Citi: "There Was Something About The Entire Recovery Narrative That Is Downright Wrong"

Tyler Durden's picture

Yesterday, we laid out what according to Citi's Matt King, one of the most insightful and respected credit analysts in the world, is most surprising about the ongoing market selloff: the odd interplay between some asset classes which are declining in an orderly, almost boring fashion, and other assets which have crossed into and beyond a state of existential panic.

The reason for this ongoing paradox is still unclear but as Citi's King, BofA's Martin and Hartnett, and DB's Konstam and Reid have all hinted on numerous occasions, the fundamental driver of everything that is wrong with the market are the actions of the policy makers themselves, who in their feverish attempt to preserve the market in the post-Lehman devastation, have made the market into a "market", one where nothing makes sense any more. In other words, in order to save the market, central bankers broke it.

Which brings us to the conclusion from Matt King's most recent note, one which picks up on his observations of the all too clear dislocations and paradoxes in the market, those "things which, according to all the policymakers’ models of the world, are “not supposed to be happening”.

And yet they are, and as King adds, "it is increasingly clear that the world is not fixed – far from it."

The rest of King's conclusion is a must read for everyone, especially those who think that anything in the past 7 years has been fixed, or even partially resolved.

This, then, is the real implication of widespread market dislocations. It suggests that there was something about the entire narrative peddled after the crisis which was at best incomplete, and at worst downright wrong. As an FT article put it, either for the emerging markets, or indeed for what is rapidly becoming a much more broad-based sell-off, “There is no obvious high conspiracy between banks, the rating agencies and the government”. Nor is there simply a risk we might need to respond to “future adverse shocks”, as Yellen’s testimony to Congress yesterday maintains.


If the pre-crisis problem was not CDOs in and of themselves, or excessive bank lending and leverage, it must have been something else. The most obvious candidate is overly easy monetary policy stimulating unsustainable credit expansion and ultimately asset price bubbles. Banks were certainly an instrument through which this policy was enacted, but financial leverage itself – especially that behind relatively low-risk arbitrages within financial markets – was a very limited part of it. Had leverage not been available, easy money would have taken effect some other way, either by spreading to other banking systems which were less constrained, or through stimulating an expansion of credit via bond markets instead. The years since the crisis have of course seen both.

Which brings us to King at his most apocryphal.

Far from making the world safer, then, there is a risk that the post-crisis policy mix has simply suppressed problems, making markets stickier, and may even have added to them, by driving the global credit cycle far ahead of the current interest rate cycle. Recent market dislocations are a sign that that stickiness may be reaching breaking point. In the past, aggressive easing of monetary policy provided  the solution to almost all recent crises – both those which did not lead to recessions, such as 1998 and 2011, and those which did, such as the tech bubble of 2000 and the real estate bubble of 2007-8. At this point we may start to question whether it can provide a similar solution this time round, not just because of the zero lower bound, but because the entire premise on which it has been based – inducing credit expansion and risk-taking in some other part of the global economy – seems to be reaching its limits.


In the property market, agents like to say that location is everything. When it comes to fixing current problems we are tempted to resort to the apocryphal story of the response given to tourists in Ireland when asking the way to Dublin: “If I were you, I wouldn’t start from here.”

Alas, 7 years into the fake "recovery" the option of "starting from some other place" is long gone.

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Sudden Debt's picture

Just noticed that the DOW  didn't move shit in the last month...

almost 100% the same over the last month!

But option day is over now so let's see what tomorrow brings.

dimwitted economist's picture


Look Everything is Fine.

as long as you don't do something stupid (like buy Gold)

then you'll be sorry!

remain calm's picture

Well they Gapped gold down right at the open a few bucks on absolutely no volume (just like they did with slver a week or two ago). Never seen that before, ussually they bang it down when no one is around, must be a new stradegy....must be getting desperate (nervous).

When some people get nervous they eat, i have noticed recently, Janet is starting to look more like a pig than a human

wee-weed up's picture



"There Was Something About The Entire Recovery Narrative That Is Downright Wrong"

No fukin' shit... it's Obozo's sycophant MSM completely ignoring his disasterous handling of the economy for the past 7 years for purely politically correct reasons!

Shame! Shame!

philipat's picture

This is UNREAL. If they were to enter into a free subscription to Zero Hedge, they would no longer need these expensive expert ananlysts?

SuperRay's picture

at his most Apocalyptic, and when it's coming out of a big bank, you know the zombies are waking up

sun tzu's picture

When did Mr Yellen ever look human?

Cognitive Dissonance's picture

"Alas, 7 years into the fake "recovery" the option of "starting from some other place" is long gone."

Actually there is, at the bottom of the central bank crater blasted out over the last 8 years.

<You're gonna need a (much) bigger boat recovery.>

OregonGrown's picture

I just wanted to re-iterate the fact that i took my $10k citi card which had a 0 balance.... and bought a monster box of maples with it on thursday.  (told myself the moment is goes under 14.50 or over 15.50, it is a buy signal)

Dont know if i was too early or not..... but FUCK IT.... i pulled the trigger and did it, using bank credit.  Once again, we will see who is on the right side of history, Citi or I..... 

....just wanted to put that out there..... again


.... and ohh yeah, one more thing.....  FUCK YOU Matt King, you lying POS!

OregonGrown's picture

Hey.... thanks for the downvote.  Cracks me up that you have to bring my business into every comment I make and you troll. 

Just to help bring you out of 1950's and into the 2016's, here is a few links regarding the future of the marijuana market.


Just this year, the marijuana market is 6.7 Billion dollar business

... and what is projected the market to be in 35 Billion dollar market come 2020

Can you guess what the total wine sales in USA was last year?  37.6 Billion

Can you guess what the total hard alcohol market is in the USA last year? 23.1 Billion


So it is my contention that you should open your eyes to a real business opportunity when you see one.   That is how one becomes wealthy!  

.......Time to wake up, take off your rose colored glasses and recognize this is a business that is here to stay..... For this is not 1950, you are not Wally Cleaver, and this is not Mayberry....

Oh and on the personal note, from me to you..... STFU and get the fuck over it already, for my business is NOT your business.

undertow1141's picture

I make mine there too. Don't feel alone. It is one of the few actual growth industries right now.

Normalcy Bias's picture

NICE... but don't forget to include a 'boating accident.'

Sudden Debt's picture

That will cost you 100 dollars at least a month in interest.....

1200 a year... 75 ounces of silver...

don't buy that on credit man. Gold and silver protect your wealth, not your debt.

I first bought my silver 8 years ago. If it takes another 8 years before it pops you'll pay a monster box in interest and you'll still have the debt.

Buy 3 to 4 rolls a month and grow it.

I have bought relentless in the last 8 years, my stack is just way to big now and I'm switching to only gold from now on.

But I only bought with what I had to spare.


Same with shorting the market, don't expect a sudden crash, look at the charts! I can easely take another year.

All you did is making your bank happy.

OregonGrown's picture

Who said anything about paying them back? 


That being said, I spent $9000 of their money, for $9000 of real assets, securely in my safe.... and i only have to pay $100 per month for it. I think of it as cheapest insurance money can buy.

Question, how long do you think this shitshow is going to last?  12 month? 24 month? 72 months?

The way i do my math, $100 per month, for 9k in my safe is not a bad gamble..... especially if one thinks there will be capital controls, a ban on cash or a global monitary reset before then!

I think this maneuver as killing two birds with one stone and i consider it "just doing my part"...  

Besides, how much longer do you think silver (or gold) is going to be available once the world realizes there is no other safe haven, but real tangible money with no counter-party risk? 


Sudden Debt's picture

I just hate debt :)


And honestly, how long?

I'm massively short right now. 100% because I believe it will now break in the next 12 to 24 months.

And I believe so much in PM's that I'm overinvested in those to. But always think about the fact that it can take another 8 years also.

I sold a house in 2009 to buy more silver, if I hadn't don't that, I'd had as much silver now with the rent I could have collected from it and so far it's been a terrible investment.

So I don't see it as an investment, it's protection for the future.

So my advice is, don't pay interest on that protection. I could be wrong in a big way but don't listen to much to the pumpers who have been saying for years now that suddenly it will fly to the moon.

I recently saw a youtube clip that just said: SILVER TO 1000 IN A YEAR!

won't happen. First of all, I'd sell in a hartbeat at 100 and so would a lot of other people.

OregonGrown's picture

Honestly, i wish the idiots over at citi would have given me a 20K credit line so i could have purchased 2 monster boxes!  ;)

But, even with the long end of your timeline..... I will only pay $2400 of interest, on $9000 (today's prices) REAL money, in hand!

Wishing more people would do it, and bring this final act and curtain call to an end once and for all.....


"Nirp their ass, before they can Nirp yours" tm

Blythes Master's picture

Ah SD that's assuming that he/she has any intentions of paying them off at all.

I have no such intentions nor qualms of 'stealing' from the bank that has stolen from so many. Fuck em.

After the terrible boating accident, the merchandise will be but a mere memory anyway.

lasvegaspersona's picture

my stack is just way to big now and I'm switching to only gold from now on.

My point ...if you are in silver and you have to bug are going to need a gold it will fit in your pocket. I had one hundred ounce silver bars in my safe in 2011 before I reached the same conclusion. I like my wealth compact.

silverliberty's picture

I started buying silver when I was 8 yr. old.  It all started because I wanted a pound of silver.  Well, as you know, stacking becomes addictive.  I wonder if the comex needs a loan of paper silver.  I will gladly give them an IOU just like the ones it issues.  Don't worry the silver is safe in my vault and I haven't sold it to the LBMA or the Chinese.  You can trust me.  Look you have a piece of paper showing how ernest I am.

battlestargalactica's picture

I think I can empathize your pain. Second guessing a rigged market. Now just imagine being as nautically handicapped as me and continually losing that fat, heavy Maple stack overboard on a calm sea on a sunny day... Boat, too. Straight to the bottom. I mean it's so bad that when I applied to drive the Valdez run for Exxon even they wouldn't hire me.

I think the Walter said it best: "Ah, fuck it Dude. Let's go bowling."

silverliberty's picture

I know what ou mean.  I lost my wealth trying to prove all you Zhedgers wrong.  I wanted to show how easy it is to transport pm's by water, which y'all find so difficult.  So, I went to the Bermuda Triangle.  Darn the luck, it all disappeared when my boat vanished.  It must be something in the water.  History has proven it is very difficult to move pm's across water.  Look at all those Spanish galleons that have sunk. 

Blythes Master's picture

Getting my new shiti card in the mail soon and will do the same.

Fuck em all in the ass with two fists.

jaxville's picture

Don't pay a dime on the credit card.  When they phone you, tell them you are trying to raise $1,000 to pay for bankruptcy.  They will offer a deal...a smokin' deal.

  Who needs a stinkin' credit rating...!

silverliberty's picture

Tell them to TARP over it.

williambanzai7's picture

Fuck Citi and the 3 wheeled bailout jalopy they rode in on...

V for ...'s picture
V for ... (not verified) williambanzai7 Feb 14, 2016 6:22 PM

Damn right, William., the Hogarth of our times.

Tell the truth and shame the devil.

Normalcy Bias's picture

"it is increasingly clear that the world is not fixed – far from it."

He's just now noticing?!

stormsailor's picture

gap up,  the pump monkeys are riding it forward

WTFUD's picture

I get a good feel of the desperation out there by the number of missed or deliberately unanswered calls from my ex financial adviser.

V for ...'s picture
V for ... (not verified) Feb 14, 2016 6:13 PM


Citi's Buiter bitch promoted every wrong by which the world now burns, and now you want to snivel, whine and claim to be innocent? Despicable AshkeNAZI tricks, as per usual.

And ask the other stupid boy wonder ashkenazi Martin Woolf of the Financial Times why he is a lowly snake too.

End the Fed. Get rid of the AshkeNAZI fools and hate.

__Usury__'s picture
__Usury__ (not verified) Feb 14, 2016 6:23 PM

this was in the Zero Hedge twitter feed..........thanks Tyler

Israel boycott ban: Shunning Israeli goods to be criminal offence for councils, public bodies and student unions

V for ...'s picture
V for ... (not verified) __Usury__ Feb 14, 2016 6:31 PM





Angry capital letters intended to shout at the hard of thinking.

WTFUD's picture

When cunts like him are doing hard time . . . . yes! Moreover though the facilitators are my biggest enemy . . . Congress and the like. Bankers don't ask for your vote but the Police ( filth ) are there to Serve and Protect . . . . THEM . . . at OUR expense . . doesn't get anymore twisted than that

It's a hard luck life . . .

adr's picture

You can't fix a debt problem with more debt.

Seems like such a simple truth for people to discover.

silverliberty's picture

adr, the sheeple are surprised everytime winter appears.

detached.amusement's picture

and still havent figured out that the coefficient of friction of pavement changes with precipitation or temperature

Tejano's picture

Well, Surprise! Surprise! Knock me down with a feather...

buzzsaw99's picture

The most obvious candidate is overly easy monetary policy stimulating unsustainable credit expansion and ultimately asset price bubbles...

what a revelation. i can see why he is so "respected".

Bemused Observer's picture

I don't often go with a religious type of argument, but boy does our whole situation remind me of the Tower of Babel.

We have reached beyond our pay grade. Our hubris has angered the Divine. Or at least given Him cause for concern. And now He has seen to it that our language is confounded, and we are having more and more trouble understanding one another.

It isn't just linguistically either...we are having a harder and harder time understanding each other socially, religiously, legally. All disciplines are developing their own in-house languages, attitudes, customs, etc. As they do, they find it harder to understand or relate to those outside their group. Working together becomes impossible.

The effect of this will mean we can't continue to build what it is we are building, just like it stopped the post-flood folks from finishing their tower.

The NWO will never be completed. The project will be abandoned at some point, and the unfinished structure cannibalized for materials by the departing workmen. We are not meant to have such global governance, as no man or men are capable of regulating everything. And whether you think of it as Divine will or just the shortcomings of our animal selves, we are not ready to even TRY.

richinSpirit's picture

Since you brought it up...

...I agree with you as far as you went, but the issue is that the 'one-world government' gets created and run on a spiritual level by the fallen angel Lucifer. Just like entangled quanta are joined together over any space-time distance by which they are seperated (and can be harnessed together to do the work of quantum computing) the spiritual authority used by Lucifer over his (ignorant of him or not) followers is world-wide, instant, and coordinated to do his evil (but sold as peaceful) work.

When that, and the fact he is allowed to rule the world system for a time by God, are all taken together, believing the 'one-world government' is either coming or here already (I'm for the latter, with no current public revelation and false claim to be the return of Christ) becomes less difficult. Anyone who can't swallow "spiritual" methodology can be shown the shiny boxes of quantum computing and information-system theories of Big Data to put their faith in.

After all, believing demons exist but that believers in Christ are empowered to cast them out (with the guidence to not remove what you cannot replace with godly wisdom or you just make it worse when the reinforcements arrive and find a cleanly swept home again in a still unprotected mind) a mental-illness diagnosis may not be far behind when one is willing to talk about that these days.

detached.amusement's picture

 so much facepalm in the cyclical logic of folks that dont realize who the vampire really is (hint: its the one that wanted to keep man naked and ignorant)....who else would like us naked and ignorant these days.....yes, they represent he that should not be capitalized when referred to.

Duc888's picture



Bemused Observer : "The NWO will never be completed. The project will be abandoned at some point, and the unfinished structure cannibalized for materials by the departing workmen."


I'd like to share your optimism but there are probably a thousand psychopaths in charge of the planet who feel otherwise.  They'd rather scrape the likes of you,  I and a few billion others off of the soles of their shoes like dog shit.

Vint Slugs's picture

"Which brings us to King at his most apocryphal."


Uh, Tylers, he's relating an apochryphal tale.  I don't think that makes him apochryphal.

medium giraffe's picture

 "If the pre-crisis problem was not CDOs in and of themselves, or excessive bank lending and leverage, it must have been something else...."


I imagine the author required a lie down and a sangria after such cerebrally intensive deduction.

HardlyZero's picture

Cushing nearly topped off, Oil pricess plummetting from excess production, all driven by misallocated resources and malinvestment.

(then Oil +12% last Friday...must be some new free money or excess reserves).  Malinvestment with no real demand (so now excess supply).


Then all the empty Chinese cities, malinvested with no real demand (so now excess supply).


Too much 'free money' malinvested.


The real economy and demand is all hunker'd down waiting for what's next.