Give stimulus a chance, that’s the theme being set up for this week. After relentless buying across global bond markets distorting curves, upsetting politicians and the public alike, central bankers have responded en masse. There were more rate cuts around the world in August than there had been at any point since 2009. And there’s more to come. As Bloomberg [...]
The Chinese have been reforming their monetary and credit system for decades. Liberalization has been an overriding goal, seen as necessary to accompany the processes which would keep the country’s economic “miracle” on track. Or get it back on track, as the case may be. Authorities had traditionally controlled interest rates through various limits and levers. It wasn’t until October [...]
There may yet be bitter irony in the fact that China’s nascent embrace of capitalism in the late eighties allowed it to survive the wave of failed socialist states which fell all throughout the world at the time. While the Berlin Wall came down, the Eastern bloc nearly disappeared, and even the Soviet Union dissolved, the Chinese would stand almost [...]
Why don’t you fight the Fed? Sure, central banks and governments give off the impression that they are in control. The idea is repeated as if a fact. We are led to believe they let markets play around in their contained spheres but should anyone get out of hand authorities are there like referees to make sure everything remains inbounds. [...]
As of today’s close, there are only 22 trading days in the entire history of Japan’s government bonds (JGB) where the yield (or “yield”) on its 10-year paper has been more negative. Those 22 all came clustered together in June and July 2016. In other words, Japan’s bond market is today comparable only to that one period at the utter [...]
According to IMF, “global growth remains subdued.” Since it was supposed to be roaring by now, this qualifies as a substantial downgrade. Financial positions were staked out on the premise there wouldn’t be one, certainly not a disappointment coming this soon long before the breakout could actually happen. That’s why there are downside risks in the financial system. Risk-taking wasn’t [...]
For central bankers like Bill Dudley and Ben Bernanke, the Global Financial Crisis was a godsend. So much had been a disaster it was hard to pin down specific failures. Where does one begin? Practically everything went wrong, so take your pick. The Financial Crisis Inquiry Commission (FCIC) did its part pointing the finger at those greedy Wall Street bankers [...]
Like a shark smelling blood in the water, I don’t care that the blood is in the water from leaking out of what will be a dead horse, if it isn’t deceased already. I pretty much intend to beat on it one way or another. The issue isn’t just fed funds, it’s why anyone cares about that market at all [...]
Tucked away in a quiet little corner of the BIS publication library, a study was published in the organization’s September 2015 Quarterly Review. One of the biggest mysteries of that time was Chinese “capital flight.” It was breathtaking, and it would only get worse. What was really going on? Many if not most mainstream stories focused on capital restrictions. There [...]
Maybe this was inevitable. After all, it is how things work in a lot of other places. When all is lost, that last thing that happens is the lawyers come in and pick through the bones. Christine Lagarde has been nominated to replace Mario Draghi as the next head of Europe’s central bank. She has a very long and distinguished [...]
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