Oct 22

- The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market Crash (ZeroHedge, Oct 21, 2014):

“For over a year now, central banks have quietly being reducing their support. As Figure 7 shows, much of this is down to the Fed, but the contraction in the ECB’s balance sheet has also been significant. Seen from this perspective, a negative reaction in markets was long overdue: very roughly, the charts suggest that zero stimulus would be consistent with 50bp widening in investment grade, or a little over a ten percent quarterly drop in equities. Put differently, it takes around $200bn per quarter just to keep markets from selling off.”

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Oct 09

- Russia Central Banks Scrambles To Halt Plunging Ruble, Spends Over $2 Billion In Last Three Days As Inflation Soars (ZeroHedge, Oct, 8, 2014):

Recently, not a day passes without the Russian Ruble hitting new record lows against the US Dollar due to a combination of both capital outflows from Russia, tumbling prices of crude – Moscow’s most important export – which deteriorates Russia trade and current account position, coupled with the most acute USD strengthening in history in the past few months over fears of a tightening Fed.

Yet for whatever the reason, after stoically ignoring the impact of its tumbling currency on the domestic economy (and as a reminder, Japan would kill for a currency collapse of this magnitude: just think of the “economic renaissance” that would result if only Abenomics was right about killing your currency leading to growth… which it isn’t), the Kremlin is finally starting to feel the pinch leading to the biggest central bank intervention in FX markets since the start of the Ukraine campaign, buying Rubles for a third consecutive day at an amount of over $2 billion, with $1.75 billion purchased in the first two days of the current intervention attempt, and another $420 million in foreign currencies sold overnight according to Bank of Russia data. Continue reading »

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Aug 31

- It’s Settled: Central Banks Trade S&P500 Futures (ZeroHedge, Aug 30, 2014):

Based on the unprecedented collapse in trading volumes of cash products over the past 6 years, one thing has become clear: retail, and increasingly, institutional investors and traders are gone, probably for ever and certainly until the Fed’s market-distorting central planning ends. However, one entity appears to have taken the place of conventional equity traders: central banks.

Courtesy of an observation by Nanex’s Eric Hunsader, we now know, with certainty and beyond merely speculation by tinfoil fringe blogs, that central banks around the world trade (and by “trade” we mean buy) S&P 500 futures such as the E-mini, in both futures and option form, as well as full size, and micro versions, in addition to the well-known central bank trading in Interest Rates, TSY and FX products. Continue reading »

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Aug 01

BRICS-happy


- Russia And India Begin Negotations To Use National Currencies In Settlements, Bypassing Dollar (ZeroHedge, July 31, 2014):

Over the past 6 months, there has been much talk about the strategic proximity between Russia and China, made even more proximal following the “holy grail” gas deal announced in May which would not have happened on such an accelerated time frame had it not been for US escalation in Ukraine.

And yet little has been said about that other just as crucial for the “new BRIC-centric world order” relationship, that between Russia and India. That is about to change when yesterday the Russian central bank announced that having been increasingly shunned by the west, Russia discussed cooperation with Reserve Bank of India Executive Director Shrikant Padmanabhan. The punchline: India agreed to create a task group to work out a mechanism for using national currencies in settlements. And so another major bilateral arrangement is set up that completely bypasses the dollar.

From the Russian Central Bank: Continue reading »

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Jul 04

- By “Punishing” France, The US Just Accelerated The Demise Of The Dollar (ZeroHedge, July 4, 2014):

Not even we anticipated this particular “unintended consequence” as a result of the US multi-billion dollar fine on BNP (which France took very much to heart). Moments ago, in a lengthy interview given to French magazine Investir, none other than the governor of the French National Bank Christian Noyer and member of the ECB’s governing board, said this stunner at the very end, via Bloomberg:

  • NOYER: BNP CASE WILL ENCOURAGE ‘DIVERSIFICATION’ FROM DOLLAR

Here is the full google translated segment:

Q. Doesn’t the role of the dollar as an international currency create systemic risk?

Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.

In other words, the head of the French central bank, and ECB member, Christian Noyer, just issued a direct threat to the world’s reserve currency (for now), the US Dollar. Continue reading »

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Jul 03

- India’s Central Bank Will Sell Gold on the Market in Exchange for Gold at the Bank of England (Liberty Blitzkrieg, July 2, 2014):

India’s gold policy over the last several years is about as dysfunctional as any government policy I have ever seen, and that’s saying a lot. In case you need a reminder, here are a few posts I have written on the subject:

The Times of India: “Almost Every Passenger on a Flight from Dubai to Calicut Was Found Carrying 1kg of Gold”

Gold Smuggling Increases 7x in India and Surpasses Illegal Drug Trade

Indian Temples Fight Back Against Government Gold Grabbing Plot

In a nutshell, Indians were buying too much gold for their government’s comfort, so the “authorities” stepped in with duties and import restrictions in an attempt to stifle the trade. So smuggling soared.

Fast forward to today. It appears the government has finally realized they can’t stop their citizens penchant for gold, so they have decided to dump central bank gold onto the market. What is incredible to me is that they are justifying this with a so-called “swap” into phantom gold at the Bank of England. The favored global hub of shady, rent-seeking, banker oligarchs.

What’s even more interesting about this is the fact that so many Central Banks seems to be swapping or selling their gold to Western interests. Most notably Ecuador selling to Goldman Sachs, which I highlighted in the piece: Ecuador to Transfer More Than Half its Gold Reserves to Goldman Sachs in Exchange for “Liquidity.”

Now from Reuters:

MUMBAI, July 2 (Reuters) – India’s central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold, aiming to improve the management of its reserves.

Continue reading »

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Jun 29

BIS, the central bank of central banks, is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City.  It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws.  Even Wikipedia admits that “it is not accountable to any single national government.

Related info:

- Another Conspiracy ‘Theory’ Becomes Conspiracy ‘Fact’: ‘Cluster Of Central Banks’ Have Secretly Invested $29 TRILLION In The Market

- 40 Central Banks Are Betting This Will Be The Next Reserve Currency


bis-bank-for-international-settlements-basel-switzerland

- BIS Slams “Market Euphoria”, Finds “Puzzling Disconnect” Between Economy And Market (ZeroHedge, June 29, 2014):

“… it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally….  Despite the euphoria in financial markets, investment remains weak. Instead of adding to productive capacity, large firms prefer to buy back shares or engage in mergers and acquisitions.

As history reminds us, there is little appetite for taking the long-term view. Few are ready to curb financial booms that make everyone feel illusively richer.  Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms. Or to address balance sheet problems head-on during a bust when seemingly easier policies are on offer. The temptation to go for shortcuts is simply too strong, even if these shortcuts lead nowhere in the end.

     – Bank of International Settlements, 84th Annual Report

It was a year ago when the general manager of the Bank of International Settlements (the central banks’ central bank), Jamie Caruana warned that the “Monetary Kool-Aid Party Is Over.” Since then central banks have proven their own supervisor wrong in their ability to kick the can, because even as the Fed has commenced tapering its own QE (due to the same bond market liquidity issues we warned about last summer) the ECB has more than offset the Fed’s brief attempt at policy normalization by escalating, for the first time in history, from ZIRP to NIRP. In other words, the Kool-Aid keeps flowing.

Which brings us to the BIS’ just released annual report. There are many reason to read the full report cover to cover, but perhaps the most prominent one is that, once again, the Bank of International Settlements has merely compiled a book report of all Zero Hedge posts not only over the past year, but since our inception.

A quick summary of the report comes from FT: Continue reading »

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Jun 16

“Cluster Of Central Banks” Have Secretly Invested $29 Trillion In The Market (ZeroHedge, June 16, 2014):

Another conspiracy “theory” becomes conspiracy “fact” as The FT reports a cluster of central banking investors has become major players on world equity markets.” The report, to be published this week by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which “could potentially contribute to overheated asset prices.” China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials, and we suspect the Fed is close behind (courtesy of more levered positions at Citadel), as the world’s banks try to diversify themselves and “counters the monopoly power of the dollar.” Which leaves us wondering where are the central bank 13Fs?

While most have assumed that this is likely, the recent exuberance in stocks has largely been laid at the foot of another irrational un-economic actor – the corporate buyback machine. However, as The FT reports, what we have speculated as fact for many years now (given the death cross of irrationality, plunging volumes, lack of engagement, and of course dwindling credibility of central planners)… is now fact… Continue reading »

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Jun 16

In Explosive Scandal, Head Of Polish Central Bank Recorded Promising Assistance To Government If Minister Fired (ZeroHedge, June 15, 2014):

Remember when conventional wisdom said central banks are apolitical and impartial, and anyone who claimed that the world’s money printers (which in the New Normal of failed fiscal policy means the only source of stimulus, and thus infinite political leverage and an existence “above the law”) are in fact the most political and partial entities was, what else, a conspiracy theorist? Well, there goes another conspiracy theory, replaced by conspiracy fact.

Yesterday, Polish magazine Wprost released a recording of a meeting between Interior Minister Bartlomiej Sienkiewicz and central bank Governor Marek Belka which took place in a Warsaw restaurant in July 2013. In the recording, Belka told the minister he would be willing to help the government out of its economic troubles if the finance minister was fired.

Continue reading »

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Jun 07

AIPAC1

- A Terrible Price to Pay (Veterans Today, June 7, 2014):

In 1913 The City of London Zionist private Central Bankers successfully hijacked the American Monetary Production and Distribution System.

This was done by use of  stealth, bribery and massive political influence and was completely illegal despite any and all claims to the otherwise.

This terrible Treason and Sedition by top USG Officials placed complete control over the whole American economy in the hands of the World Zionists (WZs) and their International Crime Syndicate, the IZCS.

This essentially gave the WZs control over all the personal property, the fruits of labor and production of almost every normal American and all their futures with NO oversight of Congress or any institution of the USG at all, NONE.

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May 21

Putin chess

- As Russia Dumps A Record Amount Of US Treasurys, Here Is What It Is Buying (ZeroHedge, May 21, 2014):

Last week we commented that based on TIC data, while “Belgium’s” unprecedented Treasury buying spree continues, one country has been dumping US bonds at an unprecedented rate, and in March alone Russia sold a record $26 billion, or 20% of its holdings.

So as Russia is selling a record amount of US paper, what is it buying? For the answer we go to Goldcore which tells us thatRussia Buys 900,000 Ounces Of Gold Worth $1.17 Billion In April.”

 Putin-Gold

 

 

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May 20

Related info:

- The Elephant In The Room: Deutsche Bank’s $75 TRILLION In Derivatives Is 20 Times Greater Than German GDP


- Deutsche Bank: “Perhaps The Fed And Other Central Banks Are Controlling The Market Too Much These Days” (ZeroHedge, May 20, 2014):

Perhaps the Fed and other central banks are controlling the market too much these days with their guidance. In the old days central banks used to like to create an element of surprise to ensure that markets didn’t become complacent. With the crisis fresh in people’s minds, with the stock of debt still huge and with the recovery still so uncertain they feel they cannot risk creating too much uncertainty at the moment. ” – Deutsche Bank

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Apr 25

Russia unexpectedly raises interest rates

- Russia unexpectedly raises interest rates (RT, April 25, 2014):

The Central Bank of Russia has unexpectedly raised its key interest rate to 7.5 percent, despite earlier saying it wouldn’t change until June. Aimed at trimming inflation, it means more expensive loans and slows an economy that’s already losing steam.

The rate went up 50 basis points. The last time it was bumped up was in March to 7 percent, a 1.5 rise from the previous 5.5 percent rate.

Continue reading »

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Mar 03

- Russian Stocks Crash As Central Bank Scrambles, Hikes Rates Most Since 1998 Default (ZeroHedge, March 3, 2014):

Following a 150bps rate hike by the central bank – the largest since the 1998 default -desperate to halt capital outflows and a collapsing currency, Russian stocks have crashed 11% led by some of the country’s largest banks. USDRUB rose to just shy of 37 – the weakest RUB rate on record – but rallied back a little on the rate hike but the MICEX stock index tumbled 11% to almost 2-year lows with Sberbank (Russia’s largest bank) down 17% and VTB (2nd largest bank) down 20%. Between the threat of economic sanctions from the West and simple risk-aversion-based capital flight, as one analyst noted, “uncertainty risks a further escalation in domestic capital outflow.”

MICEX is down 11% today alone…

Russian Stocks Crash As Central Bank Scrambles, Hikes Rates Most Since 1998 Default

Ruble at record lows against the USD… Continue reading »

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Feb 06

- Argentine Banking System Archives Destroyed By Deadly Fire (ZeroHedge, Feb 5, 2014):

While we are sure it is a very sad coincidence, on the day when Argentina decrees limits on the FX positions banks can hold and the Argentine Central Bank’s reserves accounting is questioned publically, a massive fire – killing 9 people – has destroyed a warehouse archiving banking system documents. As The Washington Post reports, the fire at the Iron Mountain warehouse (which purportedly had multiple protections against fire, including advanced systems that can detect and quench flames without damaging important documents) took hours to control and the sprawling building appeared to be ruined. The cause of the fire wasn’t immediately clear – though we suggest smelling Fernandez’ hands…

Argentine Banking System Archives Destroyed By Deadly Fire

We noted yesterday that there are major questions over Argentina’s reserve honesty

Continue reading »

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Feb 03

- How Central Banks Cause Income Inequality (Ludwig von Mises Institute, Feb 1, 2014):

The gap between the rich and poor continues to grow. The wealthiest 1 percent held 8 percent of the economic pie in 1975 but now hold over 20 percent. This is a striking change from the 1950s and 1960s when their share of all incomes was slightly over 10 percent. A study by Emmanuel Saez found that between 2009 and 2012 the real incomes of the top 1 percent jumped 31.4 percent. The richest 10 percent now receive 50.5 percent of all incomes, the largest share since data was first recorded in 1917. The wealthiest are becoming disproportionally wealthier at an ever increasing rate.

How Central Banks Cause Income Inequality

Most of the literature on income inequalities is written by professors from the sociology departments of universities. They have identified factors such as technology, the reduced role of labor unions, the decline in the real value of the minimum wage, and, everyone’s favorite scapegoat, the growing importance of China.

Those factors may have played a role, but there are really two overriding factors that are the real cause of income differentials. One is desirable and justified while the other is the exact opposite.

Continue reading »

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Jan 22

- Things That Make You Go Hmmm… Like Gold Bullion, Gordon Brown, & A Growling Bundesbank (ZeroHedge, Jan 21, 2014):

2013 was an absolutely seismic year for gold, but, as Grant Williams details in his latest letter, the way in which the tectonic plates shifted has yet to be fully understood. Simply put, the gold in every central bank’s possession around the world is the property of the citizens of that country – not of the incumbent politicians or central bankers. Consequently, if the people want it audited, there shouldn’t be any reason to say no … unless… Williams firmly believes that in the years to come, when we look back at the great game being played in gold, we will pinpoint January 16, 2013, as the day when it all began to unravel – the day the Bundesbank blinked and demanded its gold… Continue reading »

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Jan 18

- Sprott: “Manipulation Of Gold By Central Banks Cannot Continue In 2014″ (ZeroHedge, Jan 17, 2014):

With Deutsche Bank quitting the price-setting panel for gold and Bafin bearing down on the manipulators, Eric Sprott provides some more color on where the manipulation in the precious metals markets is underway (and when it will end)…

Submitted by Eric Sprott of Sprott Global Resource Investments,

Introduction

As we very well know, 2013 was a difficult but also puzzling year for precious metals investors. The price of gold, silver and their related equities declined by a significant amount while demand for physical bullion from emerging markets and their Central Banks was exceptionally strong.

Continue reading »

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Jan 07

- Forecast 2014 — Burning Down the House (By James Howard Kunstler, Jan 6, 2014):

Many of us in the Long Emergency crowd and like-minded brother-and-sisterhoods remain perplexed by the amazing stasis in our national life, despite the gathering tsunami of forces arrayed to rock our economy, our culture, and our politics. Nothing has yielded to these forces already in motion, so far. Nothing changes, nothing gives, yet. It’s like being buried alive in Jell-O. It’s embarrassing to appear so out-of-tune with the consensus, but we persevere like good soldiers in a just war.

Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations.

Continue reading »

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Jan 03

- Four key lessons from 2013 (Sovereign Man, Jan 2, 2014):

1) Politicians believe there are no consequences for destroying our liberty…

Stimulus and response. That’s the easiest way of summing this up. When politicians steal, and there are no consequences, they’re going to keep stealing.

Cyprus proved this point handily. The government froze bank accounts for everyone in the country (of course, the big bosses got their money out in time). And yet, there was no violent revolution in the streets. People just accepted it.

Poland nationalized pensions. Argentina imposed severe capital controls. The French are taxing everything under the sun. The US government was caught red-handed spying on… everyone.

Continue reading »

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