The coming central banks crisis

armstrongeconomics.com/worl … nk-crisis/

Article seems a bit hyperbolic and self-contradicting. Says that Fed unwinding will be bad, but then won’t be bad, but EU/Jap unwinding will be bad, because something something.

The zerohedgies have been moaning about a QE-driven inflatopolcalypse for years and it hasn’t happened.

Why would the ECB deliberately torpedo the European economy?

Eurozone problems come when Germany/France needs one medicine and the peripherals need another.

Regarding the analogy to medicine, another medical analogy would be that the economic system has become addicted to the medicine of cheap money through long term QE and ZIRP, meaning that profit can be made from low quality investment that would not be profitable under tighter fiscal policy.
When the derivative exposure of banks globally is so large that even a relatively minor correction would make them insolvent and the only way to correct this insolvency would be another massive input of QE and further lowering of rates then it is hard to see how the affected economies can ever be weaned off this medicine.

Armstrong has all the qualities of a cult leader. I wouldn’t listen to him and I think he is a total charlatan. He is right about one thing, the Central Banks have cooked up another disaster in waitng: Moral hazard, wildly mispriced assets and increased wealth inequality - good luck timing the next financial disaster however. Seems overdue IMHO, but I cant say when we hit the iceberg as I can’t foretell the future. Armstrong seems to imply he can - run away!

Draghi’s introductory statement for his euro parliament hearing today:

One thing is clear, ECB will be printing lots more euros for the forseeable.
He recognises that demographic factors are involved but seems just to be saying that 3 years of negative rates plus trillions in bond buying isn’t enough stimulus for recovery but based on that utter failure of his previous policy he plans to just continue the stimulus and everything will sort itself out “over time” because there are “cyclical” components in the economy… Utter nonsense.

How is this different than a bailout?

businessinsider.com.au/albe … ?r=US&IR=T

If subordinated and collateralised bond holders are being bailed in on a weekly basis now in Europe how are banks to remain solvent if they depend on subordinated bond issues to finance themselves?

smh.com.au/business/markets- … x9fbe.html

‘End of an era warnings’ @ 12.50pm update

smh.com.au/business/markets/ … xiu5l.html

smh.com.au/business/markets- … xmpcx.html

investopedia.com/news/stocks … ed-bubble/

Fed to start unwinding bond portfolio - bbc.co.uk/news/business-41341502

Time to buy some puts.

Or some calls! Market initially sold off in wake of Fed announcement but nearly instantaneously pulled right back and S&P finished up on the day.
Is the amount of bonds that the Fed will be selling even in the same order of magnitude as the amount being continuously bought by ECB, BOJ and SNB?
Sovereign Wealth Funds like Norway’s buying up equities at current record high prices mean that the central banks investments in the stock market can be replaced by Norwegian citizens pension fund provisions before any major correction is allowed to take place.

If my quackulations are correct, at current trajectory of 10b/month that’ll only take ~35 years to get back to neutral.

I can’t see how they can vacuum up the QE and it not having any consequences. The tap needs to keep flowing into that leaky bucket!

^^ source presumably sovereignman.com/market-bub … ops-22415/