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"The Biggest Problems We Face Is That We’re All Flying Blind To A Large Degree" Warns Deutsche Bank
For everyone confused about the current state of the global financial situation, you are not alone. To help, here is DB's Jim Reid with a pretty good summary of where we all currently stand.
From DB's Jim Reid
One of the biggest problems we face is that there is no historical template for current global market conditions so we’re all flying blind to a large degree. Never before have so many of the most important countries in the world printed so much money and left base rates at near zero for so long. Also never before has the largest economy in the world tried to start a slow process of reversing said extraordinary policy. So there is no road map for this journey, only educated (hopefully) predictions.
We continue to be bullish Euro and GBP credit mostly due to the fact that the global financial system is so fragile and the global economy so lethargic and asset prices generally so high (with exceptions) that it near forces central banks into a continuation of exceptionally easy monetary conditions. So we don't think this high liquidity era is over yet. Given the recent widening, in the three main currency blocks, only EUR BBBs have been tighter (just) than current levels for more than half the time through history.
So we still think very easy money is still going to be the dominant theme in financial markets. However our FX colleagues wrote an interesting report yesterday exploring their recent QT (quantitative tightening) theme. They think 2015 will mark the peak in global FX reserve accumulation following two decades of 'unremitting growth'. This is due to three cyclical drivers: China’s economic slowdown, impending US monetary tightening, and the collapse in the oil price.
They would argue that the implications of their conclusions are profound. Central banks have accumulated 10 trillion USD of assets since the start of the century, heavily concentrated in global fixed income. Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD. There are counter forces in the opposite direction (eg European current account surpluses and QE) but they'd argue that there is a change in the secular trend.
Our thoughts are that this will require the need for ever looser policy from Western nations to offset this impact. We're also still not sure the US will be able to tighten much in this cycle given all that's going on globally.
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You know what that means right?
That's right....buy equities.
If you want to sell.....that's OK too.
Cause we're not China....yet.
Circuit breakers are much less expensive in the long run.
There are historical templates for what we are seeing today, problem is you need to go back much further than the usual 100 year chart most economists are looking at when writing this stuff.
The Fed is flying blind and at the same time trying to crush its competitors for financial and economic power in this world. Was it a coincidence that Citadel, the unofficial arm of the Fed, was banned from trading in China? This cannot but end badly:
Washington’s Financial Currency War on China: The Eclipsing of the US Dollar by the Yuan
As the financial architecture of the world is being altered by China and Russia, the US dollar is gradually being neutralized as one of Washington’s weapon of choice. Even the monopoly of Washington’s Bretton Woods system formed by the International Monetary Fund (IMF) and World Bank is being directly challenged. Although they do not constitute alternatives to neoliberal economics, the BRICS News Development Bank (NDB) and Beijing’s Asian Infrastructure Investment Bank (AIIB) are challenging the Bretton Woods system through a rival financial structure.
The US Empire has been cognizant of the moves to establish a rival financial order. Policymakers in the Washington Beltway, the Pentagon, and Wall Street all watched the dual summits of the BRICS and Shanghai Cooperation Organization in the Russian city of Ufa with concern. Up to that point, they had been waging an information/propaganda, energy, financial market, currency war, and general economic war against the Russian Federation. Post-Ufa, they extended the financial market and economic war to China.
http://www.globalresearch.ca/washingtons-financialcurrency-war-on-china-...
The bankers are eventually going to get 'thrown under the bus', so the peasants can tear them apart, thinking they are free, can then be gradually enslaved under Agenda 21/2030.
Yep, they, including Yellen (et al), are just making stuff up trying to continue to appear relevant/necessary.
Maybe we should finally kill the creature from Jekyll Island.
Wear earplugs......casue they're gonna scream like bitches.
Too late to kill the creature from Jekyll Island without a catastrophic event such as a war or a revolution or other calamity as it runs this country now - a troika of Wall Street, MIC and spooks control the land of the free today
your troika for your future ... war is peace and all that
Too late to kill the creature
I'm willing to risk it.
Screw the false tribe....hows that for some inside baseball?
… unfortunately, I believe you’re right because, unfortunately, this is Mutually Assured Destruction.
They won’t go unless we kill ’em, and if THEY can’t live, they’re gonna take us WITH THEM.
All that you mentioned is coming regardless of whether we kill the beast or not.
I'm take that as a yes......and put words in your mouth.
If you don't mind.
"Currency wars, trade wars & world wars."
"when all else fails, they take you to war."
-Gerald Celente
How can the guy who wrote this stuff hold up his head or stomach his job, knowing Deutsche and et al are the perpetrators of this crime and now pretend to be “flying blind” with the rest of us? And, anyway, he stole his no historical template premise and much of what he said from Jim Sinclair. See:
http://usawatchdog.com/plunge-protection-team-losing-control-of-markets-jim-sinclair/
Never before have we had to compete with the HFT bots to buy and sell stocks. That is the real story here. Until the HFT's are banned, I'm out.
It's not just stocks that are HFT infected. Try FX and bonds as well. Thankfully the cure is easy. Pull the plug and dislocate the HFT servers.
You mean wipe them with a cloth or something?
could be summarised as follows "nobody has a fucking clue about what to do!"
www.teamramgold.com/about-us
Our thoughts are that this will require the need for ever looser policy from Western nations to offset this impact...
require the need? with mad wordsmithing skilz like that he should go work at the fed.
Well CBs fucked the world and they know it.
Somehow they are trying to undo what they did while keeping the spoils.
Kind of like juicing to hit more home runs, and keeping the record even after everyone found out you were cheating.
Keeping your Grammy even after people found out you were lip syncing.
A dollar you didn't earn really isn't yours.
Should I sell the Van Gogh, Picasso or Pissarro?
I've got to cover a bit of margin.
--Banana Man
A slice of your ear would be a good start.
ADP 190,000 miss and Prior was +185K (revised down to +177K)
02Sep/Mark Carney: Inflation in a globalised world
Weeze gonna be monitoring the situation to getters done.
/sarc
What we do know is we are at the top of the debt supercycle and the top of a market peek. What's next then? Hmmm.
"They think 2015 will mark the peak in global FX reserve accumulation following two decades of 'unremitting growth".
Forgot to mention debt accumulation by governments and households, so how much of this growth was borrowed from the future...
As government is spending 140% of tax revenue, my best guess is:
All Your Future Is Ours, Bitchez.
Good thing my EBT Black just arrived.
As this unwinding gains speed, I can tell you who's fault it will not be...The un-fed and all CB's. They will lay the "blame" on any and everything else.
They are a very sick delusional group, who are never at fault. Even though the whole fucking mess is their doing.
Never before have so many of the most important countries in the world printed so much money and left base rates at near zero for so long.
And no mention of the historical and current level of defaults.
When they're clueless about what money is and the process of managing any MOE (Medium of Exchange), mystics have a field day.
It's not that damn hard to figure out. We have too much debt around the world and now the empire is issuing a global margin call. Same as it's always been, loose money to get as many people as possible leveraged, and then tighten credit to shake out the weak hands and eventually consolidate assets into the hands of a few.
It is difficult to retain good repeat customer for your thriving illicit drug trade. You can extend them credit to keep their appetites alive in hopes they will pull that extra shift at work that can pay you back. Eventually of course the job fails and in these hard times it is not unusual to extend credit in hopes that your customers can find some old lady to rob to pay the bill. Unfortunately these customers play out as it is a rough life to be a drug addict. What is needed is NEW customers, but the problem is that you have burned through all of the truly productive ones and are forced into lower classes, those who have very little earning power, so they quickly revert to criminality to support their habits.
Credit IS this illicit drug. It is addicting and deliberately so for the purpose of incentivizing consumption, but demand is not infinite. There is no 12 step plan to end this. It will be cold turkey, ugly mean and violent.
"Never before"?
According to Hayek, it was proven in the early 19th century (early 1800s) that Keynsianism does not work to accomplish its stated goals (other goals, yes; stated goals, no).
... and we are supposed to believe the bankers when they say, "this is all new", "we had no idea", "it is the perfect storm", "no one could have foreseen this" ... a "black swan".
Tell us another one, parasite!
The bankers are nothing if they are not lying bags of sh*t and lacking completely in constructive creativity.
We may well be flying blind but we are told that it is fine to do so...that our government and our bankers have got our back.
We are driving in the dark at a high rate of speed, with our headlamps turned out deliberately, for if they were fully illuminated we might notice the hazards scattered along the roadway, including the dead carcasses of our fellow travelers and the steep cliff just to our left with a rotten guardrail. This would prove far too disconcerting for this to be visible and would definitely lead to a traffic snarl. Now we aren't stupid. We know bad things happen, but they are minimized and dismissed and we are told they are anomolies not to be concerned with. Stuff that always happens to other people.
So yes, full speed ahead with our lights out, oblivious to all dangers other than coming in last.
This is just a nice way of saying, you can't taper a ponzi scheme. Maybe they should enlist Fed-Ex (that other Federal Agency) to use their Drones to drop bucket loads of Money anywhere there is a Bank. Because the only way out is too give Banks more FREE Money, while the rest of us have to earn it.
Simple! Just transfre the debt to equity and ween culture back to working VS loaferism.
They are not flying blindly, greedily for sure, but definitely NOT blindly....
THEY are not. THEY are asking us to fly blind....and just trust them.
China’s economic slowdown ?
I was under the impression that China's economy was shrinking. Not just slowing.
"educated (hopefully) predictions" - Not possible in any sell-side shop where deeply embedded conflicts and systemic biases prevent any objective or even realistic assessment of the issues. I respect Reid for trying to walk the middle ground, but in the end these "strategists" will always come down on the side of "stay fully invested with an overweight to equities" as they lead their clients into the wood chipper. Its what they do!
I would suggest dismantling and liquidating DB and distributing the resulting proceeds to all the serfs of the Earth except that there probably aren't any proceeds to disburse.
I think the point of this article is when the man says we are all flying blind, what he means is that we are all flying blind.
Kind of a "filler" article. Reid has not done any of his homework. This sort of scenario has happened many times in the past including Rome and Constantinople. The scenario is super simple and goes like this: society does well -> society gets greedy and goes into debt -> debt becomes excessive and governments raise taxes, steal private property, impose excessive fines, debase what is money at that time, whatever, to increase revenues to pay that debt -> people get pissed -> crash and burn -> start all over.
It's actually refreshing to see a remark like that from a major bank.
I would rather see a little bold-faced honesty, compared to the usual "extend and pretend". I don't think that anyone knows where the global markets will eventually go. But I do think tha the process of creating zero-interest credit for an extended period of time has been an enormous mistake. It's not clear that the USA or Europe can "rescue" themselves from these policies now.
Bravo. They really fucked up on initiating this policy. NWO, Dead on Arrival - YouTube
The final frontier; "to go boldly where no man has ever gone defore"!
Log; Captain Yellen
And never before have so few been able to lie-to and steal so much from so many. And they call it "banking?"
We're all flying blind? I seriously doubt that. He knows exactly what DB has in their records, up to the second. As others have been saying, there is plenty of historical evidence and precedence to foresee how this plays out and this is a very lame attempt to try to prevent any personal liability he and his cohorts are guilty of foisting on otherwise trusting people around the globe.
It baffles the mind to think these “lenders” are so caught up in their deviousness and trickery to entangle others in their contracts to repay “in like kind” so as to think there will never be a day of reckoning for them. If there’s going to be personal accountability for their patrons, then there must be personal accountability for each and every head and other responsible person directing these CB WMDs.
Just repeating the obvious.