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The Impact Of A Liquidity Bubble On Price In One Chart
The following chart, courtesy of Citigroup, demonstrating the liquidity cliff i.e., the impact of a liquidity bubble on price and risk, is so mindbogglingly simple, it is no wonder that virtually nobody gets it.
As Citi observes, all a liquidity tsunami does for credit, as well as for equity, is to perpetuate the illusion of maximum pricing while shifting the risk curve to the point where any deviation from "perfection" - or loss of faith in the liquidity or its providers (as in central banks who in 2015 are finally going "all in") will ultimately lead to an instantaneous waterfall in price.
Which also explains why lately the exchanges have all been practicing how to most efficiently shut down when the "waterfall" moment arrives. Because if there is no market, one simply can't sell.
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don't worry
Waterfall down in 10% increments as the "circuit breakers" keep hitting.
Not a bad little chart, but has little to do with the real economy.
I think the deflationary effects of the computer revolution, and globalization are finally starting to bite, one everything except government and sick care. Bummer.
Comprehension of this chart leads to falls out of high windows and accidents with nail guns.
https://www.youtube.com/watch?v=hV0zu1Qgl0w
pushed/fell off building...
https://www.youtube.com/watch?v=hV0zu1Qgl0w
pushed/fell off building...
Everyone with a brain knows economic charts are silly and meaningless.
(Sarc)
I like the red roller coaster.
think they can keep this turd afloat until the elections?
My volatility bets are hoping NO....
That way the Dems can blame the next Republican president for the crash? Great, Barry gets off scott free.
All the contenders should be signaling a market crash will be the first thing to happen after elections, if it doesn't before then.
If they get the message out now that the dems are trying to hold back a market crash until elections, it may be of some benefit. To somebody somewhere.
I'd say a rerun of 2008, a crash ahead of elections. This way the banksters can shake down CONgress with threats. Meanwhile, the Republican establishment pick (another GD Bush) will speechify about how he'd fix it. Then, after election, just lard more freebies to them in the name of saving the economy from itself.
I have a felling that any attempts to replay that would be a very unwise idea...no particular REASON, just a feeling.
Might not go so easy this time.
I'm sure that had something to do with Romney's decision to say "Fuck it"...Whatever you think of the man, he has got to see where all this is going. Maybe he's decided he would rather not be in the driver's seat when we hit the wall.
I still say we could see Hillary pull back too...Watch the rats...they let you know when sinking is imminent when they all start running.
THAT'S when you get your 'dark horse' candidate, and keep in mind that anyone who volunteers to captain a sinking ship has plans...
Obama has done nothing to address problems. But that's his plan - allow problems to build to much worse heights while only giving lip service and actually doing nothing to solve them in the hopes things will implode. Its all purposeful and Obama's methods are working swimmingly well.
The country is in horrible shape by almost any measure - particularly in makingng real progress against it problems.
The debt bubble is a bipartisan effort going back to Reagan who really got the party going. They are all scared to death of deflating the bubble, not least of all the Fed plutocrats. Pitchforks and torches come to mind.
Not that the current administration necessarily has a whole lot to do with this (they're not the ones handing down the orders), but they do have some complicity and the sheer arrogance on display, like some sort of African dictatorship (gee, how did that slip in there...?), is likley to meet its fate before a seamless 'hand-off' to the next puppet is finalized. I say it meets a comeuppance at some point within the remaining term.
Ahh, Rhodesia weeps for us. Pfftt....
Whether or not they even want to depends to a large degree on how Wall St. friendly the next potentate will be.
My 'mechanical' analogy....the bearings are shot, the wheels has gotten hot once but luckily a shot of grease into the bearing is keeping it together....it won't be long until it fails and then the wheel falls off of this thing.
*most likely to the elections but not much later than that.
Print and devalue until a currency blows up.
If you are interested in drones check out this site http://pickyourdrone.com/
Nothing to see here, continue buying stocks as the world crumbles around you! Schnell!!
No...
'MACHT SCHNELL...!!!'
"the exchanges have all been practicing how to most efficiently shut down when the "waterfall" moment arrives. "
the man said after me the ...deluge
"If there is no market, one can't sell."
That will be the fate of the BTFD'ers. Locked out in a millisecond, stuck in their long positions while they watch the S&P go to 500.
"...while they watch the S&P go to 500."
Always the optimist. I figure the S&P will end up around 350.
Or hit 666 and stay there for two weeks to make it clear who is running this dark carnival.
No, no, no: you *always* bid the f'ing D. Buy the f'ing dip. Buy the f'ing disaster. Buy the f'ing deflation. Buy the f'ing depression. When you always buy, you never have to worry about selling. /s
But until then.........PAR.....TAAAAAAYYYYY!!!
Well...that would be more light a "profit sustainment exercise" in order to generate tax revenues.
That's why oil matters so much and why the Fed says "inflation is the goal."
They need revenues.
If oil prices collapse or worse prices collapse across the board then Government pretty much seizes up on the revenue side.
Obviously creating more debt doesn't help. Nor does raising taxes.
This remains a problem of jobs and creating "final demand."
Very low prices can create that demand actually. (The Great Depression.)
I would take a good standard over that any day of course.
Vet...by a good standard if you mean bi-metal, I'm on board with that.
When humans have all killed eachother off, the HFT algos will still be trading stocks and the DJIA will be at 19,500.
"Because if there is no market, one simply can't sell."
Market says, no bid.
Actually, with NIRP and QE the price of debt (money) even goes above 100%. Pretty obvious graph of how the cheap money in the system distorts prices.
Steam starts escaping May - September...
yah lost count of how many time BATS shut down in jan.
Faith? Ummm...no, none. Not in politics, policing, or the fucking asshole (limited education vocabulary) banksters.
Heard there is a huge discount on nailguns at Home Depot?
Also...pisses me off that the Dutch companies won't send seeds to the USA anymore. Dang it!
"The presidency must be destroyed. It is the primary evil we face, and the cause of nearly all our woes. It squanders the national wealth and starts unjust wars against foreign peoples that have never done us any harm. It wrecks our families, tramples on our rights, invades our communities, and spies on our bank accounts. It skews the culture towards decadence and trash. It tells lie after lie. Teachers used to tell schools kids that anyone can be president. This is like saying anyone can go to Hell. It’s not an inspiration; it’s a threat.
The presidency — by which I mean the executive state — is the sum total of American tyranny. The other branches of government, including the presidentially appointed Supreme Court, are mere adjuncts. The presidency insists on complete devotion and humble submission to its dictates, even while its steals the products of our labor and drives us into economic ruin. It centralizes all power unto itself, and crowds out all competing centers of power in society, including the church, the family, the business, the charity, and the community."
http://www.lewrockwell.com/2015/02/lew-rockwell/down-with-the-presidency/
Trust me. A congress with some balls (that isn't corrupted......I know IT IS), was supposed to protect against this. Those men failed.
I'm sure the Fed will launch operation quadrillion followed by operation googleplex x 10.
Keep on hitting that liquidity button until their finger bleeds......bs and liquidity, it's all they have left.
If this was just about liquidity all soverigns would be trading at cents on the dollar. Its about complete elimination of all soverign debt. The chart above assumes printing will stop, but it will not.
So, they are selling/buying overpriced risky shit because there's too much funny money (liquidity) in the system. What else is new?
Since they are using Krugman's DSGE model to flood the economy using data collated by fraudsters and liars, who knows WTF "Normal" liquidity is any more? We left normal town quite a few miles ago on this Bedlam highway of destiny to impact city and the brakes were removed in the last pile up of 2008.
Pace the halls and climb the walls and get out when they blow.
Markets will stop. Poof. Into the bunkers they go.
Can newlyweds go there for their honeymoon.....
The red line is Wile E Coyote before he looks down.