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Global financial system implosion begins

hipipol said:
Sterling-Euro rate 1.5c our way in the last hr
Click to expand...

And...

chart
 
:confused: So the EUrozone is now paying its banks to effectively just do overseas development? My understanding is they can get almost free money off the ECB for having loans ... but the whole package means its not worth having those loans actually in the EUrozone, and nobody wants to borrow anyway coz of the threat of deflation. Whilst this stops the rest of the world parking money in the EUrozone, does it not mean that its driving EUropean banks into buying up the dodgy debt in UK and and US, and help prop up China shadow banking.

If so, this will not end well
 
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hipipol said:
Cant copy the graph sadly you'll have to look at the page
Its a free source so limited as to what I can post
http://uk.reuters.com/business/currencies/quote?srcAmt=1.00&srcCurr=GBP&destAmt=&destCurr=EUR
That spike does not appear here, in fact its inverted
Turns out the day ended flat
No matter
I used to trust Digital Look, not sure any more
Click to expand...

The spike's visible - though differently smoothed - if you change the settings properly!

http://uk.reuters.com/business/currencies/quote?srcAmt=1.00&srcCurr=EUR&destAmt=&destCurr=GBP

chart2.png
 
laptop said:
You've picked the wrong person with whom to argue about skill in tricky language.

Do you now accept that the chart is real?
Click to expand...
The chart is real no dispute
But then I never said, read it again, that it was faked
I asked if it was, if you construed that as some sort of insult, sorry
 
hipipol said:
Sod whatever they say - net/net this is a Euro devaluation strategy
The idea seem to be that ANY yield will be better than an overnight charge for parking cash
Bizarrely the dont seem to realise that anyone with half a head will now lend OUTSIDE the Eurozone for higher returns both on the interest rate and the FX uptick
Example:-
Lend Bocconi construction Euro 10m @ 3.5% for six months to build some houses in Milan
Yield = Euro 175,000
Lend El-Minari Construction Euro 10m @ 5% for six months to build houses in Dubai
Yield = Euro 250,000 plus the FX appreciation - I would have loaned in Diram, converting back to Euro 6 mos from now should add an extra 2% should current trends prevail, ie another 200,000 Euros
More like Japan than they seem to think
Classic carry trade opportunity just like Japan had for all those years
Click to expand...
I know there were different circumstances for Japan but the yen carry trade didn't help them long term?

It does seem to be competitive currency depreciation? They'll devalue the deficits and import inflation.

Not everyone can do it though. https://en.wikipedia.org/wiki/Currency_War_of_2009–11
 
gosub said:
http://blogs.telegraph.co.uk/financ...hdogs-rattled-by-lack-of-fear-in-the-markets/
Click to expand...
My own view is that ever rising equity prices today are incompatible with ever sliding bond yields. The two markets are each telling a different story about the state of the world.

I notice the heroic efforts to justify this on the grounds that falling inflation raises real incomes and profit margins. To which one can only say that falling inflation – and therefore falling nominal GDP growth – also lowers the forward trajectory of equity prices, at least compared to what they were assumed to be. Investors are latching on to one part of the story they like, but ignoring the other part.

Split personality in bonds and stocks can happen for short periods. This rarely lasts. One or the other is going to face reality before long.
Click to expand...

Unstoppable $100 Trillion Bond Market Renders Models Useless
Bloomberg. 2014-06-02
If the insatiable demand for bonds has upended the models you use to value them, you’re not alone.

Just last month, researchers at the Federal Reserve Bank of New York retooled a gauge of relative yields on Treasuries, casting aside three decades of data that incorporated estimates for market rates from professional forecasters. Priya Misra, the head of U.S. rates strategy at Bank of America Corp., says a risk metric she’s relied on hasn’t worked since March.
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After unprecedented stimulus by the Fed and other central banks made many traditional models useless, investors and analysts alike are having to reshape their understanding of cheap and expensive as the global market for bonds balloons to $100 trillion. With the world’s biggest economies struggling to grow and inflation nowhere in sight, catchphrases such as “new neutral” and “no normal” are gaining currency to describe a reality where bonds are rallying the most in a decade.
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The “new neutral” and “no normal” paradigm. Somewhere silent alarm bells are ringing.
 
What I wouldn't mind knowing is how soon there's going to be another crash, seeing as from what I gather no lessons have been learned and no real changes made since the last time.
 
NoXion said:
What I wouldn't mind knowing is how soon there's going to be another crash, seeing as from what I gather no lessons have been learned and no real changes made since the last time.
Click to expand...
I wish I knew. The Federal Reserve and other central banks are still full swing on their disaster recovery plan from 2008 six years ago.

Ultra low, now negative in EU, interest rates, with USA, UK and Japan also doing quantitative easing. QE is the central banks buying "dodgy" perhaps unpriceable financial instruments from banks etc. The EU is considering starting QE.

Now six years on I'd've thought the recovery plan should be over. But instead they've just created more asset bubbles in housing, stocks and shares etc.

In my lifetime government debt/bonds, usually a safe haven, and equities were counter cyclical. High bond yields when equities are doing well. Low bond yields when equities are tanking.

There a number of reasons for this cash rich multinational doing share buy backs and central banks have became vast holders of their own debt.

Within the internal logic of capitalism something is wrong. This maybe tied into high frequency trading. The market is opaque and pricing/risk signals are askew.

I think something is going to go bang.
 
The introduction of tech, enabling HFT, destabilised the entire system.
HFT is literally making money out of nothing.

Interesting times ahead...
 
you know I have mentioned metals issues with China and financing and shit...

http://online.wsj.com/articles/banks-cut-credit-to-chinese-metals-traders-1402316411

"The trading firms hold the deed to the metal, which can be used to secure financing, but the metal stays in a warehouse. Banks fear a private Chinese company may have used the metal as collateral to get multiple loans, potentially defrauding the lenders and trading firms"

this is the tip of the iceberg...
 
not-bono-ever said:
you know I have mentioned metals issues with China and financing and shit...

http://online.wsj.com/articles/banks-cut-credit-to-chinese-metals-traders-1402316411

"The trading firms hold the deed to the metal, which can be used to secure financing, but the metal stays in a warehouse. Banks fear a private Chinese company may have used the metal as collateral to get multiple loans, potentially defrauding the lenders and trading firms"

this is the tip of the iceberg...
Click to expand...
The article is behind a paywall. Some bits are in zerohedge

http://www.zerohedge.com/news/2014-...hinas-rehypothecation-evaporation-goes-global

How much is at stake? Bit difficult the west criticising China considering the Libor and Forex fixing scandals, mortgages backed securities etc.
 
Dr Jon said:
The introduction of tech, enabling HFT, destabilised the entire system.
HFT is literally making money out of nothing.

Interesting times ahead...
Click to expand...
not quite from nothing
Trader presses key to buy x
HFT systems detect the order, and buy it themselves prior to the traders order being processed
HFT sys then post the same stock at a marginally higher price
Trader has to execute the order - buys it for 0.01c more than he had wanted
not a mega change
 
Fed still buy $45b a month as it "tapers" its QE program
Carney says rates may move sooner
Maybe he knows someone at the Fed
As for rates being hiked slowly, I for one dont buy it
The desperate search for yield (no panics, I didn't mean you mate!!;)) plus the fear of holding the ball when the music stops means a lot of itchy trigger fingers
I would not be surprised to see 1 or 2 % jumps, prob early september - the usual month for shitpanicmadness - possibly before, but that seems to fit
 
Why Japan's Debt Markets Are Frozen
Bloombergview Jun 17, 2014
What worries me is that central banks in Frankfurt, Tokyo and Washington now find themselves on a treadmill from which there's no escape. As it accelerates, their bond-buying efforts will have to keep pace. Over time, there's no doubt that the world's biggest central banks are headed toward the widespread monetarization of debt -- effectively nationalizing bond markets and raising troubling questions. Not least of them: How exactly does a central bank withdraw from a market it essentially owns?
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European stocks, German Bund yields fall after U.S. GDP data
Reuters. Wed Jun 25, 2014
European stocks extended losses, while German 10-year Bund yields fell to their lowest since May 2013 on Wednesday after data showed the U.S. economy contracting at a much steeper pace than expected in the first quarter.

U.S. gross domestic product fell at a 2.9 percent annual rate, the economy's worst performance in five years, instead of the 1.0 percent fall it had reported last month.
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USA GDP -2.9%. Just from tapering QE? :thumbs:

Zero interest rates and the Federal Reserve is still spending tens of $ billions...
 
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