Thursday, May 12, 2016

Wall Street Is Falling Off A Cliff, 
& The Bottom Is A Long Way Down
"QE and negative interest rates turned out to have unintended consequences, one of which is a drying up of bond trading. If governments buy up all the high-grade bonds then obviously there aren’t many left to trade. And if the yield on new bonds is negative, holders of existing positive-coupon bonds have no incentive to sell them. Hence, eerily silent trading desks around the world .. The financialization of the global economy has created a vast sea of hot money that flows mindlessly from one location and asset class to another on a scale that exceeds traders’ ability to predict and/or manipulate. Put another way, in a world where it’s impossible to know what’s going to boom or crash next, it’s irrationally dangerous to place big bets on anything .. Where do we go from here? Probably into a crisis in which the world stops trusting markets, and financial assets are devalued accordingly."
LINK HERE to the essay

1 comment:

Anonymous said...

A Central Banker Officially Loses It: "We Are Magic People"

He also made it clear that the end of cash is indeed coming:

Vasiliauskas also backed the ECB’s decision this month to stop production of the 500-euro banknote. The measure was taken because of the note’s perceived role in crime, though it drew criticism in countries such as Germany and Austria.

“I think modern societies shouldn’t concentrate on cash -- alternative ways of payment are more effective,” he said. “Personally, I was supportive. Less cash in a society is better and safer for everybody.”

Despite all these clear hints, many will be shocked when central banks finally outlaw all physical cash one day.

Still, the portly central banker's punchline was the following:

“Markets say the ECB is done, their box is empty,” Vasiliauskas, who heads Lithuania’s central bank. "But we are magic people. Each time we take something and give to the markets -- a rabbit out of the hat."

What is most disturbing is that he was dead serious when he said it, which is important, because it is finally obvious that central bankers are neither gods, nor magicians, nor even doing "god's work on earth", but plain and simple psychopaths. At least the magician he was right about one thing: "we give to the markets."