Friday, September 02, 2016

THE CENTRAL BANKS ARE COVERING THE LOSSES OF THEIR FRIENDS, THE BANKS. THE IDEA THAT THEY ARE HELPING THE PEOPLE IS A DECEPTIVE TRICK.
-------------------------------------------------------
Martin Armstrong 'gets it' .. the theme point that we keep repeating: "The greatest trick central bankers ever pulled was convincing the world they work for the public and not for the banks."

Armstrong says: "The central banks are trapped. They can no longer even hope to sell the bonds they have bought in a vain attempt to stimulate the economy. So government can, in theory, keep their rates at zero as long as the central banks buy it, but they won’t be able to sell it to the public. The Sovereign Debt Crisis is already here. The liquidity is collapsing and central banks are rapidly becoming the only buyer. True, German 10-year notes have sold well, but that is a bet AGAINST the euro surviving rather than people willing to pay just for the state to hold their money. They count on the central bank buying if they want to sell. What happens when the central banks stop the buying? I would not want to own any government paper. I would expect its price to drop 25% in the first three months from the turn .. Nobody seems to be talking about .. the pretend derivatives clearing houses setup after the financial crisis .. The Bank of International Settlements (BIS) has issued a report on the derivative clearing houses. Unquestionably, there is a high concentration of risk among the 10 central derivatives counterparties and clearinghouses, which they lack the ability to manage. Some central counterparties mentioned without names in the report have no guidebook to explain how to judge the extent of financial risk in such complicated instruments. The total value of these contracts in the world is more than $600 trillion, according to the BIS. However, the BIS is proposing standards to try to get a handle on that risk .. The one thing to come out of the financial crisis was the LACK of central clearinghouses. The movie Big Short illustrates how,
without a central clearinghouse, the banks could refuse to acknowledge a loss until they have covered themselves."
- Martin Armstrong
link here to the reference

No comments: