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Bubble, Bubble, Toil, & Trouble: When Authorities Buy Assets To Prop Up Markets
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The Central Planners who thought that buying shares to prop up the stock bubble was an excellent fix are about to find out the true meaning of toil and trouble.
The actual line from Shakespeare's Macbeth is double, double, toil and trouble, fire burn, and cauldron bubble but for the purposes of analyzing what happens when authorities prop up market bubbles by directly buying assets, bubble, bubble, toil and trouble is also appropriate.
China's authorities seem to have chanted Shakespeare's magical incantation nonstop this year, as the Shenzhen and other Chinese stock market indices have more than doubled. This chart illustrates what the Chinese authorities were aiming for: a bubble that just keeps expanding and never pops:
But what actually happened was predictable: China's stock bubble burst. In response, Chinese authorities threw everything within reach into the market to stem the decline: criminalizing negative comments about stocks, loosening credit, enabling greater fools to post their homes as collateral for margin accounts, and the last and chillingly irreversible tool in the Central Planning Bubble Inflation Tool Kit, direct purchases of stocks: China Spends 10% Of GDP On "All Bark, No Bite" Stock Bailout:
In gambling parlance, Chinese authorities doubled-down on their bet (there's your double, double) that they could save their bubble, bubble.
The problem is that double, double leads to bubble, bubble which leads to double trouble, because once you start down the path of buying assets to prop up bubbly markets, there is no exit.
As Sartre noted in No Exit, Hell is other people, which in the case of China's imploding stock bubble includes all the banana vendors who are now itching to sell Centrally Planned rallies to get their borrowed money off the table before the ball drops into a slot on the roulette wheel and they lose everything.
Having accepted the poisoned chalice of buyer of last resort, Central Planners have no choice but to buy every share sold by every banana vendor who wants out.
In other markets, the sellers might be hedge funds, private equity funds, pension funds or insurance companies. But the dynamic of private sellers realizing it's time to get out while the getting's good is the same in all post-bubble markets.
That leaves Central Planners in a world of toil and trouble that is much like a financial Roach Motel--you can go in but you can't get out. The Central Planning fantasy is that after buying a huge chunk of the market to stabilize the bubble, private buyers will rush back in, allowing Central Planners to distribute (sell) their shares to the credulous banana vendors, pension funds, towns in Norway still sitting on the mortgage-backed securities they bought in the previous bubble, etc.
This fantasy overlooks human psychology. A bubble is not just financial; it is a bubble of euphoria, confidence and greed. Once that bubble pops and is replaced by caution and fear, people want out--not just fickle banana vendors but professional asset managers.
Central Planners have taken on an impossible task once they become the buyer of last resort: they have to keep buying to prop up valuations, but the pool of greater fools willing to take the inflated shares off the central planners is shrinking.
The Central Planners can keep the market cauldron bubbling by buying assets hand over fist, but once they lower the fire of their buying, the bubbling stops and the market crashes.
The Central Planners who thought that buying shares to prop up the stock bubble was an excellent fix are about to find out the true meaning of toil and trouble. Double, double, bubble, bubble, double trouble. The magical incantation isn't about saving markets, it's about destroying them.
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I received this from the Lord Monday morning, 7-13-15
"Thus saith the Lord, the only God: My Word has been spoken and it has been here for many generations to see; it has been here for many generations to hear by the preaching of the Gospel of Jesus Christ. It has been sent mightily through this nation and out to many other nations of the earth, but it has been rejected. As Israel of old turned their backs on Me and judgment came upon them, so you have turned your backs on Me and I have turned My back on you. As you cry out in reveling of your sins, relishing them and flaunting them, so you will cry out in your pain and suffering that shall very shortly come suddenly and swiftly upon you. As you have given your children to the lust of this world so you shall lose your children before your eyes. What was once precious in your sight you have selfishly let go.
My Word has gone forth and it has been ignored by multitudes, including most of My church. My words of warning that have resounded for several decades now have vastly gone unheeded and now it is time to reap the whirlwind of My just judgments. Your weeping and howling and gnashing of teeth that shall so very, very shortly fall upon you will leave you in utter shock and disbelief that this has happened to you here in America. I will come for My people, but you will have to endure until I do come. The sins of this nation reach unto heaven as did the sins of Sodom & Gomorrah and Nineveh; so it is ripe unto judgment and you must be purged. The dross must be taken out of the silver. The fields must be cleansed.
Look to Me now, for it is too late for some of you to begin; your life will be lost, but your soul shall be saved. You cannot begin training for a battle as you march into it, but must made ready before that time is at hand. Take no delay, take no more time to waste, but seek Me diligently and swiftly in My Word, according to My Word, always seeking Jesus and always pointing to Jesus. Nothing that shall be done by any man that is of Me will point anywhere else but to Jesus and My Word all according to My Word. If it does not move, speak and breathe in accordance to My Written Word, reject it and leave it alone; get far away from it. Try the spirits whether they are of Me; you shall try them by My Written Word.
The pangs of judgment are now come upon you. The fires of My jealousy for My espoused will burn across this once great land. The land will tremble and shake, the rivers will overflow and it will be torn asunder. Unheard of violence will spread like an uncontrollable cancer, eating at the very heart of men. Oh, the sorrows of suffering that will be upon you, that you shall shortly see, that you never thought you would see! Look at what happenend to Jersusalem, to Shiloh, to Israel; and you, America, have far gone beyond what they have because of the Light that was shined in you and given to you. Now youwill reap what you have sown. You have sown to the flesh in choosing to indulge in you lusts, and now you will reap what you have sown as I have lifted My hand of protection and My hedge about you is now gone and only around My true, chosen children. Repent, every one of you that have not. Come to Me now before your last heartbeat, for that is all you have. Time is short and no one is promised a tomorrow; come to Me, Jesus Christ, now, before it is too late, for your own individual soul. Stand on My Word. Thus saith the Lord of hosts
Read the Obama Antichrist prophecies at http://revelation12.ca
Here is another from yesterday....
Oh America, America, the nation once so bright for My Name, you have sealed your fate with your wicked ways, and the days left for you are numbered.
Then horrors shall fill your streets. The dead will outnumber the living, and the sounds of war will fill the ears of your people. As you have trampled over others, so shall your enemies now trample over you.
Your people shall rummage for food, where once it was abundant. They will thirst for pure water, because they have rejected Me, the living water. They shall cry for mercy but find none, as they have shown none to My people.
Prepare to meet your fate, America.You have been weighed, and found wanting. Your reign of power has come to its end.
Here is one for you this afternoon . . .
Fuck off. Go find another forum to post this shit on. This is Fight Club here. We talk about economics and compete for the title of "most outrageously vulgar, sexist, and racist contributer."
The closer a thread gets to the heart of darkness that is the Fed (e.g. market manipulation, gold) the quicker the discussion derailment trolls come out.
Which trolls? The pro-american cunts? The KKK/neo-nazi pieces of shit? The jihadist twats? Russian neo-patriots?
I assume anyone that talks about Israeli control of the media, gov, banks et al... is a neo nazi kkk troll in your eyes?
PS - 9/11 was a Mossad/CIA job
https://www.youtube.com/watch?v=SDqNLrOd_SY
Eat shit and die you muslim cunt!
Not a problem as long as the Gov does not sell the shares it bought.
/s
Agreed - they will buy and buy and in the end if they own everything , well then they own everything.
If at that time you want in , ... well here's the price... whether you buy or not is irrelevant
Who exactly is going to stop them when they can print until eternity?
The Chicoms start by owning everything and they end up owning everything. Whether by a gun or the printing press, theft is mighty profitable.
https://www.youtube.com/watch?v=7tbobaz8nn4
You are getting alot of down hits, but I support your thoughts..Lets keep each other in prayer. It is difficult for me to see why someone would go out of their way to give you a down. If they dont believe there is an entity that created the earth, then that is their right. But nobody knows for sure, and there is a good chance you are correct.
THanks for the post, I felt your words in my spirit...God Bless.
Fuck off already! This is Fight Club, not 700 Club! Show some Goddam respect! Nobody signed in here to read this crap on a Saturday afternoon. We're here to drink, scratch our balls, and read hilariously vulgar and outrageously politically incorrect comments.
Get thee to a fucking nunnery!
Actually we are sharing our beliefs and how they effect the economy.. Because of my beliefs I have done quite well financially and totally ready for the fall global economic collapse. Our beliefs and how they effect the economy have been proven valid theories for centuries. We think Keynes is wrong and the Austrian theory is probably more prudent. We dont believe in usury. In fact, I know of someone who did more than anyone who posts here that existed 2000 years ago...He turned over the money changers tables and whipped them, and ended up being killed for it. Go Jesus!
Our beliefs and opinions are not only a valid theory in regards to our economic state of being, but they are very relevent to this website and the articles that it brings...
p.s. I dislike the 700 club. THey are a corporate religious organization and are as bad as washington D.C. and Langley.
Jesus was a jew bankster. Fuck him too!
He was murdered by the "jew bankster". He was a carpenter who kicked over the money changers tables in the temple and told them to cut that shit out. You are an uneducated idiot.
‘‘Faith.....Belief without evidence in what is told by one who speaks without knowledge, of things without parallel.’’
— Ambrose Bierce
PRAY, v. To ask that the laws of the universe be annulled in behalf of a single petitioner confessedly unworthy.
---Ambrose Bierce
I dont pray to ask for the laws of the universe to be annuled, I do quite the opposite. The Lords prayer says "let thy will be done". What I do pray for is wisdom and guidance, something that is freely given to anyone who asks and he gives it without reproach....Look up the difinition of reproach. But yes on the unworthy part, I am.
The laws of the universe...you mean, like gravity? Which, in all human history the great scientists of the world still cannot explain? You have faith that gravity is true, because you can observe it, but you cannot explain it. Why so different to believe in a God whose work is so readily observed even if He cannot be explained?
We have a secular school system that teaches evolution, a theory so infeasible, so debunked by readily-available information, that to perpetuate it is an act of willful denial. Yet, the masses have faith in that theory (presumably because it comforts them that there is no accountability to a creator if it is true).
There is no evidence against the existence of God; there is only disbelief and the will of those who wish that He does not exist.
God seems to forget Ontology, Quantum Mechanics, Quantum Physics, and his own words in the Bible. Methinks, you ain't reading the Bible, Tribulation Blues.
I havnt posted much lately because it seems all the news is just the same shyte, different day. But I wanted to say this one more time, because through my studies and even meditation, I truly believe the following is true: Whether a person believes in the bible is irrelevant, because through out thousands of years in history, there has been one main stream of thought. There was some type of fallen angel, or whatever, and the fight between good and evil arrived. Currently, a very powerful entity (group of people), control most of the planet. They are not wise, but they are clever, they cannot create but they can manipulte the creation. I think David Icke hits it on the head, that they are alien reptiles or something. Point being, there are no markets, no graphs, no nothing of any reality. The price of gold will be where they want it to be. The stocks will be where they want them to be. They are neither stupid, or incompetent. They were smart enough to take over most of the worlds financial system...What do you think the likes of the Rothchilds have been doing the last 500 years? They have been taking over the world, especially the financial system. Trying to guess what they are going to do? You have to get into their evil minds, not history graphs, etc. I also believe they have a planned global financial super crisis coming this fall. For those that think gold will go up because of it? You would think huh? Well, it will go wherever "they" want it to go. THey could make it illegal even. etc. Everything you see going on, they all planned it starting a centruy or more ago. Yes, they run into difficulties because humanity can kick them pretty hard sometimes (think Thomas Jefferson) But they just figure out another way. They are patient, they will just give the job to their desendents.
Anyway, I could write a novel,and almost did, but I hope you get the point. There is no reality, its all a matrix, and for all of those who dont realize it are simply part of the matrix and non-reality.
Thanks for reading, I wish I could have done a better job explaining.
Allow me to simplify;
1) Real capital and talent always go where they are respected.
2) that which cannot be sustained, won't be.
Your post is very american-centric and demographically speaking, americans are not that significant, their behavior is, for now...
same as it ever was...
Allow me to simplify: he is just another gold pusher. If you haven't noticed it's been tough for the gold money-changers the last few years. Pretty tough to buy new stock for your little store when prices are falling. Thus the "you just can't find physical" bullshit argument. No shit - easy to stock and sell a product when prices go up. Quite the opposite when they start going down.
3) what goes up must come down
4) an object in motion tends to stay in motion
5) shit, i think 3) might be wrong now
Butt sex, the same as it ever was...
You are not taking into account the rest of the world, the non-Western, larger population, larger land mass, larger resources, non-dollar financials, etc.
It's the endless battle of immediate vs everlasting satisfaction. Immediate satisfactions feed the cravings of the ego while everlasting satisfaction amplifies the soul.
There are few true protectors of the spirit but many shepherds. By design, one must always save themselves. No ego means no protection only guidance. What David Icke speaks of is very true but those entities have only control of the environment (they are not the creators of spirit itself, but for our reality in this time vortex they have created this particular recipe of fleshly existence on our earthly sandbox and thus given the human spirit a place to play out the theater of humanity)
Jesus, et all, were a spirit unbound by cravings of the flesh and thus an example of a 'freed spirit' functioning solely with the enduring creative energy of soul which many call god.
So what to make of it? We (our souls) are here to experience each other's projections (egos) in this reality. If you don't have control of yourself & also the will to project and protect your own ego, others will eventually control you unless you free yourself completely from all cravings of the flesh as many scriptures preach for enlightenment.
thus, 'life abhors a vacuum' explains 'why' we are 'here'
'it's a dog eat dog world' explains the battles amongst our competing egos
and a million love songs to remind you that love is true but shall always be in a struggle vs our cravings
and what does this all mean for this thread on the markets?? well, if you can control the cravings of enough people, you control their egos thus you control their realities, and so you get to control the markets they believe in and anything else you care to control in their lives. Groupthink shall be their chains.
go long hippie communes...berry baskets...sandals
http://all-that-is-interesting.com/hippie-communes
It's clever to fool others about your abilities. It's self-destructive to fool yourself about your abilities.
Great comment reaper....and the money changers who are trying to control the world, are self destructing....Many ask me, why does God let this continue. My answer is, if God were to take them out, he would be a dictator, same as the evil. So, God waits as evil burns itself out. One day, and that day may be soon, they will burn themselves out because, as you said, it is self destructive to fool your self about your abilities. But they are going to take everyone they can with them, thus, TB's comments on what is in the not so distant future.
You might have thought that in 2008 someone would have realised that bankers and economists are totally clueless.
clueless? they got you to pay for their mistakes. genius is the word you were looking for.
Not a problem as long as the Gov does not sell the shares it bought.
/s
Hold till maturity?
oh Yeah! Exactly the thinking of the FED when they bought all those Treasury issues (QEs) and all of the under water Fanny and Freddie notes. They destroyed both the markets and the asset values too. They know they don't dare try to sell. They know that mark to market is just waiting to show them the truth.
Boom and bust is all a part of the game.
"Federal Reserve officials meeting Tuesday and Wednesday are virtually certain to end their latest bond-buying program, but they won’t be retiring the policy for good.
Their recent comments show bond purchases are now an established part of the Fed’s policy tool kit that they could employ again in times of deep economic trouble..."
From:
http://www.wsj.com/articles/fed-set-to-end-qe3-but-not-the-qe-concept-14...
Counterfeit, crash, repeat!
Animals - Don't let me be Misunderstoodhttp://www.youtube.com/watch?v=mfwN0X8YnWo
What part of global Weimar don't people understand? This type of behavior/governance/managment has been going on all over the world.
As long as wages don't rise, they can print all they want, but people can't afford $100/gal gasoline and $500/lb chicken or $50 million houses. It will just be cycles of high inflation followed by deflationary crashes. Japan is the model.
But if I could sell my house for the price of 100,000 lbs of chicken, I suppose I would be in a decent situation given I paid only the price 58,000 lbs of chicken for it.
The zero interest rate, which forces everyone into the rigged market is the key.
China is trying the same scam having observed how well it's worked here.
-dup-
let the central powers keep digging a deeper hole
It now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy. QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system.
Everyone paying attention knows that the size of the derivatives market is about 20 times larger than the global economy. About 95% of the $230 trillion in US derivative exposure is held by four US financial institutions, the article below looks into how this could collapse the economic system.
http://brucewilds.blogspot.com/2014/03/derivatives-house-of-cards.html
The central banks and central bankers of earth are well aware of the size and implications of the global derivatives market. Tell me, what would prevent them from coming to some agreement that "forgives" or negates all this bullshit paper? Their debt dissappears, yours does not.
Either way we all know that the peasants of the earth are screwed.
As long as the risk is spread relatively evenly amongst the players and no one gets to greedy, everyone can lob off a few zeros and the game can continue.
there is no market there is only the boj, fed, boc, ecb, et al.
http://www.shtfplan.com/headline-news/top-economic-forecaster-warns-have...
Correct! the whole system is a Ponzi-Game without any market!
When there is no more price discovery, the market is no longer a vehicle for raising capital or creating value. It becomes just another instrument of oppressive government policy.
ZH had a great article yesterday from Salient Partners ( http://www.zerohedge.com/news/2015-07-24/casino-fication-markets-pervasi... ) about how public perceptions and beliefs get re-shaped over time. That process is under way right now in the way we think of "markets."
How well did it work out for North Korea or the Soviet Union when they owned everything?
How well did the HUD housing work out?
Whenever the government takes over it usually ends in a disaster.
Yet the majority of sheeple keep clamoring for government to take over and it ends in disaster for the sheeple.
Tens of thousands more layoffs and firings coming from the buyout of health insurer, CIGNA, by Anthem. formerly Wellpoint and now a Blue Cross Blue Shield company. There go more casualties of Obamacare, as big Health insurers shrink from 5 to 3, and then there was one.
At least a hundred thousand newly unemployed careerists, laborers, administrators, and others due to ripple effects in the HQ of CIGNA to hit the streets looking for similar jobs.
Good luck with that.
Hero status will be awarded any politician that takes Blue Cross/Blue Shield out back to the woodshed and forces it to disgorge its companies.
Corporatocracy is killing the middle classes, week by week.
There is no such thing as authority. There is only violence.
"Lady MacBeth, rock me mamma; like my back ain't got no bone."
And QE4 coming next year. The Fed wants ever-increasing bubbles. The last bubble will be the most destructive.
Thunder and lightning.
Enter three central bankers
(Yellen, Carney, Kuroda):
When shall we three meet again
In thunder, lightning, or in Spain?
When the hurlyburly’s done,
When the rally’s lost and won.
…
Thrice the triple top hath peak’d.
Thrice and once the hedge-fund whined.
Carney cries: ‘Tis time, ’tis time.
Round about the cauldron go;
In the poison’d mortgage throw.
Tranche, that under CDO,
Slice and dice had thirty o’.
Shorted option margin got,
Put thou first i’ the charm-ed pot.
Double bubble, toil or trouble,
Money print and assets bubble.
Remnant of a Fannie Mae,
In the cauldron boil away;
Eye of bull and toe of bear,
Oversight or blind man’s stare,
Freddie Mac and Greenspan’s Put,
Bailed-out banks, the bill to foot,
For a charm of powerful trouble,
Like a hell-broth, inflate a bubble.
Double bubble, toil or trouble,
Money print and assets bubble.
Cool it with a saver’s blood,
Then the charm is firm and good.
O well done! I commend your pains;
But only we shall share the gains;
And now about the cauldron sing,
Live Gnomes of Zurich in a ring,
Enchanting all that you put in.
By the easing of my sums,
Something wicked this way comes ...
Try and explain this to your average passive investor . . . they'll smile and say 'so what', 'it's no big deal', 'the government should support the markets'. I've stopped pounding the table at this outrage, the passive investor has made some really good returns . . . I have not, I can't put money ina fraud and there's nothing left that isn't a fraud. Cash is king until you're forced to spend it.
This is the most poetic thing I've seen from CHS. Wonderful writing. Fire