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The Central Bankers Dilemma: The Pendulum’s Back Swing
Submitted by Mark St. Cyr
The Central Bankers Dilemma: The Pendulum’s Back Swing
Today, July 5th, a referendum is to be voted on in Greece as to whether they should vote “Yes” for the austerity measures demanded by the bankers of the Euro Zone (EZ.) Or, vote “No” against such demands. Where a “no” vote will in effect all but ensure an exit from it (whether voluntarily or not.) How this vote will come down no one knows. For when a populace is scared, many times they’ll vote blindly for what they perceive in the present as the lesser of two evils, and let longer term consequences be damned.
On the other hand, when a populace is both scared and mad – what was at first thought to be implausible (i.e., against what many outsiders may perceive as in their best interest) within the confines and privacy of the voting booth. Anger, as well as a disgust for the present can over-rule. Where it’s the consequences of the moment that will be damned. Where an overwhelming affinity for the possible future suddenly reins supreme. Whether realistic or not.
It is this latter point that catches most (i.e., outsiders looking in) flat-footed. Especially those that tend to think everything is based only in numbers, models, or rationality, and it’s ultimately controllable. This form of thinking implies: If you control the numbers, and can interpret the models – you can control the rationale, as well as an outcome.
Not only is line of thinking rampant throughout academia. It is followed with a near religious zeal. However, there’s the inherent problem: Yes you can – till you can’t. And that’s where the most critical issue fails within Ivory Tower thinking. For they don’t ever contemplate, or anticipate the “till you can’t” part. For them it shouldn’t exist. Therefore – it mustn’t.
Yet, anyone with just a modicum of business acumen knows all too well: More often than not what you’re convinced won’t happen; is exactly what will. Usually – at the most inopportune of times.
Here is where we find many of the Central Bankers today. Suddenly their implied omnipotence is being turned on its head from “omnipotent” to “oppressive.” From “rescuer” of an economy to “destroyer.” And the distaste as well as grumblings against this Central authority is growing. Why? As I stated before: Central Banks are now perceived as “the body politic.” No-matter how much they rail against the inclusion. And the vitriol (as well as the impending implications) are just getting started in my opinion.
Over the last week the IMF dropped what was for all intents and purposes a bombshell of a revelation. It stated (I’m paraphrasing) that Greece was indeed in need of a debt reduction (i.e., write-offs) just as much as it was in need of restructuring of those said debts. Otherwise, it would all be for naught because Greece would never be able to surmount them.
This singular point has been at the heart of all Greece’s arguments. However, what has been argued back to Greece by the Troika has been nothing less than “Tough – deal with it. That’s your problem – not ours.” Well, it seems that’s not so much the case anymore. Regardless of which way the vote goes, it is the Troika itself that may find the problems are just beginning. And those problems are theirs.
In a previous post I drew an analogy from the Iron Man 2 movie. The premise was: If one can make the gods bleed, no matter how small, people will not only will lose faith, but will turn on them. It seems Greece did in fact strike the first in what might be a mortal blow. Not so much with the degree of the initial cut, but with the ever-growing infectious nature to follow. Even if Greece votes “yes” this Sunday – the damage has already been done to the EZ as well as the central banks within. While quite possibly to Central Banks everywhere.
The revelation that the IMF concurred in secret with what Greece was proclaiming all along; while demanding the opposite; siding with the more austerity demands by their fellow members; as not only the people suffered but as the politicians themselves (i.e., ridiculed or voted out) will not be lost on Italy, Spain, Portugal, ____________ (fill in the blank.)
Yet, as damaging as it is to have one of the three parts (e.g., Troika) acknowledging what Greece has been insisting was needed all along via a leaked document. To now have it leaked that all three were of the same conclusion yet: wouldn’t budge or acknowledge it? This is quite another, and will be used by any and all as an excuse (whether rightly or wrongly) to demand new terms. Or worse, like Greece – just refuse to pay until the bargaining table is reopened.
Suddenly it’s not the borrowers that have a problem. Rather; it’s the other way around. And it’s only been days since these revelations. Yet, there’s now “blood” in this ever-growing pool. And that’s a problem no “bazooka” or “printing press” may be able to overcome. However, this is just Europe…
In China the financial markets are tumbling faster than any other time in history since 2007. What many forget (and what the main stream financial media will not speak of) is that right before the financial crisis took hold here in the U.S., It was none other than China’s Shanghai Composite Index that was the harbinger of what lay ahead as it tumbled from that meteoric rise in ’07 to within a year – it would go on to lose some two-thirds of its value.
Right before the crash the Chinese markets were assumed “unstoppable” (sound familiar?) as they went parabolic to near vertical assent when viewed on a chart. Then: they fell in spectacular fashion entering “bear market” statistical valuations in mere weeks (i.e., losing 20%.) This had never been seen since. That is – until now.
Suddenly there are reports of extraordinary measures being allocated behind the scenes by China’s central banking authorities. The problem? So far, by all accounts – it ain’t working. The index continues to fall. Many of the components (I would like to say businesses however, there are far too many reports these “businesses” are in name only) that make up these composites are opening up daily to “limit down” selling pressures with no relief in sight.
So much so it has been reported the only way for this rout to be reeled in is for the PBoC to directly “buy the market” in one form or another. Yet, the rout is so wide-spread, and so fierce (imagine 10’s of millions of first time traders all heading for the one and only exit door – all at the same time) that it is being openly questioned if the PBoC itself has the monetary firepower to overcome it. And just for perspective, China’s market isn’t some backwards market in size or scope those in the “general public” might think of when they first hear. For those not familiar: China’s market is number 2 in the world, right behind the U.S. And last time such a thing happened the contagion effects were here seemingly overnight – and the great financial meltdown of the U.S. markets were upon us.
Is “this time it’s different?” Who knows, but one thing is for sure: The general public today is still enamored with the main stream media’s push that what ever “bad” happens in the world or markets: “The Fed. has their back,” or “The ECB” or “China’s growth will solve our malaise” or ______________(fill in the blank.)
Today one thing is more certain than any other time before. With the Federal Reserve’s unwillingness to allow the markets to stand on their own feet, and not be so dependent on their interventionism with QE for years, and Zero interest rates for the same – the tool box may in fact be empty – at the most inopportune time.
So here we are, once again, waiting or watching for what could possibly be the start of another contagion effect to ripple through the markets that has the potential of resembling 2008, or worse. And the only thing to stand in its way will be the faith and/or belief in their omnipotence. For it seems – that’s all they have left. All while we watch the same crumble in the eyes of others across the waters as their Central Banks are being perceived daily more as villains or worse – inept.
I’ve stated many times in what I’ve coined “the pendulum rule.” It’s not the first swing that can ruin you. It’s when you get up thinking you’ve dodged a one time fatal blow and act as if it can’t happen again. You don’t prepare. You don’t harden your resources. You act as if it were a one time only thing. And just when you’re at your most vulnerable – the back swing is what takes you out.
It would seem the pendulum is indeed still swinging. What transpires from here once again – is anyone’s guess.
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"Yes you can until you can't."
Has a nice ring to it. Listen up America, no one has your back.
I dont know, I'm thinking Amerika's going to get it in the back.
I have coined don't be so self important!
After reading your "article",WTF are you talking about????
"Fuck your debt I ain't payin'!"
seems to me...
<<So here we are, once again, waiting or watching for what could possibly be the start of another contagion effect to ripple through the markets that has the potential of resembling 2008, or worse. And the only thing to stand in its way will be the faith and/or belief in their omnipotence. For it seems – that’s all they have left. All while we watch the same crumble in the eyes of others across the waters as their Central Banks are being perceived daily more as villains or worse – inept. I’ve stated many times in what I’ve coined “the pendulum rule.” It’s not the first swing that can ruin you. It’s when you get up thinking you’ve dodged a one time fatal blow and act as if it can’t happen again. You don’t prepare. You don’t harden your resources. You act as if it were a one time only thing. And just when you’re at your most vulnerable – the back swing is what takes you out.>>
Fantastic synopsis. This is why "prepping" is such a fast-growing phenomenon. The status-quo clingers are becoming nervous. The hard part is having to prep for inflation and deflation at the same time, for war and disease together, for the highest of technology (job-replacing automation, space-age cybertech and its related wars) and the most primitive of agricultural subsistence lifestyle, all at the same time. Totalitarian governments trying to control more and more, as they increasingly lose credibility with their subject populations. Laws for everything, and lawlessness everywhere, especially at the highest levels. Extreme unpredictability means that you have to be prepared for anything, which is impossible.
Times are unpredictable, and much more so than they've been for the last 100 years. Our extremely controlled economy is reaping a harvest of anarchy. Economy - geopolitics - even the environment - nothing can be relied on anymore.
Out of order, disorder. Mettle is the only thing left to us.
This is all the fault of those evil, Austrian economists and their evil reality......
LoL. Reminds me of a discussion I had with an Economist many years ago regarding von Mises' book "Human Action". His contention was it couldn't possibly be a book about economics since it didn't have any charts and graphs...
None of this is a surprise to those who actually own these banks and run the entire scam. They know there are cycles of collapse. They are built into the brew so to speak. The only real question each time is what is their next plan? More nat'l currencies? intro an IMF/BIS SDR style option, or just let is crash for a while. We can never know because they speciailze in lying. Disinformation is their game. Keep everyone guessing. The only thing you can know is that they are lying. But since they put out countless lies on all sides in what they call Non-linear disinformation, we can only sit and guess. http://www.thetruthaboutthelaw.com/non-linear-disinformation-makes-it-im...
ONLY BITCOIN ACCEPTED!
MOVE ALONG PUNY HUMAN!
Yeah baby !!!
What goes up will eventually come down. The hubris of central banks has led them to beleve that the economies of the world can have endless debt at zero interest forever. Greece is a microcosim of a situation that will soon expend to the rest of the world. Learn to garden. Learn to shoot. Learn how to survive in the new world order.
In the new world disorder.
Expect delegations from Russia and China, any minute now.
champagne all around...compliments of the mighty euro
"Angry Teller Machines"...the new ATM's would appear....
The only beef I have with the Greeks in this case is they want it both ways. The pensioners have top be jettisoned for Greece to recover. Without pensions being DRASTICALLY cut back the Greek economy can never function. They need some outside the box thinking. The pensioners are going to lose the vast majority of future payments under any current scenario, why not make it up by fully nationalizing the assets that the Troika wanted them to privatize and redirecting all revenue from those assets as well as mortgage and bond debt held by Greek banks into a fund that outlays to pensions? I would think that along with the Russian gas deal would reduce the haircuts needed.
We don't seem to be seeing any type of solution seeking from the Greeks that doesn't continue to rely on full pension solvency in Euros. How is that in anyway realistic??? I'm on their side vis-a-vis the Troika, but they really need to grow up, nut up, and realize the recovery to a solvent and more vibrant Greece will take sacrifice and work.
"All while we watch the same crumble in the eyes of others across the waters as their Central Banks are being perceived daily more as villains or worse – inept."
No. Not inept. Villains and worse, yes, far worse than the witting illusion of ineptness, ignorance, etc. Until one grasps "money from nothing, chicks for distraction" -- HELLO! Caitlyn!! -- little will change.
Nothing a weekend at Bohemian Grove pissing in the long grass won't resolve.
Looks like Greece 'oxi'-cleaned the Euro clock!
"The Central Bankers Dilemma: The Pendulum’s Back Swing"
Bernankie couldn't prevent deflation from happening here. The pendulum does swing in both directions and a cycle does have two phases, one of which is down.
Janet can fix it all. Money printing is digital now, so, she can bail out Greece and China, if need be. How many zeroes in a quadrillion?
The IMF disclosure and subsequent wiki leaks disclosures of Merkel knew the debt couldn't NEVER be paid - and negotiated in bad faith is - actionable and therefore will be punitive damages in World Court in the hundreds of billions for pain and suffering needlessly
If the USA can say - via Victoria Nuland -- "Fuck the EU"......so can the Greeks!!!!!!
Greece is not responding correctly. Central Banks and IMF meet back at their lab to discuss what Greece did wrong.
"In a previous post I drew an analogy from the Iron Man 2 movie. The premise was: If one can make the gods bleed, no matter how small, people will not only will lose faith, but will turn on them."
For the Greeks as well as for the rest of the Western world population, it was not so much a matter of "making the gods bleed" as of knowing the enemy. How many people know the neoliberal banking system is the cause of the ever-expanding debt that crushes whole countries?
Because of the negociations they've been following for five months, today the Greeks know what they're up against, something subhuman, not amenable to reason, logic or basic decency, an overbloated fascistic monstrosity.
It's much easier to fight when you know precisely who, or what, is attacking you. And when you know that what you have in front is merciless and even sadistic, you have no mercy either.
The EU is basically finished.
One need not guess what will manifest for the Central Bankers given that we have evidenced 29 successive business quarters of contraction with no let up in terms of the trend towards Ponzi Hell & Purgatory for the Central Banksters of the World. A zero sum game is playing out for the World and the Central Banksters will not be on the winning side of the equation I assure you all.
Our reality is problematic