Matt Taibbi. Wallstreet rigs the interest rate swap market. All the ususal suspects are involved. Once again, more preversion from the OTC market. More QE anyone? CB's and regulators to the rescue.
The exchanges b/n Brent and I in the last post-led Brent to send me this link. It sounds like the Fed's announcement of a 2% inflation target is a stated commitment to Market Monetarism. NNGDP targeting can be seen as a form of asset price targeting, which is the inconsistency I was referencing in my last post. Inconsistency, of course, is not the problem so much as the unintended consequences of QE on businesses, savers, and governments (that I have discussed repeatedly on these pages). Ultimately, as risk and leverage pile up globally the question will be asked and answered as to whether "the Fed (and other CBs) can navigate the ocean of risk it is creating?". My opinion is that the answer will be no, and that this period of time will be viewed as a serious overreach by central banks (with significant buyers remorse in all quarters). While important others (including those in the Fed's inner circle) share my reservations, I acknowledge that my view runs counter to the mainstream. And it must be noted that CB policies have worked so far.
Analysts are finding a reason to cheer the competitive devaluation QE of the major economies. The report even suggests that Japan's actions will now pave the way for more QE by the Fed, as we have entered a virtuous cycle where stocks can't go down. The central banks having once argued that they can't tell a bubble and therefore should not asset target, are sure acting differently now. The markets are convinced that the world's central banks can just keep increasing their monetization without consequence.
We have a Fed fairy that grants our wishes and keeps us safe.
The Fed is our Tinker Bell, the market is Peter Pan. and we live in Neverland.
A world without limits. Imagine that. No need to worry about inequality, or demographics, or collateral, or over capacity, or structural unemployment. A world without tradeoffs.
Like Peter Pan, the world and its policy makers remain in a state of perpetual arrested development.
Will the leadership pump up the credit some more or will they allow a rebalancing to start? My guess is they will keep this hot -cold thing going until they reach a point where they can't do it anymore. I would expect they have a few more years of rope to hang themselves though events in the world (Japan-Europe-US-QE) may be shortening the rope.
America: #1 In Fear, Stress, Anger, Divorce, Obesity, Anti-Depressants, Etc.
But hey, the one % keep doing better......
You have heard many of these things many times on these pages. But it is quite a complete summary.
When it gets down to it–we’re talking trade balances here–once we’ve brain-drained all our technology into other countries, once things have evened out, they’re making cars in Bolivia and microwaves in Tadzhikistan and selling them here–once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel–once the Invisible Hand has taken all those historical inequities and smeared them out into a broad global layer of what a Pakistani bricklayer would consider to be prosperity–y’know what? There’s only four things we do better than anyone else
high-speed pizza delivery