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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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.

slewie the pi-rat's picture

corner on stocks?

[re-post from yesterday morning]

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).

piliage's picture

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

Can we start defunding Ivy League Economics Departments yet?

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.

battle axe's picture

Print and print some more....

BliptoP3's picture

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

fonzannoon's picture

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

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.    

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.

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.


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."



donsluck's picture

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

Spastica Rex's picture

global soviet style ineffective non-economy


It will be very effective for the people who matter.

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.

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


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."


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.

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.

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



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

IBelieveInMagic's picture

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

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.  

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."

Obama threatens to attack Syria


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


Investors in Health Care Seem to Bet on Incumbent


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"


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


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.

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.   

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.  

SheepDog-One's picture

YAY for our saviour...LEVERAGE!

urbanelf's picture

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

Hedgetard55's picture

Wow. BoE will crash and burn first!

Sancho Ponzi's picture

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

donsluck's picture

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

Milton Waddams's picture

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

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.

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.

Xibalba's picture

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

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?

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.

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.

hack3434's picture

That DV01 for the BoE must be pretty up there 

Undecided's picture


off topic but i wonder why lol


BBC says it won’t allow statue of George Orwell at its entrance Add to ...
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.

q99x2's picture

Interesting. No more markets. The machine ate it.

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...

css1971's picture

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

LawsofPhysics's picture

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

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.

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".