• ilene
    01/28/2015 - 19:33
    Suppose you could print up counterfeit dollars, euros or yen that were identical to the real things. Fun, you think? Here's how it plays out. 

Monetization

Monetization
Tyler Durden's picture

A Mania Of Manias





If the tech mania was based on magic, and the housing mania was based on a supposed fact that was historically untrue, today’s mania is a mania of manias, interlinked and resting on premises that are patently illogical, contradicted by both the historical record and current experience. Those premises are: central planning works, government debt promotes prosperity, and economic growth stems from central banks buying that debt with money they create from thin air. On these premises rest manias in governments, their debts, and central banking.

 
Tyler Durden's picture

Draghi's QE Plan In Jeopardy After IMF Suspends Aid For Greece Until New Government Is In Place





Things for Europe (and liquidity addicts around the globe) just got a little more complicated. Earlier today, moments after the failed Greek presidential vote pulled the forgotten topic of a Grexit up front and center, the IMF announced that it is suspending financial aid to Greece under its huge rescue program until a new government is formed. RTE quotes IMF spokesperson Gerry Rice who said discussion on the completion of the sixth review of Greece's bailout will resume once a new government is in place. Mr Rice added that the holdup in the program would not impact the country's finances in the short term.

 
Tyler Durden's picture

When Fearmongering Goes Bad: Greece Scrambles To Prevent Deposit Run Goldman Warned About In Its "Worst Case"





Recall that just over two weeks ago, none other than Greek currency swap expert Goldman (alongside Jean-Claude Juncker who quite explicitly warned Greeks not "to vote wrong") came out with a Fire and Brimstone worst-case scenario which was nothing but an attempt at fearmongering designed to scare Greek MPs into doing Samaras' bidding, in which it said not electing the designated presidential candidate may lead to a worst-case scenario which involves a "Cyprus-style prolonged bank holiday." Basically what Goldman said is that unless Greece quickly folds back in line and does as the unelected Brussels eurocrats demand, there will be a Cyprus-style bank closure coupled with preemptied bank runs. Well.... oops. Because if that was the doubled-down bluff, then Greece just called it, and the "downside scenario" is now in play.

 
Tyler Durden's picture

The Keynesian End Game Crystalizes In Japan’s Monetary Madness





If the BOJ’s mad money printers were treated as monetary pariahs by the rest of the world, it would at least imply that a modicum of sanity remains on the planet. But just the opposite is the case. Establishment institutions like the IMF, the US treasury and the other major central banks urge them on, while the Keynesian arson squad led by Professor Krugman actually faults Japan for being too tepid with its “stimulus”. Now comes several new data points that absolutely confirm Japan is a financial mad house...

 
Tyler Durden's picture

Japanese 10Y Yield Drops To Record Low; 2s Sell Subzero After BOJ Indirectly Buys Record Foreign Stocks





While the rest of the world was preparing to celebrate Christmas, China was busy easing its economy into growth, and its stock market into low earth orbit, by lowering non-bank deposit reserve rates to zero as reported previously, while Japan was enjoying the consequences of the BOJ monetizing 100% of all gross JGB issuance, when overnight the Japanese Ministry of Finance not only sold $22 billion in 2 Year paper at a negative yield of -0.003%: the first time ever a government note (not bill) has sold at a negative yield, but the Japanese 10 Year yield dropped to 0.31%, declining below the previously all time low hit on April 2013 when the BOJ first announced its unprecedented QE program.

 
Tyler Durden's picture

Greece On The Edge After Second Failed Presidential Vote





A week after the Greek Prime Minister, Antonis Samaras, was unable to push through his nominee for president, Stavros Dimas, in a vote in parliament that needed 200 votes to pass, hours ago the second presidential vote took place and just like last week it again failed to secured the needed 200 votes, with just 168 lawmakers voting for the designated appointee. This means that in the third and final voting round next week, on December 29 - a trading day where bad news will propagate like wildfire in the absence of any market liquidity and means Kevin Henry will have to work overtime buying ETFs - New Democracy's Samaras has to find (or bribe) another 12 votes or else Greece is facing a snap election where the anti-bailout/anti-austerity leftist Syriza party is expected to win, and set off a chain of events that may result in Greece being kicked out of the Eurozone at least if the jitters seen during the summer of 2012 are any indication.

 
Tyler Durden's picture

Demographics - Why The Great Recession Started (And Won't End Anytime Soon)





WWII is still reshaping our economic reality. The subsequent baby booms in the US and globally in Japan, Europe, and so many more locations which were affected by the war created a “pig in the python” moment. This unusually large wave of population growth from ’45-’55 was “pent up demand” from the war. But society and its leaders assumed this baby boom anomaly to be the new reality.  The “pig is passing” from the American and global workforce into retirement and now the wreckage and folly of such basic misnomers has come home to roost…and will get far worse.

 
Tyler Durden's picture

2014 Year In Review (Part 2): Will 2015 Be The Year It All Comes Tumbling Down?





Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."

"I’m tired of being outraged!"

 
Tyler Durden's picture

Bond Yields Set To Plunge In 2015: Next Year Global Treasury Supply Will Tumble By 20% As ECB Joins The Party





According to Goldman's own calculations, the demand squeeze for the High Quality Collateral that is global "Developed Market" Treasurys is about to go through the roof mostly thanks to central banks which will - even in the Fed's temporary hiatus from the monetization scene - soak up an unprecedented amount of Treasury collateral from both the primary issuance and secondary private market in their scramble to push global equity prices to unseen bubble levels and achieve the kind of Keynes-vindicating, demand-pull inflation that Russia was delighted to enjoy in the past several weeks.
How much?  The answer: a lot, as in a whopping 20% collapse in supply, once the ECB joins the fray!

 
Tyler Durden's picture

2014 Year In Review (Part 1): The Final Throes Of A Geopolitical Game Of Tetris





Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."

 
Tyler Durden's picture

I'm Not Buying It - Not The Wall Street Rip, Nor The Keynesian Rap





The current illusion of recovery is a result mainly of windfalls to the financial asset owning upper strata, the explosion of transfer payments funded with borrowed public money and another supply-side bubble - this time in the energy sector and its suppliers and infrastructure. But that’s not real growth or wealth. Indeed, the desultory truth about the latter is better revealed by the fact that the American economy is not even maintaining its 20th century level of breadwinner jobs. And the real state of affairs is further testified to by the lamentable trend in real median household incomes. That figure - not distorted by the bubble at the top of the income ladder - is still lower than it was two decades ago. So much for the Keynesian rap. Yet that’s about all that underpins the latest Wall Street rip.

 
Tyler Durden's picture

Central Banks Are Now Uncorking The Delirium Phase





Virtually every day there is an eruption of lunacy from one central bank or another somewhere in the world. In short, the central banks of the world are embroiled in a group-think mania so extreme and irrational that it puts one in mind of the spasm of witchcraft trials that erupted in the Massachusetts Bay Colony nearly four centuries ago.  As a practical matter, this mania amounts to a race to the currency bottom and the final extinguishment of the price discovery mechanism in every financial market on the planet. Flying blind, the financial markets are thus bubbling - in the delirium phase - like never before. That is, until they don’t.

 
Tyler Durden's picture

"Neoconica" - America For The New Millennium





"...so many still maintain that America is the greatest nation in the world.  They swear that America represents all that is good; freedom, democracy, merit based capitalism and the rights of the individual.  That is true America does represent such things.  However, it is fraudulent to consider our current nation America.  America was a concept that promoted all that is good.  And so it would seem that the nation in which they find themselves cannot be America.  Their nation today represents the will of the political class at all costs, period.  Their sole motivation is themselves.  Very different from America.  And so perhaps a renaming on the nation is required, at least until or if the people decide to take it back and reintroduce the world to the concept that is America for as discussed below you cannot destroy a concept and so there is hope to bring her back.  But until then we need a name for this geographic region and its new societal system... It seems"Neoconica" is most fitting."

 
Tyler Durden's picture

Mario Draghi: Goodbye ECB, Hello Italian Presidency?





While the entire financial world is hanging on to every Mario Draghi word in hope Europe finally improves the market's (if not the economy's) "fundamentals" to new record highs, and joins the rest of the "developed" world's central banks in injecting trillions of liquidity into the Div/0 P/E stocks "whatever it takes" (because in a world where only multiple expansion is left, the ECB is the last wildcard at least until the US is dragged right back into the global recession and the Fed admits any pipe dreams of a rate hike in 2015 were just that), something far more different may be taking place behind the scenes. According to at least one journalist, the Fiscal Times' Patrick Smith, "Draghi appears set to leave Frankfurt and return to his native Italy the first chance he gets."

 
Bruno de Landevoisin's picture

Uncork the Central Bank Bubbly!





The Federal Reserve and its owners print and party, while the rest of us work and weep..................

 
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