banks have been enabled to hold vast real estate collateral from failed loans by ZIRP granting free use of our money. The strategy was to reflate, then sell the RE at enormous gains. Theft is what it is.
I agree with you GCT, I'm getting to be a "ole guy as well." We are dumping a lot of debt on the future generation and the continued welfare state is creating multitutes of individuals that can't or won't take care of themselves. It's going to be a mess. I wish the younger folks that continue to carp about the Fed hurting the middle class would quit whinning about their plight and take steps to counter the inevitable outcome. I'm afraid whinning won't do any good, we are too far down the path and the majority of Americans don't have the gumption to stop and rectify the situation. Button down the hatches, stay out of debt, large welfare cities, and don't forget to build your own reserves. It won't be easy, but at lease you will have a chance.
Stay out of debt... needs repeating IMO.
Each person has the responsibility to give up let others lead or make there own beliefs. Each have different benefits and cost.
Fully agree!!
Or said differently, all the whining and SNB-accusing right now is self-serving propaganda from the ones licking their wounds.
Renfield has just crystalized what is fundamentally wrong with everything. This reads like a manifesto. Perfection.
insiders get the speech before they talk or tips of their tone and place their markers-ah, simple 100 percent guaranteed as long the herd moves, which they always do. what if the swiss betrayal has changed things? na, same shit, que drag queen this week. how can i get his speech? eruo parity w/dolla? nice 10-15% gain on deck...ah, but potential betrayal from no less that the german purveyor of "following the law". intersting weeks ahead. all as a shit storm brews in russia. what do i see south of ussa, 100k beans coming north to da promissed land as oil has plummeted, maybe they can haul oil on their backs following the keystone trail. ah the possiblities...
Outstanding, Sir Renfield!!!
Nothing sweeter than truth expressed so well on the ears of those who hear, and for those who see.
Big giant blessings on All the Truthbearers and Truth Lovers here!!
No real money was harmed in the making of this farce!
The distribution of the number of zeros and ones in a bunch of computers is what changed.
The world's financial system is beyond 'gamed' - no point trying to do any logical assesments. Only the insiders have even a clue of what's going on - some more than others I guess.
The whole edifice needs to fall.
Trouble is, too few are prepared and so will panic and vote the same bastards in again, to 'save' them.
Lather - Rinse - Repeat.
Until enough wake up.
We will hear about all the big losers as a result of the SNB action to remove the peg.
But there had to also be big winners.
Who are they?
Yeah, there had to be the "other side" of the trade. Nobody has leaked who they were. Thank god Pelosi or Hillery weren't on the other side of this.
The other side doesn't win till it gets paid---and it ain't getting paid cause there isn't anything to pay um with---
Whom in their right minds would short the franc against anything? Surely, the rule had to be play the Euro & be chf neutral, as sooner or later a surprise would come from the SNB no? (Risk reward on the euro /chf pair ....no)
A larger surprise is that very few appear to have seen it coming & with hindsight it was a good play, a la James Grant. Wish I had been paying attention.
If you play the euro, you have to play it against something. Either borrow USD and buy euros or borrow Yen and buy euros. If you played it against CHF you got reamed. If you borrowed the USD or Yen to buy euros, you got hit in the head.
holders of the CHF won
I will suspect Tim Morge may have been one of the winners, he runs a lot of money for a few sov wealth funds and the queen.
A rate hike by Yellen is out of the question; the interest on the debt would skyrocket; there would be pressure on the criminal 535 to rein in spending; can't have that now, can we?
Sky rocket to what - 3% on the 10 year? :-O
If they raise rates the bond yeild curve will get even flatter and will be another unspoken indicator that this "recovery" is a farce.
They might raise rates but not more than ~5 basis points, just so they can say "we raised interest rates" in FedSpeak and the liars on CNBS can talk about Yellin being hawkish
Its not like they can't print more debt to pay the higher interest payments......that benefit whom???
Have we not noticed that amounts are only relevant with regard to their intended effect? No one gives a shit if our debt is 18 trillion or 200 trillion, or what amount of interest is paid. This interest is the vig, the skim provided to the banking industry that enables, facilitates this shit. There is only one thing that can stop it and that is us. We have to stop participating. Yes it sucks and will definitely hurts but our only other option is to continue as we have, putting our labor earnings into their hands, their control, their "evaluation".
GET THE FUCK OUT!
Raising rates is not in the cards, ever... Any rate hike above 0.0% will drive debt service out of the range of affordability... They are bailing water from the boat as hard and fast as they can to keep ahead of the curve, but it won't stop the inevitable... The rats know the ship is going down and the SNB realized the only way to save the Swiss Franc was to decouple, and did so without notifying any other CB or the IMF... The shit is about to get deep...
How does JP Morgan expect me, a consumer, to pay 17.24% on credit card debt?
keyser-interesting as we assumed they are in the club. betray a fellow card holder, hmmm.
so the wolve are nipping at each others heels? soveriegnty trumped. how noble...
davos may be a non-starter. notice to cber's and corp oligarchs; the location is at jeckel island at midnight...
ps. where a costume...
GET THE FUCK OUT!
By whatever means seem right to you. As said above, we (I) have to stop participating.
If they want my labor, they can put aside the "finance" mummery, and just come get me the old-fashioned way, with rifle-butts and chains.
upvote... cute, true, but latter part is a bit simplistic, can't run a business that way.
Exactly...
"Yellen Signals She Won’t Babysit Markets in Turmoil"
All the more reason to believe that there will be no rate hike and very well may be more QE.
US central bankers have done what they Said would do regardless of the facts. Alan and Ben said they would print that being against reality. If they stay consistent with history maybe yellin will do what she said she would focus on. Alan's focus was to achieve perpetual wealth. Ben was reduce unemployment ( fake as it turns out). Yellin stated purpose that I got was to offset the wealth balance of rich and poor.
US central bankers have done what they Said would do regardless of the facts. Alan and Ben said they would print ghat ping against reality. If they stay consistent with history maybe yellin will do what she said she would focus on. Alan's focus was to achieve perpetual wealth. Ben was reduce unemployment ( fake as it turns out). Yellin stated purpose that I got was to offset the wealth balance of rich and poor.
Can they raise interest rates until they clear out the corruption then lower the interest rate like Volker? Seriously doesn't feel like the late seventies after disco ( now dj culture ) faded. Only this time the Saudi will try a different solution to lowering oil price than creating oil shortage and crazy gas lines. Rhyming of history.
That is why the BOJ must and will continue "quantative easing."
They may be using an excuse of trying to generate inflation. However that is overlooking the fact that they are in an impossible position with their debt payments. They must do everythhing to keep rates low as long as possible to delay the certain blowup and default. If the BOJ assets are Japanese govt. bonds, what will the balance sheet look like when Jap rates go to just 3%?
Jan. 15, 2015 (EIRNS)—In a lengthy interview given on Jan. 13, Russian Deputy Foreign Minister Igor Morgulov told the official Chinese news agency Xinhua that Russia is committed to “transform the BRICS from a dialogue-based forum ... into a full-blown mechanism of interaction on the key issues of the global economy and politics.” (The BRICS alliance consists of Brazil, Russia, India, China, and South Africa.)
Russia takes over the chairmanship of the BRICS in April, and, after an initial dialogue on the deepening ties between Russia and China, emphasizing the increase in trade, and especially energy, agreements, Xinhua turned the discussion to the BRICS and the Shanghai Cooperation Organization, which will meet in tandem with the BRICS in Ufa, Russia in July.
Morgulov began by summarizing:
Soon after he elaborated:
Hey you can't say pork anymore.....
It's a good thing to be so well prepared for our eventual mussy overlords.
http://www.straitstimes.com/news/world/united-states/story/europe-needs-...
Well then I like to dyne on swyne cause they taste so fyne.
Funny China banning any food from US when their food chain is a random poison guess.
You seem to be missing a key concept.
It's not about food safety.
I'd bet you a pound to a pinch of shit the reasons are financial.
ALWAYS follow the money.
I love reading these old-line Comintern press releases about massive new plans for brotherly cooperation and vastly improved opportunites that are right around the corner.
5000 tons a year is 10,000,000 lbs a year, or approximately 1 ounce of pork per year per Russian citizen. Or 1/8th of an ounce per year per Chinese citizen. Could be using metric tonnes instead, but you get the idea.
Equal time signing off.
Saturday EU humor ...Very Funny: German Satire of Anti-Russian Propaganda
https://www.youtube.com/watch?v=V4D0EiuEsg0#t=487
https://www.youtube.com/watch?v=WkldaRRPAw4
Published on Jan 3, 2015
The scandal episode of the German political satire program 'Die Anstalt' about the media leaders' ties to lobby organisations and their use of enemy images in the Ukrainian conflict.
The major German newspaper Zeit got an injunction against ZDF to prevent this episode of 'Die Anstalt' from being aired as it questions the impartiality of the publisher of Zeit.
>>>Saturday EU humor ...Very Funny: German Satire of Anti-Russian Propaganda
Good stuff, thanks for posting.
BTW the programs are subtitled for those whose German language skills are not what they used to be.
Bullish for suicides?
Let's hope so. It will save some of the cost of justice, of trying and executing these people. Do me a favour. Removing themselves is one way they can be of benefit to the economy, at least once in their sorry lives.
Had fun watching one of my brokers, FXCM, almost go bankrupt. Thankfully no money in that account.
What a circus. A CB acts as it should & gets lambasted. Thank you SNB for bringing some sense of sanity back to this fiasco.
The Swiss move is a perfect example of why anyone who thinks the FED "has to keep QE" because the economy would yank otherwise, simply doesn't understand CB's or their real purpose.
Hint:
It's not to maintain a stable economy or prop up the system, they'll do that for only as long as it's in their best interests, not yours. Ignore this at your own peril.
The Swiss move is a perfect example of why anyone who thinks the FED "has to keep QE" because the economy would yank otherwise, simply doesn't understand CB's or their real purpose.
Hint:
It's not to maintain a stable economy or prop up the system, they'll do that for only as long as it's in their best interests, not yours. Ignore this at your own peril.
so when i trade i need to put on the hat that says sociopath(dow 20K)???
Parobolic bond prices and Parobolic US dollar don't bode well
IMO one of Raul's best yet. I like him derisive.
Funny old world, after all. You have to laugh, don'cher?
Ooooooooh, the insiders lost hundreds of millions?
https://www.youtube.com/watch?v=eGXyjNI25Qo
Is FXCM really dead in the water? A look at the stockcharts website shows that they have bounced back from this low share price before back in August. Am I missing something here?
Up until close Alpari still executed all orders (except chf).
Don't know if you can withdraw.
Well, they got the bailout from Leucadia. Tried to call yesterday with a question unrelated to the solvency issues and they told me it could take a week to get back to me.
no, they got a cash infusion from jeffries or some shit.
its like knight capital all over again
Reading between the lines SNB were really pissed off with this endless QE shit by the FED, BOJ and the constant Draghi bollox of the last few years, they were also hugely pissed off with Goldman Sachs, Citibank Barclays etc and all those other cunts taking huge CHF positions... In one second they wiped all those scum out.
Lagarde was almost fuming when interviewed when she admitted she had not been forewarned, as were any of the other CB's. I'm sure the Swiss Banks were warned to take adequate positions to hedge what they would not have time to unwind though...
So this is the first Central Bank to say "Good luck but this shit ain't for us anymore"...have to wonder if anyone else is getting itcy feet?
Here's hoping SNB was the first domino.
The SNB believes the EU will release endless QE and the Swiss said fuck that!
oh, please gemany, please wake up.
those who are the greatest pain, wake up first. has germany forgoten its pain from wwII? we shall see..
maybe it will be greece who is cry next from the pain. there up to bat, so they have the next opportunity, or they go back to resting.
japan has temendous amount of pain threshold with very little protest. the nail that sticks up must be hammered down is their mantra. then they mask it with android sex dolls and sushi. but kyoto and okinawa are magical societies who have insulated themselves from the current japanees policies as the culture in these two cities are strong as the swiss if not stronger. okinawa has figured it out pretty good.
Maybe it will be the BIG baby US. Least amount of threashold but lashes out and the clostest and smallest kid to smack up side the head like a bully has the inclination to do.
those who are rational also wake up fast. Like the swiss. the nordic folk are quite rational. tuff conditions tend to make a society rational or they would not survive. china can be rational for periods of time, the were ahead two hundred yrs ago no?. and russia is that drunkin uncle that you have no clue what he will do but he is a surviver and will put up the longest fight and just wear them down til the bitter end then spit on them. why the fuck would you come any mess with the shitty hell, I live in? spit!!!!
With all due respect, that 1 in a thousand may include you IMHO. The deflation coming us financial assets in real asset terms, some of which will be accomplished through financial assets dropping, some through fundamental currency adjustments (G3 weakening relative to China), and through gold going parabolic to reliquify the system. No one seems to actually pay attention to CB balance sheets and accounting identities anymore. All the CB ate really trying to do is prevent cascading collapse and force currency realignment. The huge moves down in commodities have been driven by TBTJ manipulation of paper markets because they are coming to realize that the CB will engineer inflation.
Let's be clear about the root cause. Fractional reserve banking is inherently a ponzi where phantom AND SENIOR financial claims on real flows of value from labor and actual savings (production less consumption) concentrate "wealth" and "income" in the financial sector. This distributionally driven demand destruction is the cause of our inequality and instability. The Central Banks inherited the ponzi and have managed it for decades. But, in so doing, created a global ponzi. There is 1 and only 1 semi stable path out of this mess. Gold is the only way to reliquify the system. It is also the only way to end the inherently destabilizing disconnect between value creation and value capture.
We all play a role. Literally, if we all vote our values with our wallets and encourage those around us to do the same, we can change the system. In fact, because it is SO IMBALANCED and hyperlevered against fundamentals, VERY SMALL changes in feedback loops can have profound effects. This is what the arrogance of the TBTJ misses. We truly are approaching the engage and even pawns matter to the outcome in the endgame.
Start by selling essentially fraudulently priced financial assets and converting them to cash (keeping 3-5% of cash assets in physical form outside the TBTJ banking system -- regional banks are fine) and gold. China understands that cash and gold are real options without expiration, that such a strategy creates a judo effect, employing the abuse of TBTJ against them. Ultimately, and this is ESSENTIAL, redeploy the cash to investment in PRIVATE DOMESTIC PRODUCERS NOT SUBJECT TO HFT / MM GLORIFIED THEFT. Our economy will eventually come back into balance and that means domestic/local production will grow with respect to consumption. Reallocating from domestic consumption ponzis to domestic producers will not only be a great financial investment, it will also improve the future for your children.
<<Literally, if we all vote our values with our wallets and encourage those around us to do the same, we can change the system.>>
Yup. The power of example has never been as strong as now, and tomorrow it will be even stronger. Our revolution will not be fought with guns. Refuse to participate in their markets, their media, their language, their fear.
"The best revenge is a good life", was never more true or important than it is today.
Trade and barter when possible!
Thereis always a certain % of vendors at gun shows who will take Ag for a slight fiat discount. Of course, everyone the gun show is also into PMs, so you are in a crowd of fellow-thinkers.
Try to expand your barter system. I have a great handyman who takes silver for a fiat discount.
"1,000 in dollars or 900 in silver, LC."
"thanks,_______."
Sadly, the local andvregional banks, who love to pitch the meme "It wasn't us, it was those crooked TBTF banks" are just as damned and doomed. I was part of a local political reform groupbwho was stunned at what we found with respect to banks. Trusting such people to restore us to a sound system is wishful thinking, although on a relative basis, you can make the case that asset quality is better.n
The entire comment by techstrategy, was very good, but the following quote was especially interesting;
"Keeping 3-5% of cash assets in physical form outside of the TBTF banking system.."
I have considered any assets I own, showing only on a computer screen to be expendable. I feel that the brokerage and bank accounts will just disappear off the sreens one day, when the computers and grid shut down...perhaps on purpose. I need a certain amount in accounts to cash flow my life, and business, but I try to keep 95% of my assets outside of the banking system now.
Everyone should have a stash.
Wasn't 'cover your own bets' recently taken care of by Congress? They know shits coming. I wouldn't be surprised if some that did take a hit knew about it and for whatever reasons maintained they never seen it coming. Yep, my trust is so far gone it has manifested into full blown paranoia.
Generally speaking Congress 'covering your bets' means being stocked with enough favorite Scotch to make the world look rosie .
Fuck the nations. Fuck the moral. They are gonna print to oblivion.
They wont raise interest rates ever. Rates may go up for a short lived spurt that will cripple everything but they wont be the one raising them. The are boxed in. Deflation is kicking them in the teeth every morning and will continue to do so
Russia'scentral bank said on Friday that net capital outflows in 2014 amounted to $151.5 billion, the largest on record http://www.cnbc.com/id/102345187
Sinking ... deeper ... downward ....
Please listen to the song I wrote last week.
Especially the words.
https://www.youtube.com/watch?v=vkloNM2J6aw
The text is under it to read.
Central Banks = all in this together, I know some CB must have made money on this deal
When did Central Banks start intervening?
When the markets went into mania mode over the new internet, just as they did in 1600's Holland over the new tulips.
Modern sophisticated markets .... you are having a laugh.
Central Bankers biggest mistake is trying to shield the banksters from the effects of their own incompetence (internet, sub-prime).
Not one man in a thousand thinks Raul understands deflation.
When Soros attacked Sterling the BoE caved in.
When FX traders attacked the Swiss Franc the Central Bank caved in.
Bankers were surprised when sub-prime NINA (no income no asset) mortgages started defaulting.
Everything is a black swan on Wall Street.
What is that bright yellow object coming up over the horizon this morning? ..... another black swan for Wall Street.
To make the world a safer place:
1) Get bankers back on the plain vanilla
2) Get the 1930's legislation back in place
3) Nett the quadrillion dollar deriavative market to zero now, before it all goes horribly wrong
Then why were the FX traders massively on the wrong side of the trade?
Read the above again slowly.
What's that, another black swan.
Wall Street were taken by surprise by massive defaults in sub-prime when there were things like NINA and NINJA loans about.
Wall Street getting things wrong is only a surprise to Wall Street.
Psychopaths never learn from their mistakes, because they never take responsibility for them.
It's not a black swan event if some clear-sighted people saw it coming.
Because the SNB was playing gut poker and kept their cards well-hidden.
Moral hazard? We do not have this in our country.
The bankers own the Central Banks, do they not?
Maybe that's where their "sense of entitlement" comes from.
Ya know, if I were a cynical type, I might just begin to wonder if this whole Central Banking thing is just some kind of a confidence game.
Eliminate all banks. They are dangerous and do not serve a purpose.
All banks be gone.
All central banks, anyway.
I don't have a problem with people choosing to use banks in a free market - and I do mean, a FREE TO FAIL market - although for the life of me, I don't know why anyone does choose this.
Never could understand my so-called fellow man.
The Swiss were smart. They were the first to pull the plug on the charade and the smarter for doing so.
I wonder how many more are going to get burned when the next piece of the charade is exposed?
Yellen's tough love will disappear when she gets a call from one of the TBTF telling her that an unimaginable event had produced results beyond their modeling parameters which in turn created temporal asymmetry in some of their financial tool sets. When she asks them "what the hell are you talking about"? They'll tell her that risk mitigating hedges produced aberrant results and we have a temporary cash insuffiency. To which she replies "what do you expect me to do?" And they reply "call the PPT you dumb c*nt"
That's "dumb c*nt, ma'me" to you, buster!
She's worked hard to earn that title.
So...they finally raise the short end 25bp, the long end goes DOWN? Safe Haven or ??
Regarding the SNB:
"There's 3 ways to win: 1. Cheat, 2. Be Smarter, 3. Be First"
They are not mutually exclusive. #1 is temporary as moral hazard always wins in the end as Paul Paulson had feared.
Volatility can be played with the right tools.
http://www.globaldeflationnews.com/how-to-tame-the-volatile-financial-ma...
The only problem with this analysis is that a return to normal cannot work. The Fed has been dealing in an impossible environment since 2008. That has not changed. All the reasons why they needed QE (to fund the USG ) are stil there. There is no recovery. Hyperinflation still looms.
In normal monetary systems a shock like this could be the destroyer of confidence in central bank forcasts, today the markets and the Fed have no choice. The Fed will not raise interest rates. If (when) needed the Fed will do QE Again™. Not much will change in the FEds behavior just because of the actions of a European bank. They need to plan for the future. The Fed needs to plan it's demise.
Or rebirth. Do you remember all craziness over the debt in late 70's ( word trillion did not exist then) and Volker raised interest rate to clear out corruption and allow the strong to becompetive and take over. We have quadrillion and any number does not matter. Corruption and the lack of faith that it creates is what matter. Yellin needs to create faith if the fed and old money is to survive.
Fund the USG? Surely you must be joking. QE's, TARP, etc. accomplished one simple thing. Trillions and trillions of private sector debt were heaped on public balance sheets.
There were takers in this scenario for sure, but they weren't a bunch of brown skinned poor people, teachers, firemen and other public employees. No, these takers wear seer sucker suits and Italian loafers and they got away with it because of the economic illiteracy of the general populace. A populace regaled with bullshit such as "pull yourself up by the bootstraps", or "shining city on a hill".
Define "cannot work."
If you meant cannot work in reestablishing the status quo as it was 5/10/20 years ago, I agree.
Now what's bad about that?
I do believe as well that the FED will not raise interest rates, at least up until before the dollar starts completely imploding.
As a Fed guy said ages ago, "The very last thing a Central Banker will tell the public is the truth".
This still stands and will remain valid probably forever.
LOS ANGELES (Reuters) - A body found on the grounds of a California desert resort hotel has been identified as that of a missing AIG executive who failed to turn up for meetings last week, the sheriff's office said on Friday.
Belgium guards possible terror targets amid manhunt
Police across Europe arrested more than two dozen suspects as security forces there try to prevent more attacks. A manhunt is underway in Belgium for three people believed to have trained with ISIS in Syria.
Soldiers are deployed in Belgium amid tightened security in many European countries after last week's attacks in France and anti-terror raids.
latest:
http://tersee.com/#!q=belgien&t=text
The debt they call money is too large to ever be repaid.
Ipso facto there will be no return to normal.
but debt on the feds balance sheets represents what? digital fiat in the system-moar debt with usery. it is the usery that will kill the ponzi...
as it aproaches zero return the faith wanes. negative returns will seek out positive. interesting to watch the swiss...
bonds are the killing fields of the masses, ah, yet so attractive as rates decline...
Central banks exist to maintain order to destructive fiat currencies. But now that the hoards are to the walls of the CB's things are about to implode and the Swiss flashed a light on this fact. The great reset is coming--this last monetary system sucked.
Well guys, don't hold your breathl. People are lot more stupid and gullible than you think they are.
http://www.bloomberg.com/news/2015-01-17/swiss-franc-trade-is-said-to-wi...
Beautiful--A central bank frontruns the investment community
“The succession of Fed puts over the years has led to a wide range of distortions in financial markets,” said Lawrence Goodman at the Center for Financial Stability. “There have been swollen asset values followed by sharp declines. This is a very good time for the Fed to move away.” Yellen is TOAST...the (other) banksters will never tolerate such surly indifference to their interests.
Note that swiss are small and accept reality. The US is big and tried to create is own reality. So the mind set, communication and the need to maintain the illusion are different. If you are in integrity you can weather what others think, if you are based on illusion what others think of you is all you have. Human strategies are bizarre but there is some logic there twisted as they seam.
Sorry Raul - we're not Switzerland, and You do not understand the politics of the U.S. economy. Nor do you grasp the the social dynamic here, which is quite different than Europe's. You guys at the Automatic Earth were proffering the same stuff in 2008/2009/2010 and looky what happened to your thesis then, as it will now.
Raul is a good writer, but I have to agree with you Consuelo. The SNB is not the FED, and there is NO WAY that the central bankers of the world are not still firmly under the thumb of the too big to fail banks.
The central bankers absolutely will bail out the banks again and again with more QE the minute things get a bit uncomfortable in the markets. The FED might try to hike rates with its fingers doubly crossed, but when the resulting turmoil is too much to take, QE will be rolled out promptly (or a new chairperson will be ushered in). It's just like when the kids are screaming in the restaurant at the top of their lungs, you give them back their Ipads rather than attempt discipline, because the temporary discomfort is too great, even if the long-term result is that your kids grow up fat and zombie-like.
I am sure there was a time when the JCB "thought about" reining in their support of the Japanese economy, but my belief is that once you start QE you can't stop it, and DE-flation is the result. Why? QE doesn't cause deflation by itself, it is the conditions under which QE becomes necessary which causes deflation, namely, an overleveraged debt stuffed economy with not enough real capital or production to shoulder the weight of ever increasing levels of government debt, consumer debt, and business debt (financials mostly, real businesses that make real things might be one of the few areas left that still don't over leverage) all tied to ultra low (zero) interest rates.
The only question is when will Central Banks pull out the real bazooka - the helicopter money - with only a few tiny little strings attached.
"Deflation"? How about Depression on a Global Scale?
ABM Amro has the nerve to talk trust!?!
Gold thieves calling currency manipulators crooks, I have died and gone to heaven!!
There are so many more surprises coming that we should not get overly excited by what the SNB did.
As I always say, speed is not a problem, taking corners definitely is.
Yellen's tough love will come to a screeching halt when the entitlement state raises its ugly head and screams.
You are being intellectually lazy.
I'm Confused.does this article mean that the fed will raise rates unexpectedly or keep the same course?
Yes.
(Such as an unexpected 0.1% interest rate rise, which in effect equals doing nothing or keeping the course.)
Come on Davey do we have to tell you everything?
" Many private investors have lost everything and then some."
Central Bank and insider traded manipulated markets have made most investors feel they need only trade the central bank manipulation and they will always be winners. The idea of trading a real market where fundamentals drive share prices and FX rates is so old hat. What our markets need is a massive shake out, an epic wipe out of people and firms who have collected billions just by sitting around and putting bets on a market that is managed by the central banks to always pay off. Capitalism, in theory, is supposed to sweep away the losers and badly invested trades. For years now nobody has been swept away, except the wage earner and savers.
I just can't express the pleasure I will have in reading about traders and firms going under, as some form of fundamentals finally asserts power over the rigged communist fak, as they have finacially engineered every possible market niche. Derivatives sitting on the banker's books are simply out of scale to the real world economy. Let the losses begin, I hope they are deep and tear the guts out of as many do nothing financial engineers as possible. So many of them seeking to make their fortunes without work, I mean productive work. The old days, when a capitalist added net wealth to the global economy by their actions, not todays expert manipulators and skimmers of wealth. All they do is engineer the trasfer of wealth from productive enterprise and wages and interest on savings, they transfer it to the market skimmers and financial engineers.
Bring on the losses, I hope they make the pigs squeal.
Meanwhile, Feinswine is raking it in.
http://pagesix.com/2015/01/16/senators-husband-stands-to-profit-from-government-deal/
but, but, but, according to Simon Black the post office is losing money.