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"Central Bankers Look Naked... & Investors Have Nothing Else To Believe In"

Tyler Durden's picture




 

Via RBS' Alberto Gallo,

"Policymakers responded to the financial crisis with easy monetary policy and low interest rates. The critics — including us — argued against 'solving a debt crisis with more debt.' Put differently, we said that QE was necessary, but not sufficient for a recovery. We are now coming to the moment of reckoning: central bankers look naked, and markets have nothing else to believe in."

The Emperor Is Naked...

 

As The FiscalTimes details,

Gallo believes an overreliance on excess liquidity has actually hindered capital investment — as companies have focused on debt-funded share buybacks and dividend hikes instead — limiting the global economy's potential growth rate.

 

Now, contagion from China — lower commodity prices, lower demand, currency volatility — has revealed the structural vulnerabilities. More stimulus, in his words, "could be self-defeating without fiscal and reform support."

 

As for Fed hike timing, Gallo sees the odds of a September liftoff at just 30 percent, down from 36 percent last week, based on futures market pricing. December odds are at 60 percent.

The open question is: Should the Fed delay its rate hike and the People's Bank of China ease, will stocks actually rebound? Or has the Pavlovian reaction function been broken by a loss of confidence? We're about to find out.

 

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Wed, 08/26/2015 - 10:19 | 6472762 xcehn
xcehn's picture

And there's that general sense that everything is rapidly falling apart. Perfect storm.

Wed, 08/26/2015 - 10:22 | 6472775 HonkyShogun
HonkyShogun's picture

I guess robbing the masses systematically doesn't make you very popular. That and the world is a bunch of antisemites.

Wed, 08/26/2015 - 11:14 | 6473103 Question Reality
Question Reality's picture

Of course robbing the masses makes you unpopular. But just cause the bankers doing so are mostly Jewish doesn't make the upset masses antisemites. They aren't upset the people robbing them are Jewish, they're upset their getting robbed....

Wed, 08/26/2015 - 12:15 | 6473419 mvsjcl
mvsjcl's picture

Anyone who says that QE was necessary must work for the criminal cabal.

Wed, 08/26/2015 - 10:24 | 6472794 Right-on Left-off
Right-on Left-off's picture

Only the manipulators and the manipulation remains.  How can 'Trust' be placed with them.  They are self-preserving, greedy cannibals.

Wed, 08/26/2015 - 10:26 | 6472806 junction
junction's picture

The real central bankers are partying hard on their yachts, their funds safe in Cayman Island bank accounts, as these banksters with their rentgirls or rentboys enjoy a summer August holiday.

Wed, 08/26/2015 - 10:27 | 6472814 Winston Churchill
Winston Churchill's picture

Liquidy for insolvency is as much use as an umbrella in a hurricane.

Talking of which, looks like the backside of the eye wall is about to pass overhead.

We're on hurricane alert already down here in s.Florida, why not add a financial one.

That would be twice for me,1987 and now.Got to ring my bookie, I'm feeling

lucky.

Wed, 08/26/2015 - 10:36 | 6472861 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Faith is fragile, and it rarely erodes in a gentle and gradual manner. Rather, it tends to evaporate the moment it proves to be misplaced. There's a growing concern that this is where the markets now stand.

Wed, 08/26/2015 - 10:56 | 6472979 ParkAveFlasher
ParkAveFlasher's picture

GOLD, BITCHEZ!

Wed, 08/26/2015 - 10:22 | 6472780 NoDebt
NoDebt's picture

"Gallo believes an overreliance on excess liquidity has actually hindered capital investment — as companies have focused on debt-funded share buybacks and dividend hikes instead — limiting the global economy's potential growth rate."

File under: no shit.

And is that Gallo with a G or Callow with a C?  Cause Jerry Gallo is dead.

Wed, 08/26/2015 - 10:27 | 6472812 Osmium
Osmium's picture

Did you say yutes?

Wed, 08/26/2015 - 10:37 | 6472872 NoDebt
NoDebt's picture

Yeah, these two yutes.

Wed, 08/26/2015 - 10:51 | 6472952 Headbanger
Headbanger's picture

Positraction

Wed, 08/26/2015 - 11:33 | 6473214 Marvin the Martian
Marvin the Martian's picture

Your honor may I have permission to treat Mrs. Vito as a hostile witness?

Wed, 08/26/2015 - 10:22 | 6472781 Bill of Rights
Bill of Rights's picture

A naked Yellen " my eyes they're burning "

Wed, 08/26/2015 - 10:29 | 6472824 Usurious
Usurious's picture

use naked pics of Golda Meir and Janet Yellen on the southern border to control illegal immigration..........cheaper than building a wall......

Wed, 08/26/2015 - 10:34 | 6472854 gaoptimize
gaoptimize's picture

Exactly the vision that regretably popped into my mind reading this headline.  Coffee always makes me a little nauseous, and this thought made me feel very bad.

Wed, 08/26/2015 - 10:59 | 6473004 Baa baa
Baa baa's picture

Pluck 'em out.

Wed, 08/26/2015 - 11:38 | 6473238 J Jason Djfmam
J Jason Djfmam's picture

And I thought the murder footage was horrifying.

Wed, 08/26/2015 - 10:30 | 6472831 Turin Turambar
Turin Turambar's picture

No rate hike and more jawboning about closely monitoring the economy...blah, blah, blah.  Me and my QQQ puts would absolutely love a rate hike.  It'd be nice to not have to worry about working again.  :-O  Then again, so many people are going to be hurt by this.  :-(  I promise to buy some land with some tall trees and extra strong lengths or rope to make bankster nooses, if that'll help.  It sure as hell wouldn't hurt.

Wed, 08/26/2015 - 10:30 | 6472834 q99x2
q99x2's picture

On the far right of the chart should be a box labeled fascism and WWIII.

Wed, 08/26/2015 - 10:36 | 6472859 JustObserving
JustObserving's picture

If you were stupid enough to believe in the omnipotence of the corrupt, criminal cabal of banksters, you deserve your misfortune as markets crash

Wed, 08/26/2015 - 10:57 | 6472986 Baa baa
Baa baa's picture

Not everyone enjoys your level of perspicacity regarding the markets. Many are persuaded by the lies and obfuscation that are the stock and trade of the banksters.

This article addresses the need for people to have a trustworthy stewardship of their money. With trust in any market machine ebbing away, people are lost and many still require educated assistance to manage their funds. The banksters still have a fiduciary obligation to care for the interests of the client and if they ignore this responsibility, they can and should be sued, jailed, stripped and sterilized. I am waayyy oversimplifying but.

Dick, we have a case here.

Stupidity is not the issue, anyone can get tricked/conned by self absorbed, greedy sociopaths.

Wed, 08/26/2015 - 10:45 | 6472919 I Write Code
I Write Code's picture

QE was only ever done as an emergency measure.

The economy "was supposed to" just recover on its own, given this supportive care.

It hasn't, because the main problem was globalization, or "structural" as the economists like to say.

The Bernank knows this, though he seldom mentions it publicly, and had arranged a slow convergence of currency values with China to help mitigate it.  He could do this because he had leverage over them of their billions in Treasuries.

But as of early this year that arrangement broke down ... and it was never going to work anyway. 

Wed, 08/26/2015 - 11:03 | 6472959 TeethVillage88s
TeethVillage88s's picture

It's worse than that. Private Debt has sky rocketed and appears to always lead to Major global Crisis.

Here is a study by Alan M. Taylor, you might skip to the last part #5 near the end.

http://www.nber.org/papers/w18290.pdf (NBER WORKING PAPER SERIES, THE GREAT LEVERAGING)

http://www.daniellazar.com/wp-content/uploads/Durant-Christ-and-Civ.pdf

I got this from Washington's Blog.

CBO Seems to Agree today:

http://www.washingtontimes.com/news/2015/aug/25/budget-deficit-smallest-...

Wed, 08/26/2015 - 12:40 | 6473529 I Write Code
I Write Code's picture

Well but if money is free of course a rational agent goes into as much "debt" as he can.

... which is exactly what lead to 2008, no-money down speculators (including but not limited to low-income buyers) bought houses, lots of houses, tons of houses, with "mortgages" on which they never even *planned* to make the first payment.  Either the house would flip sooner, or they'd simply default until the house did flip, and mere inflation would make them enough to clear the paper.  Until it stopped working.

Never thought I'd live to see the days when *lack* of inflation was a problem.

Wed, 08/26/2015 - 18:30 | 6475205 TeethVillage88s
TeethVillage88s's picture

Yeah Down is Up and Left is Right and Good is Bad.

It is all jacked. I didn't remember that about housing. I guess California, New York, and places with hot RE Markets.

They keep saying we need a new bubble or two like housing to be a Tailwind.

Or they say well the FISCAL Policy is too tight we have to spend more/get more debt.

Or the change the Rules, like Accounting, Auditing, Financial Ratings, create new Financial Instruments that aren't monitored or tracked,... or get Liberalization of Regulations, Reserve Requirements, get QE & Bailouts or Bail-Ins, or get Federal Subsidies or Federal Contracts...

Banks are the Most Liberal of all Industries except for Washington DC Politicians.

Wed, 08/26/2015 - 10:47 | 6472930 fowlerja
fowlerja's picture

And I quote.."central bankers now look naked"

 

So you mean that Central Bankers are now starring in porno flicks...how disgusting...

Wed, 08/26/2015 - 11:03 | 6473025 TrumpXVI
TrumpXVI's picture

It's getting harder and harder to navigate ZeroHedge.  It seems all "clogged up".  My cursor just spins and spins tying to "catch up" with the page loading.

Is this a ZeroHedge issue, a computer issue, or sabotage?

Wed, 08/26/2015 - 11:36 | 6473230 J Jason Djfmam
J Jason Djfmam's picture

DeezNutz16, What system and browser are you using?

Wed, 08/26/2015 - 11:12 | 6473095 Pumpkin
Pumpkin's picture

Central Bankers are always naked.  They do a lot of things 'naked' that would get the rest of us arrested.

Wed, 08/26/2015 - 11:31 | 6473204 objectivist
objectivist's picture

The problem is that the Fed needs to do the rate hike to maintain credibility, but they can't pop the bubble.  The solution:  do the rate hike but make it so small that it's insignificant. 

So a rate hike of 0.25-0.5% would be ideal.  This is enough for them to say "See, we hiked rates." but not enough to matter.

And then they can wait another decade or more before the next rate hike, citing slow growth.  So yes, it's still "liftoff" but then rates will never actually rise to free market levels. 

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