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Europe's Biggest Bank Dares To Ask: Is The Fed Preparing For A "Controlled Demolition" Of The Market
Why did we focus so much attention yesterday on a post in which the IMF confirmed what we had said since last October, namely that the BOJ's days of ravenous debt monetization are coming to a tapering end as soon as 2017 (as willing sellers simply run out of product)? Simple: because in the global fiat regime, asset prices are nothing more than an indication of central bank generosity. Or, as Deutsche Bank puts it: "Ultimately in a fiat money system asset prices reflect “outside” i.e. central bank money and the extent to which it multiplied through the banking system."
The problem is that the BOJ and the ECB are the only two remaining central banks in a world in which Reverse QE aka "Quantitative Tightening" in China, and the Fed's tightening in the form of an upcoming rate hike (unless the Fed loses all credibility and reverts its pro-rate hike bias), are now actively involved in reducing global liquidity. It is only a matter of time before the market starts pricing in that the Bank of Japan's open-ended QE has begun its tapering (followed by a QE-ending) countdown, which will lead to devastating risk-asset consequences. The ECB, which is also greatly supply constrained as Ewald Nowotny admitted yesterday, will follow closely behind.
But while we expanded on the Japanese problem to come in detail yesterday, here are some key observations on what is going on in both the US and China as of this moment - the two places which all now admit are the culprit for the recent equity selloff, and which the market has finally realized are actively soaking up global liquidity.
Here the problem, as we initially discussed last November in "How The Petrodollar Quietly Died, And Nobody Noticed", is that as a result of the soaring US dollar and collapse in oil prices, Petrodollar recycling has crashed, leading to an outright liquidation of FX reserves, read US Treasurys by emerging market nations. This was reinforced on August 11th when China joined the global liquidation push as a result of its devaluation announcement, a topic which we also covered far ahead of everyone else with our May report "Revealing The Identity Of The Mystery "Belgian" Buyer Of US Treasurys", exposing Chinese dumping of US Treasurys via Belgium.
We also hope to have made it quite clear that China's reserve liquidation and that of the EM petro-exporters is really two sides of the same coin: in a world in which the USD is soaring as a result of Fed tightening concerns, other central banks have no choice but to liquidate FX reserve assets: this includes both EMs, and most recently, China.
Needless to say, these key trends covered here over the past year have finally become the biggest mainstream topic, and have led to the biggest equity drop in years, including the first correction in the S&P since 2011. Elsewhere, the risk devastation is much more profound, with emerging market equity markets and currencies crashing around the globe at a pace reminiscent of the Asian 1998 crisis, while in China both the housing and credit, not to mention the stock market, bubble have all long burst.
Before we continue, we present a brief detour from Deutsche Bank's Dominic Konstam on precisely how it is that in the current fiat system, global central bank liquidity is fungible and until a few months ago, had led to record equity asset prices in most places around the globe. To wit:
Let’s start from some basics. Global liquidity can be thought of as the sum of all central banks’ balance sheets (liabilities side) expressed in dollar terms. We then have the case of completely flexible exchange rates versus one of fixed exchange rates. In the event that one central bank, say the Fed, is expanding its balance sheet, they will add to global liquidity directly. If exchange rates are flexible this will also mean the dollar tends to weaken so that the value of other central banks’ liabilities in the global system goes up in dollar terms. Dollar weakness thus might contribute to a higher dollar price for dollar denominated global commodities, as an example. If exchange rates are pegged then to achieve that peg other central banks will need to expand their own balance sheets and take on dollar FX reserves on the asset side. Global liquidity is therefore increased initially by the Fed but, secondly, by further liability expansion, by the other central banks. Depending on the sensitivity of exchange rates to relative balance sheet adjustments, it is not an a priori case that the same balance sheet expansion by the Fed leads to greater or less global liquidity expansion under either exchange rate regime. Hence the mere existence of a massive build up in FX reserves shouldn’t be viewed as a massive expansion of global liquidity per se – although as we shall show later, the empirical observation is that this is a more powerful force for the “impact” of changes in global liquidity on financial assets.
That, in broad strokes, explains how and why the Fed's easing, or tightening, terms have such profound implications not only on every asset class, and currency pair, but on global economic output.
Liquidity in the broadest sense tends to support growth momentum, particularly when it is in excess of current nominal growth. Positive changes in liquidity should therefore be equity bullish and bond price negative. Central bank liquidity is a large part of broad liquidity and, subject to bank multipliers, the same holds true. Both Fed tightening and China’s FX adjustment imply a tightening of liquidity conditions that, all else equal, implies a loss in output momentum.
But while the impact on global economic growth is tangible, there is also a substantial delay before its full impact is observed. When it comes to asset prices, however, the market is far faster at discounting the disappearance of the "invisible hand":
Ultimately in a fiat money system asset prices reflect “outside” i.e. central bank money and the extent to which it multiplied through the banking system. The loss of reserves represents not just a direct loss of outside money but also a reduction in the multiplier. There should be no expectation that the multiplier is quickly restored through offsetting central bank operations.
Here Deutsche Bank suggests your panic, because according to its estimates, while the US equity market may have corrected, it has a long ways to go just to catch up to the dramatic slowdown in global plus Fed reserves (that does not even take in account the reality that soon both the BOJ and the ECB will be forced by the market to taper and slow down their own liquidity injections):
Let’s start with risk assets, proxied by global equity prices. It would appear at first glance that the correlation is negative in that when central bank liquidity is expanding, equities are falling and vice versa. Of course this likely suggests a policy response in that central banks are typically “late” so that they react once equities are falling and then equities tend to recover. If we shift liquidity forward 6 quarters we can see that the market “leads” anticipated” additional liquidity by something similar. This is very worrying now in that it suggests that equity price appreciation could decelerate easily to -20 or even 40 percent based on near zero central bank liquidity, assuming similar multipliers to the post crisis period.
Some more dire predictions from Deutsche on what will happen next to equity prices:
If we only consider the FX and Fed components of liquidity there appears to be a tighter and more contemporaneous relationship with equity prices. The suggestion is at one level still the same, absent Fed and FX reserve expansion, equity prices look more likely to decelerate and quite sharply.
The Fed’s balance sheet for example could easily be negative 5 percent this time next year, depending on how they manage the SOMA portfolio and would be associated with further FX reserve loss unless countries, including China allowed for a much weaker currency. This would be a great concern for global (central bank liquidity).
Once again, all of this assumes a status quo for the QE out of Europe and Japan, which as we pounded the table yesterday, are both in the process of being "timed out"
The tie out, presumably with the “leading” indicator of other central bank action is that other central banks have been instrumental in supporting equities in the past. The largest of course being the ECB and BoJ. If the Fed isn’t going doing its job, it is good to know someone is willing to do the job for them, albeit there is a “lag” before they appreciate the extent of someone else’s policy “failure”.
Worse, as noted yesterday soon there will be nobody left to mask everyone one's failure: the global liquidity circle jerk is coming to an end.
What does this mean for bond yields? Well, as we explained previously, clearly the selling of TSYs by China is a clear negative for bond prices. However, what Deutsche Bank accurately notes, is that should the world undergo a dramatic plunge in risk assets, the resulting tsunami of residual liquidity will most likely end up in the long-end, sending Treasury yields lower. To wit:
... if investors believe that liquidity is likely to continue to fall one should not sell real yields but buy them and be more worried about risk assets than anything else. This flies in the face of recent concerns that China’s potential liquidation of Treasuries for FX intervention is a Treasury negative and should drive real yields higher.... More generally the simple point is that falling reserves should be the least of worries for rates – as they have so far proven to be since late 2014 and instead, rates need to focus more on risk assets.
The relationship between central bank liquidity and the byproduct of FX reserve accumulation is clearly central to risk asset performance and therefore interest rates. The simplistic error is to assume that all assets are treated equally. They are not – or at least have not been especially since the crisis. If liquidity weakens and risk assets trade badly, rates are most likely to rally not sell off. It doesn’t matter how many Treasury bills are redeemed or USD cash is liquidated from foreign central bank assets, US rates are more likely to fall than rise especially further out the curve. In some ways this really shouldn’t be that hard to appreciate. After all central bank liquidity drives broader measures of liquidity that also drives, with a lag, economic activity.
Two points: we agree with DB that if the market were to price in collapsing "outside" money, i.e. central bank liquidity, that risk assets would crush (and far more than just the 20-40% hinted above). After all it was central bank intervention and only central bank intervention that pushed the S&P from 666 to its all time high of just above 2100.
However, we also disagree for one simple reason: as we explained in "What Would Happen If Everyone Joins China In Dumping Treasurys", the real question is what would everyone else do. If the other EMs join China in liquidating the combined $7.5 trillion in FX reserves (i.e., mostly US Trasurys but also those of Europe and Japan) shown below...
... into an illiquid Treasury bond market where central banks already hold 30% or more of all 10 Year equivalents (the BOJ will own 60% by 2018), then it is debatable whether the mere outflow from stocks into bonds will offset the rate carnage.
And, as we showed before, all else equal, the unwinding of the past decade's accumulation of EM reserves, some $8 trillion, could possibly lead to a surge in yields from the current 2% back to 6% or higher.
In other words, inductively reserve liquidation may not be a concern, but practically - when taking in account just how illiquid the global TSY market has become - said liquidation will without doubt lead to a surge in yields, if only occasionally due to illiquidity driven demand discontinuities.
* * *
So where does that leave us? Summarizing Deutsche Bank's observations, they confirm everything we have said from day one, namely that the QE crusade undertaken first by the Fed in 2009 and then all central banks, has been the biggest can-kicking exercise in history, one which brought a few years of artificial calm to the market while making the wealth disparity between the poor and rich the widest it has ever been as it crushed the global middle class; now the end of QE is finally coming.
And this is where Deutsche Bank, which understands very well that the Fed's tightening coupled with Quantiative Tightening, would lead to nothing short of a global equity collapse (especially once the market prices in the inevitable tightening resulting from the BOJ's taper over the coming two years), is shocked. To wit:
This reinforces our view that the Fed is in danger of committing policy error. Not because one and done is a non issue but because the market will initially struggle to price “done” after “one”. And the Fed’s communication skills hardly lend themselves to over achievement. More likely in our view, is that one in September will lead to a December pricing and additional hikes in 2016, suggesting 2s could easily trade to 1 ¼ percent. This may well be an overshoot but it could imply another leg lower for risk assets and a sharp reflattening of the yield curve.
But it was the conclusion to Deutsche's stream of consciousness that is the real shocker: in it DB's Dominic Konstam implicitly ask out loud whether what comes next for global capital markets (most equity, but probably rates as well), is nothing short of a controlled demolition. A premeditated controlled demolition, and facilitated by the Fed's actions or rather lack thereof:
The more sinister undercurrent is that as the relationship between negative rates has tightened with weaker liquidity since the crisis, there is a sense that policy is being priced to “fail” rather than succeed. Real rates fall when central banks back away from stimulus presumably because they “think” they have done enough and the (global) economy is on a healing trajectory. This could be viewed as a damning indictment of policy and is not unrelated to other structural factors that make policy less effective than it would be otherwise - including the self evident break in bank multipliers due to new regulations and capital requirements.
What would happen then? Well, DB casually tosses an S&P trading a "half its value", but more importantly, also remarks that what we have also said from day one, namely that "helicopter money" in whatever fiscal stimulus form it takes (even if it is in the purest literal one) is the only remaining outcome after a 50% crash in the S&P:
Of course our definition of “failure” may also be a little zealous. After all why should equities always rise in value? Why should debt holders be expected to afford their debt burden? There are plenty of alternative viable equilibria with SPX half its value, longevity liabilities in default and debt deflation in abundance. In those equilibria traditional QE ceases to work and the only road back to what we think is the current desired equilibrium is via true helicopter money via fiscal stimulus where there are no independent central banks.
And there it is: Deutsche Bank saying, in not so many words, what Ray Dalio hinted at, namely that the Fed's tightening would be the mechanistic precursor to a market crash and thus, QE4.
Only Deutsche takes the answer to its rhetorical question if the Fed is preparing for a "controlled demolition" of risk assets one step forward: realizing that at this point more QE will be self-defeating, the only remaining recourse to avoid what may be another systemic catastrophe would be the one both Friedman and Bernanke hinted at many years ago: the literal paradropping of money to preserve the fiat system for just a few more days (At this point we urge rereading footnote 18 in Ben Bernanke's "Deflation: Making Sure "It" Doesn't Happen Here" speech)
While we can only note that the gravity of the above admission by Europe's largest bank can not be exaggerated - for "very serious banks" to say this, something epic must be just over the horizon - we should add: if Deutsche Bank (with its €55 trillion in derivatives) is right and if the Fed refuses to change its posture, exposure to any asset which has counterparty risk and/or whose value is a function of faith in central banks, should be effectively wound down.
* * *
While we have no way of knowing how this all plays out, especially if Deutsche is correct, we'll leave readers with one of our favorite diagrams: Exter's inverted pyramid.
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Yes they are creating a controlled demolition of the stock market. FACT.
Random thought. Do you think that Bill might have tried to cheer up Hillary this morning by reminding her that Nelson Mandella wasn't elected head of state in South Africa until after 27 years in prison?
I'll take 94 year old presidents for $1000 Alex !!!
Wonder what those cankles will look like in 27 years ???
What is taking place right now is a controlled demolition of China. Our NYC boys are getting ready to go abroad and pick off foreign assets, and to do that they will want a strong dollar. They will raise rates to achieve that. Everybody who thinks raising rates has anything to do with the stock market is wrong, right now. That was the last stage of the plan. This stage involves a strong dollar, regardless of what happens to equities. In fact, if our equity market tanks, the perception or reality, however you look at it, will drive down global asset prices further. "We" are getting ready to buy back assets for pennies on the dollar.
Yes. The fact that we have a presidential candidate talking about tariffs, after 25 years of 'free trade' baloney, agrees. Same goes for ME oil countries. They are up to their eyeballs in debt. Raising rates is the equivalent of their monetary tide turning and leaving their shores.
The last "info" graphic fails to show Ag, which is a typical oversight...............Au is 'overvalued' in terms of Ag
What if the fact that Ag is an industrial metal actually hurts the perception of its value as the production of electronics tank? What if the little guy who has been able to buy Ag suddenly needs to convert their Ag into fiat to pay for necessities? What if the people rushing to the safety of monetary metals have no idea what you are talking about and focus on Au? Are large institutions prepared to store silver in the quantities needed to represent their deposits, or do they only have capacity for the much more compact Au? How much Ag can you sew into the lining of your clothes? To my mind Ag does seem to be better positioned in many ways, but I'm pretty sure that doesn't matter.
'Bout time, I've been saying it for a while.
From its inception, the central planning usurers KNOW what the inevitable outcome of their diabolical central banking practices will be. They are evil. No other way to put it. The fount of all of their power on this earth is through the control of the counterfeiting banking system they have nefariously erected. We must act to ensure that when it finally does collapse, they are not only not allowed to enslave us with another debt-based monstrosity, but are hanged with due diligence.
When I was a good part of taking apart Fairchild Semiconductor, the gold wire vaults were a big deal.
I have taken apart vaults that have been bigger delios but Fairchild was the most memorable.
https://www.fairchildsemi.com/about/history-heritage/
I'm sorry, but where in any of the quotes that are used by non-Zero Hedge sources is the term "controlled demolition" used? I couldn't find any.
Your comment locked my computer
Expect a visit.
Speaking of circle jerks
https://www.youtube.com/watch?v=zyvMdqvH2zg
to mvsjcl: larry silverstein: we pulled it.
http://www.luogocomune.net/site/modules/sections/index.php?op=viewarticl...
https://www.youtube.com/watch?v=U1Qt6a-vaNM
There is no controlled demolition. The FED is simply stuck. If they raise rates, the whole house of cards collapses. So they might try a snail-paced rate hike. But it won't work. Expect more QE.
the central planners take care of their own and destroy every one else.
Israel is transporting an undisclosed number of Africans to Sweden in a deal brokered by the UN. “Dozens” have already arrived in Sweden. Each is given a $3,500 “grant” by Israel.
Sweden is a tiny nation of only 9.5 million. Already, a shocking 2 million are non-Swedes. Swedes also have one of the lowest birthrates in Europe. About 530,000 are non-European immigrants. In 2013 Muslims rioted in Sweden for a week straight causing massive amounts of damage.
The Interior Ministry said the migrants left for Sweden in the context of a government incentive scheme and were granted $3,500 each upon departure. They are encouraged to leave Israel voluntarily and to promise not to return.
The Jewish Supremacists argue that having non-Jews in Israel “threatens the Jewish nature of the state.”
“If we don’t stop their entry, the problem that currently stands at 60,000 could grow to 600,000, and that threatens our existence as a Jewish and democratic state,” Netanyahu said.
the jewish state as a jewish state is doomed. demographic trends, moore's law, the internet and nuclear weapons technology insure it if the better case of global ostracism proves fruitless.
i'm more worried about beautiful sweden and everywhere else being invaded with diversity directed by the world planners.
It's all by design, so cui bono.
“Anti-Semitism in Europe”—Caused by Jewish Lobby Promoted Third World Immigration
http://newobserveronline.com/anti-semitism-europe-caused-jewish-lobby-pr...
There is no point in worrying about Sweden, or most of Europe for that matter. It is already lost. Oddly, every other ZHer's favorite villan in eastern Europe when regarding Ukraine and Russia, Poland, is the least affected to this point.
As enthralled as I am about this topic and the economic breakdown we are about to experience, I've come to believe that this is just a smokescreen for something much bigger than people can imagine.
Put me down as a nutjob or whatever, but I've spent quite a bit of time reviewing the research into extraterrestrials this past year. I don't have a doubt in my mind that not only do they exist but that their existence is the greatest secret ever kept from the world. So much documentation of their existence that this isn't reallly the point of this comment. What IS relevent is what they are doing here and how much of what is currently being planned is part of an agenda that involves them (maybe none of it, but does a NWO fit their agenda)?
There are many researchers that have uncovered quite a bit of evidence but I like this guy Bob Dean because he is someone who actually read the NATO report on ET's and has spent decades putting together a comprehensive (as much as can be possible under the circumstances) theory of why they are here. It's fascinating and once you adopt the belief that we are not alone and never have been, it's almost impossible to view world events in any other light than that of a grander scheme (for better or worse). I recommend everyone take the time to look at all the evidence that is being documented in real time.
For those interested, google (in no particular order) Stephen Greer, Richard Dolan, Bob Dean, "secret space program" (there are several speakers on youtube from last years conference in San Mateo you can find online), Hoagland and Hancock (can't recall their first names). Not all are in agreement on what is going on and some have some pretty wild theories that are mostly unprovable opinions. What isn't opinion is that ET's exist and are here.
As a primer, check out Bob Dean's speach he gave last year (former command Sgt Major and staff member at SHOC, supreme headquarters operational command post, european theater) when you have time.
https://www.youtube.com/watch?v=ergzkwCA1cQ
hanger one is a bomb ass show.
You're right, it is about something much bigger.
ETs are a controlled opposition diversion to cover for military technological development over the past 50 years that we've been kept in the dark about. Think about it, ETs are like us in relation to a random ant hill in the Amazon. What's more likely you, as an alien, have the technology to go anywhere you want, yet you decide to focus your energy on directing the politics of this tiny ant hill... or, the militaries around the world have secretly been developing advanced technologies and are releasing it in a way that serves their agendas?
Don't you think you, as a military, would basically instantly win WWIII if you presented yourself as an alien race to broker piece and destroy all nuclear weapons? Best pysop ever.
Hoagland is an opportunistic quackpot.
@chubber: they are not extraterrestrial. They are extra dimensional. Scientists are hard at work (CERN) to open up a portal to allow these demons to pour on thru.
Like I said in a post yesterday...the central bank's bazookas are completely out of bullets. Got nothin'. Nada...nichto. And all poor Janet can do at this point is run to the end of her chain and bark. The "Bernank" totally screwed that pooch.
Fate the Magnificent
"Push the Button. Max"
Footnote 19.
Some recent academic literature has warned of the possibility of an "uncontrolled deflationary spiral," in which deflation feeds on itself and becomes inevitably more severe. To the best of my knowledge, none of these analyses consider feasible policies of the type that I have described today. I have argued here that these policies would eliminate the possibility of uncontrollable deflation.
http://www.federalreserve.gov/boarddocs/Speeches/2002/20021121/default.h...
The more incompetent the presidential candidate, the better chance they have of getting elected. That has become the rule and still continues to be the rule.
All the candidates know it and are trying to outdo each other in the Asshole department.
You can talk about plans or models or just anything you want, I'll put my money on a chaotic universe. Right now God is pointing and laughing......
The bankers must repay us; and helicopter money will work.
The "Network of Global Corporate Control" stole "many thousands of trillions" of dollars from us, which amounts to millions of dollars each for every person on the planet.
http://divinecosmos.com/
https://www.youtube.com/watch?feature=player_detailpage&v=lyXi1efbYrk#t=863
"
http://www.zerohedge.com/sites/all/modules/blockquote/images/menu-leaf.g...); background-position: 0% 0%;">If we only consider the FX and Fed components of liquidity there appears to be a tighter and more contemporaneous relationship with equity prices. The suggestion is at one level still the same, absent Fed and FX reserve expansion, equity prices look more likely to decelerate and quite sharply."
On the long running argument at ZH regarding "Flow vs Stock", i.e. Tyler's argument w Fonzanoon. The above quote from Deutsche supports Tyler's assertion that it is the Flow not the stock of liquidity that matters.
detais please. which nyc boys... which china assets
China is not stupid enough to sell off its assets for pennies. There is that small matter of sovereign nationhood to consider. They don't have to sell a damn thing if they don't want to.
Great post!
"Everybody who thinks raising rates has anything to do with the stock market is wrong"
They love to say rising rates impacts earning negetively so stock prices fall. Bullshit!
This will not be a meaningful rate increase and earnings are/should be affected by demand for a company's products. Demand has been crushed. Stock markets are levitated through central bank liquidity management, buy backs and algos.
If they need any inspiration of how to pull off a "controlled demolition", there are plenty of easily accessible YouTube vids of Building 7 coming down.
Ordo ab Chao
Many September Events (cue doomy musak):
SEPTEMBER 23, 2015 CHAOS: Cancelled TV Show TELLS EVERYTHING ABOUT 9/23 AND CERN DIMENSIONAL DOOR
https://www.youtube.com/watch?v=HsSgrbEc8XQ
27 THINGS THAT WILL HAPPEN IN SEPTEMBER-OCTOBER 2015
https://www.youtube.com/watch?v=HZ03_m50T-M
September 23, 2015 The Crowning of Nimrod's Tower
https://www.youtube.com/watch?v=gwsfKvzO8Ks
One of the more enlightening documentaries on the subject:
The New Pearl Harbor
https://www.youtube.com/watch?v=dWUzfJGmt5U
indeed. just realizing that nothing below the plane hits was "supposed to be" damaged, so a part, in one case a small part, of a building is falling on the rest of the building. it would collapse somewhat, a little, at a slowing rate. that's physics. to watch the collapses in slow motion, magnified, is a revelation.
not to mention studying larry silverstein's machinations, lease arrangements, health issues, insurance policies, litigation and media slip ups.
dante needs a new ring.
At the most basic level, the physics don't make sense relative to the official version.
https://www.youtube.com/watch?v=Ddz2mw2vaEg&index=2&list=PLCFCB1EBC1BD3F5D9
September folks, *SEPTEMBER* - the month for high scale controlled demolitions, did you forgot it?! The kind which benefits very few clever guys and screw millions of suckers
https://youtu.be/YehuX9B868k
https://youtu.be/cCOLcMqdpls
Elephantitis is my guess for $100.
You'd lose the hundred, Winnie. It's elephantiasis.
this?
http://www.dreamstime.com/photos-images/elephant-foot.html
I think could actually rub one off to a vision of that bitch behind bars in an orange pantsuit....
Bill's punishment for being a white headed pimple on the face of American history is partially having to wake up next to that skanky monster reading us sexy ZH posters on her Blackberry.
The other part is the Vickster Nuland menstruating and snoring next to them.
Let that image burn in a while. Go ahead, I double dare ya punk.
Love Alexa
That's disturbing.
Thanks for the complement Knuks.
Please, what makes you think Bill and Hil sleep in the same house or time zone? Haven't you heard? Wild Bill bought a mansion for Hil and her gal-pals. He calls it "The Humador".
Not quite nice ., but well on the way to perfect.
Now, That is fucking funny.
Is that where he keeps his cigars?
I get sick if I even imagine the stench that ruminates from the cunt of hilary. Such a pig
Bill doesn't wake up next to Hillary, they have separate residences and have had for some time now. Their "relationship" is of strict political convenience only.
Sticky Vicky's in the middle so they can both have a go!
I much prefer the term "controlled implosion," since the wrecked U.S. economy we now have got its start in the implosion of the World Trade Center 14 years ago next week. Too bad we can't ask Larry Silverstein who his partners were in Reichstag-type false flag attack on the WTC. George Soros is probably still angry that he could not cash in on his airline put options back then. But Related Companies has been handsomely rewarded for walking away from the WTC lease it won after outbidding Silvestein. The operative words in the NWO attack on the World Trade Center and the USA are "none dare call it treason." Or you wind up gunned down like Philip Marshall, the CIA contract pilot who knew too much about the Marana "boneyard" and as a result was murdered along with his kids and dog by Mossad agents.
BTFD'ers think the stock market will go up forever cause "the FED has to."
LOL! How wrong they are!
Fundamental collapse is about the dollar and country as dear leader wishes.
There will be no collapse of equities by the Fed.*
* - Until GS & JPM have all their shorts in place.
Yes...I believe you can take this to the bank but they won't make it easy
Joe Nobody, me, called this a long time ago. This is kinda disturbing. If it's true, they have to destroy all the non-club members shorts.
Naw. Do lions take all the kill? Nope; after they've had their fill, the leftovers are for the jackals and hyenas. Unfortunately, financial sociopaths are not man enough to be called lions. Just Snakes In Suits.
In Exter's diagram, why are corporate bonds considered safer than CDs? I think most corporate paper would fail before FDIC.
six words all that's needed
first by inflation, then..
Why do so many agree with you? It doesn't make sense. The whole purpose of making a bubble in equities it to gain confidence of the consumer. To build another Ponzi scheme.
It doesn't matter if its a "controlled" demolition or an "uncontrolled demoition". There will be millions of very unhappy Americans that watch their retirement disappear. (Yes I know most americans don't have stocks and yet quite a few still do, note all the government bullshit that encourages you to place your bets in the stock casino, 401K anybody, Roth, whatever).
Blowing up the stock market will destroy consumer CONFIDENCE. And there goes spending.
So the fuck do all you people agree with his statement.
Uncle Fraud is going to do whatever it can to maintain the bubble therefore CONFIDENCE in our economy. Which means there will be a great deal more printing/borrowing to come and inflation will slam everybody. The reason complaints haven't gone off the charts concerning inflation, is because up till recently, MILLIONS were feeling fat and happy from their equity investments.
So WHY PEOPLE, do you agree with the above? Since the original intervention (TARP) the Fed has assumed the role of market intervention. You can count on them being involved. There would be no reason for them to stop intervening. Inflation has the side benefit of paying off debt with inflated dollars. That is also part and parcel of the strategy.
"controlled"?
"Controlled Demolition" Of The Market
Haven't they been doing that ?!
https://www.youtube.com/watch?v=PyobpFUX6no
you have no idea who we are.
Clever editing ..
We are the DVD. We work largely out of Dachau ..
http://www.veteranstoday.com/2015/05/04/neo-so-much-more-than-nukes/
We, also have superiors ..
http://tuppersaussy.com/museum/html/writings/articles/15brienner.html
For further bread crumbs, read this entire dialogue ..
http://tuppersaussy.com/museum/html/writings/articles/dialvol1no1.html
None of us are infallible. Eventually there comes a sense of [temporal] equilibrium ..
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp
Begin with 11 minute teaser. Yada, yada, yada ..
(I feel like a Sunday School teacher, trying to prepare children for Adult Bible Class.)
Veterans Today has been outed as a cattleman's clearing house for manure.
Surprised A. Neumann isn't all over you.
Already once said here that "economics" is not science and was crucified (never seen so many "-" in a review!).
Well, I reiterate my observation.
Economists are sons of bitches who invent a lot of papers and formulas to replace decent work and the money earned from good people.
Those who produce the wealth of a country.
Whoever heard you pay for gold and take back a role?
Think about it in the absurd!
In my farm, seeing a cow, I want money.
No he did not buy diesel, seeds etc. .
Not seeing early harvest, I am not sure crop, plant and seeing how God gives the conditions.
Cash.
I have no credit card (looks like an aberration), only work with cash and check (another aberration).
If everyone lived within their means, maybe the shit would not be so great.
Another thing, Economist for me is at the same level of esoteric signs that creates graphics (mine is Scorpio)
Kkkkkkkkkkkkkkkkkkkkkkkkkk!
Come on, do not be shy, I want more than the 18 "-" I had the last time!
hehe.
wtf?
Disagreement: http://www.acting-man.com/?p=39814 (i.e., economics IS a science - nevertheless, some of what you say is correct, especially w.r.t. modern mainstream economics).
Trust me when I say.....Desperation is never a controlled experience..."to raise or not to raise, that is the ONLY question To be, or not to be--that is the question:
As Ive postulated before, must be nice to be paid to sit around day after day wondering when to raise rates....pushing on the string, painting yourself into a corner, roosters coming home to roost etc..
I've been saying for a while that the fed can't just start QE for no reason right now even though they would love to. After years of saying how great the economy is, starting QE now doesn't make sense. There must be a catalyst, and the easiest one to force logistically is a stock market crash.
Maybe they will continue saying how great the US economy is... BUT our trading partners, our friends, need our help?
We'll guide them through to the other side of THEIR crisis!
LOL
Oh no, the Fed's gonna 9/11 the stock market!
Damn Banksters.
Controlled demolition. And yes, the stock market too.
Call it whatever you want... The Fed will hike, the Fed Gov't will issue enormous amount of Tresauires and QE 4 will sop them up.
The Fed hike's for show but prints for dough.
Absoutely true. Historically rate adjustments have very little effect. Just a propaganda signal. QE is where it is at man. So signal all is well, then be 'Shocked! Shocked! that there is gambling going on!" and roll out the QE4 to save the day.
Interesting.
The Fed is founded on the flaw that it knows all the dependencies and variables in the chaotic dynamic system we call an economy, and that it can play with its control levers to achieve a particular outcome. The Fed thinks it can see and manipulate the inivisble hand. In fact, it is completely clueless insofar as understanding the functioning of an economy, but it has a lot of clues on how to protect its GS/CITI/JPM elites from their own mistakes. In fact, this may have been its primary purpose when it was organized. Nevertheless, I give them credit for pushing out the unintended consequences of its actions for 40+ years. That took an incredible amount of pretzel logic presented to pundits and Congress.
The Fed is a criminal cartel, formed in secret by criminal bankers.
https://answers.yahoo.com/question/index?qid=20070404073258AAZXNYw
https://www.federalreserveeducation.org/about-the-fed/structure-and-func...
http://www.apfn.org/apfn/fed_reserve.htm
http://fortune.com/2011/10/26/bernie-sanders-the-big-banks-rule-the-fed-...
(No fan of bernie, by the way , but he is irritating, a good thing)
https://www.richmondfed.org/faqs/frb
I think "California wildfire" is a better metaphor. The cradle of western civilization, Greece, light the fire. Now it's spreading throughout the world economy. What goes around, comes around from cradle to grave.
My favorite picture.
Deutsche Bank must have read my zerohedge posts
the fed will take on ALL treasuries- and the "write it all off"
-you know who the ACTUAL crediters are..
YOU and ME
-and with guns pointed in our faces, who will protest?
double post? why?
Because you fat-fingered the Save button.
You hit save twice azzhole.
Now stop it and kiss my boot.
Love Alexa,
Your Dream Dominatrix
U r on a crap platform.
Paypal suspends service in Puerto Rico - capital controls coming?
https://smaulgld.com/pay-pal-pulls-out-of-puerto-rico/
The question is not, can they, or would they, but why wouldn't they? What is the nature of a banker, honest, caring for others, or venal? Trust is an opiate of sheeple, financial advisers and fools.
Dat headline
I think I've heard it referred here on zh as the margin call from hell . Oh yeah and. Bitchez!!!!
OMG THE BANKING SYSTEM IS FUCKED!
:)
Guess I'll throw a grand into faz and let it ride until the end of the year.
Might consider shorting FAS instead. Just a thought.
FAZ like all ETF's will vaporize in a puff of shit but go ahead. Read the prospectus, derivitaves of derivatives of derivatives.
cash is more liquid than Treasury bonds, so if JY bought those 1T through Belgium then sea level is rising. it may be that those dollars are not as liquid as they used to be, what does America sell (besides it politicians). its obviously inflationary, adding liquidity to the global market, because a lot of those dollars are recycled via the NYSE. the petro dollar died, relieving countries of the need to hold fx reserves, while at the same time we are hemoragging global fx reserves, as we pay off bond holders.the higher the fx goes the less anyone wants it, and short of some reason to make them hold it, it loses value. its like the gold market in reverse, when the price of gold drops supply disappears, people use dollars which are ubiquitious and no one wants to sell gold. (and there is not enough treasury paper in the system for the cbs to properly monetize their spending) gold should go up instead they repress it through short sales and supply vanishes. sounds like a problem to me even without the equity blowback
controlled deomolition? nah...they will just blame it on some underground fires....just like they did with WTC7....
What's a bank?
So thats why Yellen didn´t show at Jackson Hole.
She has been busy at the White house planning a giant global sosialist attack on capital.
Crash stocks, bonds, and drop money on the streets!
I guess Obama is going to discuss this plan with Xi Jinping´s under his first Whashington visit later this fall.
Hedge accordingly!
Well, of course the Fed is going to attempt a controlled demolition, because they know some sort of collapse is unavoidable. Don't be surprised if a false flag event is perfectly timed to help deflect attention from the true criminals and remove any remaining rights you may have. Those who own the Fed will be positioned quite nicely no doubt, and more so with each of the contrived bounces in the holiday illiquid market. Wouldn't be surprising to see equities crash next week when the global financial elite's Fed will have the most control for a demolition. Then, don't be surprised if the recently enacted laws by the criminals who call themselves US government will be implemented to do savers a "favor" and convert all those juicy retirement funds into US Treasuries. The Fed's owners can then buy those equities low and savers will be forced to buy Treasuries at an all-time high.
With the last of the real capital ownership of productive assets transferred to the global financial elite, they will no longer be concerned with face values in the equity markets. Meanwhile, the sheeple will watch their savings disappear into an inflationary sink hole of illigitimate government debt under which they were encumbered by the criminals who call themselves government, and those who own them.
The next act is the most critical one, when most central governments collapse in financial and moral bankruptcy. Extensive top secret plans have been made for continuation of government by the criminals who would benefit most from it. First, they want to eliminate a large majority of the population which will have been milked for everything that can be stolen from them. Then to save themselves, they will try to ban cash, create a new currency, default on the debt owed to the people (but not their owners), and then impose martial law to ram it down our throats. All the while, they will be claiming that all the pain is because of the loss of central government and that we need a stronger new one to do a better job (on us).
Indeed, the inevitable self destruction of central governments will be extremely difficult, because of what central governments have done to destroy the intrinsic value of what people use as a medium of exchange, money. If commodity backed non-government money doesn't re-emerge quickly (very unlikely), economic exchanges will be severely hindered after the self-destruction by the return to barter for the most part. Supply chains will collapse, and then a large majority of the populations of people whose survival depend entirely on the supply chains will perish in a few months.
When, not if, the central governments self-destruct, we need as many people as possible to remember these few simple facts:
All of the societal pain will be because of what central governments did to consume the resources of society and destroy its money, while enslaving the majority to dependence upon it's stolen and counterfeit money. The pain will NOT be because of the absence of central governments. The return of the state will only assure that future generations will experience this pain again.
...Life, Liberty and the Persuit of Happiness. To secure "these rights", governments are instituted AMONG men, not over them. No form of "government" beyond, possibly, the most local level is needed to secure "these rights". Anything more, will only serve to violate "these rights". Central government is unnecessary and only serves to violate these most basic rights.
For those of us who survive the pending calamity, and all future generations, we must do everything in our power to prevent the return of central governments after they soon self-destruct. No other lesson for the future of mankind is more important.
To learn more about the many advantages of a stateless society, start with Murray Rothbard's "For A New Liberty", available free at
http://pure-liberty.org/Visions.html
WELL SAID
WELL SAID
Bravo.
+ a million
Meine Droogies,
Such a long, boring article with such pretty graphs and such busy words like Deutsche Bank, "Quantitative Tightening", "helicopter money" "controlled demolition", biggest can-kicking exercise, Premia, illiquid Treasury bond market, €55 trillion in derivatives, counterparty risk, Exter's Pyramid and the author congratulating demselves on how prescient dey are... with the typical "I told you so" attitude. Shieze!
Fuck dat.
I want to know when das fucker crashes so I can fit it in my schedule between fucking, licking, piercing, biting, screaming, sucking, humiliating and kicking banker's asses for large amounts of fiat currencies.
Cans I gets a vitness Dominic?
Love, Alexa
(you will sooner or later Bitchez)
Now, let's Danse!
https://www.youtube.com/watch?v=KLxqm7ey4Nw
Nothing here that a good old fasioned world war can't fix.
When does Jade Helm end?
Huge nothingburger that turned out to be. Watching the chicken littles here cry for their mommy over it was pathetic and hilarious.
Not sure if it ever really began after the light of the alternative media shone full upon it and all the military "leadership" cockroaches ran for cover. This is a huge success against the parasitic criminals that call themselves US government. They will be less prepared to implement continuation of government after the central government self-destructs in a financially and morally bankrupt heap. We will be far better off without them (see earlier comment under this article).
At the tip.};{D>
So the light finally goes on with Central bankers. Why now?
Why now? Because it's too late to fix it.
Just like they wanted.
"Liquidity in the broadest sense tends to support growth momentum, particularly when it is in excess of current nominal growth.
Positive changes in liquidity should therefore be equity bullish and bond price negative.
Central bank liquidity is a large part of broad liquidity and, subject to bank multipliers, the same holds true. Both Fed tightening and China’s FX adjustment imply a tightening of liquidity conditions that, all else equal, implies a loss in output momentum."
WHY would changes in liquidity be bond price negative?
The multiplier can as easily be applied to bonds as equities, if not more easily -via repo.
We CAN & DO have ways of measuring equity margin leverage; but, where is the data on aggregate bond repo leverage to be found?
We are told when 'retail' equity margin leverage rises and falls and by how much..
What about wholesale? Shadow inventory long-leased in the dark pools?
Hello, Commercial Interbank Repo? Hello, Central Bank Repo?
Hedgies, Insurers, Pension Funds, Sovereign Wealth Funds?
London calling or London called?
Am I missing something??
No one can price anything anymore. The constant intervention in markets by central banks and government plunge protection teams, along with artificial interest rates make price discovery a joke. There is none, Governments see Equity Share Prices as vital to each nation's economic recovery plan. Wealth Effect is an open secret. The elite bankers use central bank policy to produce wealth effect that goes to a top of no more than 1%. Structural economic failures are overlooked in the joy of record high markets. Record debt, falling real wages, rising prices for education and health care. Inflation in necessities is 10% a year or more, jobs pay less each year. Markets are the cure for all this, but if we raised interest rates, and let the naked swimmer drown, the political power of those threatened would force government back to ZIRP and QE. The vast array of bankrupt institutions hold enough political power, via bribed politicians, to force policies to bail out financials, and let the real economy go to hell.
The first two sentences were good.
The rest were tripe.
Don't use more words than you you need to.
hum-dee-dee-dum whistles Yellen standing outside the FED. Nervously looking around she drops a match onto the gunpowder trail ... with a woof of smoke comes an almighty explosion. Under her breath she quietly whisphers, "fuck all left for you too audit now".
As the article implies, the best the FED might be able to hope for with all the dollar creation that has been going on for decades it might be better if nobody finds out.
I mean why did the French try to redeem dollars for gold?
Would you, finding somebody in your house thieving, leave the fuckers in there to thieve on an ever bigger scale?
Economically you could say that is what happened.
Maybe the expected implsion/ explosion will simply be the pretext for mopping up any remaining wealth, introducing an Orwellian cashless society and cauing the rest of the world to go into a spin so that the crappy state of the US will look a lot better.
The Chinese reopen their markets in just over 24 hours, that will be interesting. The catalyst for a crash will be the lift of interest rates by the Fed, it's hard to imagine they will do this knowing the consequences. Short sellers heaven, sadly no shorting in my country.
What happens when the total amount of debt created, far exceeds the total bank liquidity?
I understand what happens when individuals or corporations try this for an extended period of time...
"Liquidity in the broadest sense tends to support growth momentum, particularly when it is in excess of current nominal growth. Positive changes in liquidity should therefore be equity bullish and bond price negative. Central bank liquidity is a large part of broad liquidity and, subject to bank multipliers, the same holds true. Both Fed tightening and China’s FX adjustment imply a tightening of liquidity conditions that, all else equal, implies a loss in output momentum."
Such a simple statement.
Bravo to whoever crafted it.
"Europe's Biggest Bank Dares To Ask: Is The Fed Preparing For A "Controlled Demolition"
The FedRes isn't, but the FedRes' owners, Zion and the Rothschild banksters are.
Unless one believes that Zion and their grifting banksters do not desire to profit from the dollar's descent as they have from it ascent over the years.
Zion is a scheme, not an ethnicity.
The dollar is up on "exit."
god almighty that shit is rife with egregious errors. that was written by a banker? truly idiocracy is upon us.
So, ‘The first bullet has flown trough the Church’ :Dutch Proverb Org: ‘De kogel is door de kerk’.
And just after the first bullet https://www.youtube.com/watch?v=APLCbcu1hrY
Its the emergence of one world currency. They will make a huge problem and present the 'solution'.
Correct.Introduce global trauma then offer a novel global solution. The age old dream inexorably advancing into reality.
Since there is no trust left for those who have been running our financial system, i think it will be very difficult for those people to sell a novel global solution.
Agree. They think they are better than they are, but its too complex now. In history many times some minor unforseen event can derail a plan and change the course of events. Some human element most likely. Some group doing the unexpected
Looking forward to see the new james bond in november, provided there's no incident in between which closes all the banks and supply networks while anarchy prevails while the system is reset etc.
All money is made out of thin air by private banks and guaranteed by their central banks who are little more than first among equals. If there were no debt there would be no money; this simple fact has allowed bankers to enslave us with the shackles of interest.
A sovereign money/mutual credit system could work wonders, reducing the impetus for perpetual and sustained growth that is simply impossible on a limited planet. Most of the "growth" in Western countries since the 1970s has gone into fattening the pockets of capitalists and bankers.
Lots of people are talking about building walls nowadays. I think their real intentions are to keep people IN.
Lots of important sounding words trying to make a simple problem seem oh-so complex... it ain't.
The problem is lack of velocity. (period)
The Makers don't want money right now (at any price) 'cuz there's nobody worthwhile to sell to.
The Takers can't get money at any price 'cuz they ain't credit-worthy.
The banksters' ancestors made their beds eons ago. Time for them to take a nap, eh?
Yes indeed, "The problem is lack of velocity", if you want to get the collapse of the US dollar over with. Once all those petrodollars, eurodollars and all other forms of US dollars start to move, they will be looking for something to buy, because fewer people will be wanting them. That increase in velocity is likely to continue accelerating until finally nobody wants them or will accept them, leaving the US dollar worthless. The conditions are over-ripe with a historic supply and all that's needed is some trigger that makes a critical mass of people sufficiently doubt the full faith and credit of the criminal gang that calls itself US government.
It's only a matter of time (period), and I'll be using every minute to be better prepared to survive the societal calamity that will soon follow (see earlier post in this comments section).
Yeh, but in the grand scheme of things, there's really not that much actual currency floatin' around. Most of the USD's we fret about are notional. Just like Precious Metals, if you can't put your hands on 'em at a moment's notice- what are they actually worth?
Last I heard ('cuz nobody reports such things anymore), China held 1.3tn in UST's -vs- a 19tn debt. That's a chunk, but it's still well under 10%.
Rumor has it that China is either a net seller, or net buyer (via Belgium, WTF?) of treasuries. It's all smoke and mirrors.
The bottom line is that no matter who owes what to whom, there ain't enough assets on the planet to make everyone whole at NP(stated)V.
I wish I could take you on a linear, step-by-step explanation of my thought process. Sadly, my brain far outpaces my typing ability.
Thanks for the reply!
If ledger entry money went away, or was no longer accepted, and electronic transactions stopped, I could see your point. Unfortunately, the push by the power elite is the opposite direction, eliminating cash and leaving only the binary fiat that you can't even use as toilet paper.
Perhaps if we gathered up all of the money and launched it to space it would reach an exceptable velocity.
Off-topic
Controversy leaves no crab-picking winner
http://www.delmarvanow.com/story/news/local/maryland/2015/09/05/crab-picking-controversy/71778604/
I'm saving the comments from this thread.
This is the Zero Hedge I signed up for.
There's some absolutely brilliant and informative posts in this article.
Zh, addicting since 2009, an American treasure....
I just farted.
You just farted.
USSA is in hyperinflation. The price of oil hyperinflated and has now decoupled. The rest of the commodities have now decoupled from the USD. The FED MUST RAISE RATES just like in the good old 80's to turn around the hyperinflation. We will end up with Trump in the White House to oversee the "tough" decisions.
Has anyone seen Elliott Alderson or Tyrell Wellick? Just askin'.
Inverted Pyramids don't last.
Signed,
Mr. Ponzi
This a young MAN that knows how to think for Himself >Bitchez
Karaio
Vote up!
12Vote down!
-1Already once said here that "economics" is not science and was crucified (never seen so many "-" in a review!).
Well, I reiterate my observation.
Economists are sons of bitches who invent a lot of papers and formulas to replace decent work and the money earned from good people.
Those who produce the wealth of a country.
Whoever heard you pay for gold and take back a role?
Think about it in the absurd!
In my farm, seeing a cow, I want money.
No he did not buy diesel, seeds etc. .
Not seeing early harvest, I am not sure crop, plant and seeing how God gives the conditions.
Cash.
I have no credit card (looks like an aberration), only work with cash and check (another aberration).
If everyone lived within their means, maybe the shit would not be so great.
Another thing, Economist for me is at the same level of esoteric signs that creates graphics (mine is Scorpio)
Kkkkkkkkkkkkkkkkkkkkkkkkkk!
Come on, do not be shy, I want more than the 18 "-" I had the last time!
Every single move the fed makes is reactionary. The system was built and put in place for those who run it. Unless conditions change that require tweaking of the system to get back to the desired conditions, no changes happen.
Any statements or discussion or anything related to policy changes is because their hand was forced, no matter how it is wrapped up in the news. If they get everyone looking left, you can be sure something is happening on the right.
I think this bears repeating. IF the Fed takes ANY actions at all in any way shape or form, it is only to solidify the status quo, no matter the pageantry.
What's left is building empty cities just like China.
The one who laughs last laughs best.
Fill those ghost cities with workers?
There's plenty of help?
China is in the midst of a thermal nuclear financial meltdown.
I challenge anyone to contest me. CIA & NSA excluded.