Tag Archives: Money For Nothing

Bank of Japan’s Kuroda’s Stunning, Doubled-Down QE ‘Experiment’

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“The unprecedented increase in ‘quantitative and qualitative monetary stimulus’ announced Friday, October 31, by Bank of Japan governor Kuroda Haruhiko is one of the most risky, if not reckless, and possibly disastrous actions in the history of world central banking. Japan is now conducting ‘a laboratory experiment’ and ‘Governor Kuroda’s monetary experiment has in effect morphed into a strategy of devaluation plus financial repression.’ [..] ‘it is well known that Prime Minister Shinzo Abe, who keeps a stock monitor in his offices, sees rising stock prices as critical to voter confidence in Abenomics and hence his own approval ratings.'”

http://www.forbes.com/sites/stephenharner/2014/11/04/reactions-to-bojs-kurodas-stunning-doubled-down-qe-experiment/

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Losing Velocity: QE and the Massive Speculative Carry Trade

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“The narrative of overvalued carry trades ending in collapse is one that winds through all of financial history in countries around the globe. Yet the pattern repeats because the allure of ‘reaching for yield’ is so strong. To reach for yield, regardless of price or value, is a form of myopia that not only equates yield with total return, but eventually demands the sudden and magical appearance of a crowd of greater fools in order to exit successfully. The mortgage bubble was fundamentally one enormous carry trade focused on mortgage backed securities. Currency crises around the world generally have a similar origin. At present, the high-yield debt markets and equity markets around the world are no different.”

http://www.hussmanfunds.com/wmc/wmc141103.htm

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Swiss central bank opens Singapore branch [2013]

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“The Swiss National Bank opened its first overseas branch on Thursday, in Singapore, as it seeks to improve management of its huge foreign currency reserves, including more than $50 billion in Asian assets.  The SNB has accumulated over 430 billion Swiss francs ($445 billion) in foreign currency defending the 1.20 per euro cap it imposed on the Swiss franc in 2011.  The bank is looking to diversify these reserves, nearly half of which was in euros as of the first quarter of this year, partly by branching into Asian assets.  Designed to improve the round-the-clock management of the reserves, Jordan said the Singapore office will allow the bank’s traders to operate in a favourable time zone.”

http://www.reuters.com/article/2013/07/11/snb-singapore-idUSL4N0FH0LO20130711

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Swiss central bank fights to block public vote on gold backing

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“Now the SNB is fighting on a new front: to block a populist motion that would force it to almost treble the proportion of reserves held in gold.  At the end of November, Swiss citizens will vote on an initiative that calls on the central bank to hold at least 20 per cent of its assets in gold; to repatriate any gold stored abroad; and to refrain from selling any gold in future.  The initiative seeks to tap into a current of Swiss public opinion that is fiercely proud of the country’s independence, and unsettled by the economic struggles of its neighbours. The government has rejected the idea, saying last year that ‘gold no longer has any meaning for monetary policy’. Parliament voted against it by a large majority.”

http://www.swissinfo.ch/eng/swiss-fight-to-block-public-gold-vote/41061340

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China Tries Again to Jolt Tired Economy

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“China’s central bank is planning to inject 200 billion yuan into the banking system, according to financial executives briefed on the matter, as recent credit-easing measures have failed to push the world’s second-largest economy back to stronger growth rates amid deepening worries about a global slowdown.  The latest effort by the People’s Bank of China, which will offer funds to about 20 large national and regional banks, follows last month’s move to pump 500 billion yuan into the country’s five major state-owned banks. It comes as concerns mount in Beijing that the nation will miss its growth target—set at 7.5% this year—for the first time since the 1998 Asian financial crisis.”

http://online.wsj.com/articles/chinas-central-bank-to-inject-more-funds-into-chinese-banks-1413549172

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Draghi-Weidmann fight intensifies as ECB debates action

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“ECB president Draghi repeated he’s ready to expand the ECB’s balance sheet by as much as €1 trillion to beat back the threat of deflation.  Bundesbank head Weidmann responded by saying that a target value isn’t set in stone. History suggests Draghi will ultimately prevail over his German colleague. The Bundesbank head is concerned that a balance-sheet target may lead to the ECB paying too much for assets under its programs to purchase asset-backed securities and covered bonds, he said on Oct. 9. Germany’s Focus magazine reported that Draghi finds cooperating with Weidmann has become ‘almost impossible’ and that he no longer divulges his plans to him beforehand.”

http://www.irishtimes.com/business/economy/draghi-weidmann-fight-intensifies-as-ecb-debates-action-1.1961552

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There They Go Again: Fed Officials Give Rate Timetables

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“Federal Reserve officials insist that the outlook for interest rates depends on how economic data evolves and isn’t driven by the calendar. They are nevertheless offering various views on the probable timing of the first increase since 2006.  The Fed’s pledge that interest rates will stay low for a ‘considerable time’ could mean anything from two months to one year, Vice Chairman Stanley Fischer said today.  New York Fed President William C. Dudley said this week that forecasts for an increase in mid-2015 are ‘reasonable.’ Today, San Francisco Fed President John Williams said that timeframe is a ‘reasonable guess to my mind.'”

http://www.bloomberg.com/news/2014-10-09/fischer-says-considerable-time-is-2-months-to-a-year.html

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Bill Bonner: Get Ready for QE4

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Bill-Bonner2

“Stocks have barely begun to correct (the S&P 500 is down about 7% from its September high) and the St. Louis Fed president is already preparing for QE4.  But where is the proof – from logic or experience – that QE pays off?  It is a shame that quack philosophers, politicians and central bankers are not subject to penalty. After all, bridge builders and hedge fund managers suffer shame and ruin when their projects fall to pieces.  Fed officials are promising more cash and credit, neither of which they actually possess.  You’ll recall that stocks fell when QE1 and QE2 ended. Why shouldn’t they fall now that QE3 is ending too?”

http://bonnerandpartners.com/get-ready-qe4/

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Bernanke’s Helicopter, and a Note About 9/11

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“You won’t believe the idea that America’s quintessential foreign policy establishment organ is floating now.  Or maybe you will.  In its September/October issue, Foreign Affairs wanders away from the calamity of its interventionist foreign policy consensus to offer equally calamitous interventionist monetary advice.  The publication offers a piece instructing the Federal Reserve to give the money it prints directly to the people.  The Fed, according to this incompletely thought-out option, could generate consumer spending in this way, bypassing financial institutions like banks and employers altogether.  It is an idea of Keynesian absurdity.”

http://www.moneyandmarkets.com/bernankes-helicopter-note-911-65405

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Broken Links: Fed Policy and the Growing Wall Street-Main Street Gap

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“Probably the strongest feature of the foregoing chart is the tendency for inflation to move higher and lower in trends that have very little to do with unemployment, and for unemployment to move up and down in trends that have very little to do with inflation. Not to ruin a good theory with the facts, the failure of this misguided Phillips Curve formulation to describe the real world has resulted in a wide variety of ways to ‘augment’ it using expectations, varying ‘natural’ rates of unemployment, and so forth. The idea seems to be that using the right set of assumptions, we can make sense of the fact that the planets that circle around the Earth keep stopping and going backwards.”

http://www.hussmanfunds.com/wmc/wmc140825.htm

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