Fiat ponzi is aptly named

[pmbug]

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." ...

To summarize, the global equity market is now one massive Ponzi scheme in which the dumb money are central banks themselves, the same banks who inject the liquidity to begin with.
...

http://www.zerohedge.com/news/2014-...nks-have-secretly-invested-29-trillion-market

Must. Levitate. Equity markets.

 

[pmbug]

...
OK, in perspective, the value of all stock markets on the planet added together are about $62 trillion, now it is revealed that $29 trillion or so has come from the world’s central banks. How did this happen? Do central banks have an extra $29 trillion to throw around? The answer of course is no they do not… unless they just print it up and presto, there it is ready and able for whatever folly they choose. For a little more perspective, the Federal Reserve supposedly has a total balance sheet of some $4.5 trillion or about 15% of this $29 trillion (I dropped the ".1" because it’s only $100 billion). But, this $4.5 trillion is all accounted for as being invested in Treasuries, agencies and some "junkier stuff." Please don’t tell me that the world’s central banks are doing something that the Fed is not… or worse, the Fed is doing something that they are not admitting or accounting for!
...
Going even further down the rabbit hole, this means that central banks own nearly half of the equity in all publicly held businesses. It means that by simply printing money, they have "privatized" the world! ...

http://www.jsmineset.com/2014/06/16/jims-mailbox-1530/

 

[pmbug]

...
In brief, if anything, the Fed would prefer that all retail investors pull their money out of bonds funds (and money markets of course), and invest them into 100x+ P/E biotech stocks. Because after all, today's stock market is nothing but the biggest Fed-propped Ponzi scheme in existence.

And in order to achieve that, according to the FT, "Federal Reserve officials have discussed imposing exit fees on bond funds to avert a potential run by investors, underlining regulators’ concern about the vulnerability of the $10tn corporate bond market."

FT justifies this latest unprecedented pseudo-capital control by sayng that "officials are concerned that bond-fund investors, as with bank depositors, can withdraw their money on demand even though the assets held by their funds are long-term debt and can be hard to sell in a crisis. The Fed discussions have taken place at a senior level but have not yet developed into formal policy, according to people familiar with the matter."

“So much activity in open-end corporate bond and loan funds is a little bit bank like,” Jeremy Stein, a Fed governor from 2012-2014 told the Financial Times last month, just before he stepped down. “It may be the essence of shadow banking is ... giving people a liquid claim on illiquid assets.”

The Fed's justification for this latest bazooka approach in forced capital reallocation:

Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely.

"Oddly" there is nothing in the Fed's proposal about gating the most overvalued asset classes of all, equities, or say, biotechs and momo stocks, where the drawdowns, when they happen, are so fast and vicious, the bulk of hedge funds are still down for the year precisely because they were all led like obedient sheep into the Div/0 PE slaughter. Also, memory is a little fuzzy, but in the days after Lehman, it was equity hedge funds that promptly gated all their investors.... not bond hedge funds, which in fact were scrambling to deal with the influx of new funds.

Also, it goes without saying that "discouraging investors" from withdrawing funds is the last thing on the Fed's mind, which knows very well that when it comes to investor behavior all that matters is how the Fed's future intentions are discounted.

And with this unprecedented step, the Fed is sending a very clear message: it may be next year, or next month, or next week, but quite soon you, dear retail bond-fund investor, will be gated and will be unable to pull your money.

The only thing that was missing from the FT piece was a casual reference to Cyprus.

So what is the obvious desired outcome, at least by the Fed? Why a wholesale panic withdrawal from bond funds now, while the gates are still open, and since those trillions in bond funds have to be allocated somewhere, where will they go but... stock funds.
...

http://www.zerohedge.com/news/2014-...nd-runs-looking-imposing-bond-exit-fees-gates

Manipulation doesn't have to be overt.

 

[pmbug]

Interesting bit of speculation here:

...
So to summarize: The BIS publicly recommended popping the bubble now… and Yellen said no.

So what’s going on?

We could take all of this at face value if we chose: The BIS playing hawk, and the Fed playing dove. And that might well be the case — as to some extent Yellen is still something of an unknown entity.

But there is one more twist to the puzzle: Yellen has openly stated that she would not be offering clear guidance to the market as her predecessor had advocated. The age of Fed-glastnost is apparently coming to an end.

So indulge us for a moment as we present another possibility:

Yellen is going to orchestrate a controlled collapse. Or, at least one which we hope is controlled.

There are political considerations to be made, however: The Fed, which has not only come under intense fire for overt market manipulation, but which is also deeply concerned with market perception, simply cannot afford to be perceived as an instrument of the market’s collapse. To be seen as the instigator of a crash could do irreparable harm to the institution.

Pop bubbles? Who us?

So just maybe the Fed fully intends on heeding the advice of the BIS, and is strategically positioning itself as a stalwart dove to shield itself from the public fallout of it’s orchestrated financial calamity.
...

http://www.zerohedge.com/news/2014-07-08/fed-going-attempt-controlled-collapse

 

[dontdeBasemebro]

But is the BIS being truthful with their recommendations? Obviously we wouldn't be so simple to take any of these banksters at what they say, but my skepticism is of a different nature.

Why would the BIS recommend popping the fiat ponzi when it is still working? There is still more money to print, more debt to accumulate, and more wealth to extract. I could easily see this monster lumbering along to at least 2020.

Then again, it could go right now. Is the BIS concerned that they need to exert control over the system, any control, while they still can? I could see it just getting away from them, but a crash can get away from them just as easily too.

I think we can at least agree that the crash will come at some point, and we will be the ones paying for it regardless.

 

[pmbug]

It is hard to give any banker the benefit of the doubt when they open their mouth. They live far outside the circle of trust.

 

[mmerlinn]

It is hard to give any banker the benefit of the doubt when they open their mouth. They live far outside the circle of trust.

The LAST duty of a central banker is to tell the public the truth.

"The message you have entered is too short. Please lengthen your message to at least 4 characters." Gah. Bah. Humbug!

 

[pmbug]

Well, despite Yellen's protest that they won't pop bubbles, the FOMC says QE ends in October:

http://www.zerohedge.com/news/2014-...s-investors-are-too-complacent-qe-end-october

Their messaging about "complacency" harkens back to Greenspan's "irrational exuberance" IMO. They are clearly trying to deflate some bubbles.

 

[mmerlinn]

Well, despite Yellen's protest that they won't pop bubbles, the FOMC says QE ends in October:

http://www.zerohedge.com/news/2014-...s-investors-are-too-complacent-qe-end-october

Their messaging about "complacency" harkens back to Greenspan's "irrational exuberance" IMO. They are clearly trying to deflate some bubbles.

The most likely day for another stock market "panic" is Monday, 20 October 2014. If that happens, the Fed will panic again, just like they did in 2008, and flood the markets with more worthless money. So much for the end of QE.

 

[DSAbug]

I agree mmerlinn.. The market is setup for pain. We just need a catalyst.

 

[dontdeBasemebro]

Last summer I thought we were headed for a Syria war and that would kick things off. Oil would spike, and the rest of the economy would get slammed.

It's hot outside again, so maybe they'll try for Iraq 3.0.