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Behold The "New Normal" Buyers Of First, Last And Only Resort

Tyler Durden's picture





 

In a "new normal" "market" that has long since given up discounting fundamental news, and merely reacts to how any given central planner banker blinks, coughs, sneezes, or otherwise hints on future monetary injection plans at any given moment, it is useful to know the only market players that matter. Courtesy of Guggenheim, they are listed out below - these are no longer the major TBTF banks, Jamie Dimon and Lloyd Blankfein ambitions to rule the world notwithstanding; they are now the world's central banks, whose assets are rapidly approaching their host sovereign GDPs even as their overall leverage is increasing by leaps and bounds on a daily basis, putting such recent Investment Bank overlevered behemoths to shame. It is in this playing field where the price of any one "risk asset" is no longer indicative of anything more than monetary, and in a world in which politicians have long been made obsolete by the central planners, fiscal policies. It also means that capital markets are only whatever the various central bankers want to make them... and nothing else.

Full Guggenheim piece can be found here

 


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Wed, 08/22/2012 - 15:53 | Link to Comment Lost Wages
Lost Wages's picture

Stabeeleetee.

Wed, 08/22/2012 - 16:12 | Link to Comment fireangelmaverick
fireangelmaverick's picture

"In a "new normal" "market" that has long since given up discounting fundamental news, and merely reacts to how any given central planner banker blinks, coughs, sneezes," You forgot Farts.

Wed, 08/22/2012 - 16:14 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

corner on stocks?

[re-post from yesterday morning]

Wed, 08/22/2012 - 16:15 | Link to Comment Mark Carney
Mark Carney's picture

http://www.youtube.com/watch?v=cGzuw9ErEM0

 

AAPL's happy dance....

Wed, 08/22/2012 - 18:38 | Link to Comment TruthInSunshine
TruthInSunshine's picture

For those of us who've opined or agreed with the opinion that the U.S. "is turning Japanese," upon reflecting on this chart, it looks like The Bernank has the Fed's balance sheet following in the BOJ's footsteps pretty closely now...

Let's see if there's Japanese style follow through in the real economy (I suspect there is and that it will continue).

If so, the mutant strain of Japanification that takes place in the U.S. is likely to be a new level of ugliness that no U.S. "middle class" since the 1930's or during wartime WWII has known.

You keep your heads down out there. The place is littered with mines.

 

*As an oddity that is anyone's thesis for the taking, Japan's currency has strengthened remarkably against most other currencies, including the USD & €, even though Japan has been printing yen hand over fist (and has embarked on more stimulus spending than any other nation on earth during the last 20 years).

Tue, 09/04/2012 - 05:36 | Link to Comment piliage
piliage's picture

Don't forget, according to Krugman, Japan is a workable and positive model. A veritable success story...

http://krugman.blogs.nytimes.com/2012/05/30/japan-as-role-model/

Can we start defunding Ivy League Economics Departments yet?

Tue, 09/04/2012 - 05:49 | Link to Comment akak
akak's picture

The comments of Little Paulie Krugman, the Keynesian Doughboy, on economics and the economy are about as honest and intelligent as are those of Jon Nadler on gold.

Wed, 08/22/2012 - 16:13 | Link to Comment battle axe
battle axe's picture

Print and print some more....

Wed, 08/22/2012 - 16:22 | Link to Comment BliptoP3
BliptoP3's picture

Whatever happened to the term Fedamageddon?  I liked that word, think I'll throw it out again.

Wed, 08/22/2012 - 15:53 | Link to Comment fonzannoon
fonzannoon's picture

The full article is on another site. I like this site better though.

Wed, 08/22/2012 - 15:55 | Link to Comment slaughterer
slaughterer's picture

How do we take down the BOE, FED, BOJ, ECB, SNB without a "mega Ron Paul"?  We can't and don't.  It is a market operated, controlled, and benefitting these 5 mega players.    

Wed, 08/22/2012 - 15:58 | Link to Comment fonzannoon
fonzannoon's picture

They will take themselves down. They will blow out there balance sheets. China will have arranged trading ties with Canada, Latin America etc. The BRICS are forming their own central bank I thought.

It will take years and years though.

Wed, 08/22/2012 - 16:12 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Central fractional reserve banks will buy up the equity "markets" and then trade shares with each other, also using unicorn valuations to back their balance sheets.

Epic.

When the inevitable wipeout occurs (as these entities will so severely distort the flow of anything remotely capitalistic or market driven, crushing & distorting supply/demand, aggregrate demand for goods/services, and price discovery even further), they'll say "[n]o one could have seen this coming."

 

Bitchez.

Wed, 08/22/2012 - 17:27 | Link to Comment donsluck
donsluck's picture

Inevitable wipeout? I see a slow, multi-generational grind down into a soviet style ineffective non-economy.

Wed, 08/22/2012 - 18:04 | Link to Comment Spastica Rex
Spastica Rex's picture

global soviet style ineffective non-economy

 

It will be very effective for the people who matter.

Wed, 08/22/2012 - 18:25 | Link to Comment Poor Grogman
Poor Grogman's picture

Did I miss somthing?

What ever happened to the "Exit Strategy"

 

Oh thats right this is the same "Exit Strategy" as seen before in the USSR.

1. Pretend to introduce reforms

2. Let the whole system collapse anyhow.

3.Transfer all assets  to friends and cronies.

4. Pillage the wealth of the sheeple through all the ususal tricks (capital controls, inflation, new currency etc)

5. Install a "firm but fair" dictator who is "tough on diissent" to maintain "control".

6. make use of new recently acquired powers fema-camps etc as required by executive decree.

Wed, 08/22/2012 - 16:21 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

:slaughterer  We can't and don't.  It is a market operated, controlled, and benefitting these 5 mega players."

Well if we cant then we can't right now but the least we could do is stop/slow down a lot of this.  First up get rid of bernanke Romney said he would give him the boot & people might not like to hear this but at least the GOP voted overwhelmingly to audit the Fed, is making that part of their platform and have complained about QE.  Those balance sheets wouldn't be that far out of whack either if the spending was stopped or at least slowed down in other words if Congress actually had to balance the budget.  

 

Romney Warms to Ron Paul's Fed Audit Idea

snip

Republican presidential candidate Mitt Romney has come out in support of one of Ron Paul's perennial policy ideas -- auditing the Federal Reserve. Romneyreiterated, though, that the Fed should maintain its independence from Congress.

"The Federal Reserve should be accountable," Romney said at a New Hampshire campaign stop Monday. "We should see what they're doing."

In response to a question later, he said that he supports an audit of the Fed, but added, "I want to keep [the Fed] independent. There are very few groups that I would not want to give the keys to. One of them is Congress."

more http://www.christianpost.com/news/romney-warms-to-ron-pauls-fed-audit-idea-80419/

Wed, 08/22/2012 - 16:32 | Link to Comment El
El's picture

Hate to tell you this...

 

Ben Bernanke received an unlikely defense of his work at the U.S. Federal Reserve by a top Mitt Romney adviser, who said on Tuesday that he should be considered for a third term as chairman.

 

http://in.reuters.com/article/2012/08/22/us-usa-campaign-hubbard-fed-idI...

Wed, 08/22/2012 - 16:49 | Link to Comment worbsid
worbsid's picture

He said to give The Bernak every consideration and I agree ... then throw him out. Make Ron Paul chief honcho of the FED.

Wed, 08/22/2012 - 16:55 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

 

 

Adviser's say a lot of crazy things I guess what matters is what the candidates themself's say and then ultimately what they do for example Obama claiming he would prosecute the Fat Cat bankers.

Mitt Romney says he wouldn't keep Bernanke

ROMNEY: BERNANKE NOT THE RIGHT FED CHIEF

 

CONVICTED: Bush 1300+, Clinton 1000+, Obama 0.0 (+/-)

REPORT: Five Senior Goldman Sachs Execs Gave $130K To 'Obama Victory Fund' WHILE Eric Holder Was Deciding Whether To File Criminal Charges

Thu, 08/23/2012 - 00:56 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

Just attempting to snag Ron Paul supporters with some noise about replacing Bernanke. We can see thru it.

Wed, 08/22/2012 - 17:06 | Link to Comment slaughterer
slaughterer's picture

Romneyonomics remains a weird mystery to me given the Hubbard link.  If it was just Mitt, I could say yes, but with Hubbard inside, it is kind of like O with Summers--ugh, more of the same.   It would be easy to trade a Romney win at first: short nat gas, short clean energy (esp WPRT), short health care, go long military, etc.  It would be simple to invest that win.  But with O as winner, I really do not know what I would do.  Seriously.  The whole market would either tank or go up into a false statosphere devoid of reality.  

Wed, 08/22/2012 - 18:51 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

I would bet the vast majority of people who come to ZH don't like hubbard.  I know I don't but obama's advisor's and in fact his cabinet was filled with banksters and lot's of other questionable characters. Looking at the chart above though and obama's record of no prosecution it should be clear that O has to go.  As for going long military seriously ? with obama's record and now he wants to attack Syria.  Clean energy lol like Solyndra or Fisker/Government Motors you could go long cronyism. We have plenty of EPA rules and regulations anyway in fact too many. So many that Industry left now they pollute other countries something they couldn't get away with here.

As for healthcare the money is betting on obama why do you think that is the kindness of there hearts? It was the healthcare industry and wall st. who got the best part of that deal.  That's the real elephant in the room the spending on things like healthcare, yes the Fed should be abolished we shouldn't be paying them interest like we are doing now on IOER or a 6% dividend to it's member banks we don't need the Fed. we can print our own currency but those balance sheets didn't get that high because of the Fed that was done by our politicians

"Once you understand the details of modern central banking, you are able to step back and see that it truly is a way for the government to use the printing press to pay its bills. All of the complicated process of targeting interest rates through buying Treasuries simply hides this essential point — and perhaps deliberately so."

http://mises.org/daily/4029


Obama threatens to attack Syria

 

Solyndra, Cronyism, and Double-Dipping on the Taxpayers’ Dime

 

Investors in Health Care Seem to Bet on Incumbent

6%

Every member bank is required to purchase shares (of $100 each) of a Federal Reserve bank in its respective district. 

The member bank must subscribe (purchase) an amount equal to "6 per centum of the [member bank's] paid-up capital stock and surplus", no more or less. 

Presumably, this "capital stock and surplus" is derived from the equity portion of a member bank's balance sheet.

If a member bank's own capital stock reduces, or its Fed shares exceeds the mandatory amount, it must surrender some of its Fed shares back, to bring it back down to 6% of its capital stock and surplus.

The Fed bank pays a member bank an annual dividend of 6%, based on the amount of shares the member bank owns. 

For example, if a member bank owns 1,000,000 shares at $100 each, for a total of $100,000,000, the annual dividend at 6% would be $6,000,000.

Net earnings are derived from the income of the assets owned by the Fed.  The Federal Reserve Notes (the money created) are receipts for assets the Fed purchases, currently irredeemable, unless the Fed sells the asset to somebody. 

These receipts are held by the public or the government.

Net earnings remaining after the dividends are paid, must be held in the Fed's "surplus account." 

The Fed as a matter of practice, maintains the surplus account equal to the "paid-in capital account", i.e. the capital contributed by the member banks to the Fed for purchase of the shares.

According to the Fed, the surplus account acts as cushion in the event the Fed experiences losses greater than its undistributed earnings, such as losses from foreign currency it holds when the dollars appreciates, Treasury securities it may sell below par value, losses from the discount window, etc.

Net earnings, beyond what is considered necessary to maintain the surplus account, can at the discretion of the Secretary of the Treasury be transferred to the Treasury, and be used only for these two purposes exclusively:

  1. "supplement the gold reserve held against outstanding United States notes"
  2. "shall be applied to the reduction of the outstanding bonded indebtedness of the United States"

http://www.federalreserve.gov/aboutthefed/fract.htm

 

Here is a press release from the Fed about its net earnings

http://www.federalreserve.gov/newsevents/press/other/20100112a.htm

 

Wed, 08/22/2012 - 16:21 | Link to Comment J 457
J 457's picture

Slaughterer, good call on GSE.  HPQ??  Not so sure about SLV or WTI going down for at least a few weeks.

Wed, 08/22/2012 - 16:59 | Link to Comment slaughterer
slaughterer's picture

We got out of HPQ while the getting was still good in AH. :-)  GES is a short against the impoverishment of European youth who cannot afford to buy Guess clothing anymore (most of their sales revenues is from periphery countries).  I bet GES sinks even more: their clothes are low quality, over-priced, and only trust fund clubber Euroteens allocate 15% of their clothing allowance to GES (the other 85% goes to Hollister and AAPL).  We kind of pissed for missing the URBN pop: URBN is the only thing that makes sense in the teen/youth clothing sector, besides ANF.   

Wed, 08/22/2012 - 17:01 | Link to Comment slaughterer
slaughterer's picture

Oh yeah, we can wait for a few weeks for the SLV and WTI shortd to work out.  It is not a sweat.  No way Jackson HOle brings QE3.  You have to relaize that the FOMC minutes today were about a meeting that took place when WTI was in the 70s.  As Tyler has pointed out numerous times, the best way for the market to block getting what it wants is to front run it: namely, QE.  NO QE until 2013.  Jan Hatzius is right on this.  

Wed, 08/22/2012 - 15:55 | Link to Comment SheepDog-One
SheepDog-One's picture

YAY for our saviour...LEVERAGE!

Wed, 08/22/2012 - 16:09 | Link to Comment urbanelf
urbanelf's picture

The dollar will die for our sins, but, unlike Jesus, she's stayin' down.

Wed, 08/22/2012 - 15:55 | Link to Comment Hedgetard55
Hedgetard55's picture

Wow. BoE will crash and burn first!

Wed, 08/22/2012 - 16:27 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

Britain's private debt ratios are crazy. They'll be de-leveraging for a decade.

Wed, 08/22/2012 - 17:30 | Link to Comment donsluck
donsluck's picture

Disagree with the crash and burn scenario. Slow death folks.

Wed, 08/22/2012 - 15:56 | Link to Comment Milton Waddams
Milton Waddams's picture

in your estimation, what percentage of the global population recognizes that this is all a confidence game?

Wed, 08/22/2012 - 16:14 | Link to Comment Winston Churchill
Winston Churchill's picture

2.5% on the inside.

5%, and growing on the outside.

Only 3%of the American pop. were actively involved in the revolution.

Wed, 08/22/2012 - 16:00 | Link to Comment CClarity
CClarity's picture

It is really messed up that Central Banks have balance sheets are ballooning enough to be approaching thier sovereign GDPs.  CBs ARE now primary power and that is scary. This does not add up to efficiency in markets or economies, just manipulation and less and less money flow through economy with any kind of multiplier effect (not including HFT robot exchanges of trades).  Without multiplier we will end up with implosion, deflation, destrauction - whatever you want to call it - - - and it will be devastating but probably necessary in order to have a reset.

The Swiss CB has been rather well behaved, despite its frequent currency interventions - which some would argue is a role CBs shoud play.

Wed, 08/22/2012 - 15:59 | Link to Comment Xibalba
Xibalba's picture

The 'new normal' looks a lot like Nazi Germany...

Wed, 08/22/2012 - 16:00 | Link to Comment saycheeeese
saycheeeese's picture

well.  as per the chart... The FED is "contained" in its actions so far.  The SNB... quite extended... so  BUY CHF sell USD?

Wed, 08/22/2012 - 16:00 | Link to Comment Manthong
Manthong's picture

I wonder if the masses will ever figure out that the “assets” are in fact, a bleak future for them and chains on their children.

Wed, 08/22/2012 - 16:20 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

The masses ARE the assets.  WE have been collateralized through taxation to pay for the interest the central banks created through their fiat debt scheme.

Wed, 08/22/2012 - 16:37 | Link to Comment Abraxas
Abraxas's picture

We are also liability.

Wed, 08/22/2012 - 17:10 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

Manthong

Debt is Slavery

Wed, 08/22/2012 - 16:00 | Link to Comment hack3434
hack3434's picture

That DV01 for the BoE must be pretty up there 

Wed, 08/22/2012 - 16:01 | Link to Comment Undecided
Undecided's picture

http://www.theglobeandmail.com/news/world/bbc-says-it-wont-allow-statue-of-george-orwell-at-its-entrance/article4493106/

 

off topic but i wonder why lol

 

BBC says it won’t allow statue of George Orwell at its entrance Add to ...
Wed, 08/22/2012 - 16:02 | Link to Comment timbo_em
timbo_em's picture

The Greek National Bank has roughly twice the country's GDP on its books and I can't imagine that the bank has any real assets left...that is literally off the charts.

Wed, 08/22/2012 - 16:06 | Link to Comment q99x2
q99x2's picture

Interesting. No more markets. The machine ate it.

Wed, 08/22/2012 - 16:07 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Leverage bitchez.  Anyone ready to take the system back yet?  Bloody sheep.  Is the Bank of England really more than 100x leveraged?  Seem ludicrous...

Wed, 08/22/2012 - 16:17 | Link to Comment css1971
css1971's picture

Honestly, 100:1, 1000:1,  10000000000000:1 does it really matter for a central bank?

Wed, 08/22/2012 - 16:33 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Only if you think $1,000  $10,000 or $100,000 gold matters to a central bank.

Wed, 08/22/2012 - 17:32 | Link to Comment donsluck
donsluck's picture

It...does...not...

Wed, 08/22/2012 - 16:11 | Link to Comment YesWeKahn
YesWeKahn's picture

This is because we haven't had any major war for 50 years. A lot of economy expansion was helped by major wars.

Wed, 08/22/2012 - 17:34 | Link to Comment donsluck
donsluck's picture

Common misconception. The last "major war" being, what, WWII? Look it up, rationing, forced recycling, war bond purchase pressure. Not the signs of an economy expanding or being "helped".

Wed, 08/22/2012 - 20:29 | Link to Comment Clever Name
Clever Name's picture

Yes, certainly the 60 million people that lost their lives in WWII were happy to aid in the 'economy expansion'.

Wed, 08/22/2012 - 19:19 | Link to Comment Praetorian Guard
Praetorian Guard's picture

Broken Window fallacy...

Wed, 08/22/2012 - 16:11 | Link to Comment madcows
madcows's picture

Can I short the central banks?

 

Wed, 08/22/2012 - 16:17 | Link to Comment Xibalba
Xibalba's picture

yes. by exchanging that note they so eagerly print for something they cant print and has no debt liability....like gold

Wed, 08/22/2012 - 16:14 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

Yep, you can sure can short the central banks. Just hold USD or EUROS!

Wed, 08/22/2012 - 17:35 | Link to Comment donsluck
donsluck's picture

Increasingly, those are the only "assets" that are safe to hold.

Wed, 08/22/2012 - 16:16 | Link to Comment alien-IQ
alien-IQ's picture

That chart fairly well explains why they will not, at any cost, let the market go down.

But as any trader knows...it ain't profit until you sell. Until then...it's just a liability.

Wed, 08/22/2012 - 16:18 | Link to Comment Knightbk
Knightbk's picture

It's all good, see:

http://money.cnn.com/2012/08/22/news/economy/middle-class-pew/index.html

Incidentally, this is why I think the "death of equities" calls are ludicrous. The Government will support equities until it collapses.

Wed, 08/22/2012 - 16:19 | Link to Comment russwinter
Wed, 08/22/2012 - 16:21 | Link to Comment hugovanderbubble
hugovanderbubble's picture

SHORT EURUSD

Wed, 08/22/2012 - 16:23 | Link to Comment hugovanderbubble
hugovanderbubble's picture

SHORT EURCHF till 1.10 NEW PEG

Wed, 08/22/2012 - 16:31 | Link to Comment Turin Turambar
Turin Turambar's picture

I know many people, myself included, expect the central banks to eventually blow up, but I have an interesting question that I'm not sure how to answer.  Please feel free to chime in:

Before the big bust, why don't the central banks just print and print and print and buy gold until their respective fiat currencies collapse?  That would be my end game plan if I were a central banker.

Wed, 08/22/2012 - 17:20 | Link to Comment SMG
SMG's picture

The current central banks are just a tool of the Elite to bring about a centrally controlled global currency.   The national banks will be discarded in favor of the new global structures.  

There are rumors of tremendous amounts of gold that has been stolen over the centuries, including the from US which may have been stolen from places like Ft Knox, that the elite control.   So there is no need for the central banks to aquire much more.   That gold will be used to back the new Elite controled Bancor, or whatever they decide to call it.

Wed, 08/22/2012 - 16:46 | Link to Comment analyzer_66
analyzer_66's picture

the easy answer is supply & demand

Wed, 08/22/2012 - 16:48 | Link to Comment dragoneyes74
dragoneyes74's picture

I would love to hear their plan of how they're going to shrink their balance sheets.  Oh, wait, the world will be a job producing machine by then because this is clearly working.  So I guess the need for historic world tightening won't be an issue.  Sovereign default schmovereign default.    

Thu, 08/23/2012 - 00:50 | Link to Comment hannah
hannah's picture

why has every financial crash happened in an instant once it started yet people seem to think we will plod along for decades with this debt load and corruption....people..billions of people are at the starvation point because of food inflation. hungry bellies dont just curl up and die......

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