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The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play
The most important piece of news announced today was also, as usually happens, the most underreported: it had nothing to do with US jobs, with the Fed's hiking intentions, with China, or even the ongoing "1998-style" carnage in emerging markets. Instead, it was the admission by ECB governing council member Ewald Nowotny that what we said about the ECB hitting a supply brick wall, was right. Specifically, earlier today Bloomberg quoted the Austrian central banker that the ECB asset-backed securities purchasing program "hasn’t been as successful as we’d hoped."
Why? "It’s simply because they are running out. There are simply too few of these structured products out there."
So six months later, the ECB begrudgingly admitted what we said in March 2015, in "A Complete Preview Of Q€ — And Why It Will Fail", was correct. Namely this:
... the ECB is monetizing over half of gross issuance (and more than twice net issuance) and a cool 12% of eurozone GDP. The latter figure there could easily rise if GDP contracts and Q€ is expanded, a scenario which should certainly not be ruled out given Europe’s fragile economic situation and expectations for the ECB to remain accommodative for the foreseeable future. In fact, the market is already talking about the likelihood that the program will be expanded/extended.
... while we hate to beat a dead horse, the sheer lunacy of a bond buying program that is only constrained by the fact that there simply aren’t enough bonds to buy, cannot possibly be overstated.
Among the program’s many inherent absurdities are the glaring disparity between the size of the program and the amount of net euro fixed income issuance and the more nuanced fact that the effects of previous ECB easing efforts virtually ensure that Q€ cannot succeed.
(Actually, we said all of the above first all the way back in 2012, but that's irrelevant.)
So aside from the ECB officially admitting that it has become supply*constrained even with security prices at near all time highs, why is this so critical?
Readers will recall that just yesterday we explained why "Suddenly The Bank Of Japan Has An Unexpected Problem On Its Hands" in which we quoted BofA a rates strategist who said that "now that GPIF’s selling has finished, the focus will be on who else is going to sell. Unless Japan Post Bank sells JGBs, the BOJ won’t be able to continue its monetary stimulus operations."
We also said this:
"in 6-9 months, following the next major market swoon when everyone is demanding more action from the BOJ, "suddenly" pundits will have discovered the biggest glitch in the ongoing QE monetization regime, namely that the BOJ simply can not continue its current QE program, let along boost QE as many are increasingly demanding, unless it finds willing sellers, and having already bought everything the single biggest holder of JGBs, the GPIF, had to sell, the BOJ will next shakedown the Post Bank, whose sales of JPY45 trillion in JGBs are critical to keep Japan's QQE going.
The sale of that amount, however, by the second largest holder of JGBs, will only last the BOJ for the next 3 months. What next? Which other pension fund will have the massive holdings required to keep the BOJ's going not only in 2016 but also 2017 and onward. The answer: less and less.
Once again to be accurate, the first time we warned about the biggest nightmare on deck for the BOJ (and ECB, and Fed, and every other monetizing central bank) was back in October 2014, when we cautioned that the biggest rish was a lack of monetizable supply.
We cited Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo, who said that at the scale of its current debt monetization, the BOJ could end up owning half of the JGB market by as early as in 2018. He added that "The BOJ is basically declaring that Japan will need to fix its long-term problems by 2018, or risk becoming a failed nation."
This was our summary:
The BOJ will not boost QE, and if anything will have no choice but to start tapering it down - just like the Fed did when its interventions created the current illiquidity in the US govt market - especially since liquidity in the Japanese government market is now non-existant and getting worse by the day. All that would take for a massive VaR shock scenario to play out in Japan is one exogenous JGB event for the market to realize just how little actual natural buyers and sellers exist.
That said, our conclusion, which was not to "expect the media to grasp the profound implications of this analysis not only for the BOJ but for all other central banks: we expect this to be summer of 2016's business" may have been a tad premature.
The reason: overnight the IMF released a working paper written by Serkan Arslanalp and Dennis Botman (which was originally authored in August), which confirmed everything we said yesterday... and then some.
Here is Bloomberg's summary of the paper:
The Bank of Japan may need to reduce the pace of its bond purchases in a few years due to a shortage of sellers, said economists at the International Monetary Fund.
There is likely to be a “minimum” level of demand for Japanese government bonds from banks, pension funds, and insurance companies due to collateral needs, asset allocation targets, and asset-liability management requirements, said IMF economists Serkan Arslanalp and Dennis Botman.
Here are the excerpts from the paper:
We construct a realistic rebalancing scenario, which suggests that the BoJ may need to taper its JGB purchases in 2017 or 2018, given collateral needs of banks, asset-liability management constraints of insurers, and announced asset allocation targets of major pension funds.
... there is likely to be a “minimum” level of demand for JGBs from banks, pension funds, and insurance companies due to collateral needs, asset allocation targets, and asset-liability management (ALM) requirements. As such, the sustainability of the BoJ's current pace of JGB purchases may become an issue.
Back to Bloomberg:
While Governor Haruhiko Kuroda said in May that he expects no obstacles in buying government bonds, the IMF analysts join Nomura Securities Co. and BNP Paribas SA in questioning the sustainability of the unprecedented debt purchases.
Who in turn merely joined Zero Hedge who warned about precisely this in October of last year.
Back to the IMF paper, which notes that in Japan, where there is a limited securitization market, the only "high quality collateral" assets are JGBs, and as a result of the large scale JGB purchases by the JGB, "a supply-demand imbalance can emerge, which could limit the central bank’s ability to achieve its monetary base targets. Such limits may already be reflected in exceptionally low (and sometimes negative) yields on JGBs, amid a large negative term premium, and signs of reduced JGB market liquidity."
To the extent markets anticipate limits, the rise in inflation expectations could be contained, which may mitigate incentives for portfolio rebalancing and create a self-fulfilling cycle that undermines the BoJ’s objectives.
For those surprised by the IMF's stark warning and curious how it is possible that the BOJ could have put itself in such a position, here is the explanation:
So far, the BoJ’s share of the government bond market is similar to those of the Federal Reserve and still below the Bank of England (BOE) at the height of their QE programs. Indeed, the BoE held close to 40 percent of the conventional gilt market at one point without causing significant market impairment. Japan is not there yet, as the BoJ held about a quarter of the market at end-2014. But, at the current pace, it will hold about 40 percent of the market by end-2016 and close to 60 percent by end-2018. In other words, beyond 2016, the BoJ’s dominant position in the government bond market will be unprecedented among major advanced economies.
As we expanded yesterday, the biggest issue for the BOJ is not that it has problems buying paper, but that there are simply not enough sellers: "under QQE1, only around 5 percent of BoJ’s net JGB purchases from the market came from institutional investors. In contrast, under QQE2, close to 40 percent of net purchases have come from institutional investors between October 2014 and March 2015."
This is where things get back for the BOJ, because now that the BOJ is buying everything official institutions have to sell, the countdown has begun:
given the pace of BoJ purchases under QQE2 and projected debt issuance by the government (based on April 2015 IMF WEO projections of the fiscal deficit), we estimate that Japanese investors could shed some ¥220 trillion of JGBs until end-2018 (Table 2, Figure 4). In particular, Japanese insurance companies and pension funds could reduce their government bond holdings by ¥44 trillion, while banks could sell another ¥176 trillion by end-2018, which would bring their JGB holdings down to 5 percent of total assets. At that point, the BoJ may have to taper its JGB purchases.
Then there are the liquidity issues:
As the BoJ ascends to being a dominant player in the JGB market, liquidity is likely to be affected, implying that economic surprises may trigger larger volatility in JGB yields with potential financial stability implications. As noted in IMF (2012), demand-supply imbalances in safe assets could lead to deteriorating collateral quality in funding markets, more short-term volatility jumps, herding, and cliff effects. In an environment of persistent low interest rates and heightened financial market uncertainty, these imbalances can raise the frequency of volatility spikes and potentially lead to large swings in asset prices.
This, too, is precisely what we warned yesterday would be the outcome: "the BOJ will not boost QE, and if anything will have no choice but to start tapering it down - just like the Fed did when its interventions created the current illiquidity in the US govt market - especially since liquidity in the Japanese government market is now non-existant and getting worse by the day."
The IMF paper conveniently provides some useful trackers to observe just how bad JGB liquidity is in real-time.
The IMF is quick to note that the BOJ does have a way out: it can simply shift its monetization to longer-dated paper, expand collateral availability using tthe BOJ's Securited Lending Facility (which basically is a circular check kiting scheme, where the BOJ lends banks the securities it will then repurchase from them), or simply shift from bonds to other assets: "the authorities could expand the purchase of private assets. At the moment, Japan has a relatively limited corporate bond market (text chart). Hence, this would require jumpstarting the securitization market for mortgages and bank loans to small and medium-sized enterprises which could generate more private assets for BoJ purchases."
But the biggest risk is not what else the BOJ could monetize - surely the Japanese government can always create "monetizable" kitchen sinks... but what happens when the regime shifts from the current buying phase to its inverse:
As this limit approaches and once the BoJ starts to exit, the market could move from a situation of shortage to one with excess supply. The term premium could jump depending on whether the BoJ shrinks its balance sheet and on the fiscal deficit over the medium term.
When considering that by 2018 the BOJ market will have become the world's most illiquid (as the BOJ will hold 60% or more of all issues), the IMF's final warning is that "such a change in market conditions could trigger the potential for abrupt jumps in yields."
At that moment the BOJ will finally lose control. In other words, the long-overdue Kyle Bass scenario will finally take place in about 2-3 years, tops.
But ignoring the endgame for Japan, and recall that BofA triangulated just this when it said that "the BOJ is basically declaring that Japan will need to fix its long-term problems by 2018, or risk becoming a failed nation", what's worse for Abe is that the countdown until his program loses all credibility has begun.
What happens then? As BNP wrote in an August 28-dated report, "Once foreign investors lose faith in Abenomics, foreign outflows are likely to trigger a Japanese equities meltdown similar to the one observed during 2007-09."
And from there, the contagion will spread to the entire world, whose central banks incidentally, will be faced with precisely the same question: who will be responsible for the next round of monetization and desperately kicking the can one more time.
But before we get to the QE endgame, we first need to get the interim point: the one where first the markets and then the media realizes that the BOJ - the one central banks whose bank monetization is keeping the world's asset levels afloat now that the ECB has admitted it is having "problems" finding sellers - will have no choice but to taper, with all the associated downstream effects on domestic and global asset prices.
It's all downhill from there, and not just for Japan but all other "safe collateral" monetizing central banks, which explains the real reason the Fed is in a rush to hike: so it can at least engage in some more QE when every other central bank fails.
But there's no rush: remember to give the market and the media the usual 6-9 month head start to grasp the significance of all of the above.
Source: IMF
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"hasn’t been as successful as we’d hoped."
Banker-speak for "It's been an abject failure".
More like banker/elite/zio speak for:
'Worked exactly as planned, we've siphoned off enough wealth to be comfortable while the crash happens and frankly the well is going dry anyway"
Just inflate until there's another zero or two to the dollar-yen conversion. Who'd even notice?
Couple of options:
1. .gov increases spending. They could give away money directly to the citizenry in the form of rebates, and then issue corresponding debt.
2. Corps goes into debt/buyback overdrive(r), with the CB's buying up corporate bond issuance (up to and including junk).
I anticipate this happening post-crash.
that's what i wrote yesterday in the Japan article.
no JGBs left to buy? start buying "vouchers" for Food, Education, Housing, Health....etc. all the big buckets for taxpayers. and "loan" them (give) out at 0%. So, in essense, you're soaking up debts - current and FUTURE - from citizens....the govt pre pays for all these large buckets.....pumping cash into agriculture, universities, developers, hospitals, etc....
but since it's a "loan", it can be rationalized. but in turn, it creates full and widespread dependence on govt.....and one party governance is achieved.
The Dodd Frank act prohibits QE directly to the people - The banks saw to that. Purchased with all of the juice they pay to congress
State Department policy also prohibits use of 3rd party email servers for classified communications....
anyway, it's not QE....it would be a "Loan".....
Is that QE?
it depends what the definition of "is" is.....
After they are done buying the debt they'll just go to straight printing/copterdrop. It will be no more outrageous than the steps already taken. And as usual the money will go to their banker buddies, not Joe Schmoe.
91 yo Alan Greenspan: 'I'm baffled'.
Shake your hips,
Swing and Sway,
Re-ar-range your DNA!
I wonder if they would continue these policies if an empire didn't have them occupied.
The Counterfeiters will buy debt, equity, hard assets, land, options/futures, carbon credits... EVERYTHING.
You nailed it!
Wake me when they start buying back their leased out gold !
The US Bureau of Land Management can be privatized. They have an income stream from leases on federal lands. The federal lands in the west can be sold to private investors or securitized and sold to the Federal Reserve just as easily as the Greek ports and airports.
As much as I dislike the BLM, divesting the public lands would be a tragedy.
we are fkd, pray for u all its comming
Fucked in this case maybe relative. Some will fare better than others when the music stops but TPTB all have a seat unless things go very very wrong. Psychopathy and stupidity are not necessarily linked.
Miffed
Nope. JH II enslaves us all.
See EO 13684
HPC
NSCI
population
energy & private-rationing
resources/municipal-rationing
AI weapon
brain mapping
synthetic DNA turning living cells into computers for the global mesh network.
DHS - Police State
Geoengineering included
Digital money
Auto Food production/distribution
AI driven global mesh neuro net over humanity both biological/neurological
90 days from JH15
PM's are useless unless GFO now.
Psychopathy and stupidity are not necessarily linked.
And ain't that a shame, dammit?
Destroying the last vestige of hope?
Those who own things have ensured that politicians - whether Repub or Dem - are controlled to the extent that no fiscal policy can be enacted due to stalemate. They WANT the Rep and Dem numbers to be close enough to offset each other. They'll support (and buy) a Dem in one instance and a Repub in another without regard to their own political affilication to ensure an offset.
So 1/2 of the basic economics principle of the combination of fiscal policy and monetary policy is absent. No fiscal policy due to stalemate leaves a void. So those that own the FED, Wall Sreet, mega-corps, etc totally guide policy. And monetary policy since 2008 has been instituted to increase the fortunes of the .01 - 1%, the TBTF banks and primary dealers, and all the other scum suckers. Now the true nature of monetary policy is being exposed to the extent that even the dimwitted general public can understand. Not good times ahead.
"The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play"
Nope, not yet anyways, as my guillotine is still in the backyard. I just checked.
It is eager to get going though.
Zion is a scheme, not an ethnicity..
Guillotines are so passe.
Wood chippers are the bees knees.
Fertilize your lawn with ZioNazi pig shit.
How many banksters can you pack into a Volkswagen beetle?
All of them.
Zion is a scheme, not an ethnicity.
The answer. Governments around the world will go ever deeper in debt. Why stop at 18 Trillion U$ ? If they all do it, all of them have no cloths - which is already the case anyway. The masses don't care and/or don't understand anyway, so what difference does it make? They can paper over everything paper, and they will. But they will need to revalue the PMs at some point, either by their own choice or by force (China liquidating 3T and buying fizz with it). Debt will linger, more bail-outs of "important" companies will occur as well as bail-ins of the sheeple for the "greater good". The insanity will continue as things will get worse and worse. Their plan is working 100%.
"18 Trillion U$"
I'ts so cute you believe that.
It's cute you believe I believe its 18T. I could have equally said ~180T plus the derivatives in the order of 1+ Q, but the point remains. Why stop now?
Sorry; I didn't get a hint of sarcasm or see any qoutation marks or such. So why say 18Trillion instead of say somewhere north of 230Trillion?
Disregard: I see your edit & concede your point. Indeed why stop now.
Just because it's their "official" number, which on it's own is already too big, while the debt problem is as you correctly state is at least an order of magnitude larger than that. All good, we're on the same page :-) cheers
so the CB's conjure up electronic 1's and 0's call it "money" buy bonds the government issue and has no intention's of making good on. Got it!
A deeper analysis will reveal that it is not necessarily the amount of fiat-debt that is a concern, but the amount of plunder, "income," flowing up to the plunderers.
As the flow of plunder slows, tyranny increases in a desperate attempt to keep the plunder flowing at current levels. So commensurate with an increase in fiat-debt, one can expect a demonstrably increase in tyranny in the service of that debt, as Eric Garner and the Greeks have found out the hard way.
Zion is a scheme, not an ethnicity..
"There is a good chance that we have entered a period of low productivity growth. There is a chance that we have entered a period of structurally weak demand, which will require very low interest rates. And low growth combined with increasing inequality, is not only unacceptable morally, but extremely dangerous politically."
-Olivier Jean Blanchard
Aug 31 2015
brave new world
well he has left the Titanic.
can of prepper spam 2015
older dated can of prepper spam 2016\2017
Soylent Green is people!
Spam is forever !!!
The Spam inside will actually outlast the can it's in !!!
Spam lasts forever unless the can is leaking.
Hmmmm, first, not enough sellers, then, not enough buyers...(scratches head in puzzlement) can't they just magically print up or create some buyers and sellers, just like they print up and create fiat out of thin air...?
Two to 3 more F'n years bitchez and I was hoping something would happen so I wouldn't have to take my final exam next week.
Never let the mother of all crisises go to waste. I wonder what they got planned?
At this point the Central Banks will just take the Governments private.
http://www.sec.gov/answers/gopriv.htm
So, when all available bonds run out, where will additional debt instruments come from?
They’ll do exactly what the Federal Reserve did… purchase delinquent Small Business Admin loans, delinquent Student loans; delinquent credit card loans; delinquent car-lot loans…
Can you believe it… such paper trash serving as collateral for issued bank notes and American bank reserves?
Remember when gold was such collateral?
"An Act to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper..."
You mean the barbarous relic?
Nah, I'm not that old.
It looks like the US is in pretty good shape compared to the others ... I only hope that everyone doesn't want to come to the US to share in our prosperity. You know then we might have an immigration. problem
Thank goodness we have 2,000+ klicks of ocean between the U.S. and the other continents. The Darien Gap in Panama is also impassable.
They just might pitch in and help Trump with that wall.
It's Friday and am headed to the deep white sand on a Florida beach. Thank you Tylers for the great work over the last few weeks and thank you all for so many great comments.
Best dam web site on the planet.
+1000
apart from Von Mises you may be right.
Nice, some of us live down here (in South Florida at least) and also love the beaches and weather.
I love this site.. but can the Tylers please cut down on the number of articles printed here per day? Sometimes it really is a B to keep up with it while working in the day. Otherwise, I'll need to take a serious and long break to chill out for a bit. I really love keeping up with this but this is becoming a little too much..
I just saw a vote for Pedro video on youtube.com saying astroid hitting just west of Puerto Rico, putting FLA and most of east coast under water.
trump's trade and fx war will solve all US problems by creating more instability and pain to China/Japan/EU. They in turn will put the pain back in our court.
I do not see how there can be a "nightmare scenario" for central banks.
They print as much money as they want. They have no oversight, no accountability, no consequences. They are only responsible for setting the stage for their owners to control the world... and even so, they are expendable, since a new central bank can be created overnight.
But...but...but Nobel prize winner Krugman says they aren't doing enough - need to do MOAR!!!
I can't think of anything else really bad to say about the man, anymore.
See you next Tuesday.
Smells like... victory.
How many years now have we been waiting for the central banks to lose control? It's always just around the corner, any day now. Somehow that day never comes. I suppose someday it will come, sometime between now and when the sun shrinks to a red dwarf. I'm tired of waiting. I needed it to happen four years ago.
I am not so keen to see the day of reckoning coming, as it will be pretty fucking bad.
Look, normally banks will stop issuing fresh credit to businesses, which will end the boom phase and invite in the healthy investment realignement phase called the "bust". In a world without fiat, this happens often and is actually quite beneficial.
Today the situation is different, since the world relies on fiat, which allows a much larger credit expansion to occur. Since the govts have no incentive to stop credit expansion, it will go on until we reach what Mises called the "Katastrophenhausse", which is the point where people suddenly want to get rid of their money.
Since this is a new situation, and most people are not smart enough to see what is going on, I think we have to wait a little longer. But, it is inevitable and will happen.
Great analysis! If you look at the Venezuelan stockmarket, May/June 2015 looks like a "Katastrophenhausse". For the US, the situation is a bit different, because of the reserve currency status. I guess we still have to be patient for quite a while longer.
the day that never comes...........
https://www.youtube.com/watch?v=5j_-T4cfSYE
Born to push you around
Better just stay down
You pull away
He hits the flesh
You hit the ground
Jungle Jim, keep being productive in the meantime, and be thankful for every day in which you can make "just one more" improvement to your personal circumstances.
Some Day Never Comes
www.youtube.com/watch?v=NwNuQulK6N0
Fuck me! Where did all those years get away to?
Japan is already dead. Its like the point of no return. You have enough fuel in your airplane to fly 2/3rd of the way to Hawaii but you embark on the journey anyway.
Kicking the can is what our central banks do and who is going to suffer? The little people. They most certainly won't.
They need to pay, but they are far, far too protected.
Give me a break. Japan will just put a bid under every major equity and corp. bond market on planet earth to insure the expansion of it's QE~ Infinity program.
The BoJ is well aware of the JGB shortage, and Japan voted to allow QE amounts larger than gross bond issuance for just this exact reason.
@YC
Most certainly :-)
But what will everyone else be able to obtain if Japan buys it all? Finite resources and infinite QE don't work.
As desperation starts for all central bankers in the competative bidding war for paper value you can just see the relative worth of of QE collapsing.
yes they will, but also japan and the us will force pension funds and small investors out of treasurys at gunpoint if necessary. everyone is worried about them banning gold. imo the next thing they ban is private ownership of the safer instruments such as USTs & JGBs. also, nirp is coming, so they will confiscate savings accounts and money markets too. the billionaires need bag holders. it will be sold as being for our own good, and for the good of the children, but it is naked theft. we will all be corzined in the end.
For in much wisdom is much grief, And he who increases knowledge increases sorrow...
What is crooked cannot be made straight, And what is lacking cannot be numbered...
So I said in my heart, “As it happens to the fool, It also happens to me, And why was I then more wise?” Then I said in my heart, “This also is vanity.”
I've got a garage full of junk. Maybe the CBs would like to buy it?
You need to sercuritize it: junk bonds!
is your name goldman sachs? if not then probably not.
Sunday night, Monday in Europe and Tuesday everywhere will be interesting.
Watch the charts and listen to some blues.
https://www.youtube.com/watch?v=drNjrr4NNYw
OT:
http://freebeacon.com/issues/govt-accuses-company-of-discrimination-over-employees-having-to-prove-citizenship-status/
The Department of Justice has accused a business of discrimination due to the company requiring employees to show proof of citizenship for employment.
Nebraska Beef agreed to pay $200,000 in a civil penalty settlement and said they will establish an uncapped back pay fund for people who lost wages because they could not prove they are in the country legally
FUBAR
Great link, thanks! How crazy is this: If you don't hire illegal aliens, you get dragged into court for discrimination! Is everything in the western world now completely upside down?
That story was an interesting one so I did some research, it appears that the applicants were in the US legally but that the company specified which documents they should show which is illegal.So it looks like the company did not follow the correct E-verify procedure
paying a $200,000 fine is cheap compared to a felony for hiring an illegal alien
COn an American construction site, if they don't speak English, they do not belong. It is too dangerous.
The central banks are playing pass the QE at the moment that is the only thing they have left.
Print and attempt to buy is only part of the story you also have the concept of all those QE purchases add to the market value because it is written down in a ledger somewhere.
So even buy the existance of the purchases they indirectly affect the market and seeing as this is being used as the prop for many economies no way you can EVER remove it now.
Even if you put it on a paper in a safe and throw away the key the value is there and indefinitely used to justify the current level of debt.
Personally I don't think central bankers can hold the economic system indefinitely because the problem that got us into this mess is still there and growing bigger every day.
Yet they still cannot name exactly what the problem is although they are very good at trying to hide it.
Works hours and efficiency, masked over by allowing debt to grow as a quick fix to a problem they could never solve.
Idiots ... hang them please then we can finally move into a new economic era.
The entire Western banking system (US, Europe, Japan) was bankrupt back in 2008. Nothing in the last 7 years has changed this ... and things are now WORSE!!
It should be no suprise that things are deteriorating - we have got the same deluded Central Bankers, and the same unscrupulous traders, running the system.
I am admitting ignorance by asking this question:
If bond owners won't sell, then just offer them 10% over fair market value. Or whatever it takes to entice them to sell.
There's a lot of owners who can't sell at any price because there's nothing else to buy that would keep them in compliance with their fiduciary responsibilities - pension funds, big endowments, trust funds. They all have investment policies and they can't violate those without putting themselves in personal financial jeopardy if it blows up.
You mean Lady Lagarde does not have the solution in her Hermes Bag?
the solution is the refugees streaming into europe.
der spiegel says it will boost economic growth and corporate profits - german companies are salivating. no shit.
the germans always knew : arbeit macht frei.
Mutti is from Ost Deutsch; she has loooong memories of those who don't "arbeit".
Now they have a million frei arbeit deniers! (as long as the unions don't get their hands on them. But all of Ost Europe is one big german low cost hinterland. Prost! )
Europe is for the uber nations truly.
A mercantilist Grmany has the world by the nuts as SWING country between falling Pax Americana and rising Asia. The Euro à la Germany can replace USD and also divest of Club Med as a 2nd division surrogate to core Europe once the US made dystopia brings down the whole Med region in social free for all.
Then Charlemagne's Europe will rise once again; or so hope the Frankfurt/Zurich/Brussels axis.
History teaches us one man's loss is another man's gain.
Play on Oligarchs neo-feudalism is now IN !
bla bla blablbab bla bla!!
don't sweat those guys will increase German population, big trauma for Mutti. So its cheap labour and cheaper future population; give or take a little bit of melanin.
Once again ZH and the Tylers have proven to be much smarter and insightful than the central banksters. Coming to this site is like looking into the future. Thanks Tylers, and everybody have a great Labor Day Weekend!
“diminutive” septuagenarian
you mean "old jewish broad with a lisp" don't you
you call it corn, we call it maize
So paper ASSets become worthless! All governments print fiat currency until worthless. How long will it take most people to figure this out. When the truth vaporizes every last worthless paper ASSet to ashes. Too bad! I'm so sad!
Well then, I guess they are going to be late to the party ..
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp
Start with the 11 minute teaser. Follow bread crumbs .. (deja vu?)
That VT stuff is gov. tool propaganda, imho. I use to post there a year or two ago; always got Trojans and/or crap disabled on my computers. Yes, the Government is our biggest Thugs...
+100 poco
it's interesting that Iran's PRESSTV has fallen for VT's disinfo hook line & sinker ...(i haven't tuned into presstv much though in the last couple years, so don't know if they still
VT can publish some interesting stories, and I don't mean to paint the entire staff with a broad brush, but I agree, as has been stated by others on this site that it's hard to give them credibility ...
My personal RED LINE with VT was the character assassination hit piece Stew Webb put on former FBI Ted Gunderson (after TG death) Ted passed the LITMUS TEST, as real Zeros know what that is, in flying colors. I spoke with him personally at several 9/11 awareness events & anti-war events in California circa 2002-2004. He didn't have to do that, he could've coasted on the .goob bennies for the rest of his life, but he didn't - he did what he could to tell us what was WRONG. And to see VT authorize such trash about him - WRONG.
He found out about the very bad things going on within the FBI / LEO environment in California and beyond. Here is a link to the SMEAR HIT PIECE Webb did on TG after he died (he was poisoned - do a youtube search for Ted Gunderson poisoned for an interview with the doctor who treated him) http://www.veteranstoday.com/2014/01/31/the-octopus-nothing-is-secret/
i'll look in my library for the yt link with his doctor - it was a slow and painful poisoning, i think arsenic ... his fingers went black first ....
No ... the problem materializes a LOT faster than that.
Companies are not making money - goods are not selling. Serious layoffs will begin very soon. Start tracking news of large layoffs ... publish them here.
Emerging markets are imploding ... Venezuela has collapsed. Brazil is on Skid Row. CDS spreads on the emerging market countries (financial measures for the risk of default) will start exploding. The standard downgrade system for bonds is meaningless - and far too slow - in this environment. Hedge funds will go under. The LOSSES in the system are real - they cannot be buried. One (or more) of the derivatives markets will get into serious trouble this time.
All that's needed now is one large natural disaster.....the final push
All that's needed now is one large natural disaster.....the final push
ZH: Every day it's the end of the world. Can you guys back off on the hysteria?
It's coming. maybe next week.
jeff berwick's (dollarvigilante) 2nd part of teh Shemitah video is up, pretty good
teh link is https://www.youtube.com/watch?v=-rQaKUwOWAE
for teh LoLz, Y'all ! :)
"The end of the world?" No. If you'd bothered to read, it's stockmarket meltdowns, currency collapses, credit failures and asset values that could potentially go to zero. The situation would, of course, be fairly serious, but we'll all be fine. Until maybe you turn up, demanding everybody else shares what they have with you because at that point it turns out you have nothing.
It is all mumbo jumbo because next up this will serve as an excuse for the ECB to start doing what all CB do = outright equity purchases
When there are no more bonds to be bought, that will mean that the thin-air fiat promises have bought all that can be bought. Thus they will collapse the monetary system so that the bonds will not be redeemed. That means the holder of the bond then has title. So the 1889 book "The Great Red Dragon" was right in stating that the financial sociopaths' goal was "to own the earth in fee-simple."
when there are "no more bonds", the govts will simply issue more of them. dont worry about that.
Ahem! Sweden.
I have never been so totally confused by an article.
I guess it takes a thief.
We have seen the future and... On a long enough timeline the survival rate for everyone drops to zero...
Tyler
Can you please hire a temp who has expertise in drafting Cliff Note versions of thsee long winded articles. Who has the patience to pore through all this verbage. That or provide a link to discount reading glasses.
Or you can just scroll down to the comments section...
Ain't that the problem with your kind of people? Ever wondered why you're such a dumb fucker? You are typical of hundreds of millions - you just outed yourself (by avoidable accident,) of being what is known round here as - sheeple. You're one of them.
What happend to figure 5? I was looking forward to another ballgraph.
But there's no rush: remember to give the market and the media the usual 6-9 month head start to grasp the significance of all of the above.
Source: IMF
No... No worries... We still have plenty of time to "iron" this one out!...
Most laughable and fitting end to this most disquieting read that everyone knew was well on the way 4 years ago. Japan needs to align itself with Russia and China and go beyond the talking stage to commit unification for trading directly in each others currencie(s)...
But only if it can ensure that it's commercial nuclear reactor(s) are free from sabotage when they "push the ejection button" on the USD along with the Eastern neighbors just mentioned!
The solution is obvious: if the central banks don't find enough govt bonds to buy, the govt can simply spend more money and issue more bonds.
The article is unnecessarily complex. The author is too stuck in wonky IMF logic. It does not matter who issues bonds, govt or companies, as long as there is a group of people called central banks who can simply print money to buy them. This is a simple wealth transfer mechanism from ordinary people to govts or corporations (whomever the central bank buys bonds from). The central banks cannot stop buying, because that would cause a massive seizure in the bond markets, which will effectively destroy those institutions that rely the most on bond markets: governments. Since govts run the central banks, they won't let that happen, so the money printing will go on until the bitter end, i.e. what Mises termed the Katastrophenhausse.
This arrives when there is A) no more wealth to be transferred or B) people wake up before that point and change their savings from fiat to gold etc. Until that day, central banks will find something they can buy, be that bonds, companies or greek islands.
It would be helpful if the author understood this, because for us investors it would be important to know when scenario A or B come about. The technicalities of some self-imposed buying limits of sovereign states' central banks are really not important.
Even easier; naked selling of bonds by large banks (ghost-bonds) and repurchased by Central Banks. That is, in fact, already being done as JP Morgue has be doing that very thing and the FED buying back. It ends in war, then famine, then pestilence because it is written and it will come to pass.
Even less complex.
Two Central Banks can create digital currency on each other's balance sheets via generation of 'currency swaps'.
CBx and CBy both create equal amounts of 'money' "in exchange for the other's newly created money".
Then each can 'spend' the foreign currency either by converting it to their own/host currency and then spending it, or via spending it in their counterpart's markets.
Another way to generate digital currency is done within the Commercial Banking realm via the re-hypothecation of existing assets.
Banka takes a loan from Bankb and posts a Bond as collateral.
Bankb does the usual conjuring of the digital currency out of thin air to make the loan.
Bankb now has the Bond.
Bankb now takes the Bond to bankc and gets a loan.
Repeat as required including Bankc taking the Bond right on over to Banka which had the Bond at the beginning of the round robin...
Wolframm,
Thanks for cutting through the BOJ/JGB.IMF crap and getting right to the point in one tenth of the verbage.
But then where would the financial media be if they actually spelled it out like it truly is? You truly can put world economic education on the back of a post card these days
All we are talking about here is assigned values for prices. Not true assets or goods but what the government sign board says they are worth today.
What they are desperately afraid of(especially in the financial media where tens of thousands get paid to discuss the tea leaves thrown against the wall) is people realizing that the Fed is just a mechanism for print on or print off.The rest is what the butt of a bull can produce....much more efficiently
Tks you have blown the Smoke. IMF's role is supporting the choices of the Central Banks in deciding on who to transfer wealth to and taken from. They spin from this axiom with its diminishing credibility. No more Police of global financial staibility.."Get it".
Israeli helicopters transport ISIS terrorists injured in Syria battlefield: Report
http://presstv.com/Detail/2015/09/04/427721/Syria-Israel-helicopters-tre...
The Israelis are some brilliant mofos, if you ask me. At least, assuming that everyone's thesis about them running the ISIS (Israeli Secret Intelligence Service) show is correct. I don't pay much heed to those silly acronym things, of course, since I remember the meme about the Knights In Satan's Service, but I have no doubt that ISIS is stuffed full of double agents from every agency on the planet. Anybody who shows up at their HQ is signed up on the spot. Too easy to penetrate and speaks poorly of their opsec and basic intelligence level, even if their brutality quotient remains high.
But just think of the sheer daring and brilliant execution of this alleged Israeli scheme. You've got an entire sub-continent of Stone Age tribesman hollering for the privilege of barbecuing your ass on a goat spit, and you simply subvert their leadership cadre and send them off to loot and murder each other instead of the nation and civilians you are tasked with protecting. Which one of you would elect to do things any different if the responsibility was yours?
This is like an Intelligence Service equivalent of nuclear warfare. Probably the greatest op ever waged in the history of human warfare. My hat's off to them.
Why, it's simply satanic! I'm sure the ziocunts are proud. Of course we'd all be like them if given the chance.
NOT
This is again one of those great ZH articles that I download and save. It is good to have a long term picture behind what takes place in daily investment decisions (and a timetable for the purchase of an ultra-light to get the hell out of LA).
i agree, finally back to some great reporting. Keep it up. I was getting sick of the huffington post feel of this recently.
The eternal answer for these fuckers, is to solve un-payable debt with even more un-payable debt, ad infitum.
Now listen here mr cameron, mr obama, mr hollande, mr erdorgan, the lot of you cunts running the world right into the ground while knowing fine well what you lot of child molesting bastards are up to.
You have been found owt. You have been found wanting, thinking that the average joe in your collective countries will accept this bullshit as truth. I wont, and neither will those that live in your collective countries. We have hit the very edge of what a human can endure and earn without being on our knees. Not all of those humans will stay down and take whatever the fuck you throw at them with a wink and a nod. Not all of those humans will sit still and wait on the instructions you fuckers put owt as truth.
Some of those humans, will say fuck this, tighten the belt, sharpen the razor, load the gun, hoist the petard, buckle down, clench their fists, and come and give you cunts the fucking dream thats kept you awake for longer than the NSA GCHQ knew of. Look on the web you cunts. The line has been stepped over, you asked for it, not me, not us.
We cant go on like this, and you are just about to find owt how fucked off people really are. You knew this was going to happen, and you still didnt stop those that caused it. Lets hope your collective families are safe and sound while you fucking cunts just 'Do your job'. It didnt work as an excuse for the 'Third Riech', so what makes you think you no neck cunts are above them?
Remember them fuckers that you protect beyond all cause rape and abuse kids, could even be one of yours while you do your job you muppets, just remember and think of that nagging doubt in the back of your heads. You did indeed do the wrong thing you stupid fucking cunts. The IMF? Its the least of your worries.
Cunts
:-)
ad nauseam could be added
Your manifesto is exactly what they are hoping for as opposed to just quit participating in their schemes, but mankind is the same from the top of the heap to the bottom; it is just the means to commit their favorite sins is limited in the lower end and intensified on the upper-end....sin is sin and all will be judged guilty except a few. People hate truth and live the lie.
My manifesto Mr Crocodile? No its not mate, not in the slightest.
Do me a favour and go-ogle this, 'Trussell Trust', and after doing so, get back to me and explain why some 1.2 million of my fellow countrymen now rely on food banks, you cant get them while out of work or on benefits my friend, you must be in work. Then explain how 13 million folk out of a supposed 66 million live in relative poverty. After that could you explain to me why 1.2 million people dont know what I do?
After doing that could you please explain why the MPs that rape children here and cover it up deserved an 11% pay increase to some £77,000 a year, nearly £1,500 a week while you deserve £53 a week of the same money. Never minding the fact the bastards claim it all back, plus much more in expenses, could you answer that for me?
You know I know this. Wait till the vast majority know this, and that 'Manifesto' you reckon I wrote will become a bone chilling reality. Remember the French revolution? its coming back, in high definition.
Of that I have no personal doubt.
Got it?
;-)
I so admire eloquence....
@ITM96,
It's over with JH II.
so basically 2018 is when the bottom is going to hit from the plunge that's just starting now? AWESOME CALL! errr maybe? guess that'll be when WWW-V starts after the EMPs make all electronics useless?
Go turn on cnbc for a very important message : stocks have recovered their decline and now's a great time to buy.
You would think this much QE would spur investment by now---if it was really QE like we have been told it would but I bet these central bank bond purchases are nothing but borrowings from already bankrupt cities and states which do not create new jobs (just keep paying the ruling class too much salary and benefits with a car to boot)... oh but the central bankers say these are high quality ---hope thats a different measure than the high quality MBS of a few years ago
Hey guys,
You can download a complete copy of this IMF Working Paper at the following link:
http://www.imf.org/external/pubs/ft/wp/2015/wp15186.pdf
IMF Working Paper
Monetary and Capital Markets Department and Asia and Pacific Department
Portfolio Rebalancing in Japan: Constraints and Implications for Quantitative Easing
Prepared by Serkan Arslanalp and Dennis Botman
August 2015
Abstract
Portfolio rebalancing is a key transmission channel of quantitative easing in Japan. We construct a realistic rebalancing scenario, which suggests that the BoJ may need to taper its JGB purchases in 2017 or 2018, given collateral needs of banks, asset-liability management constraints of insurers, and announced asset allocation targets of major pension funds. Nonetheless, the BoJ could deliver continued monetary stimulus by extending the maturity of its JGB purchases or by scaling up private asset purchases. We quantify the impact of rebalancing on capital outflows and discuss JGB market signals that can be indicative of limits being within reach.
The FED seems hell-bent to nominally raise interest; Their nightmare scenario must be guiding this sense of urgency/desperation. And for the chaser, the IMF is giving the serfs notice. Endgame.
I don't get the conclusion about the Fed. It owns a mere 13.4% of the US treasuries market.
http://2.bp.blogspot.com/-0kN6t5dhWWk/VVjaIH28iFI/AAAAAAAAL3Q/Zoviz787Wn...
Far from the dangerous 60% figure mentioned. It still can buy up all China's US debt holdings and still have some headroom.
Or that tapering and rate hike rumors are not related to the US gov debt market but some other assets Fed monetizes, MBS for instance? Does it mean that the MBS market is in trouble of being overbought by the Fed? We need stats.
Well, if there are no financial products to buy, they'll just have to start buying cars and bread. After all, the 99% need that money far more than they need the essentials of life.
Does this mean anne margret isn't coming?
She is, and her 90-year old lips are gonna be all over you.
And then you'll coming!
Does this mean anne margret isn't coming?
They can buy my mortgage; no charge.
I've always paid my debts, like my father and grandfather. This ship is sinking whether you pay your mortgage or not. I almost wrote in response to you post "Why bother?" but that's not right. I know the temptation must be to just let it go because God knows it doesn't matter. You'll not lose your home. But keep the faith.
-Argenta
Dedicated the loons in the IMF. Keep shaking and shaking your lost dreams.
black dragons in da house now, bitches... get ready to rock and roll.
Shouldn't we be getting ready to power down on da Funky Chicken instead?
But I'm up for a party this weekend, no matter who the DJ is.
Oh, and welcome to the financial wing of the asylum.
The Olympics in Brazil has just been cancelled... If they are smart...
http://www.wcvb.com/chronicle/power-players-john-fish/34209786
He is to slated to be the next chairman of the Boston Fed Reserve...and pushed to have the Oympics there. Not to say he is a nice guy but there is a pattern.
The Final Curtain (for Wall St.)
https://www.youtube.com/watch?v=_aogvnLTojM
just move on from soverign treasuries to the next best quality, wash rinse repeat
They live by QE they'll die by QE.
The central banks will print hundreds of trillions of non-productive dollars/Yen/Euros.
Impoverish what's left of the 99%.
All these goddamn bums used to be able to openly lie to the general public and get away with it.Not any more thanks to ZeroHedge and the modern high tech computer-communication age.You can run but you can not hide from discovery.
Japan’s economy is finished. Further, no one in Japan wants to talk about the proverbial elephant in the room- the continuing disaster at Fukushima-Daiichi Nuclear Power plants- the disaster that keeps on giving. Clean up costs for this mess will run $$ hundreds of billions and have not even begun. In addition, GE was involved in the design and building of these reactors, and along with TEPCO, should be held financially liable for this disaster. This could easily bankrupt GE.
See: www.fairewinds.org
If the Japanese government wants to print yen, they will do so. The Bank of Japan won't have to get involved at all.
What Faber and the others seem to gloss over, if they even have a strong sense about it, is the lengths to which CB's, and their benefactors (the government and the financial rackets) will go to prevent the inevitable.
I don't think they fully appreciate how desperate these people are.
I've said several times that the Fed HAS to raise rates, not because conditions have recovered enough to permit this--far from it--but because NOT raising rates, at this late stage, has really raised the credibility stakes to stratospheric levels.
I mean, they've been blowing about basically two parameters throughout this 7-year bullshit period: inflation (the good kind from jobs with paychecks that enable new consumer spending binges--NOT the bad kind caused by devaluation and the concomitant lost fiat purchasing power--which we have had for a while, but which they don't want to acknowledge)...
...AND lower UE (originally, 6%, or less).
NOW...they have BOTH...but...for the wrong reason: a warped--but well stimulated--corpse of an economy.
Hell...even the one-percenter's will tell you that things are kinda screwed up for a lot of people!
And while the Fed MUST know this (which is why they've held off so far--they're looking for a place to land their thing)...my guess is...they'll STILL raise rates because they HAVE to.
What the hell does anyone think will happen if they DON'T?
When that DOESN'T work (and...how could it)...THEN the desperate shit show will be laid bare for everyone to behold...
THAT, I think, is when it finally blows apart...all over.
Yet, watch this carefully.
Because if they try to unwind quickly (circle the airport to try again), that may signal the need for the millions of damaged Americans, of the former middle class, to energize as never before, and force a crash landing to put an end to all the racket bullshit.
If they don't, who knows when it'll end, or how bad it will finally be when it does?
Remember...desperate people (even well-papered CB academicians) do desperate things...
m
This is the end, and it will manifest in mass genocide and death for millions upon millions of human beings, animals, and the environment. Frankly, the refugee crisis in Europe will break the banks worldwide once and for all leading to the final war to end all wars, and life itself as we once knew it.
One must not forget that the people running the central banks actually do believe their own bullshit. Their understanding of economics borders on economic illiteracy imo. They are destroying the economy's capital structure, but are evidently unaware of this fact. In the end the entire currency system will probably collapse.