Posts Tagged ‘Bank of England’

The Silver Curtain

The Silver Curtain

Courtesy of Marla Singer, Zero Hedge 

On the 5th of March in 1946, in Fulton Missouri, at Westminster College, Winston Churchill delivered an address (since christened the "Sinews of Peace") lamenting the burgeoning power and influence being slowly but surely gathered up by the Soviet Union.  Perhaps the address will be familiar to some of you owing to its most famous passage:

From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in many cases, increasing measure of control from Moscow. Athens alone — Greece with its immortal glories — is free to decide its future at an election under British, American and French observation.

Ironic, as I will address, that he should mention Greece.

Much less well known perhaps is this later passage:

Our difficulties and dangers will not be removed by closing our eyes to them. They will not be removed by mere waiting to see what happens; nor will they be removed by a policy of appeasement. What is needed is a settlement, and the longer this is delayed, the more difficult it will be and the greater our dangers will become.1

The "Iron Curtain" came, of course, to signify the cavernous ideological, and eventually concretely physical, divide between East and West.  It took some 43 years before it was lifted once more, first and haltingly, in the form of the removal of Hungary’s border fence in mid-1989 and then, of course, finally via the fall of the Berlin Wall in November that same year.

Not to be compared with a production of Italian Opera, the Iron Curtain did not describe a sudden, smooth, abrupt descent over the stages of Eastern Europe.  Quite the contrary, its drop was in stutters of discrete, fractional lowerings, such that it was a full fifteen years after Churchill used the term before its ultimate expression, the Berlin Wall, was finally…
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Jim Rickards: “Goldman Can Create Shorts Faster Than Europe Can Print Money”

Jim Rickards: "Goldman Can Create Shorts Faster Than Europe Can Print Money"

Courtesy of Tyler Durden at Zero Hedge 

Jim Rickards, who recently has gotten massive media exposure on everything from the JPM Silver manipulation scandal, to the Greek default, was back on CNBC earlier with one of the most fascinating insights we have yet heard from anyone, which demonstrates beyond a doubt why any attempt by Europe to print its way out of its current default is doomed: "Look at what Soros did to the Bank of England in 1992 – he went after them, they had a finite amount of dollars, he was selling sterling and taking the dollars, and they were buying the sterling and selling the dollars to defend the peg. All he had to do was sell more than they had and he wins. But he needed real money to do that. Today you can break a country, you don’t need money you just need synthetic euroshorts or CDS. A trillion dollar bailout: Goldman can create 10 trillion of euroshorts. So it just dominates whatever governments can do. So basically Goldman can create shorts faster than Europe can create money." Just wait until Europe finally realizes that the CDS "speculators" had all the cards in the poker game all along. And we hope Europe listens to the man: being LTCM’s GC he knows all about failed bail outs.  

 


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Americans Have Been Bailing Out Foreign Banks for Years … And We’re Getting Ready To Do It Again

Americans Have Been Bailing Out Foreign Banks for Years … And We’re Getting Ready To Do It Again

Courtesy of Washington’s Blog

As the Wall Street Journal points out, the Federal Reserve might open up its "swap lines" again to bail out the Europeans:

The Fed is considering whether to reopen a lending program put in place during the financial crisis in which it shipped dollars overseas through foreign central banks like the European Central Bank, Swiss National Bank and Bank of England. The central banks, in turn, lent the dollars out to banks in their home countries in need of dollar funding. It was aimed at preventing further financial contagion.

The Fed has felt that it is premature to reopen this program — which was shut down in February as the financial crisis appeared to wane — because it wasn’t clear that foreign banks were in need of dollar funds. Still, trading floors on Wall Street are abuzz with anticipation today that the Fed might use the program again as Europe’s problems take on a more global dimension.

***

The international lending lines are known among central bankers as swaps.

Fed officials believe the swap program was one of its most successful interventions aimed at stemming a global crisis, when many banks overseas became strained for dollar funding. In their normal course of business, they borrowed dollars in short-term lending markets and used those dollars to finance holdings of long-term U.S. dollar assets, like Treasury or mortgage bonds. When those markets dried up, the swap lines helped to prevent overseas bank funding crises in 2008.

Fed officials see the swaps as a low-risk program, because its counterparties in these loans are foreign central banks, and not private banks. At a crescendo in the crisis in December 2008, the Fed had shipped $583 billion overseas in the form of these swaps.

Federal ReserveAs the BBC’s Robert Peston writes:

There is talk of the ECB providing some kind of one year repo facility (where government bonds are swapped for 12-month loans) in collaboration with the US Federal Reserve.

See this for more information on swap lines.

Indeed, the Federal Reserve has been helping to bail out foreign central banks and private banks for years.

For example, $40 billion in bailout money given to AIG went to…
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The Center Cannot Hold

The Center Cannot Hold

brown falcon Courtesy of John Mauldin, Thoughts from the Frontline 

The Risks from Fiscal Imbalances 
The Challenge for Central Banks 
Bang, Indeed! 
The Center Cannot Hold 
A Decent Employment Report 
Montreal and New York and Italy

Turning and turning in the widening gyre 
The falcon cannot hear the falconer; 
Things fall apart; the center cannot hold; 
Mere anarchy is loosed upon the world, 
The blood-dimmed tide is loosed, and everywhere 
The ceremony of innocence is drowned; 
The best lack all conviction, while the worst 
Are full of passionate intensity.

- William Butler Yeats

Last week we focused on the first half of a paper by the Bank of International Settlements, discussing what they characterized as the need for "Drastic measures … to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability." As I noted, you don’t often see the term drastic measures in a staid economic paper from the BIS. This week we will look at the conclusion of that paper, and then turn our discussion to the fallout from the problems they discuss, initially in Europe but coming soon to a country near you.

But first, what a week in the markets! I’m sure more than a few investors felt like they had a severe case of whiplash. We will discuss the volatility a little more below.

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Former Fed Gov. Poole Blasts Fed’s Favoritism; Soros Bought More Gold, Says Pound Devaluation is Option; New York Faces $1 Billion Shortage in June

Former Fed Gov. Poole Blasts Fed’s Favoritism; Soros Bought More Gold, Says Pound Devaluation is Option; New York Faces $1 Billion Shortage in June

Courtesy of Mish

In a candid attack on his former colleagues, Poole Says Fed Has ‘Tilted Playing Field’

“The Fed did not provide assistance to all on an equal basis but tilted the playing field,” Poole said in remarks prepared for a lecture at the University of Delaware, where he is a scholar in residence. “Why should the Fed have had a program to buy commercial paper from large corporations and no program to help small businesses starved for funds?”

The Fed’s program to purchase $1.25 trillion in mortgage- backed securities issued by government-sponsored enterprises probably contributed to the demise of the market for non- government mortgage-backed securities and will “complicate monetary policy in the years ahead,” Poole said.

“Much more research is necessary to determine whether the Fed made the right choices; clearly, I have my doubts,” said Poole, 72. He was president of the St. Louis Fed from 1998 until retiring from the post in March 2008, the month that Bear Stearns collapsed.

Poole expressed concern about “an appalling lack of economic literacy in Congress” and said that neither the House nor Senate versions of legislation to overhaul financial regulation address the most important shortcomings.

Poole is correct about the Fed’s favoritism and the Fed buying mortgages. It is very doubtful the Fed helped housing much, but at some point the Fed has to get rid of that $1.25 trillion in mortgages. That will pressure mortgage rates.

Why did the Fed even purchase the last half-trillion? By then, the Fed was already discussing an exit strategy. It made no sense.

Certainly Congress does consist of economic illiterates, but the same thing can be said about the Fed. Pray tell what did Bernanke or Greenspan get right?

New York Faces $1 Billion Cash Shortage in June

In a scene playing out in nearly all states in varying degrees New York Faces $1 Billion Cash Shortage in June.

New York state faces a $1 billion cash shortage in June, budget director Robert Megna told reporters today.

The state is considering all options to deal with the shortage, including borrowing, Megna said. “We are significantly underfunded in the first week of June,” Megna said.

Soros Bought More Gold, Says Pound Devaluation Is Option
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Distortions, Lies, and Muggings by the Fed, Bank of England

Distortions, Lies, and Muggings by the Fed, Bank of England

Courtesy of Mish

The first priority of Central Bankers in any crisis is to buy time by any method available. By now, it should be perfectly clear that Central Bankers are willing to unconstitutionally usurp authority in an effort to buy that time.

I talked about that idea most recently in Hussman Accuses the Fed and Treasury of "Unconstitutional Abuse of Power"

Hussman: "The policy of the Fed and Treasury amounts to little more than obligating the public to defend the bondholders of mismanaged financial companies, and to absorb losses that should have been borne by irresponsible lenders. From my perspective, this is nothing short of an unconstitutional abuse of power, as the actions of the Fed (not to mention some of Geithner’s actions at the Treasury) ultimately have the effect of diverting public funds to reimburse private losses, even though spending is the specifically enumerated power of the Congress alone.

Needless to say, I emphatically support recent Congressional proposals to vastly rein in the power (both statutory and newly usurped) of the Federal Reserve."

Fed Uncertainty Principle

Long before that, and even before such blatant abuses occurred, I predicted such happenings in the Fed Uncertainty Principle, written April 3, 2008.

Uncertainty Principle Corollary Number Two: The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.

Uncertainty Principle Corollary Number Four: The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it’s easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.

Ironically, after being lied to for years by the likes of Bernanke and the BOE, the Central Bankers act shocked at proposals like "Audit The Fed".

With that backdrop, let’s now look at shenanigans, lies, and manipulations by the Bank of England.

Bank of England Props Up RBS, HBOS at Height of Crisis

Inquiring minds are reading Bank of England propped


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Bank of England Throws Money at Economy

Bank of England Throws Money at Economy

Currency Projected on Stock Market Listings

Courtesy of Mish

It’s no wonder that gold is soaring with the US, UK, and China all printing money like mad. Throw enough money around and gold is bound to rise regardless of anything else that might happen (all of it bad).

Please consider the latest insanity in the UK: BOE May Expand Bond Plan as Officials ‘Throw Money’ at Economy.

The Bank of England may increase its bond-purchase plan by 50 billion pounds ($83 billion) today as central bankers and politicians scramble to shore up Britain’s banking system and drag the economy out of recession.

Governor Mervyn King’s nine-member Monetary Policy Committee will expand the asset-buying program to 225 billion pounds at 12 p.m. in London, the median of 48 forecasts in a Bloomberg News survey shows. That follows Prime Minister Gordon Brown’s pledge this week to spend almost 40 billion pounds in a second bailout of two the nation’s biggest banks.

Any increase in the Bank of England’s emergency program would be the third since King unveiled the plan in March. Brown’s first bank bailout, the government’s fiscal stimulus measures and an injection of 175 billion pounds in newly printed central bank money have so far failed to end Britain’s longest recession on record.

“They’ve got to throw money at it,” said Neil Mackinnon, an economist at VTB Capital Plc and a former U.K. Treasury official. “The fact of the matter is that the U.K. economy is lagging behind. As to whether quantitative easing is working, the jury is still out.”

Quantitative Easing History Lesson

Mackinnon does not know if the strategy is working yet still insists “They’ve got to throw money at it.”

Neil Mackinnon is in dire need of a history lesson. Quantitative Easing was a spectacular failure in Japan, it will prove to be a spectacular failure in the UK as well. For more on the lesson of Japan, please see Is Debt-Deflation Just Beginning?

However, this should not take a history lesson. Common sense alone says you cannot cure a debt problem by throwing still more money at problems hoping something will stick.

It is impossible to have a sustainable recovery based on loose money policies. The global housing bubble should be proof enough of that.

Mike "Mish" Shedlock

 


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Did Lehman Brothers Fall or Was It Pushed?

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Did Lehman Brothers Fall or Was It Pushed?

lehman brothersCourtesy of ELLEN BROWN at Web of Debt

A year after the bankruptcy of Lehman Brothers on September 15, 2008, questions still swirl around its collapse. Lawrence MacDonald, whose book A Colossal Failure of Common Sense came out in July 2009, maintains that the bank was not in substantially worse shape than other major Wall Street banks. He says Lehman was just “put to sleep. They put the pillow over the face of Lehman Brothers and they put her to sleep.” The question is, why?

The Lehman bankruptcy is widely considered to be the watershed event that changed the rules of the game for those Wall Street banks considered “too big to fail.” The bankruptcy option was ruled out once and for all. The taxpayers would have to keep throwing money at the banks, no matter how corrupt, ill-managed or undeserving. As Dean Baker noted in April 2009:

“Geithner has supposedly ruled out the bankruptcy option because when he, along with Henry Paulson and Ben Bernanke, tried letting Lehman Brothers go under last fall, it didn’t turn out very well. Of course, it is not necessary to go the route of an uncontrolled bankruptcy that Geithner and Co. pursued with Lehman. . . . [But] the Geithner crew insists that there are no alternatives to his plan; we have to just keep giving hundreds of billions of dollars to the banks . . . , further enriching the bankers who wrecked the economy.”

Although Lehman Brothers filed for bankruptcy on Monday, September 15, 2008, it was actually “bombed” on September 11, when the biggest one-day drop in its stock and highest trading volume occurred before bankruptcy. Lehman CEO Richard Fuld maintained that the 158 year old bank was brought down by unsubstantiated rumors and illegal naked short selling. Although short selling (selling shares you don’t own) is legal, the short seller is required to have shares lined up to borrow and replace to cover the sale. Failure to buy the shares back in the next three trading days is called a “fail to deliver.” Christopher Cox, who was chairman of the Securities and Exchange Commission in 2008, said in a July 2009 article that naked short selling “can allow manipulators to force…
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Zero Hedge

FX Volatility Nears All Time Low In "Perfect Storm Of Vol, Skew And Carry"

Courtesy of ZeroHedge View original post here.

While the VIX still has a fair ways to go before it plumbs the all-time single-digits lows that defined the spectacularly serene equity markets in 2017, FX vol is already there: the JPMorgan Global FX volatility index has dropped to 6 year low levels, and is just shy of all time lows.

Of course, most of this stability in the FX realm is due to central banks depressing cross-asset vol; yet the more vol is pushed lower, the higher it will spring back once c...



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Phil's Favorites

American influence could take the hit as Putin, Zelenskiy try to make peace in Donbass

 

American influence could take the hit as Putin, Zelenskiy try to make peace in Donbass

Zelenskiy is facing a tough meeting with Russia’s Putin on Dec. 9. Ukrainian Presidential Press Office via AP

Courtesy of Erik C. Nisbet, The Ohio State University and Olga Kamenchuk, The Ohio State University

President Vladimir Putin of Russia and his Ukrainian counterpart, Volodymyr Zelenskiy, are set ...



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Kimble Charting Solutions

Gold Miners Indicator Attempting Multi-Year Breakout, Says Joe Friday

Courtesy of Chris Kimble

Are Gold Mining stocks about to be sent a bullish signal they haven’t received in years? Possible says Joe Friday.

This chart looks at the Senior Miner/Junior miner (GDXJ/GDX) ratio over the past few years. Historically when the ratio is heading up, miners tend to do very well.

The ratio has created a series of lower highs just below the falling line (1), since the summer of 2016. The ratio is currently testing the strong falling resistance line and the June 2019 highs at (2).

Joe Friday Just The Facts Ma’am; If the ratio succeeds in a double breakout at (2), it sends miners a long-awaited bullish message.

...

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Insider Scoop

Scott Galloway Calls For Twitter's Board To Replace 'Part-Time CEO' Jack Dorsey Amid Africa Move Plans

Courtesy of Benzinga

A shareholder in Twitter Inc. (NASDAQ: TWTR) and New York University business professor wrote an open letter Friday to the company's board calling for the replacement of CEO Jack Dorsey.

What To Know

Scott Galloway, who owns more than 330,000 shares of Twitter stock a...



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Lee's Free Thinking

Chart Shows the Fed Ramping Up Not QE - Funding Almost All Treasury Issuance

 

Chart Shows the Fed Ramping Up Not QE – Funding Almost All Treasury Issuance

Courtesy of Lee Adler, Wall Street Examiner 

The Fed is ramping up “Not QE” .

The Fed bought $2.2 billion in notes today in its POMO, “not QE,” operations. Actually $2.15 billion because they sold back a whole $50 million. Must have been a little glitch in the force.

This brings the Fed’s total outright purchases of Treasuries to $170 billion since it started Not QE, on September 17.

It also did $107 billion in gross new repo loans to Primary Dealers to buy Tre...



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Chart School

Silver stock taking the sector higher

Courtesy of Read the Ticker

As the US economy begins to show late cycle characteristics like: GDP slowing, higher inflation, higher wage costs, CEO confidence slump. 

Previous Post: Gold Stocks Review

The big players in the market are looking for the next swing off good value lows. This means more money is finding it way into the gold and silver sector, and it is said gold and silver stocks actually lead the metal prices.

The cycle below shows prices are ready to move in the months ahead (older chart re posted).


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Digital Currencies

Chinese Crypto Exchange IDAX Locks Cold Wallet As CEO "Goes Missing"

Courtesy of ZeroHedge

By William Suberg via CoinTelegraph.com

Chinese cryptocurrency exchange IDAX has suspended deposits and withdrawals after its CEO allegedly disappeared.

In a blog post on Nov. 29, IDAX, which earlier this week warned it was seeing a run on withdrawals, said the whereabouts of Lei Guorong were currently unkno...



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Members' Corner

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

 

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

By Matt Wilstein

Excerpt:

Sacha Baron Cohen accepted the International Leadership Award at the Anti-Defamation League’s Never is Now summit on anti-Semitism and hate Thursday. And the comedian and actor used his keynote speech to single out the one Jewish-American who he believes is doing the most to facilitate “hate and violence” in America: Facebook founder and CEO Mark Zuckerberg.

He began with a joke at the Trump administration’s expense. “Thank you, ADL, for this recognition and your work in fighting racism, hate and bigotry,” Baron Cohen said, according to his prepared...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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