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Central banks create all modern financial bubbles. Real market interest rates will destroy the US stock market prices, bond market prices, commodities market prices and so-called recovering housing market prices. Volcker showed us what raising interest rates will pop bubbles. Bernanke is showing us that forcing down interest rates through monetizing the Treasury and GSE markets blows bubbles everywhere. Remember when the market would tank and the FED came to rescue always, [...] From FT: On the surface, it seems strange: Spain is offered large loans at below-market interest rates, coupled with significant additional support by a regional central bank willing to buy the country’s government debt on the secondary market. Yet the government is reluctant to officially request this help. JPMorgan Securities LLC was sued by an Oakland, California-based community college over a $25 million bond contract which the school claims will require the issuance of bonds that will give the bank a windfall. Peralta Community College claims the bond purchase contract, which was part of a 2006 bond refinancing deal, is unconstitutional under a 2009 legal opinion by the California Attorney General. The opinion determined that so-called cash-out bond refundings [...] From FT:
Spain’s borrowing costs hit a euro-era high on Tuesday amid sagging investor confidence that Europe can prevent its debt crisis from worsening and wrangling among policy makers over how to implement cross-border banking supervision. The yield on Spanish benchmark 10-year debt hit 6.8 per cent just days after eurozone finance ministers agreed a €100bn bailout package for the country’s banks. The move was accompanied by rising bond yields in countries deemed [...] From financialaddict: In 2003 Philipp Hildebrand was the youngest person ever to join the governing board of the central bank of Switzerland, the SNB. Since 2010 he’s been the chairman of the governing board and the SNB’s public face to the world. Now he’s a heap of trouble and he’s blaming it on his wife. Hildebrand met his Pakistani-American wife, Kashya, when the two worked at Moore Capital, a New York hedge [...] Peak Oil Perspective | Do the Math Posted on 2011-11-01 by tmurphy It was by teaching a course on energy in 2004 that I first became aware of the enormous challenges facing our society this century. In preparing for the course, I was initially convinced that I would identify a sensible and obvious path forward involving energy from solar, wind, nuclear, geothermal, tides, waves, ocean currents, etc. Instead, I came out dismayed by the [...] During a presentation today at the Adam Smith Institute, economist Kevin Dowd, a visiting professor at the Pensions Institute, Cass Business School in London, told his audience: “Fiat money is entering its death spiral… Banks use crooked accounting methods to hide losses and enrich employees with bonuses. It’s another form of looting… At least 46 out of 50 US states are insolvent.” What’s behind Dowd’s thinking? He wrote this last December: “Sooner rather than later, [...] http://www.bloomberg.com/news/2011-07-14/too-much-debt-means-economy-can-t-grow-commentary-by-reinhart-and-rogoff.html Quote: Several studies of financial crises show that interest rates seldom indicate problems long in advance. In fact, we should probably be particularly concerned today because a growing share of advanced country debt is held by official creditors whose current willingness to forego short-term returns doesn’t guarantee there will be a captive audience for debt in perpetuity. Those who would point to low servicing costs should remember [...] View Enlarged Image
The Federal Reserve’s current round of asset purchases, due to expire June 30, is being bookended by economic soft patches. A logical question is whether the central bank’s $600 billion in Treasury buys merely provided a short-term artificial boost. Wild cards from Japan to the Middle East make it impossible to judge with certainty if the Fed’s latest aggressive efforts have failed. But the most telling data point — no [...] Stewart Thomson April 2011 1. There are many indications that America sits on the cusp of hyperinflation. Normal inflation is related to rising demand for goods and services. Hyperinflation, unfortunately for those who don’t understand it, is not a function of demand. It is created by increasing the supply of dollars. 2. During demand-related inflation, increases (or decreases) in your wealth are well measured with dollars. Gold is [...] by ZH One of our favorite economic commentators – Jim Grant of Grant’s Interest Rate Observer – was on Consuelo Mack continuing his ongoing crusade against Ben Bernanke’s lunacy, and the monetary central planning of the Federal Reserve, particularly focusing on the topic of pernicious inflation which for good reason has received much attention of the past year. Grant, who unlike Steve Liesman correctly observes [...] by Chris Martenson The US budget process is entirely out of control and, by extension, its fiscal future is rather bleak. All one has to do is back up two steps, entirely ignoring the meaningless budget scuffles currently ongoing in DC, to see that the federal government’s fiscal situation is in complete shambles. In fact, as things currently stand in terms of spending and revenues, the US [...] —US Treasuries last week suffered their biggest two-day sell-off since the collapse of Lehman Brothers in September 2008. The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks.— By Liam Halligan, Economic Agenda 4:49PM GMT 11 Dec 2010 The Fed is making the same kind of mistakes Japan made that resulted in its 20-year recession. The Washington Post says Larry Mayer, a former Fed governor, estimates that to work it would take QE2 bond purchases of “more than $5 trillion …10 times what analysts are expecting.†Bernanke’s plan is designed to fail. And, unfortunately, that will make life far more dangerous for American investors, consumers, taxpayers and voters. “I’m ultrabearish [...] You deposit money in a bank right? Do you happen to know the duration gap of the bank assets and liabilities. Is it positive? How positive is it? Will an increase in interest rates wipe out their asset base? What is the overall duration gap of the asset-liabilities held by US banks? If it is true that defaults reduce M3 and M3 is in fact declining will interest rates go [...] |
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‘We Are In The Midst of The Keynesian Depression’: UNPRECEDENTED Central Bank Interventions Backfire As House Price Keep Raising While Wage Growth Goes Flat. Discretionary Spending Took A Notable Turn For The Worse, And American Households Hit 43-Year Low In Net Worth.
‘We Are In The Midst of The Keynesian Depression’
Five years have passed since the beginning of the Great Recession. Growth is slow, joblessness is elevated, and the knock-on effects continue to drag down the global economy. The panic in financial markets in 2008 that caused a systemic crisis and a sharp fall in asset values still weighs on markets around the world. The primary difference between today and the 1930s, when [...]