Global financial system implosion begins

[yield]

MarketWatch 15th Sept 2014

Low volatility and compressed risk spreads are signs of high risk-taking, a Bank for International Settlements official said as part of the group’s quarterly review.

The BIS is often referred to as a central bank for central banks, and it’s been warning for years of the dangers of very low interest rates.

“A common mistake is to take unusually low volatility and risk spreads as a sign of low risk when, in fact, they are a sign of high risk-taking,” said Claudio Borio, head of the monetary and economic department at the BIS.

“It all looks rather familiar. The dance continues until the music eventually stops. And the longer the music plays and the louder it gets, the more deafening is the silence that follows.”

Borio told reporters that volatility is low because of “muted uncertainty” about the economic outlook and unusually accommodative monetary policy. “People may not necessarily like what they see, but they seem to think they see it more clearly,” he said. Borio added that the last time uncertainty was this low was in 2007 — just before one of the largest forecast errors the economics profession has ever made.

The cure for the 2008 crash, ultra low interest rates and quantitative easing, are now going to be the cause of the next one?

 

[quiquaquo]

MarketWatch 15th Sept 2014



The cure for the 2008 crash, ultra low interest rates and quantitative easing, are now going to be the cause of the next one?

No chance, just print some more money and create some more debt and the bandwagon rolls on, no problem.

 

[yield]

No chance, just print some more money and create some more debt and the bandwagon rolls on, no problem.

The Federal Reserve is planning to end QE3 in October. The Bank of Japan are still buying and the European Central Bank is considering it as their long-term refinancing operation didn't work as planned.

The central banks can't do it indefinitely though. Problem is there's too much debt. The large corporations are cash rich but they're sitting on it in the tax havens.

 

[quiquaquo]

The Federal Reserve is planning to end QE3 in October. The Bank of Japan are still buying and the European Central Bank is considering it as their long-term refinancing operation didn't work as planned.

The central banks can't do it indefinitely though. Problem is there's too much debt. The large corporations are cash rich but they're sitting on it in the tax havens.

The debt's just numbers on computers, use the delete key to knock off a few zeros. Seriously it's all bollocks both the debt and the the money that allegedly exists, of course if it all falls apart we starve so we are forced to continue to be bled dry by the parasites.

 

[yield]

The debt's just numbers on computers, use the delete key to knock off a few zeros. Seriously it's all bollocks both the debt and the the money that allegedly exists, of course if it all falls apart we starve so we are forced to continue to be bled dry by the parasites.

Someone should've told the banks. No need for the crash in 2008. Lehman Brothers could've just knocked some zeroes off their profit and loss hey presto all good.

Margin credit is back at an old time high, junk bonds are selling like hot cakes and subprime is bigger than in 2007.

 

[jusali]

and the cycle begins again.......no one learns no one cares in that trade.
It's just short term gain gambling.
No one cares about the long term or the bigger picture as long as 'their' graph is heading in an upwards direction they will continue to gamble.

 

[yield]

IMF cuts growth outlook, warns on euro zone, Japan
Reuters Tue Oct 7, 2014

The IMF has now cut its current-year growth forecasts nine out of 12 times in the last three years as it consistently overestimated how quickly richer countries would be able to pull free from high debt and unemployment in the wake of the 2007-2009 global financial crisis.

Politically acceptable forecasting.

Latest ECB measures mark new policy phase, says Constancio
Reuters Wed Oct 8, 2014

To stimulate lending and support the economy, the ECB plans to buy reparcelled debt known as asset-backed securities (ABS) as well as covered bonds, secured on solid assets such as property.

Constancio said the stock of covered bonds eligible for purchase by the ECB amounted to about 600 billion euros (472.80 billion pounds). Around 400 billion euros of ABS qualify for purchase by the ECB under its new plan, he added.

As the long-term refinancing operation worked so well.

 

[yield]

Six years after Lehman’s crash, US and UK play out next financial crisis
The Guardian, Saturday 11 October 2014

The top financial brass from the Treasuries and central banks of Britain and the US are to take part in a war game, behind closed doors in Washington on Monday, to test how they would handle another Lehman Brothers-style banking crisis .

Six years after the financial earthquake that led to the multibillion-pound taxpayer bailouts of Royal Bank of Scotland and Lloyds Banking Group, the most senior policymakers from both sides of the Atlantic will try to find out whether they are now any better prepared for the collapse of a bank deemed too big to fail.

Let me guess?

 

[ska invita]

The next financial crisis - not if but when

Photo credit: Chris Brown
OCTOBER 13, 2014 // BY: JAMES MEADWAY
Reports from the last few weeks say that the world economy is on course for another financial crisis. Global debt levels are higher than in 2008, with poorer countries now leading debt creation. Far from being safe, Britain is dangerously exposed to crises in the rest of the world, as well as having its own domestic problems.
http://www.neweconomics.org/blog/entry/Another-financial-crisis-not-if-but-when

 

[SikhWarrioR]

Hopefully when occurs they will realise that the current global financual system is unfit for purpose {has been for decades} and I would like to think that they would replace it but no doubt they will paper over the cracks and carry on until the next inevitable collapse

 

[Awesome Wells]

The question is when is this goon to happen? Years, decades, months?

 

[toblerone3]

This thread has been going on for seven years. Maybe the implosion will never happen. Can the financial trickery just go on and on and on?

 

[coley]

This thread has been going on for seven years. Maybe the implosion will never happen. Can the financial trickery just go on and on and on?

The stack of cards just keeps getting higher.

 

[not-bono-ever]

Six years after Lehman’s crash, US and UK play out next financial crisis
The Guardian, Saturday 11 October 2014

Let me guess?

 

[not-bono-ever]

^^^^ this shows how much extra cash each institution needs to have slopping about in its tills each night on top of other BASEL type requirements , just in case- the higher the requirement, the more likely to fail ( very roughly )

problem is, assessing the the worth of each bank is more difficult / opaque than ever.

list is updated in November '14 again.

 

[not-bono-ever]

MarketWatch 15th Sept 2014



The cure for the 2008 crash, ultra low interest rates and quantitative easing, are now going to be the cause of the next one?

Its sorta counter intuitiative innit- low implied vols and tight spreads surely suggest everything is functioning well yes ? erm.... not really , it just means that everyone is shitting themsleves and scared to stick their head above the parapet.

 

[yield]

^^^^ this shows how much extra cash each institution needs to have slopping about in its tills each night on top of other BASEL type requirements , just in case- the higher the requirement, the more likely to fail ( very roughly )

problem is, assessing the the worth of each bank is more difficult / opaque than ever.

list is updated in November '14 again.

Thanks for that not-bono-ever. Surely they're too-big-to-fail though?

This thread has been going on for seven years. Maybe the implosion will never happen. Can the financial trickery just go on and on and on?

What do I know I look after old people? Maybe the boom and bust credit cycles can on forever?

With the 1% then the .1% then the .01% getting richer and richer. Until there's a mass popular political solution.

Interesting piece from spring I've quoted before.

Former Head of BIS Worried About Cost of QE
forbes.com. 4/27/2014

We just saw the last chapter of that long history. This is the last of a whole series of bubbles that have been blown. In the past, monetary policy has always succeeded in pulling up the economy. But each time, the Fed had to act more vigorously to achieve its results. So, logically, at a certain point, it won’t work anymore. Then we’ll be in big trouble.

 

[ska invita]

This thread has been going on for seven years. Maybe the implosion will never happen. Can the financial trickery just go on and on and on?

as most commentators agreed from by around 2010 many advanced capitalists countries manged to successfully introduce plans that would defer the real pain forward a generation -in the crash of 1929 there was a lot less Too Big Too Fail going on, and those who lost money lost it. This time around they've propped it up but on borrowed time and money and none have really sufficiently reformed their banking systems. Its just a matter of time and next time the potential to prop it up will be a lot more limited. Very scary really.

From what i understand i think boom and bust is inevitable, and certainly what is happening right now looks a lot like an attempt to create a boom, as opposed to meaningful growth and investment.

 

[RhymnRzn]

The New Blue Collar Jobs Of Tomorrow

this was intense listening. bouncing between robots doing everything better, to what if a robot malfunctions during a safety-intensive duty, one of the speakers suggests we are in a window of time that might be called the age of "the person": or what vocations will remain for man and beast in the advent of machines and computers? love of money always squanders the benefits.

 

[not-bono-ever]

Thanks for that not-bono-ever. Surely they're too-big-to-fail though?

I dont think any of them are too big to fail ( Goldmans maybe not,as they are greasy fuckers ), but the question should really be - is there a politcal will to let them fail ?

 

[treelover]

European stock markets tumble again on global growth fears – business live
http://www.theguardian.com/business...amid-growth-and-ebola-fears#start-of-comments

Correction on the way?, how would this impact on Uk economy, Tory election prospects?

 

[not-bono-ever]

greek bonds now up to @ 8.72%

goldmans report 3Q rise in profits by 50% , mainly based on bond revenues

erm....

 

[Barking_Mad]

Low Oil Prices: Sign of a Debt Bubble Collapse, Leading to the End of Oil Supply?


http://ourfiniteworld.com/2014/09/2...-leading-to-the-end-of-oil-supply/#more-39258

 

[yield]

Dollar surges as Fed ends QE on hawkish note
Reuters. Thu Oct 30, 2014

Global equity markets were mixed on Thursday while the dollar surged to a three-week high and government bond yields rose, one day after the U.S. Federal Reserve announced the end of its six-year bond-buying stimulus program.

The Fed, as expected, said it would no longer add to its holdings of Treasury bonds and mortgage-backed securities, effectively ending a program that at its peak pumped $85 billion a month into the financial system to hold interest rates down and boost the flagging economy.

So QE infinity ended yesterday. What is the USA going to do with the nearly $4,000,000,000,000 of government and corporate bonds they've bought?

 

[yield]

Japan risks Asian currency war with fresh QE blitz
Telegraph 31 Oct 2014

The Bank of Japan has stunned the world with fresh blitz of stimulus, pushing quantitative easing to unprecedented levels in a bid to drive down the yen and avert a relapse into deflation.

The move set off a euphoric rally on global equity markets but the economic consequences may be less benign. Critics say it threatens a trade shock across Asia in what amounts to currency warfare, risking serious tensions with China and Korea, and tightening the deflationary noose on Europe.

The Bank of Japan (BoJ) voted by 5:4 in a hotly-contested decision to boost its asset purchases by a quarter to roughly $700bn a year, covering the fiscal deficit and the lion’s share of Japan’s annual budget. “They are monetizing the national debt even if they don’t want to admit it,” said Marc Ostwald, from Monument Securities.

The unstated purpose of Mr Kuroda’s reflation drive is to lift nominal GDP growth to 5pc a year. The finance ministry deems this the minimum level needed to stop a public debt of 245pc of GDP from spinning out of control. The intention is to erode the debt burden through a mix of higher growth and negative real interest rates, a de facto tax on savings.

Marcel Thieliant, from Capital Economics, said the BoJ already owns a quarter of all Japanese state bonds, and a third of short-term notes. Its balance sheet will henceforth rise by 1.4pc of GDP each month, three times the previous pace of QE by the US Federal Reserve.

Hans Redeker, from Morgan Stanley, said Japan is exporting its deflationary pressures to the rest of Asia. “It is not clear whether other countries can cope with this. There have been a lot of profit warnings in Korea. The entire region is already in difficulties with overcapacity and a serious debt overhang. Dollar-denominated debt has risen exponentially to $2.5 trillion from $300bn in 2005, and credit efficiency is declining,” he said.

Albert Edwards, from Societe Generale, said Japan is at the epicentre of a currency maelstrom, a replay of the Asian financial crisis from 1997-1998, though this time the region is a much bigger part of the global economy. “China cannot tolerate this kind of shock when it already faces a credit crunch and has suffered a massive loss in competitiveness. Foreign direct investment into China has already turned negative,” he said.

Japan to benefit from cheaper exports to increase sales and more expensive imports to boost inflation.

Feels like they've taken the baton from the USA with QE9. But the others didn't work either?

“They are monetizing the national debt even if they don’t want to admit it,” like the other countries who've done it. How much as a percentage of government debt can the issuing country buy before it becomes worthless?

 

[Barking_Mad]

Those numbers are just cuckoo, bonkers, do-laaa crazy.

 

[yield]

Those numbers are just cuckoo, bonkers, do-laaa crazy.

What I don't get is why more people aren't angry about quantitative easing?

It's basically a blank cheque for the rich with their shares, bonds and other assets.

Admittedly it does help the pension providers though many have stopped final salary pension schemes.

Quantitative easing has stoked the bubble in property prices making home ownership a dream for many and renting unaffordable.

More people in work than are out of work are claiming housing benefit.

Combined with austerity it's a massive transfer of wealth from the poor to the rich.

 

[Yuwipi Woman]

What I don't get is why more people aren't angry about quantitative easing?

It's basically a blank cheque for the rich with their shares, bonds and other assets.

Admittedly it does help the pension providers though many have stopped final salary pension schemes.

Quantitative easing has stoked the bubble in property prices making home ownership a dream for many and renting unaffordable.

More people in work than are out of work are claiming housing benefit.

Combined with austerity it's a massive transfer of wealth from the poor to the rich.

Unfortunately, most people don't have enough knowledge of economics to grasp the scale of the theft. And those that do feel they have no power change it.

 

[yield]

Unfortunately, most people don't have enough knowledge of economics to grasp the scale of the theft. And those that do feel they have no power change it.

Very true YW. A lot of people will be blaming themselves. "If only I'd worked harder"

Not realising that in our limited democracy that the political class are more concerned about the interests of their donors from Wall Street and the City of London

Child poverty up in more than half of developed world since 2008

I mean who cares if children get enough to eat those bankers need their bonuses.

 

[campanula]

my heart goes out to those bankers and their families....I fail to see how a million or so can possibly be regarded as sufficient remuneration for their hard work....