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Central Banks Ready To Panic - Again
Submitted by John Rubino via DollarCollapse.com,
Less than a decade after a housing/derivatives bubble nearly wiped out the global financial system, a new and much bigger commodities/derivatives bubble is threatening to finish the job. Raw materials are tanking as capital pours out of the most heavily-impacted countries and into anything that looks like a reasonable hiding place. So the dollar is up, Swiss and German bond yields are negative, and fine art is through the roof.
Now emerging-market turmoil is spreading to the developed world and the conventional wisdom is shifting from a future of gradual interest rate normalization amid a return to steady growth, to zero or negative rates as far as the eye can see. Here’s a representative take from Bloomberg:
The Fed’s Countdown
Take New Zealand and Australia. Yesterday, the Reserve Bank of New Zealand slashed borrowing costs for the second time in six weeks even as housing prices continue to skyrocket. A day earlier, its counterpart across the Tasman Sea (already wrestling with an even bigger property bubble of its own) said a third cut this year is “on the table.”
Just one year ago, it seemed unthinkable that officials in Wellington and Sydney, more typically known for their hawkishness and stubborn independence, would join the global race toward zero. But with commodity prices sliding, China slowing and governments reluctant to adopt bold reforms, jittery markets are demanding ever-bigger gestures from central banks. Even those presiding over stable growth feel the need to placate hedge funds, lest asset markets falter. When this dynamic overtakes countries such as New Zealand (growing 2.6 percent) and Australia (2.3 percent), it’s hard not to conclude that ultralow rates will be the global norm for a long, long time.
Indeed, the major monetary powers that are easing — Europe, Japan, Australia and New Zealand — have all suggested rates may stay low almost indefinitely. Those angling to return to normalcy, meanwhile — the Federal Reserve and Bank of England — are pledging to move very slowly. Even nations with rising inflation problems, like India, are hinting at more stimulus.
“As interest rates continue to fall across most of the globe, central banks are also united in their main message: Once rates have come down, they’re likely to stay down,” says Simon Grose-Hodge of LGT Bank. “And when they finally do tighten, the ‘normal’ rate is going to be a lot lower than it used to be.”
Could the People’s Bank of China be next? “With underlying GDP growth still looking weak, more monetary policy moves are likely,” says Adam Slater of Oxford Economics. “And China may even face the prospect of short-term rates dropping towards the zero lower bound.”
This is not how the Fed, ECB or Bank of Japan envisioned the year playing out. They see ultra-low rates as an emergency measure, temporary in nature and to be dispensed with asap. From MarketWatch:
Here’s the real reason the Fed wants to raise rates
Federal Reserve policy makers are hoping, even praying, that no unexpected domestic development or international crisis intervenes to prevent them from taking the first baby step to normalize interest rates at the Sept.16-17 meeting.
Why? Fed officials point to a number of reasons: the unnatural state of a near-zero benchmark rate; the potential risk of financial instability; an improving labor market; diminishing headwinds; and yes, expectations of 3% growth just over the horizon.
Fed Chairman Janet Yellen, usually considered a member of the Fed’s dovish faction, sounded determined to act when she testified to Congress last week.
“We are close to where we want to be, and we now think that the economy cannot only tolerate but needs higher interest rates,” Yellen said during the Q&A. “Needs,” as in the patient needs his medicine.
What’s the urgency with an economy chugging along at 2-something percent and low inflation? I suspect Fed officials are terrified of being caught with their pants down, in a manner of speaking. Should some unforeseen event come along to upend the economy, the Fed’s arsenal would be dry. They’d like to put some space between their policy rate and zero.
That “unforeseen event” has arrived, leaving most central banks with a stark choice:
- Let the deflationary crash run its course at the risk of blowing up the quadrillion or so dollars of interest rate, credit, and currency derivatives hidden on bank and hedge fund balance sheets.
- Or push interest rates into negative territory pretty much across the developed world.
Since option number one carries a statistically-significant chance of ending the modern financial era it is absolutely unacceptable to Goldman et al, and is thus a non-starter. Which leaves only option two: more of the same but bigger and badder.
So…the central banks will panic. Again. Countries that retain some control over their monetary systems will see their interest rates fall to zero and beyond, while those that don’t will be thrown into some kind of new age hyperinflationary depression. Not 2008 all over again; this is something much stranger.
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It's time to prepare now! If you haven't begun, you better get to it.
Maybe this time the wealthy might sweat a little.
"Cheap money is here to stay" but you can only get it if you don't really need it.
How long did it ake for the sky to fall from above Chicken Little?
The sky is still falling and the pieces are getting much bigger. Many think ZH'ers are crying wolf, but remember how that story ended. The wolf did come and all the doubting chickens got ate and the us chicken littles who prepared with gold and silver and took cover survived and took Humpty Dumpy's place on the wall.
People who serve the interests of the puppetmasters will get 0% or even negative interest loans, which might as well be gifts in this environment. For everyone else, there are bail-ins, negative interest savings accounts, and 18% MasterCard.
And millions of fat-ass idiot sheeple who sit on the couch and say nothing about it. Even elderly Japanese got off the couch long enough to protest the death of their Constitution. In 'Murka people are voting with their behinds every day for debt, slavery, and war. But...Brawndo's got electrolytes.
Brawndo makes everythign better, until the crops fail.
Then we need Joe.
nothing gonna happen in 2015, every psycho mongerers doomsdaypreppers and firesteel vendors gonna look at their feets,
gumbling pathetic excuses about calendar misinterpretation, and once fucking more time they gonna say it was not for this year but the next one...
you not sicked of been in tape delay mode since you are borned ?
"I love cheap money, I mean I’ve always loved it,” - Donald Trump
End The Fed!
They're developing the killing robots as fast as they can. No guilt or PTSD to deal with when you don't have a human being getting their hands dirty.,,
Okay, I just made a sandwich.
A bit late to prepare. You should have done that about 20 years ago if you had any modicum of Wall readiing ability.
What I said....
1987... 'Blood in the Streets"
Prepare!?! I can't afford to prepare!!
Somehow I do not believe there is no way you cannot add to your preps in some small way each and every day.
Yes. Like I tell people I know - there is great advantage to be had if you play your cards right. This is a great opportunity!
Imagine being the only person on your block who has real, intrinsic wealth in the form of beans, bullets, band-aids, metals, cash, a strong person-to-person network, good physical and mental shape, strong family, and everything else a household needs to sustain itself as well as being debt-free.
You'd be one of the wealthiest people within miles and your social network will go far in allowing you to keep it.
fiat is circling the drain no matter what.
the trick is to not let these fucks get their 3rd world war.
Is it even possible to stop? Are there enough people left who would be able to see through a false flag attack on the US and refuse to fight a war for the petrodollar?
Not sure if a world war is over the horizon....but, there will be small-scale, co-ordinated terrorist attacks on US soil, on the anniversary of 9 1 1, and on 9/12/15/ the traitor in the White House gets his wish, and begins the imposition of something akin to Marshall Law. So, if you need to get anything out of your bank before then, do it.
Marshall Law? Is that like Marshall Dillon? or did you mean MARTIAL law??
I am properly admonished. hurrying came up with Marshall Plan. Quietly withdrawing.
You're going to let a troll chase you away???
The following location, at
11766 Wilshire Blvd, Suite 1150 Los Angeles, CA 90025, is very, very close, DutchBoy.Anyone can tell how much alcohol or hashish you've been huffing by how sloppy you progressively get when challenged on your buffoonery. and really, all the accolades for a mere usage correction???
Buck Sergeant E-4 USAF , you meant martial law? Did you pass your WAPS testing?
Yep. Right in line with the Shemitah, blood moons, perennial October stock market crashes...from 9/11 until 10/12, things will get a hell of a lot worse before they get worse, so PREPARE NOW.
I only wish it was time. This tick-tock wait is awful.
The clock just stopped.
OFF topic
News is that hundreds of German and French business execs are already in Tehran making big deals. 182 BILLION will be freed up.
How many American companies?
ZERO!!!!!!!
Always a day late and a dollar short.
Ranked DEAD LAST on this list
https://www.cia.gov/library/publications/the-world-factbook/rankorder/21...
That list is absolutely fucking amazing!
Americans say they won't go to Tehran until they have Titty bars Casinos and crack houses. The all American culture.
I thought you were from The Netherregions. So I wouldn't be banging on about the pervasiveness of whore houses and drug dealers in someone else's country if I were you.
One 3 square block in Amsterdam. Wow you sure believe lots of myths.
I alway found it funny that the Amsterdam Bourse was directly in the middle of the red light district.
Money whores amongst the real ones.
Gotta have lunch time entertainment handy.
But the hookers pay taxes and are unionized. So they contribute.
Street hooking is illegal .
I used to date a German woman when I worked in Germany. ONce we went near the Heidelberg Army PX compound. There was an old hooker that stood outside of the gate everyday. My GF said, ''Watch this woman, within 6 months she will be driving a new Mercedes.
Sure enough about 8 months later she was still at the gate but sitting in a brand new MB.
It's no myth that the Dutch are overrun with Islamists and Jihadists. It's no myth that the Dutch will shortly be under Sharia law. DutchBoy2015 is very proud that he left the USA to live in a country infested with Islamists and Jihadists. He's either one himself or a Nazi fellow traveler. But, I'm sure that the Islamists and Jihadists will eventually have his head on a stick.
You spew bullshit from your single wide. You know nothing and are a joke and ever been to the Netherlands.
I was BORN in the Netherlands, Dumbo , Its my home country.
I challenge you to come here for a month and I will destroy your idotic myths but all you fucking Americunts are COWARDS who are brain washed.
Totally brainwashed ==That is YOU
Hey dipshit, What the fuck do you care about if we go Sharia law? (we won't).
You are a total moron and that is why the USA is the laughingstock of the intelligent world. You don't even realize just how fucking ignorant you are, thats how funny it is.
Its Sunday today, All stores are closed. A day of rest. People are not money crazy here.
Once again, I ask you, where do you get your crazy myths from? FOXCNNABCCBSNBC??
The Dutch are overrun with Islamists and Jihadists. There is no country of the "Dutch" any longer. Sharia law is just around the corner. DutchBoy2015 is just trying to ingratiate himself with his new Islamist a Jihadist masters. I'm sure they loathe him, too.
Where do you get these LIES and myths from? Can't answer that can you, Mr. Moron.
more off topic but relevant. just back from Milano:
Feeding the Planet, Energy for Lifehttp://www.expo2015.org/en
kind of lame but the point is the USSofA exhibit was a disgrace
Was there a few months ago, helped a neighbour move his belongings to a place he bought nearby Milan.
Nice drive thru Switzerland. Took about 14 hours.
I hope they DO panic. I want them to shit their pants. And I want the opportunity to see their faces at least ONCE on the news with that greenish, sick look while they try to answer questions like the muttering, stuttering fucks they all are.
That moment it all slips out of their grasp, and they know it and they know everyone's watching, THAT'S the moment I want to get to see.
And Cramer looking like his cholestemy bag has split, again.
That was fun during the last collapse, the only fun part.
Yes that was fun. But also seeing Nancy Pelosi and her congress critters standing behind Hank Paulson , looking like they just saw a ghost. All of them. I saw it in their faces ,yet I didn't really understand it at the time. I do now. And I remember it like it was yesterday. And I hope I get to see those looks again this year.
Only this time they won't be caught by surprise. All those predators had a chance to "get real" and "get honest" after the 2008 fiasco... but instead every single one of them chose to dig in and become 100% corrupt and utterly slaughter the goose to shreds.
So this time they'll be cool, calm and collected... as they tell everyone that living in FEMA camps is good for your souls.
That would be great. But they are skilled lying actors. No matter what happens, they'll concoct stories about how they're ready to fix the problem.
And then I want them marched straight to the gallows and watch their faces as the nooses go over their heads and tighten around their evil traitorous necks (no black hoods). Then hoist them off the platform to watch them kick and strangle (no trap doors to let them drop and break their necks).
This will inevitably lead us to another major perpetual war in the form of both cold and hot, in the narratives of securing resources such as water and oil, in order to continue to socialize cost while privatize profit. The Neoliberal Ideology started in Reagan Administration essentially is what requires this so-called New World Order put in place exclusively to benefit ig capital that has been brainwashing us into believing that this is only way for entire humanity because there is no alternative. All these boom and bust bubbles are the requirements for the final realization of the NWO.
The *crisis* in 2008 was the "market failure", basically mechanical, that then caused a landslide of other disasters (ask Jon Corzine) due to stupid, unethical, but marginally (sic) legal leverage plays.
The rest would have been manageable by "modern" methods of printing and corruption.
So anything as immediately drastic as 2008 is much less likely. OTOH that may only lead to something much worse than 2008, if and when it finally breaks, but I don't see that on the immediate horizon.
2008 was caused by a lack of good collateral.The FedRes may be able to print dollars,
collateral is beyond their ability.
There is already a shortage ,and condom wrappers aren't going to work
Tyler, how about an update on the shadow banking system ?
The chasm will open there again.
Market failure. WTF dummy
Greenspan created the economic enviroment, the bankers sold as many loans as they could and sold them to bigger dummies in different financial products, then the government did nothing to either seek justice and did nothing to prevent so it wouldn't happen again. WTF are you talking about. It was corruption, greed and stupidity on steroids. It was about bad people making bad decisions and dumping it on the stupid tax payer
The next crisis will be a many magnitude greater than the last. and it won't be about market failure. It will be corruption, greed and stupity.
That crap was all manageable as long as the markets stayed open and liquid, but when mark to market froze all trading, banks couldn't legally balance overnight, which made their securities worthless, which cascaded across the system, crashing virtually everybody overnight, and turning up a lot of very shadowy deals at Citi, Merrill, and of course our favorite AIG. The whole CDS system also collapsed.
The crap they were trading was largely bad loans, and they had all been mis-priced and leveraged, but that alone was not the cause of the 2008 crisis. On a list of proximate causes the trillion dollars in worthless loans was maybe 10% of the total - after all they weren't worthless, they did represent ownership of real property that had a lot more salvage value than CDO derivative junior tranches.
How does negative interest rate work? If you know you're going to be paid to borrow, won't everyone simply keep their money under mattress and start to borrow? Which in turn will push the interest rate higher? Anticipating which everyone will short the currency?
Think of negative interest rates like a 100k auto loan. Does it matter if the rate on that loan is negative. You lost half before you finish signing the loan. All negative rates do are push up the prices of "assets". They do nothing but kill the investments, for the sake of modeling price on a spreadsheet somewhere.
Feeding the deflation when that 100k loan is defaulted on. Forceing irrational actors on an economy is the way economies are killed.
I'm looking to get a zero down negative interest loan, with interest only payments.
You would think so, but the consumer tends to get things wrong. In this period of interest rates being at 0, many people are trying to pay off debts. Then when the time comes that they need cash and don't have it, interest rates on new loans will be 21% again (paging Chairman Volcker). The consumer ("dumb money") tends to get it all exactly wrong.
God says:
I've got too much physical copper bitchez! Not looking good.
http://finviz.com/futures_charts.ashx?t=HG&p=m1
Kinda reminds you of pre-war Syria. "Emergency measures" get put into place and create an emergency that lasts 40 years...
got popcorn
Panic this makes me laugh these central bankers dont give a rats ass about anyone but themselves and dont think for a second that they dont know what they are doing. This article is fear porn for us to have hope they will be fearfull. We arent even close to the end of this shit We all still have something they can take from us to keep them happy for a while to come
True, but they're getting very close to the beginning of the SHTF phase.
Agreed. We are many, they are few. They're feeling it.
John Exter will be vindicated in the end.
Gold is gold. Paper $$$ are also good. U.S. Treasuries are good for a while yet.
Here’s the real reason the Fed wants to raise rates
Federal Reserve policy makers are hoping, even praying, that no unexpected domestic development or international crisis intervenes to prevent them from taking the first baby step to normalize interest rates at the Sept.16-17 meeting.
What are "normalized interest rates"?
In a properly managed Medium of Exchange (MOE), you don't change interest collections "when you want to". You change them immediately on experiencing DEFAULT.
The operative relation is INFLATION = DEFAULT - INTEREST = zero.
To show how clueless they are, try to get any of them to show you a DEFAULT time series. They don't exist ... and never have. That means they don't have the absolutely necessary input to know what interest should be.
The bankers created this mess to force everyones hand.
They do play it to the bone.
FREE MONEY!
About goddamn time.
I'd like to borrow 100 grand at zirp for 30 years please, I'll be 106 by then, and promise to pay it all back.
OT
Iran’s media reported on Sunday that the recent surge in the enthusiasm of European automakers to get a foothold in the Iranian market is already pushing Chinese brands to leave.
http://presstv.com/Detail/2015/07/26/421952/China-Iran-Auto-Market
Meanwhile the Republicans are wanking off in Congress about stopping the deal.
Butchie, I see that you have discovered the magic of methamphetamines.
WTF you talking about wanker?
I think the man may be referring to our Lord God, Creator of Heaven and Earth.
Quite frankly, I've said lots of stuff I regret, and posted stuff I regret. I got the AARP solicitation in the mail a few years ago, but I'm still trying to grow up.
My preacher gave a good sermon on what come out of our mouths or off our fingertips is a reflection of our souls.
Sorry to hear you are so weak minded that you listen to some charlatan preacher.
No wonder you are such a loser
God asks:
Hey Arnold.
Exactly what is it about FREE speech that you detest?
God kills people, or damns them to an eternity in Hellfire, for the exercise thereof.
Even Jesus said that we shall be judged from the WORDS out of our mouths.
But God allows us the freedom to choose damnation.
In fact even using that Nickname will make your destiny assured.
Survey done, question removed. Thanks.
Central bankers won't panic until an angry mob pulls them out of their ivory towers for an oldfashioned tar and feather party. As it is, they are sitting pretty with everything and everyone at their beck and call.
Sounds like they are going to print themselves some more money.
They cannot hide the depression if they raise rates.
That's why they wont do it until after the 2016 election.
The federal reserve has NEVER intended to raise rates soon. They probably know they can NEVER raise rates until after the dollar explodes and is replaced.
What the federal reserve DOES want to do is PRETEND the economy is good (blatantly false), unemployment is low (blatantly false), and their medicine has been working to improve the economy (blatantly false).
The federal reserve ARE the predators-that-be (many of them), and their intention is to misdirect ALL wealth from producers to financial and political predators.
They are succeeding. And as long as most people think "they're trying", their agenda to destroy mankind will continue.
And succeed.
-----
PS: The notion they need to raise because "that's all they have" is TOTAL NONSENSE. They can print, print, print, helicopter drop, drop, drop... bail-in, bail-in, bail-in... and even worse, I figure.
And they will. But only after they allow enough of a collapse so they and their predator friends and co-conspirators can buy up boatloads of assets on the super cheap. Rinse, repeat, steal everything.
So long nuclear boms are there, tehy can do, whatever they are told from tel-aviv.
And another thing. Who picked my car to drive off the friggin cliff?
Thats the Ted Kennedy "1%er" patch
Yellen is Mugabe!
Mugabe is Yellen!
Robert is prettier.
"Not 2008 all over again; this is something much stranger."
It isn't something stranger, it is something more extreme. For each action, there is an equal and opposite reaction.