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Another Ex-Central Planner Speaks Up: Currency War Policy "Risks Major Downward Shock To Asset Prices"
Merv "The Swerv" King - former governor of The Bank of England - has joined the ranks of those ex-central-planners-who-feel-the-need-to-protect-their-legacy-by-rewriting-history-and-admitting-the-entire-thing-is-crazy. Speaking in Tokyo overnight, King said he’s concerned that financial markets believe real interest rates will remain very low for a very long time which has created "a significant disequilibrium in the world economy," adding that he does "not believe and expect a market economy to thrive on real interest rates that are close to zero." Warning that many nations realize "they have pushed monetary policy as far as it can go," King added that with the additional risk of currency wars, "markets will discover that they have been pushing asset prices to an excessively high level and there will be a major downward shock to asset prices."
As Bloomberg reports, Former Bank of England Governor Mervyn King says central banks and governments are becoming more and more strident in their determination to talk down their exchange rates.
“Many countries today can see that they have taken monetary policy as far as they can go.”
“Exchange rate policy may now become an instrument of monetary policy.”
“Since exchange rate changes are a zero sum game, there is a risk of currency war.”
King says disequilibrium in world economy is causing chronic weakness in demand
The must be addressed, says King, noting that monetary and fiscal stimulus may not be able to bring a recovery unless the disequilibrium is addressed
King also explained that he’s concerned that financial markets believe real interest rates will remain very low for a very long time.
“They may be right, they may be wrong,”
“If they are right, I think we have a significant disequilibrium in the world economy. I do not believe and expect a market economy to thrive on real interest rates that are close to zero.”: King
“If they’re wrong, then at some point markets will discover that they have been pushing asset prices to an excessively high level and there will be a major downward shock to asset prices and with debt levels fixed in nominal terms, that could cause some serious problems at some point in the future.”: King
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Next thing King will tell investors that Gold is money...
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Jungle Love, It's driving me MAD! It's making me Crazy.
Getchur yield while you can. Period EOC.
This is not your dream meltdown or collapse. This is for the time being a serious deflationary spiral, A FUCKING BLACK SWAN, the collateral damages of which are gonna grab yer nuts and squeeze you dry.
You're in a Liquidity Trap and no measure of fiscal or monetary stimulus is gonna help, by definition.
This is a function of non-monetary phenomenon and unless you clearly see a reformation of the banking, tax and political systems, ain't going away.
Good luck
Own high stable quality income generating assets
No stalwks or anything like...
And gold etc., will be your long tail risk pal.
Gonna be long, drawn out and very fucking painful.
Y'all ain't seen nothing, yet.
"Well, I was in to whips n' things, she was in to pain,"
David Allan Coe
As I recall knuks, you theorized gold and bonds two years ago and I have referenced you on that call many times. I thought you were early, but, damn - i think you were right.
Thank you.
And my concern of lower yields today is much greater then it was, back then.
As well as the necessity for a long tail hedge.
I have only one, very small at the moment, holding outside of that overall strategy.... a position, small and growing very very slowly, in agricultural commodities. Reason is that living out here in CA, I'm seeing first hand that there ain't been any rain. If we don't get drenched shortly, there will be no water in the Central Valley. No water in the CV, no crops, cattle, milk, etc. And CA is one of the worlds largest agricultural producers.
We've had enough rain the hills are greened up. The reservoirs are bone dry and many wells have been sucked dry. This is not a small thing. It is a problem and will become a problem when it does, later this year , if no rain.
+1 Brilliant man and with you on the Ag side. I'm in that industry and there are all sorts of problems that are underscoring bullish bets there. I remember when Jim Rogers told Maria Bartiromo that one day it will be the farmers driving the Benz's and wall street driving the tractors. In the end, I don't think he will be far off either. be well
Knucks the weekly top 40 guy told me 10 yrs ago straight to my face he didn't care if every cow on his placebdied as long as there was water to his golf course. He changed his tune about 2 hrs ago. Now he's bought every farm around that one and its full of cattle corn and soy. Also I do biz on a lot of big farms here . They have spent Big $ on expanding ag here. It's been good biz for me but I am concernd about how much leverage is involved. A farmer told me you needed 200 + acres to make living farming here in ky depending on the soil. Now I see 20,50 what ever acres with new fence and full of cows.
The elevator door is closing. Next stop level (negative) yields.
As you exit>>>> Please apply your fecal protector> <<<<<<
Have at it girls.
? Jungle Love- Steve Miller Band - YouTube
Hello Mr. Knukles,
I'm asking your opinion of the Tyler's chart in this post. Perhaps I'm Missing something?
Charting S&P500 prices against a Bond yield seems misleading to me. When Bond yields go down the actual Bond Price is going up. That's how Bill Gross made so much money.
Shouldn't The chart show 30 year bond 'prices' increasing along with the SPY stock prices?
Readers might begin to wonder if 'Smart' money is leaving the stock market and moving, quietly, to the safety of Government Bonds.
Looking at the charts for TLH and TLT. Their annual return is up 21% and 11% on Schwab.com
TMF and LBND look even better over the last year.
How long will this trend last? Until it turns, I suspect.
Thanks for your time.
bollocks. To infinity and beyond! [/buzz lightyear]
Cuntral Banker.
All these dickheads are all coming out of the woodwork trying to point fingers at each other, afraid to admit to themselves that their whole life's work was nothing other than stealing, lying and fucking people over.
.
For 6 Years these bastards have been slapping my wife & kids calling them "Whores" and trying to butt F**K me in the Ass.
- How much more of this do we have to put up with
- Financial Rape is no Longer Permissible
- US Executive now might be a Derogative Term
- US Public Officials are Executives of some Royal Class
- US Wall Street Bankers are Baby Killers
Hey, I guess the other end of the Pitch Fork can be lubed up can't it.
"For 6 Years these bastards have been slapping my wife & kids calling them "Whores" and trying to butt F**K me in the Ass."
Well...at least they didn't try to butt fuck you in the elbow.
Why didn't he say that when he was BofE governor. Now there's a GS puppet in place, so that's the UK economy screwed.
We hear the truth from children, drunks and former central bank executives.
-----> Yields converge to 4.5%
-----> S & P crashes 1700 pts.
flip flopper
+1 he he heee
I have a feeling that at some point in the future, we might see S&P 666, and blow right past it, heading down like that one scene in the movie Aliens:
"We're on an Express Elevator to Hell, going Down!"
Never gonna let that happen. The elite will lose everything they hold near and dear. They will keep rates under 1percent and by friday markets will be at a record again greece done check fed spoke check apple positive check facebook kickin ass check. Btfd and give up on the collapse theory
Do not worry about the 1%. That is a diversion brought to you by the CIA handlers of Occupy.
If you had a trillion dollars and the market dropped to nearly zero just imagine how much of the market you could end up owning.
The .01% are going to make a killing when they announce we've lost our battle of Waterloo and the market tanks.
That bit about exchange rate becoming monetary policy is comedy gold. "No shit Sherlock." Except he said it with a straight face.
Downvotes are a badge of honor at this stage of the game.
So bloody true.
Most the folks here have never traded or managed assets for a living. Most seem to be of the grand collapse immediately is a wonderful idea variety. As we know, things take years to deteriorate... long times and massive trends are determined by the unexpected. As in Black Swans. We just had the trigger for one... cratering oil prices. The collateral damage will be horrific and nobody's see it. Negative rates?!?!?!? Holy be-Jesus! Yep, just might be the world of contrary thinking opposite the threads and a very careful reading of Tyler's postings... very careful readings.
The collective consciousness is not of reality. (Consensus is way out of the ball park... maybe in a world of Disassociative Disorders)
The cumulative aggregation of to where we have arrived is staggering.
The standard paradigms are inoperative at this time.
aka... no old rabbit holes are good rabbit holes, QED
Get to work Mr. Bullard!
Laughing and also feeling pitty these kids weren't educated about 2008.
A whole new group of useless idiots to to campare market crashes on Thanksgiving with.
What I want to know is: When does US housing crash?
I've been noticing price cuts, but it seems like sellers are still trying to get more than what they paid for out of their used structures.
The entire market has been supported by investors and the return of low-quality loans. When those go away, there's your crash.
My guess is you won't have that long to wait, except they will probably throw a lifeline to the market because this would kill the banks again.
Simple thought experiment, thanks to Dodd-Frank's bail-in provisions: given a choice to save the banks, which whould they do, prop up real estate or fuck depositors?
My bet is this go-round they'd fuck depositors and let R.E. crash so they could buy in low and be safe from the dollar collapse that happens in the not distant future.
Also as granny and pop die off . That nice well kept 50s 80s etc house gets on the market . Prices Are dropping to sell them off. Property tax in a average city limit as here is a grand plus. That on a house might bring 650 a month. If very much is owed most just let it go.
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If asset prices move lower, the debt becomes even more unpayable.
Long Xerox.
“markets will discover they have been pushing asset prices . . .”
Market_1: “Damn, what a fool I’ve been -- it appears I may have been pushing asset prices to an excessively high level. Sonofabitch!”
Market_2: “But Swervin’ Mervin sez this occurs only if we markets believe ‘real’ interest rates will remain low forever, rather than these fake centrally planned rates.”
Market_1 (obviously relieved): “Whew! The Swerve-Man had me going there for a minute. Call JPY, VIX and his little brother, RVX, for tomorrow we ramp, 9:30:03 a.m. sharp!”
Market_2: “Why the 3 second delay?”
Market_1: “Latency: can’t let our brothers in Columbus miss out on the fun.”
Banks turned into a casino, Period.
It is so fucking wrong, i don't even know where to start.
Janet Yellen is an academic and a bureaucrat who hasn't got a clue, which we are finding out month by month - Jim Rogers.
Fill, wash, rinse, spin, drain, repeat..............
You can make tons of money when you control this or at least know the timing of the cycle in advance.
That is what's in play here.
When are we ever going to get the reason, or I should say "conspiracy theory" for all the banker murders??? I mean suicides.
What the fuck was going on with that shit? That was pretty damn bizzare.
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| .' '.HELP!'.| _ \:\/:::/:::::::\| |
| / .-. \_I'm_ \ (((_)),__/:::/\:::::::|| |
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|_________ /ve at_/ ( ''---''( | |
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__________________\______.___|_|__(________|__)_____
If payment can be made it goes on, Russia about to find out.
It really is interesting that these old guard bankers (Greenspan, King) are coming out with this criticism lately. Recall Larry Summers: "[T]he first rule is, insiders don't criticize other insiders." Ego is mean thing, but it doesn't strike me as likely that these guys have turned coat out of some sense of saving their reputations. Though admittedly I cannot come up with a good alternative theory.
I think things are starting to unravel at an accelerating pace, but I think the Fed can keep the ponzi up for a long time yet. My assumption is that the US is going to see a significant repatriation of USD as a result of people reflexively seeking "safety", and (to a much lesser extent) increasing de-dollarization by Russia, China, etc.
That seemingly weighs in favor of equity and UST prices continuing higher. And that's assuming the Fed isn't still printing, which I think it still is.
The plutocrats will eventually just own everything. How long til then, who can say. But that's where it is headed. We'll all be serfs or apparatchiks.
Eventually, we're all going to be Palestinians.
'Risk' of a currency war. Thanks Captain Hindsight!
nice, if only he had had the moral courage to stand up and say this whilst in office, this man is a moral coward who cared more bout his career than his duties to the country he purported to serve,
Central Bank independence my ass.
Central bankers are trapped. They have kept the economy afloat with ZIRP, QE and now NIRP while the developed economies all continued to pile on regulations, structural social welfare increases and general increases in the size and cost of government, driving the private sector into the ground - and so there will be no recovery, ever. As soon as any CB tries to raise rates, the lack of any economic pulse will immediately be evident and they will be forced to back off. It is what it is...