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Of Bonds & Bankers: Impossible Things Are Commonplace
Submitted by Tim Price via The Cobden Centre,
Facts do not cease to exist because they are ignored.
-Aldous Huxley.
There was once a time, perhaps, when unprecedented things happened only occasionally. In today’s financial markets, unprecedented things are commonplace. The Queen in Lewis Carroll’s ‘[Alice] Through the Looking-Glass’ would sometimes believe as many as six impossible things before breakfast. She is probably working in the bond markets now, where believing anything less than twelve impossible things before breakfast is for wimps.
The average yield on all German government debt is now less than zero, for example. This doesn’t really make any sense, but then not much does any more in the interest rate markets. We saw last month that the Danish sex therapist (this detail being entirely gratuitous) Eva Christiansen had just been approved for a small business loan at a rate ofminus 0.0172%. She is herself receiving interest on the loan she’s taken out. At the same time Danish depositors are being charged 50 basis points simply for the convenience of keeping their money in the bank. Jamie Dimon, chairman and CEO of JP Morgan, points out that on October 15, 2014, the yield on US Treasury bonds moved, intra-day, by 40 basis points. How did he describe that move ? “Unprecedented.” But it matters, because Treasury bonds are meant to be the cornerstone of the capital market structure. If Treasury yields move up and down – in a single day – like a whore’s drawers, it does not exactly betray massive confidence in the rest of the financial system.
This pronounced volatility may or may not be a precursor to larger shocks to come. One reason to believe it might be is cited by Dimon when he talks about much reduced liquidity in the bond market:
..the market depth of 10-year Treasuries (defined as the average size of the best three bids and offers) today is $125 million, down from $500 million at its peak in 2007. The likely explanation for the lower depth in almost all bond markets is that inventories of market-makers’ positions are dramatically lower than in the past. For instance, the total inventory of Treasuries readily available to market-makers today is $1.7 trillion, down from $2.7 trillion at its peak in 2007. Meanwhile, the Treasury market is $12.5 trillion; it was $4.4 trillion in 2007. The trend in dealer positions of corporate bonds is similar. Dealer positions in corporate securities are down by about 75% from their 2007 peak, while the amount of corporate bonds outstanding has grown by 50% since then.
“Inventories are lower – not because of one new rule but because of the multiple new rules that affect market-making, including far higher capital and liquidity requirements and the pending implementation of the Volcker Rule. There are other potential rules, which also may be adding to this phenomenon. For example, post-trade transparency makes it harder to do sizeable trades since the whole world will know one’s position, in short order..
Imagine a small room improbably crammed full of elephants. There is only one tiny door by way of an exit. Now let off a firework.
We heard a great line at an investment conference during the dark days of 2008, post-Lehman:
If you’re a distressed seller of an illiquid asset in a market panic, it’s worse than being trapped in a crowded theatre that’s on fire. It’s like being trapped in a crowded theatre that’s on fire, and the only way you can get out is by persuading someone on the outside to swap places with you.
For context, the sort of stuff whose values imploded spectacularly in 2008 included dodgy corporate credit and mortgage backed securities. Given the liquidity dynamics of the institutional marketplace highlighted by Jamie Dimon, the sort of stuff whose values can implode instantaneously today includes the likes of US Treasury securities themselves. So in the fixed income market, all bets are off.
At the recent Grant’s Conference in New York, fund manager Paul Singer identified an even bigger short than the original Big Short (repackaged sub-prime tat). This new, even bigger short ?
Long-term claims on paper money. In other words, all bonds.
Is it remotely possible that at some point, perhaps quite soon, the bond market could see yields spike higher, driven by .. <answers on a postcard> ? As Paul Singer puts it,
A surge of inflation which far exceeds the strength of the economies is not out of the question and could be catalyzed and accelerated by the oft-stated goal of central bankers to cause more of it.
The bond market is acting schizophrenically. The cognitive dissonance is deafening. It has pushed down the yields of bonds on the tacit understanding that central banks (most recently, the European Central Bank) will be buying them by the bucket-load. But the expressed purpose of so-called Quantitative Easing is to ignite inflation. If you believe that central banks can succeed in creating inflation, then you should be selling bonds, not buying them, especially when they’re yielding less than zero. We’re not convinced that central bank money creation can easily trigger inflation when the forces of deflation seem to be currently so powerful. But it matters not. Anybody with half a brain cell will recognize the risk inherent in bond markets today. The relative and absolute attractiveness of value equities, by comparison, is now astonishing. The only people who should be buying bonds today are billionaire altruist lunatics with a death wish.
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"Facts do not cease to exist because they are ignored" - It bears repeating over & over. My only contention would be that if Huxley had a 'do over', he'd title it 'Pussified New World'
Ah, like so many things, it was Bill Shakespeare who actually came up with the phrase "Brave New World."
http://en.wikipedia.org/wiki/Brave_New_World
Brave New World's title derives from Miranda's speech in William Shakespeare's The Tempest, Act V, Scene I:[4]
—William Shakespeare, The Tempest, Act V, Scene I, ll. 203–206[5]
"That depends on what the definition of 'is', is" - Other famous 'Billy' quote
"The first thing we do, let's kill all the lawyers"
I'll 2nd that. :D
If you close your eyes real tight and wish REAL hard, it'll be rainbows and fairy dust forever. Just don't open your eyes because you really don't want to see the avalanche bearing down on you.....
It's got to get more impossibler by the day or the wheels fall off.
More and more impossibler. :-)
Imagine a mag 7 earthquake in Kalifornia that does some real damage. All of a sudden the cost of borrowing goes up, just a little, and then to dominoes start to fall....
Correction : ... all markets are acting schizo .
See paper gold price today.
OT: Sweet jesus are we fucked. I just read this for the first time, and still cannot believe how fucked up it is. http://www.newyorker.com/magazine/2014/10/06/before-the-law
Browder was one of seven siblings. WHAT? WHY would his parents, who couldn't afford an attorney or $3,000 bail, have SEVEN children? Who is teaching these people to have more children than they can protect? Perhaps we should put the parents in jail, along with the preachers and EBT workers who told them it was not irresponsible to have more children than they could protect.
The article states his parents had two children. All the others were adopted.
When we say "adopt", do we mean "receive money from the taxpayers to raise these children as their foster children"? That's a BUSINESS, not charity.
I bet we all know someone who runs a FOSTER FAMILY BUSINESS. Their income is my taxes, so they get no thanks from me.
Also, whether natural or adopted, they had more children than they could afford to protect. So they weren't doing the children a favor. Again, they get no thanks from me.
"If you believe that central banks can succeed in creating inflation, then you should be selling bonds, not buying them, especially when they’re yielding less than zero."
This is why I'm buying bonds...
[We are ALL Japan now...]
Meh...
The markets are up and all is perfectly fine!
Go back to sleep...
The fairy tales in this country go back to the begginning.
"Don’t believe the brainwashing that only “scholars” and formal historians are fit to comment about “history”. You don’t have to go through the archives to see what was really going on at the constitutional convention. I can see THE RESULT. And that is the gigantic federal government they claim is supported by a constitution they claim created only a “limited” government. Those two don’t fit together. So maybe it is worth a bit of time to look into what REALLY happened that summer in Philadelphia."
http://www.thetruthaboutthelaw.com/they-really-put-the-con-in-constituti...
thought it was alice who believed impossible things
The trend is your friend. And, in the last market crash, junk bonds crashed less than stocks. I believe that is one reason people buy junk bonds.
I don't know about Alice in wonderland as that story always freaked me out too much to read or deal with EVER!
But I guess we all know billionaire altruists lunatics with a death wish trumps half a brain cell anytime...
as there is nothing worse than half a brain cell to those in suicide denial!
I don't know about Alice in wonderland as that story always freaked me out too much to read or deal with EVER!
But I guess we all know billionaire altruists lunatics with a death wish trumps half a brain cell anytime...
as there is nothing worse than half a brain cell to those in suicide denial!
Which is why I am long bond yields for the taper not or whatever waiting for ZIRP in more than just tips in perhaps a market crash.....to get my yield long on.... For at least a pop.... When I look around to decide if we roll over like we r Japanese yields or heads towards hyper inflation. I dare not get caught without my golden skyrocketing yield protection even the gov cant make illegal.
Also if we do get hyperinflation ... I will keep my eye out for any signs of complete destruction of the dollar. This way I either jump out and take my gains if the entire system going down...or ride those yields up.
Jump out? LOL. Those trades will be cancelled, or the exchange will be down, or the power will be out, etc etc etc.
This is all such hogwash...none of these people seem to remember that as recently as 2010 and 2011 long-term treasury bond yields would move 10-20+ basis points in a day in response to economic data, mostly going lower. There were 3 days during the european crisis of August/September 2011 where long-term treasury yields fell more than 20 basis points in a day. That's the last thing the NY FED wants.
So we should all buy STOCKS???
May they all rot in hell.
Bet The F_kn Fallouts (SHORT SHORT SHORT!)
http://www.zerohedge.com/news/2015-04-10/“facts-do-not-cease-exist-because-they-are-ignored”
“Facts Do Not Cease To Exist Because They Are Ignored”
The ability of social pyramid systems to back up legalized lies with legalized violence automatically becomes an exponentially worse political problem. Nearer the beginning of that process, it is slower, and less significant overall. However, as that political path of enforcing frauds unfolds, those debt slavery systems generate numbers which become "debt insanity."
At least a dozen articles republished on Zero Hedge from Phoenix Capital have been pointing out that the bond numbers are NUTS!
E.g.: The article "As Bad As Things Were in 2007, They Are MUCH Worse Now" stated:
"Nowhere is the debt insanity more apparent than in the OTC derivatives market. As of June 2014, the notional value for this market was $691 TRILLION. This represents nearly 10 times global GDP. And we are talking about just derivatives here."
INDEED, "As Bad As Things Were in 2007, They Are MUCH Worse Now." However, we ain't seen nothin' yet! Only those who have not taken the time to study the magnitude of the avalanches of problems which are set to simultaneously overwhelm us can pretend that they are somehow "prepared." There are now globalized systems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs, inside of the established systems of MAD Money As Debt, backed by MAD Mutual Assured Destruction. That MADNESS is almost impossible to cope with, since everyone who is relatively successful WITHIN that systems was able to do so only by being some sort of professional liar or immaculate hypocrite, which adapted to operate INSIDE and take advantage of MADLY ENFORCED FRAUDS.
The debt controls depend upon the death controls. It is not merely that money is measurement backed by murder, but also that it MUST necessarily be, because the production of destruction controls production. The entire political economy has been built on a foundation of financial frauds, which were able to be enforced, despite those frauds getting exponentially worse, due to those debt slavery systems having an inherent structure which drove that to happen, so that we ARE now looking at debt insanities, and the ways that those are going to play through WILL result in death insanities, BECAUSE, ALL OF THE MULTIFACETED EXPONENTIAL GROWTHS HAVE "OVERSHOT" IN EVERY WAY ... However, everyone who was relatively successful through operating through those established systems, and/or having careers within the controlled opposition to those established systems, have vested interests in continuing to perceive the world in ways which are based on bullshit, which are backwards and absurd, but which WORKED as systems of organized lies operating robberies, which got away with doing that by presenting themselves as the opposite of what they were really doing.
THE PARADOXES ARE human beings and civilizations necessarily operate as entropic pumps of energy flows, but the social successfulness of social pyramid systems based on backing up lies with violence, for generation after generation, resulted in the biggest bullies' bullshit world view becoming almost totally dominant. Therefore, while everything operates as general energy systems, the concept of entropy was deliberately developed to become as backwards, and therefore, as absurd, as humanly possible.
Social systems based on successfully enforcing frauds are simultaneously maintaining attitudes of evil deliberate ignorance. The ruling classes are relatively able to: "Tell a lie often enough and it will become the truth." However, the more successful they are at doing that, then the more society becomes based on believing in bullshit, and the more that society deliberately ignores any other rational evidence or logical arguments, which would contradict the existing systems of social successes based on being able to back up lies with violence, while the contradictions and cognitive dissonances due to those processes automatically become worse, faster, since those socially successful lies NEVER become "the truth."
THE PARADOXES of the spirals of more radical truths ARE that there is nothing but the dynamic equilibria of different systems of organized lies operating robberies, in which frauds are symbolic robberies, and the currently most dominate systems which are doing that were made and maintained by the international bankers, as the supreme gangsters, the banksters. The bond holders tend to be the pyramidion people, inside of social pyramid systems, whose problems are now due to final failure from too much social success based upon enforcing frauds.
There are double whammy dilemmas there because of the ways that production is controlled by the production of destruction, however, the production of destruction is most socially successful when done through enforcing frauds, in the most deceitful and treacherous ways possible. Moreover, that must necessarily be the case, because human beings necessarily operate as entropic pumps of energy flows, which have necessarily promoted an inverted, utterly backward, conceptualization of entropy. Therefore, the most important form of human labour is when some human beings work to kill other human beings, because the production of destruction controls production in those ways.
Eventually, the astronomically amplified magnitudes of the debt insanities WILL provoke matching levels of death insanities. Meanwhile, the established systems continue to attempt to double down, again and again, on being able to continue to enforce their frauds, while facing their own double-bind paradoxes, or self-created Catch 22, that, inevitably, as Phoenix Capital wrote, "any normalization means a crisis magnitudes larger than the 2008 crash. That crisis WILL hit ..."
2007 was the last apparently "normal" year. We are never going back to that old-fashioned sense of "normal" again. As Zero Hedge has phrased it, we first went into the absurdities of the "new normal," while more recently we have developed levels of absurdities which have become "paranormal," due to everything being based on enforcing frauds, which systems are getting more rigid, and therefore actually more fragile, due to the increasing levels of the practical impossibilities of continuing to enforce bigger frauds, at an exponentially accelerating rate.
The article above, after relatively good analysis, collapsed to bullshit "solutions:"
I PRESUME that the basis for that view is that stock equities are somehow still more directly connected to the physical world, that is still there, to some degree, inside of a political economy built on ENFORCED FRAUDS, to the degree that the virtual financialized world is orders of magnitude BIGGER than the whatever may be the physical economy still buried underneath all of that ENFORCED FRAUD. These days, the physical economy, and everything that flesh and blood people do, has become a relatively trivial aspect of the virtual world of astronomically amplified "legal fictions" piled one on top of another, as a Tower of Babel of legalized lies, backed by legalized violence, in which their ouroboros of incorporated robberies, through symbolic frauds, has exceeded the physical economy, and all the flesh and blood people, by orders of magnitude!
By and large, people who pretend that they are getting "prepared" for the foreseeable future are indulging in nostalgic nonsense and romantic fantasies. Of course, I not saying do not attempt to become "prepared." What I believe is that after one fully faces the facts regarding the magnitude of the avalanche of problems, which are automatically getting worse, faster, at exponential rates, one eventually is forced to conclude that it is NOT possible to become "prepared." In my view, what it would actually take to become effectively "prepared" would be enough political transformations to cope with the development of globalized electronic frauds, backed by atomic bombs. Anything less than that is not really in the same order of magnitude as those problems actually present.
Theoretically, one would have to better understand a problem in order to perhaps be able solve it better. However, better understanding of the ways that civilization is controlled by Huge Lies, backed by Lots of Violence, for thousands of years, getting worse at an exponential rate, does NOT lead to any easy ways to resolve that situation, other than through their own MADNESS most probably driving things to go out of control, into fits of self-destructions.
Ideally, enough people would understand enough that money is measurement backed by murder. Such an understanding of money, and the markets that use that money, would then enable the human energy systems to be integrated with the industrial and natural energy systems. However, the ways that the "markets" work now is through triumphantly ENFORCED FRAUDS, which get away to the maximum degree possible with pretending and presenting themselves that they are somehow NOT ENFORCED FRAUDS, so that all of the "markets" are as rigged as the "money" supply.
The irony is that those few who do recognize the degree to which the debt controls are backed by the death controls then tend to still propose bullshit "solutions" based on the same old-fashioned false fundamental dichotomies and related impossible ideals, that the markets should NOT include fraud and murder, which the real markets actually DO, and must necessarily so. Hence, there are deeper and deeper levels, where the lies are different at every level, regarding the ways that: "Facts do not cease to exist because they are ignored." The social successfulness of backing up lies with violence enables lies to prevail, and become treated as if they were the truth, while attitudes of evil deliberate ignorance towards other rational evidence and logical arguments facilitate the developments that "Impossible Things Are Commonplace."
We ARE living inside of a Bizarro Mirror World, or Wonderland Matrix, where everything appears proportionately backward and absurd, to the degree that everything is controlled by ENFORCING FRAUDS. However, the few that go through the process of facing those central social facts (despite that doing so requires listening enough to hear the patterns despite that the "cognitive dissonance is deafening"), STILL tend to want to go back to normal, where the social situation is NOT that the government is the biggest form of organized crime controlled by the best organized gangs of criminals. However, ironically, that kind of nostalgic nonsense or romantic fantasy is what makes resolving the real problems more realistically become too politically impossible.
Most people want to continue to rely upon using DUALITIES to perceive their world. They do not want to use UNITARY MECHANISMS. However, at the same time, progress in physical science has gone through prodigious series of profound paradigm shifts, to develop better UNITARY MECHANISMS, which have transcended the old-fashioned common sense DUALITIES, in the most basic ways regarding the common sense ideas regarding time and space. For instance, progress in quantum mechanics and the special theory of reality have made the technologies that allow for globalized systems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs, inside of the established systems of MAD Money As Debt, backed by MAD Mutual Assured Destruction.
BUT, BUT, BUT, at the same time, there has been no such progress in political science, because that would require surpassing those paradigm shifts in physical sciences with matching paradigm shifts in political science. Despite that there have developed systems of electronic frauds, backed by the force of atomic bombs, that the political economy is NECESSARILY based upon ENFORCED FRAUDS is still being deliberately ignored and/or denied. Rather, there is mostly runaway MADNESS, in the form of debt insanities, headed towards provoking death insanities.
When one goes through enough of the spirals of more radical truths, it becomes clearer that money is NECESSARILY measurement backed by murder. Therefore, the only genuinely better monetary systems would require better measurements backed by better murders. Of course, that is precisely why those problems are so intractable, and so, we are defaulting towards runaway debt insanities provoking death insanities.
Theoretically, human beings could understand themselves and their civilizations in ways which were consistent with physical science, and the general laws of energy systems in their environment, as well as in the physical realities of their economic activities. However, the main obstacle to doing that would be that enough human beings would have to become willing and able to face more of the basic facts about themselves, and especially regarding the degree to which they have all been brainwashed to believe in the biggest bullies' bullshit world view, which includes that there is a core of organized crime, surrounded by controlled opposition.
When one compares, both empirically and theoretically, the real ways that human beings operate as entropic pumps of energy flows, one recognizes that it both is the case, as well as must be the case, that society operates according to the principles and methods of organized crime. However, the biggest and best organized gangs of criminals have been able to promote their kind of backward bullshit that somehow they are not doing that, while their controlled opposition groups promote matching bookends of bullshit that nobody should do that.
Only that which actually exists can actually evolve. The only things that actually exist are the dynamic equilibria of different systems of organized lies operating robberies. The established systems are becoming extremely unbalanced, due to the degree that the biggest bullies' bullshit world view has been able to become so totally dominant. Thus, the current conditions, wherein the banksters operate through privately controlled banks being allowed to make the public "money" supply out of nothing as debts, while governments enforce those frauds against everyone else, and even against those governments themselves! Inside of those MAD Money As Debt systems, too much "money" made out of nothing drives inflation, while too much of that "money" disappearing back to nothing drives deflation. Meanwhile, the MAD Hatters are attempting to get that just right. However, just the right amount of ENFORCED FRAUDS is difficult to achieve, especially since that has to be done quite obliquely, through means where those doing that will not publicly admit what they are really doing.
There are deeper radical truths regarding the superficially correct observation that: "Facts do not cease to exist because they are ignored." The FACTS about natural selection pressures have always existed, and those drove the development of human systems of artificial selection, through the paradoxical developments of murder systems whose successes were based on backing up deceits with destruction, which morphed in financial systems based on ENFORCING FRAUDS. The central facts regarding natural selection have always been that, after life exists, then death controls direct the evolution of that life. Those same central facts necessarily apply to human life.
However, the extreme paradoxes have developed that, while natural selection became internalized as human intelligence, that intelligence was primarily applied to become better at being dishonest, and backing that up with violence, in order to deal with the biggest selection pressures, which were other human beings. Hence, the history of warfare, and then, the history of political economics, which is actually a subset of warfare, but which is deliberately presented backwards, as IF economics is, or only should be, based on production, while the production of destruction should not control economic activities, despite that it does, and must necessarily do so.
The Wonderland Matrix that we are amazed by and lost within has become electronic frauds, backed by the threat of the force of atomic bombs. In my view, the only genuinely better resolutions of those kinds of problems would be to go through sufficient intellectual scientific revolutions, which would enable using more UNITARY MECHANISMS to understand the solve political problems, rather than continuing to presume upon the DUALITIES, promoted by both the biggest bully banksters, and their controlled opposition groups, based upon false fundamental dichotomies and the related impossible ideals.
I REPEAT: money is NECESSARILY based on measurement backed by murder. There are NO realistic solutions which could exist outside of that, because it is NOT possible for human beings to stop living as entropic pumps of energy flows. However, at the present time, we are obviously headed towards the established systems that back up debt controls with death controls spiraling OUT OF HUMAN CONTROL, as debt insanities, provoking death insanities. The future will emerge out of the hyper-complicated ways that the dynamic equilibria between different systems of organized lies operating robberies develop, which will be especially hyper-complicated because the most dominant organized crime gangs doing that will continue to deliberately ignore and/or deny that is what they are really doing, while their controlled opposition groups will similarly promote moralities based upon the impossible ideals that nobody should do that.