Central Bank Watch

[raspberry-blower]

Following on regarding my comments here about the omnipotence or lack of the Central Banks, I have started this separate thread.

An interesting place to start comes from Dr Paul Craig Roberts & Dave Kranzler: Central Banks Have Become a Corrupting Force

In order to keep the dollar up, the basis of US power, the Federal Reserve has promised to raise interest rates, but always in the future. The latest future is next month. The belief that a hike in interest rates is in the cards keeps the US dollar from losing exchange value in relation to other currencies, thus preventing a flight from the dollar that would reduce the Uni-power to Third World status.

This is the stated position - however the stats posted by Charles Hugh Smith reveal that the opposite is true here. There won't be any interest rate rise soon - not from The Fed, at least. The BoE are also unlikely to raise rates anytime soon.

The Federal Reserve can say that the stock market decline indicates that the recovery is in doubt and requires more stimulus. The prospect of more liquidity could drive the stock market back up. As asset bubbles are in the way of the Fed’s policy, a decline in stock prices removes the equity market bubble and enables the Fed to print more money and start the process up again.

On the other hand, the stock market decline last Thursday and Friday could indicate that the players in the market have comprehended that the stock market is an artificially inflated bubble that has no real basis. Once the psychology is destroyed, flight sets in.

If flight turns out to be the case, it will be interesting to see if central bank liquidity and purchases of stocks can stop the rout

Pretty well sums up what I said in the linked thread. The markets - along with all other economic systems - have a level of confidence about them. As soon as they are seriously questioned in any way shape or form, they cease to function effectively.

[PS_RalphW]

The Dow Jones dropped 1000 points on opening, but rebounded sharply, presumably with CB help.

currently down 400, or about 3%

[emordnilap]

A former adviser to Gordon Brown has urged people to stock up on canned goods and bottled water as stock markets around the world slide.

Damian McBride appeared to suggest that the stock market dip could lead to civil disorder or other situations where it would be unreasonable for someone to leave the house.

“Advice on the looming crash, No.1: get hard cash in a safe place now; don't assume banks & cashpoints will be open, or bank cards will work,” he tweeted.

“Crash advice No.2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.

“Crash advice No.3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.”

Source: not the Daily Mash

[johnhemming2]

The Dow Jones dropped 1000 points on opening, but rebounded sharply, presumably with CB help.

I would not expect Central Banking to have had any real impact there. AIUI the discussions about the value of Apple shares was relevant in that Apple said they were selling well in China.

[raspberry-blower]

Looks like the rebound in the markets is nothing more than a dead feline ricochet - DJIA down 1.3% at the close.

Meanwhile, Mike Whitney has penned another interesting article:
Stock Selloff: Panic Time or Blip on the Radar?

What’s so odd about last week’s market action is that the bad news on China put shares into a tailspin instead of sending them into the stratosphere which has been the pattern for the last four years. In fact, the reason volatility has stayed so low and investors have grown so complacent is because every announcement of bad economic data has been followed by cheery promises from the Fed to keep the easy-money sluicegates open until the storm passes. That hasn’t been the case this time, in fact, Fed chair Janet Yellen hasn’t even scrapped the idea of jacking up rates some time in September which is almost unthinkable given last week’s market ructions.

Why? What’s changed? Surely, Yellen isn’t going to sit back and let six years of stock market gains be wiped out in a few sessions, is she? Or is there something we’re missing here that is beyond the Fed’s powers to change? Is that it?

My own feeling is that China is not the real issue. Yes, it is the catalyst for the selloff, but the real problem is in the credit markets where the spreads on high yield bonds continue to widen relative to US Treasuries.

Trouble at bond market mill.

Note that many fracking, offshore and other poor EROEI companies fit into that high yield bond category. Contagion in the bond markets will decimate them

[raspberry-blower]

Even in the MSM the penny appears to have dropped:

Reuters: Central Bank Cavalry can no longer ride to the rescue

The flow of easy money has inflated asset prices like stocks and housing in many countries even as they failed to stimulate economic growth. With growth estimates trending lower and easy money increasing company leverage, the specter of a debt trap is now haunting advanced economies, the Group of Thirty said.

The Fed has pledged that when it does hike rates, it will be at a slow pace so as not to strangle the U.S. economic recovery, one of the longest, but weakest on record in the post-war period. Yet, forecasts by one regional Fed president shows he expects negative rates in 2016.

Negative rates equate to a bank bail-in - after all rather than receiving interest on your savings you'll end up being charged instead. Not much of an incentive, is it?
It also exposes the illusion of economic recovery since the 2008 crash as exactly that - an illusion.


Meanwhile there is an admittance that any rate rise isn't going to happen anytime soon because it would play havoc with the financial casinos of the world comes from the IMF.

Guardian: IMF: Keep rates low or risk another crash

It added: “The supportive actions by central banks can be useful, but there are serious risks involved if governments, parliaments, public authorities, and the private sector assume central bank policies can substitute for the structural and other policies they should take themselves. The principal risk is that excessive reliance on ever more central bank action could aggravate the underlying systemic problems and delay or prevent the necessary structural adjustments.”

Official interest rates have been at 0.5% in the UK since March 2009, the lowest level since the Bank of England was founded in 1694. Several European central banks have resorted to negative interest rates to fend off the threat of deflation, but Weber warned of the danger of side effects.

It's the systemic changes that need to be addressed but don't expect that to happen anytime soon

[Little John]

Get rid of debt as fat as you can. For the average citizen, that's as good advice as it gets.

[vtsnowedin]

Get rid of debt as fat as you can. For the average citizen, that's as good advice as it gets.

Yes cash is king in a depression or other financial crisis but being debt free and having cash on hand won't prevent the rest of the economy around you from going into the tank. No good being open for business if few if any of your customers have any money to spend.

[Tarrel]

Get rid of debt as fat as you can. For the average citizen, that's as good advice as it gets.

Yes cash is king in a depression or other financial crisis but being debt free and having cash on hand won't prevent the rest of the economy around you from going into the tank. No good being open for business if few if any of your customers have any money to spend.

So, that means also reducing your need for money as much as possible. Long established principles on here, but:

- Insulate as well as you can
- Grow what you can
- Learn to make, mend, repair, etc.
- Keep a few chickens

(Ask any Russian).

[vtsnowedin]

Get rid of debt as fat as you can. For the average citizen, that's as good advice as it gets.

Yes cash is king in a depression or other financial crisis but being debt free and having cash on hand won't prevent the rest of the economy around you from going into the tank. No good being open for business if few if any of your customers have any money to spend.

So, that means also reducing your need for money as much as possible. Long established principles on here, but:

- Insulate as well as you can
- Grow what you can
- Learn to make, mend, repair, etc.
- Keep a few chickens

(Ask any Russian).

Well I insulated the house pretty well when I built it and I heat it exclusively with wood so I'm good there even if I'm not up to Pasivehause standards. We have been too busy at work to do much gardening this year but the land is there if and when I need it. I did just buy a used set of disk harrows and another set of two bottom land plows so have the ability to grow much larger crops if needed.
I built my own house, every thing except the standing seam roofing, and including the plumbing, wiring and concrete. so have the repair thing pretty well in hand. We have done chickens for both meat and eggs but again have got too busy to fool with it at current prices. The coop and brooding equipment is there if I need it. And I sighted in a new shotgun today for deer hunting next month. So all in all I'm in pretty good shape come what may.

[Tarrel]

Yes cash is king in a depression or other financial crisis but being debt free and having cash on hand won't prevent the rest of the economy around you from going into the tank. No good being open for business if few if any of your customers have any money to spend.

So, that means also reducing your need for money as much as possible. Long established principles on here, but:

- Insulate as well as you can
- Grow what you can
- Learn to make, mend, repair, etc.
- Keep a few chickens

(Ask any Russian).

Well I insulated the house pretty well when I built it and I heat it exclusively with wood so I'm good there even if I'm not up to Pasivehause standards. We have been too busy at work to do much gardening this year but the land is there if and when I need it. I did just buy a used set of disk harrows and another set of two bottom land plows so have the ability to grow much larger crops if needed.
I built my own house, every thing except the standing seam roofing, and including the plumbing, wiring and concrete. so have the repair thing pretty well in hand. We have done chickens for both meat and eggs but again have got too busy to fool with it at current prices. The coop and brooding equipment is there if I need it. And I sighted in a new shotgun today for deer hunting next month. So all in all I'm in pretty good shape come what may.

Yes, the thing is, resilience is about having choices. You may not need the chickens now, but you have acquired the equipment and, more importantly, the skills to keep them, which can be resurrected when needed.

We're not allowed to shoot deer with a shotgun here, or a bow or crossbow for that matter. 0.240 minimum calibre.

[vtsnowedin]

We're not allowed to shoot deer with a shotgun here, or a bow or crossbow for that matter. 0.240 minimum calibre.

It varies by state here and sometimes by county. Built up areas go with shotguns to reduce the chance of a stray shot reaching a house beyond the visible trees etc.
This shotgun is for hunting in Eastern Maryland where that is the rule even though it is mostly bean fields. Local politics and tradition I suppose.
In Vermont it is center fire rifles as a first choice but you can use a hand gun or a shot gun with either buckshot or foster slugs if that is what you have or prefer. Cross bows are reserved for those handicapped enough to not be able to draw and hold a bow in the archery seasons. The 22 rimfires are restricted to small game such as squirrels and dispatching fur bearers caught in traps.

[biffvernon]

Built up areas go with shotguns to reduce the chance of a stray shot reaching a house beyond the visible trees etc.

They allow hunting with guns in built up areas. USA is deeply, deeply bonkers.

[vtsnowedin]

Built up areas go with shotguns to reduce the chance of a stray shot reaching a house beyond the visible trees etc.

They allow hunting with guns in built up areas. USA is deeply, deeply bonkers.

My idea of "built up" and yours are probably quite different. Any town that calls itself a "City" bans hunting inside the City limits but then you have towns that have both sections of houses a quarter mile apart with hills behind them covering several hundred acres of woods. It is when coming out of the woods that a deer track has led you into that you come on to a houses back yard you didn't know was in front of you. Our hunter safety courses emphasis that the shooter must know what is behind his target and pass up any shot that is in doubt.

[biffvernon]

How many people are killed by hunters?