1/9/15

Mash Up; "First comes production. Then comes income. Spending and savings follow. All the rest is debt"

"Nigeria, Belarus Halt All FX Trading...

...manufacturers in Russia are facing a “bloodbath” because of the plunge in the value of the rouble.

...General Motors, Audi and Jaguar Land Rover also suspended deliveries to Russian dealers earlier this week. If car sales in Russia do continue to decline, it could affect British manufacturing.

“It is not supposed to close the market. 

We have told them we’ll continue intervening in the market,
 so there is no need to panic.”

Deputy Central Bank of Nigeria Governor Sarah Alade

...the temporary Russian FX-trading halt appears to have inspired all other nations with plunging currencies, and as a result Nigerian FX dealers halted trading after a central bank rule change meant to "limit speculation" against the plunging naira

“This raises concerns about the credibility of the central bank” 

“If it was their intention to stabilize or see some appreciation of the naira,
it’s backfired.”

Kevin Daly
senior portfolio manager...

...Investors dropped Nigerian assets as the outlook for Africa’s biggest oil producer worsened with Brent crude prices almost halving since late June.

...total credit market debt outstanding—-government, business, household and finance—-is up by 16% since the last peak—from $50 trillion to $58 trillion.

...Our government officials and policymakers continue to operate under the presumption they are gods, not subject to the laws of this world. ...by not acknowledging their mistake it allows them to still believe they can make pigs fly.  Specifically, the central bank is printing incredible stocks of money and pushing it directly into the stock market in an effort to create economic growth from nothing.

"Currently we have an international monetary non-system. 

Nobody has to follow any rules. 

Everybody does what they consider is in their own short-term best interest.

We are in absolutely uncharted territory here. 

This worries me the most.

The monetary system is dangerously unanchored

This all is a dangerous illusion."

William R. White
former chief economist of the Bank for International Settlements
on the Swiss National Bank introducing negative interest rates

...the current capitalism suffocating regime of Keynesian central banking and extreme financial repression has created systematic bias and noise in the so-called “in-coming data”. These distortions are the result of mis-allocations and malinvestments reflecting artificial, sub-economic costs of debt and capital. The resulting bubbles and booms, in turn, cause highly aggregated measures of economic activity to be flattered by the unsustainable production

During the last 80 months, 
the SNB’s balance sheet has soared from 100B CHF to 530B CHF
a 5X explosion that would make even Bernanke envious. 

Better still, a balance sheet 
which stood at 20% of Swiss GDP in early 2008
now towers at a world record 80% of the alpine nation’s total output. 

David Stockman

...our economic policymakers and really the consciousness of society is so narrowly focused on “The Market” that we seem uninterested in all things not securitized.  ...its printing endless amounts of dollars, sticking them in the stock market money machine and expecting that to somehow create economic prosperity to  all.  ...our policymakers believe they can ignore economic laws and can somehow create economic growth from nothing.

...What QE in the Eurozone will do is enable fiscal fraud in the peripheral countries and a further inflation of already lunatic valuations of sovereign debt...

...today the Italian 10-year is trading at a 1.9% yield because the fast money traders are happy to hold it on zero cost repo—- until the ECB takes it off their hands at an enormous windfall gain a few months down the road.

...once again those responsible will profit from their misguided policies and will bear no accountability for the horrible consequences of their decisions.

...bubble finance does not create growth; it funds phony booms that end up as destructive round trips.

HFT Accounts For 76% Of All Orders In Europe

HFT accounts for 76% of all orders by, 
49% of all trades and 43% of total value traded.

...Never in the history of the S&P 500 e-mini futures contract has so many contracts been traded at the market open...

...With market liquidity so compromised, HFTs can push markets around easily and they certainly did...

...urgently needed cleansing was stopped cold in its tracks when Bernanke tripled the Fed’s balance sheets in less than a year after the Lehman crisis, and then officially adopted ZIRP and the greatest spree of debt monetization in recorded history.

"Once again, on the heels of the turbulence, 
major central banks made soothing statements, 
suggesting that they might delay normalisation 
in light of evolving macroeconomic conditions.

Recent events, if anything, have highlighted once more 
the degree to which markets are relying on central banks:
 the markets' buoyancy hinges on central banks' every word and deed"

Bank of International Settlements
BIS Quarterly Review December 2014 - media briefing

...“operation twist” compliments of central bank bubble finance, embodies a temporally twisted imbalance of supply and demand that inherently results from false prices in the capital and commodity markets.

...the emerging worldwide liquidation of the energy bubble will hit the highest cost provinces first—-which is to say, the shale patch and oils sands of North America.

...Much of what meager production and job growth there has been in recent years will soon be taken back as the energy bubble comes back to earth.

...We are now entering an age of global cooling, drastic industrial deflation,  serial bubble blow-ups and faltering corporate profits.

...We are at “peak debt” in nearly every precinct of the world economy, and that means that central banks cannot close this wholly theoretical and imaginary gap; they can only blow dangerous bubbles trying.

...The current illusion of recovery is a result mainly of windfalls to the financial asset owning upper strata, the explosion of transfer payments funded with borrowed public money and another supply-side bubble - this time in the energy sector and its suppliers and infrastructure.

"eMini Liquidity was cut in half starting Dec 12. 

Unknown why."

Eric Hunsader

...The lower the liquidity, the easier to move a rigged "market" higher.

This is the greater fool theory to believe the market is deep enough for so many to “get out” at the same time with poor liquidity conditions.

...the markets’ outsized and illogical reactions are signs and symptoms that financial markets are broken. The FOMC’s meddling in financial market behavior could easily catch up to them in an ugly fashion.

...today’s 35 bps yield on 10-year JapanGBs——the debt of a government which is hopelessly bankrupt and for which there is virtually not a single bid anywhere outside of the open market desk of the BOJ. Nor does it make any more sense than today’s heated rip on Wall Street based on the word “patient” at a point in the cycle where 71 months of free carry trade money has already inflated financial asset values to the nose-bleed section of history.

Flying blind, the financial markets are thus bubbling - in the delirium phase - like never before. That is, until they don’t."

UK Unions Call For North Sea Tax Breaks As Oil Slump Threatens Jobs (Guardian)

...German pundits blamed their joblessness on good weather, whereas Goldman suggested that the Germans actually have strong growth . . . because of the weather.Fed governor Plosser says the economy is great “despite the effects of severe weather.” The CEO of Walmart doubts the weather argument altogether, instead suggesting that everybody is unemployed and broke.

“Every time it seems that we are finally drawing to an end of easy money, something (or things) in the world go wrong.” That’s not a bug. It’s a feature.

http://www.zerohedge.com/

http://www.theautomaticearth.com/debt-rattle-december-20-2014/

http://www.nakedcapitalism.com/2014/12/links-122014.html

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