Bank for International Settlements warns of stock market crash
There is no economic recovery. However, the loose monetary policies of central banks drives the share prices to record highs. Therefore, the BIS warns of bubble formation.
The markets were under the curse of the world’s central banks, the Bank for International Settlements (BIS). The cheap money pushing up stock prices at record highs, even though there was absolutely no economic recovery.
The continuing flood of money some major central banks in recent months had “helped the operators to repress signs of a global slowdown,” the FT quoted from the latest quarterly report from the BIS, the so-called central bank of central banks.
The Basel institution is particularly critical of the plans announced in April, the Bank of Japan to double the monetary base of the yen by extreme money printing.This new phase of loose monetary policy may be seen also in Europe, where the ECB has cut interest rates to historically low 0.5 percent.
The global flood of money have let the stock prices shoot up even in Europe the prices went up -. Despite the recession and despite the banking crisis in Cyprus Investor behavior will determined by the central banks, the BIS..
Central bankers themselves, whose goal was just so, to give the market prices of buoyancy, have warned in recent months against too much optimism. Both the head of the U.S. Federal Reserve and the Bank of England-Chief, have publicly warned that their policies could lead to blistering (last here ) But the central bankers are in a dilemma. One end of the flood of money would immediately cause global recession.
When Banks Don’t Trust EACH OTHER, The END Is Near: BIS records startling collapse of eurozone interbank loans
Cross-border lending is falling drastically across the western world as banks slash exposure to Europe and bend to tougher capital rules, according to data from the Bank for International Settlements.
Foreign bank loans fell by $472bn (£311bn) in rich countries in the fourth quarter of last year, contracting at an 8pc annual rate. The retrenchment was led by a collapse of interbank loans in the eurozone, where lenders in the creditor states continue to pull back from periphery countries.
Volumes fell by $284bn across the eurozone, a 20pc rate of contraction. Belt-tightening by banks is a key reason why the region remains stuck in recession for the seventh quarter in a row.
The BIS said in its quarterly report that the markets are “under the spell of monetary easing”, convinced that central banks will keep the asset boom going despite signs of “broad deceleration” in the US economy and fatigue in China.