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Schaeuble Calls For Rate Hikes, Says World's Economies Are "Drug Addicts"
Early last month, the Bundestag got to hear German Finance Minister Wolfgang Schaeuble's thoughts on the proliferation of ZIRP, NIRP, and unconventional monetary policy.
As you might imagine, he is not a fan.
Here are some notable excerpts:
"Fewer debts, fewer crises, more sustainable growth ... that is the best policy we can produce in these times."
"We shouldn't pass on the bill for the tasks that are facing us now to future generations”
“...being in favour of more debt and a further flooding of the markets with central bank money is neither original nor serious."
"Too much growth in credit does not solve any structural problems but leads to financial and debt crises.”
“Central banks' monetary policy measures can do little to change this in the long run."
And just like that, in five crisply worded sentences, Schaeuble explained pretty much all that's wrong with the current global descent into Keyneisian insanity: 1) we need sustainable growth, 2) we should not be sticking our children and grandchildren with the bill while we borrow endlessly from the future, 3) the idea that we can print our way to prosperity is a joke, 4) runaway credit growth leads to larger and larger booms and subsequent busts, and 5) thinking that one can manage long-term economic outcomes by tinkering with policy is a fool's errand.
All of this is heresy in most corners of the centrally planned universe but then again, no one ever accused Schaeuble of caring much for decorum.
For anyone curious to know whether the FinMin had reconsidered his stance on the need for ultra accommodative policies now that the Volkswagen emissions scandal looks set to present a very serious threat to Germany's economy, the answer is "no." Here's Reuters:
German Finance Minister Wolfgang Schaeuble said on Tuesday he was unhappy with the low interest rate environment and called for rates to rise "sooner rather than later".
Although it was not the first time Schaeuble has voiced support for a "normalisation" of rates, it also comes at a time when the German economy faces new threats from weakness in emerging markets and a diesel emissions scandal that has damaged its top carmaker Volkswagen .
Speaking at an engineering conference in Berlin, Schaeuble described interest rates as "too low" and said this was causing problems, particularly with regard to pension provisions.
Schaeuble said the monetary policy being pursued by central banks meant that there was sufficient liquidity on the markets around the world but he added: "I don't want us to get used to it remaining as it is."
He warned policymakers against falling into the trap of keeping rates low to actively support the economic outlook, comparing this to the situation of a "drug addict".
So sorry German automakers, you won't be getting Schaeuble's support where support means using the emissions debacle and subsequent fallout as the latest excuse to keep pursuing monetary madness in the name of supporting aggregate demand and maintaining export competitiveness.
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Bring it on!
Get some!
https://www.youtube.com/watch?v=0cMMjp0SkD8
It's not the economies that are drug addicts, it's the equities markets that are drug addicts. Get it fucking right, Mr. Schaeuble, executioner of the poorest of Greek people all in the name of the euro.
Markets are reflection of people.
And the muppets are high as fuck.
Wow, never thought I'd wind-up agreeing with that guy...
I'm not sure what he said, to be honest. And I don't think he's operating in the real world of people and events.
"Mr. Schaeuble, executioner of the poorest of Greek people all in the name of the euro."
I wish he were!
The man is a wanker per excellence. Had he ( and Merkaloid) not come to the assistance of French and German banks when the Greek crisis hit, Europe and the world would now have flushed out its problems. Instead he saved the collective bacon of the banks and the world is now paying the price of delaying the inevitable liquidation.
You don't see the glaring problem with your statement?
'geez mr Germany, supply our banks with capital generated by your taxpayers or you are the bad guy.'
This attitude is the problem with today's world. Deferring your fuckups to anyone else at any cost.
Had to downvote you.
It's not the equity markets at all it's politicians and the welfare/warfare state. Equity markets only matter because of pensioners and wall st lobbyists. MSM can use them as fraudlent baramoters for the laypeople to wonder why they aren't invested and why everyone else is doing so well when they aren't. The equity markets are a refelection of the "fake it till you make it" systemic political and financial corruption.
Without a "healthy housing" market and the social saftey net the markets wouldn't matter. When housing starts to tank again and there is another crisis (every 7 years like Jamie Dimon says - thanks to centrally planned economies) the muppets will be fleeced again and reflating the bubbles of the past will just be a Keynesian long con. "In the long run we're all deaad." -JMK
Have some more refugees idiot. QE of your own volk, traitor traitor.
How will the Nobel Prize Winner be bombing 7 Muslim countries, droning women and children and wedding parties, dropping 50 tons of munitions a day in Syria without free money from the Fed?
US Wars in Afghanistan, Iraq to Cost $6 trillionhttp://www.globalresearch.ca/us-wars-in-afghanistan-iraq-to-cost-6-trill...
Drug addicts have a nasty habbit of stabbing people in the face when they are forced to go cold-turkey.
You mean like this guy?:
Chinese investor stabs asset management CEO after defaulthttp://news.yahoo.com/chinese-investor-stabs-asset-management-ceo-defaul...
Bowser seems to really dislike Super Mario
hey Shawbull, that card has already been played - and lost - you idiot. try again
Schaeuble,
First bit of truth I heard in a long time.
And Draghi is the drug dealer. Get rid of Merkel as well. She's ruining Germany.
Meanwhile, the SPX just completed a second intraday squeeze which occurred at the top of a major (historically outsized) intermediate term squeeze, which occurred at the top of the 6 month squeeze, which occurred at the top of a massive 7 year squeeze. Volume just broke it.
We now have a cascading squeeze-break setup which looks set to result in a PLUMMET.
Hold on tight. You're about to see what happens when fractal squeezes break.
I had the unfortunate pleasure of seeing a fractal squeeze break once. Lots of puss and orange stuff oozing out. Not pretty.
For every manipulation there is an equal and opposite reaction.
Schauble is of course correct, but in this world of loss prevention, corporate bail outs and political correctness where a GDP contraction or a bear market is politically incorrect, the people in power will extend this charade as long as possible (see Japan) rather than face the wrath of big political contributors, corporate CEO's and millions of registered voters whining about how they lost money in their retirement plans.
It doesn't matter which way they turn, rate hike or no rate hike, the system will blow up. It's just a matter of which will desrtoy the system faster.
Dr. Strangelove
VW and emerging markets might pale into insignifcance compared to what might happen with the migrant crisis. That could be the biggest, blackest, swan of the lot.
I have been wondering how long Bunds can stay at zero/negative yield when the migrant crisis is likely to blow their balanced budget to bits (AFP reporting the EUR500m has been spent since early Sept). This is before the flow has stopped and anyone knows what the impact will be on racial tensions.
Hey Schloggle. Embrace your new invaders and get printing. Enough of that prudent talk.
Lo and behold! There is actually some selling!!!!! I had forgotten what it looked like.
Could it be true? I mean, actual selling? Or is this simply a reversal of a reversal of a reversal that is waiting to be reversed at the
3:30 ramp? My screen is blood red. But for how long?
Do it assholes, we dare you...
Everybody is a critic.
If I were the president of the world, and the task was up to me to come up with ideas and a plan to address all the world's troubles, I would:
___________.
If anybody cares to share, I am interested.
Abdicate and let free markets take over everything.
TESTIMONY TO DRUG ADDICITION
http://www.showrealhist.com/begun.gif
http://www.showrealhist.com/
Markets are tweekers fiending for another hit!
An exporting nation is only as strong as the countries it exports to.
Just ask China.
How is the global consumer base these days?
1) The once wealthy Western consumer has had all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.
2) Japanese consumers have been living in a stagnant economy for decades.
3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.
4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.
5) South American and African consumers are busy struggling with economies that are disintegrating fast.
Oh dear.
The wheels off the economy will fall off first OR
The wheels of his wheelchair will fall off first
These days the wheels of the wheelchair are the wheels of the economy.
Here's the source: 119th Bundestag meeting on September 8, 2015, protocol p. 11516
http://dipbt.bundestag.de/doc/btp/18/18119.pdf
>five crisply worded sentences
Amen.
Central banks need to stop inhaling their own exhaust fumes.
They'll put interest rates up for only one reason and it's got nothing to do with caring about anybody or the economy.It's all about slamming Gold below $US1,000 in order to keep confidence in the Dollar.That way the Government can slam oil and keep demonizing Russia.Keeping up the ponzi by any means necessary is the name of the game until she all comes down.
Go ahead, hike those rates; I dare you. No... I double DOG dare you!
Why would a quarter-percent rise in the interest rate be the end of the world?
Cascading US Bond debt.
MARKETS BE ALL HOPPED UP ON GOOFBALLS!!!!!!!!!!!
Schaeuble does not mention Keynes, so why does Durden. This orgy of blaming everything on Keynes is getting a little tiresome.
Um, because Keynes is responsible for the bullshit economic ideas every central bank points to to justify money printing and manipulated credit prices.
Is it me, or does a more hawkish and nationalist Germany seem like a logical pivot to the Russia. They're already strong trade partners. It seems like Frau Merkel's group could get drowned out by those who don't want to accept an Islamic takeover of Germany. It would make sense that they move towards tighter relations with the nation that supplies their energy and can buy their manufactured goods consistently. From afar it seems that a Russian/German alliance would serve the German people well and break them away from the technocrats in Brussels and London.
Germans would find national subordination to Russia impossible to stomach (again).
At the same time, while Germany has no significant alternatives to Russian Energy, Russia can set prices and conditions as they please. For that reason, nothing but total subordination of Germany is possible in an alliance with Russia.
And that is why it will NEVER happen.
Last I checked Germany has a pretty vibrant export economy, though it surely faces a tough climb ahead. Why would Russia seek to subjugate what could be such a promising partner? It's not as if Russia doesn't need to sell to Germany as much as the Germans need to buy it, especially in the current contracting energy market. Especially as it seeks allies in it's axis against London/Washington? Were not talking about the Soviets, this is a Russia with some very strong market based economy fundamentals. You've given no empirical evidence why an alliance would not be mutually beneficial.
this photo always cracks me up
One would almost think he believes that money is not created using debt as collateral.
He sounds like Peter Schiff. He must be a kook!
Speaking of money whores, and the monetary heroin addictions they utilize to generate increased borrowing. debt, & deficit spending, did you know that Justin Trudeau is going to win the next election to be CANADA's next Prime Minister? YES, that's right, Justin Trudeau who most famously claimed that 'books balance themselves' is telling all Canadian voters to vote him in because he is going to borrow money like his father did in the 70s, and he is going to run consecutive deficits in order to dig CANADA out of a failing economy, and no investment in employment from the incompetent Harper Conservative Government.
In brief, next week Canadians en masse will vote Trudeau in based on their mistaken view that if Trudeau opts for Keynesian stimulus spending he will borrow his way out of deficit.
Scheuble is right...
...in some other monetary system.
What Scheuble SHOULD be doing is charting a path to get to an alternate monetary system...whether he can talk about it or not.
THEN he can recommend raised rates.
A voice of sanity makes a simple argument against free lunch economics. Wolfgang Schaeuble for President.
ZIRP? ZIRP? Ve don't need no fooking ZIRP
Only problem with his practical common sense is that ZIRP cannot be reversed without causing a huge financial market sell-off and economic crash because the entire monetary, financial and economic system conforms to ZIRP AFTER it is implemented.
The smart thing is to NEVER enter/implement ZIRP, but once in, you have to stay unless you are willing to crash the global system to exit.
And then what level of economic activity will there be with HIGHER "normal" interest rates when zero interest rates have resulted in asset bubbles, economic stagnation and decay ?