Central banks can’t save the markets from a crash. They shouldn’t even try

https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/pictures/2015/8/29/1440835575292/Cartoon-by-David-Simonds--009.jpg?w=700&q=85&auto=format&sharp=10&s=f14e4235d77db401def8e94d95fd3cc7

Financiers have come to expect central banks to help them out. Illustration: David Simonds for the Observer

 

Alarming data from China was met with a soothing hint about monetary policy. But treasuries cannot keep pumping cheap credit into a series of asset bubbles

Like children clinging to their parents, stock market traders turned to their central banks last week as they sought protection from the frightening economic figures coming out of China. Surely, they asked, the central banks would ward off the approaching bogeymen, as they had so many times since the 2008 crash.

The US Federal Reserve came up with the goods. William Dudley, president of the bank’s New York branch, hinted that the interest rate rise many had expected next month was likely to be delayed.

Continue reading

Central bank prophet fears QE warfare pushing world financial system out of control

In short, it’s past the the point of no return and will result in a global market crash — possibly in 2015. We’ve all heard this story before and it surely sounds like a repeat from the last ten years of warnings, however, you can now see the wheels falling off as the central banks throughout the world are running out of options. Moreover, the only option they have is what’s exponentially compounding the problem. You might wonder how they could be so dumb, but on the other side you know these are experts with years of experience handling the situation. This leads to the next question: Is destroying the economy intentional? You can’t make 300 mistakes in a row and be called an idiot.

 

Former BIS chief economist warns that QE in Europe is doomed to failure and may draw the region into deeper difficulties

The economic prophet who foresaw the Lehman crisis with uncanny accuracy is even more worried about the world’s financial system going into 2015.

Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West.

“We are in a world that is dangerously unanchored,” said William White, the Swiss-based chairman of the OECD’s Review Committee. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.” Continue reading

US Economy Is A House Of Cards — Paul Craig Roberts

The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.

American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.

Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism. Wall Street no longer performs any positive function. Wall Street is a looting mechanism, a deadweight loss to society. Wall Street makes profits by front-running trades with fast computers, by selling fraudulent financial instruments that it is betting against as investment grade securities, by leveraging equity to unprecedented heights, making bets that cannot be covered, and by rigging all commodity markets. Continue reading