Update: in case there was any doubt about the ECB’s true intentions, we just got the official “denial”:
- DRAGHI: ANY ECB ACTION ON EU500 NOTE IS NOT ABOUT REDUCING CASH
Translation: the ECB action is only about reducing physical cash, some 30% of it to be specific.
* * *
The first shot in the global war on cash was just fired, by none other than the ECB, which moments ago Handelsblatt reported…
ECB wants to stop issuing 500 Euro bills – our exclusive https://t.co/LLe2qyhBjK
— Daniel Schäfer (@schaeferdaniel) February 15, 2016
… and Bloomberg confirmed – ECB COUNCIL VOTES TO SCRAP EU500 NOTE: HANDELSBLATT – has voted to scrap the second highest denominated European bank note in circulation: Continue reading »
A Nobel prize winning economist, former chief economist and senior vice president of the World Bank, and chairman of the President’s council of economic advisers (Joseph Stiglitz) says that the International Monetary Fund and World Bank loan money to third world countries as a way to force them to open up their markets and resources for looting by the West.
Do central banks do something similar?
Economics professor Richard Werner – who created the concept of quantitative easing – has documented that central banks intentionally impoverish their host countries to justify economic and legal changes which allow looting by foreign interests. Continue reading »
… as planned by TPTB.
William R. White is the chairman of the Economic and Development Review Committee at the OECD in Paris. Prior to that, Dr. White held a number of senior positions with the Bank for International Settlements (“BIS”), including Head of the Monetary and Economic Department, where he had overall responsibility for the department’s output of research, data and information services, and was a member of the Executive Committee which manages the BIS. He retired from the BIS on 30 June 2008.
Dr. White began his professional career at the Bank of England, where he was an economist from 1969 to 1972. Subsequently he spent 22 years with the Bank of Canada. In addition to his many publications, he speaks regularly to a wide range of audiences on topics related to monetary and financial stability.
In the following interview he shares his views in a totally personal capacity on the current state of the global economy and related monetary and fiscal policies. Continue reading »
JPM estimates that if the ECB just focused on reserves equivalent to 2% of gross domestic product it could slice the rate it charges on bank deposits to minus 4.5%. In Japan, JPM calculates that the BOJ could go as low as -3.45% while Sweden’s is likely -3.27%. Finally, if and when the Fed joins the monetary twilight race, it could cut to -1.3% and the Bank of England to -2.69%.
So a rumor made Deutsche Bank rise as much as 15% in the early hours, closing at +10,20%.
While algos patiently await the only thing that matters for US stocks today which is Janet Yellen’s testimony before Congress. expected to be released at 8:30 am (and previewed here), the rest of the world this morning is a hot mess of schizophrenic highs and lows.
“We have reached that fork in the road within the monetary twilight zone, where Europe’s largest bank is openly defying central bank policy and demanding an end to easy money. Alas, since tighter monetary policy assures just as much if not more pain, one can’t help but wonder just how the central banks get themselves out of this particular trap they set up for themselves.”
Back in September in “How Mario Draghi Can Force The Swiss National Bank To Go ‘Nuclear On Depositors,” we discussed the implications of the ECB’s (likely) decision to plunge further into NIRP-dom at the bank’s December meeting.
In short, DM central banks – with the possible exception of the Fed which is about to create a rather meaningful policy divergence with its core CB brethren – are in a proverbial race to bottom. It’s a beggar-thy-neighbor monetary policy regime and the more stubborn inflation expectations prove to be, the more aggressive the tit-for-tat easing, as everyone involved scrambles to protect their currency in the face of incessant competitive devaluations on all sides.
As we outlined in great detail in the post linked above, the ECB’s ultra dovish lean has the potential to create a lot of problems for the Riksbank, the Norges Bank, and the SNB. Continue reading »
… here are some shocking statistics on how we got there, and which we all take for granted, courtesy of BofA:
- There have been 606 global rate cuts since LEH
- $12.4 trillion of central bank asset purchases (QE) since Bear Stearns
- The Fed is operating a zero rate policy for the longest period ever (even exceeding the WW2 Aug’37-Sep’42 zero rate period)
- European central banks operating negative rate policies (Swiss policy rate currently -0.75%; Sweden’s policy rate currently -0.35
- Just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary “without hesitation”
- $6.3 trillion global government bonds currently yielding <0%
- $20.0 trillion global government bonds currently yielding <1%
But wait, there’s more in describing what BofA says is the most immense and long-lasting monetary stimulus, i.e., bubble, in history:
“The conditions in the economies of the rest of the world have undoubtedly proved weaker compared with a few months ago, in particular in the emerging economies. Global growth forecasts have been revised downwards. This slowdown is probably not temporary.”
Undoubtedly, the most amusing this about the prospect of more easing from the ECB (as telegraphed by Mario Draghi last week) and the BoJ (where Haruhiko Kuroda just jeopardized his status as monetary madman par excellence by failing to expand stimulus) is that both Europe and Japan both recently slid back into deflation despite trillions in central bank asset purchases.
In other words, the market expects both Draghi and Kuroda to double- and triple- down on policies that clearly aren’t working when it comes to altering inflation expectations and/or boosting aggregate demand. Indeed, both Goldman and BofAML said as much last week. For those who missed it, here’s Goldman’s take Continue reading »
For now, negative rates as a policy tool remain a “work in progress”, judging by the current inflation levels across Europe. But the rise in household savings rates amid so much central bank support is paradoxical to us, and mimics what we highlighted in the credit market earlier this year. Companies in Europe are deleveraging, not releveraging, and are buying back bonds not stock. Continue reading »
– The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play (ZeroHedge, Sep 4, 2015):
The most important piece of news announced today was also, as usually happens, the most underreported: it had nothing to do with US jobs, with the Fed’s hiking intentions, with China, or even the ongoing “1998-style” carnage in emerging markets. Instead, it was the admission by ECB governing council member Ewald Nowotny that what we said about the ECB hitting a supply brick wall, was right. Specifically, earlier today Bloomberg quoted the Austrian central banker that the ECB asset-backed securities purchasing program “hasn’t been as successful as we’d hoped.”
Why? “It’s simply because they are running out. There are simply too few of these structured products out there.” Continue reading »
– How Western Governments Will Steal Your Land, Part I (Sprott Money, Aug 19, 2015):
This was a difficult piece to write, and an equally difficult piece to title, because the people who most need to see this message are simultaneously the least-likely to read it. How do you steal anything? Boiled down, there are only two procedures: doing so via brute-force (i.e. robbery), or doing so by deception (i.e. fraud).
This is primarily a warning about the latter form of stealing, although ultimately there will be brute-force employed, for any who attempt to resist the mass-foreclosures and mass-evictions which are now imminent. To explain how your land will be stolen from (most of) you – by fraud – first requires a brief lesson in economics, conducted via a simple, hypothetical scenario. Continue reading »
– Both ECB And BOJ Warn More QE May Be Response To Chinese Currency War (ZeroHedge, Aug 13, 2015):
Minutes from the ECB’s most recent policy meeting reveal that Mario Draghi and company have a number of concerns about the pace of economic growth in the euroarea and about the outlook for inflation which, much to the governing council’s surprise, “remains unusually low.”
Board members also took note of increasingly volatile EGB markets and made special mention of the second bund VaR shock which took place at the first of June, something the central bank attributes to “overvaluation [and] one?way market positioning related to the public sector purchase programme.” In other words: “our bad.” Continue reading »
– Greek Economy Faces Total Collapse As Doctors Flee, Retail Sales Plunge 70% (ZeroHedge, July 28, 2015):
Back in May we outlined the cost to the Greek economy of each day without a deal between Athens and creditors.
At the time, a report from the Hellenic Confederation of Commerce and Enterprises showed that 60 businesses closed and 613 jobs were lost for each business day that the crisis persisted without a resolution.
Since then, things have deteriorated further and indeed, with the imposition of capital controls, businesses found that supplier credit was difficult to come by, leading to the very real possibility that Greece would soon face a shortage of imported goods, something many Greeks clearly anticipated in the wake of the referendum call as evidenced by the lines at gas stations and empty shelves at grocery stores.
– Europe’s New Colonialism: ECB Rejects Greek Request To Reopen Stock Market (ZeroHedge, July 26, 2015):
It has been one month since Greek capital controls were imposed, and as we explained earlier, Greece is nowhere closer to having its deposit limits lifted. In fact, with several more months of capital controls at least, the Greek banks are likely to suffer ongoing balance sheet impairments which will ultimately result in depositor bail-ins, with Germany already pushing for haircuts on deposits over €100,000.
However, when it comes to banks there is at least still the illusion that Greece has some residual sovereignty. The reality is that it does not, as Greece is no longer an independent nation, and as of July 15, the Greek “In Dependence” day, every Greek decision needs to get pre-approval from both the ECB, Brussels and, naturally, Berlin. Continue reading »
“What Europe Wants” – to use global issues as excuses to extend its power:
- environmental issues: increase control over member countries; advance idea of global governance
- terrorism: use excuse for greater control over police and judicial issues; increase extent of surveillance
- global financial crisis: kill two birds (free market; Anglo-Saxon economies) with one stone (Europe-wide regulator; attempts at global financial governance)
- EMU: create a crisis to force introduction of “European economic government”
– The Shocking 2008 AIG Report On “Empire Europe” And The Death Of Greece (ZeroHedge, July 15, 2015)
Yesterday, Nomura’s Richard Koo presented one of the better assessments of the situation in Greece, when he said that the “IMF is slowly beginning to understand the Greek economy“, which explains its strategic U-turn, one which now demands far greater debt cuts than what Europe, and Germany in particular, is willing to concede. Continue reading »
– Greek bailout deal highlights monumental scale of Syriza’s betrayal (WSWS, July 14, 2015):
Prime Minister Alexis Tsipras has signed up to an agreement that transforms Greece into a de facto colony of the European Union and places the country under the dictates of Germany.
What remains of the Greek economy, above all its most valuable assets, is to be pillaged so that Athens can continue to pay back loans from the EU, the European Central Bank and the International Monetary Fund.
Greece is to be placed under the direct control of EU officials. The function of Greece’s parliament will be to rubber-stamp the transfer of real authority to Brussels and Berlin. It has until Wednesday to pass a series of laws implementing the demands of German imperialism and the EU. Continue reading »
– Greece May Sue Goldman Over Bank’s Role In Greek Collapse (ZeroHedge, July 12, 2015):
It’s Goldman Sachs’ world, we just happen to live in it.
That rather unfortunate, yet exceedingly accurate, characterization of the global financial and geopolitical landscape seemingly becomes more true with the passage of time and perhaps nowhere is it more evident than Europe, where the common currency experiment (which never had any hope of working without some semblance of a fiscal union) is on the brink of collapse.
As we noted in “The Biggest Winner From The Greek Tragedy,” the losers from the disintegration of the EMU are ordinary, common, taxpaying Europeans who enjoyed a few brief years of artificial prosperity, which in retrospect was entirely due to debt, masked well by the “currency swaps” and other financial engineering concocted by banks such as Goldman Sachs, in clear violation of the Maastricht treaty which is now a long-forgotten memory of the founding ideals behind the Eurozone. Continue reading »
– Troika Says Greek Proposal Not Enough To Meet Targets, Serves As “Basis For Negotiations” (ZeroHedge, July 11, 2015):
Tsipras betrayed the public trust last night when we rammed through a draft proposal for a Third Greek bailout, one which would push total Greek Debt/GDP over 200%, which the Greek population overwhelming rejected in a democratic vote last weekend. And now, it is up to Europe to decide if it will trust the Greek government, which clearly has no problem lying to anyone, to implement reforms which Greece has been unable to effect for over 5 years.…
– Greek Financial Advisor Suing “Politically Motivated” ECB For Crushing Greek Banks (ZeroHedge, July 10, 2015):
The European Central Bank’s decision to reject the Bank of Greece’s request for increases in Emergency Liquidity Assistance (ELA) has, in a nutshell, crushed Greek banks for what appears to be purely political, nogitating-based motives. Greek financial advisor Alcimos (infamous for their heretical comments on the referendum) commenced proceedings before the General Court of the Court of Justice of the European Union, requesting the annulment of the ECB decisions.
The global and European economies are increasingly dominated by bureaucrats taking arbitrary decisions on capital allocation, with little regard for rules or process. The decisions of the ECB to reject the applications of the Bank of Greece for additional funding under ELA could have only been politically motivated, and therefore in clear violation of the ECB’s independence as enshrined in Article 123 TFEU. It is time for EU bureaucrats to stop acting as autocrats. Continue reading »
– Peak Central Banker Hypocrisy: ECB Warns On ELA “Moral Hazard” (ZeroHedge, July 7, 2015):
On Monday, the ECB ratcheted up the pressure on the Greek banking sector.
The bank holiday is now in its second week and Greeks have been living with capital controls for nine days. The unequivocal results of Sunday’s referendum suggest that the ‘inconvenience’ of the daily limit on ATM withdrawals and the supplier credit crunch that threatens to empty the shelves at Greek stores hasn’t yet been sufficient to force the country into submission. Continue reading »
– ECB Board Member Says Introduction Of Another Greek Currency “Most Realistic Scenario” (ZeroHedge, July 7, 2015):
ECB Governing Council member and Latvian central bank chief Ilmars Rimsevics — who earlier leaked that the ECB’s new haircut on ELA for Greece will mean the ailing banking sector must now post “a third” more collateral — says the most “realistic scenario” is now for Greece to introduce “another currency.”
- ECB’S RIMSEVICS SAYS INTRODUCTION OF ANOTHER CURRENCY IN GREECE IS MOST REALISTIC SCENARIO, MAY BE ONE LESS EURO ZONE MEMBER IN FUTURE
Rimsevics also says Sunday’s referendum outcome means Greeks have effectively “voted themselves out of the eurozone.” Here’s more, via Bloomberg: Continue reading »
– It Begins: ECB Hikes Greek ELA Haircuts; Full “Depositor Bail-In” Sensitivity Analysis (ZeroHedge, July 6, 2015):
Earlier today we reported that as Bloomberg correctly leaked, the ECB would keep its ELA frozen for Greek banks at its ?89 billion ceiling level last increased two weeks ago. However we did not know what the ECB would do with Greek ELA haircuts, assuming that the ECB would not dare risk contagion and the collapse of the Greek banking system by triggering a waterfall solvency rush in Greek banks if and when it boosts ELA haircuts. Turns out we were wrong, and as the ECB just announced “the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA.”
– ECB To Keep Greece On Hold Until Wednesday When Balyasny Sees Rioting Begin (ZeroHedge, July 6, 2015):
As we have repeated since January, and certainly on numerous occasions over the weekend, at this point the only variable is what the ECB will do: will it give insolvent Greek banks more aid, or will it increase its ELA collateral haircut (or even withdraw it altogether), the ramifications of which action would have a dire impact on contagion within the rest of the periphery but most certainly on both the Greek financial system as well as Greek society which is now facing an indefinitely period of capital controls.
– IOUs It Is: Why Greece May Have A Problem Printing “Rogue” Euro Banknotes (ZeroHedge, July 5, 2015):
Previously we reported that in a heretofore unknown exchange, Varoufakis told Telegraph’s Evans-Pritchard that “if necessary we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it a week ago.” Shortly thereafter, SocGen released a note in which it confirmed largely what the Greek finmin may have said, namely that “Greece is likely to issue a form of parallel currency.”
– Eurogroup In Shock: Finance Ministers “Would Not Know What To Discuss” After Greferendum Stunner (ZeroHedge, July 5, 2015):
Just out from Reuters:
- FINANCE MINISTERS “WOULD NOT KNOW WHAT TO DISCUSS” AFTER EMERGING GREEK ‘NO’ VOTE-EURO ZONE OFFICIAL
More: Continue reading »
H/t reader M.G.:
“Another great article, how the Greek vote against the greedy guts gives great challenges to the EU leaders, not just the greedy cow running Germany……Merkel (of course), along with the head of the IMF, and a few others, all will be needing new jobs. This is a huge slap in their faces, well deserved, but the economic pain their investors are now experiencing will get them out of office very quickly. Good riddance.”
Victory by Syriza party of 60% to 40% in polarising referendum presents nightmare for eurozone elites, particularly Germany’s Angela Merkel
– Greek referendum no vote signals huge challenge to eurozone leaders (Guardian, July 5, 2015):
Greece delivered a landslide no vote to the eurozone’s terms for the country remaining in the single currency on Sunday night, unleashing a seismic political shift that could derail the European project. The verdict confronts the EU’s leadership with one of its most severe crises of confidence and leaves Greece facing potential financial collapse and exit from the euro.
In a polarising referendum called by the radical leftist government of Alexis Tsipras at only eight days notice, Greeks voted by more than 60% to 40% in support of the prime minister, spurning the extra austerity demanded mainly by Germany and the International Monetary Fund in return for an extension of bailout funds. Continue reading »
– The Greek Bluff In All Its Glory: Presenting The Grexit “Falling Dominoes” (ZeroHedge, July 4, 2015):
Earlier today, Yanis Varoufakis reiterated his core thesis driving the entire Greek approach from day 1 of its negotiations with the Eurogroup: “Europe [stands] to lose as much as Athens if the country is forced from the euro after a referendum on Sunday on bailout terms.”
This is merely a recap of what we said 4 years ago when in July of 2011 we explained “How Euro Bailout #2 Could Cost Up To 56% Of German GDP“, recall: Continue reading »
– Max Keiser on Greece: ‘The IMF is a Financial Mafia’ (April 28, 2010):
The only solution for Greece is to arrest the Goldman Sachs bankers immediately and all those involved in the fabrication of Greek economic data in 2000, when you became a member of the eurozone. The next step is to nationalize all banks like Sweden did in 1993. The International Monetary Fund is that last thing you need. You will lose your sovereignty. It exercises terrorism. You will be raped in such a way, that it will be the worst pain you have ever felt.
– Varoufakis accuses Greece’s creditors of ‘terrorism’ ahead of crucial referendum (RT, July 4, 2015):
Greek Finance Minister Yanis Varoufakis has described the actions of Athens’ creditors as “terrorism,” but said agreement with them was inevitable in an interview published hours before a landmark referendum to accept or reject the bailout terms.
“What they are doing with Greece has a name: terrorism,” Varoufakis told Spain’s El Mundo daily. Why have they forced us to close the banks? To make people frightened. And when it comes to spreading terror, this phenomenon is called terrorism.”
Continue reading »