The problem with the central banks.

eurusdzn · Mar 16, 2016

zdreg said:
they cure nothing. they kick the can down the road. they exacerbate the problem. they are nothing but engines of inflation. they are hand maidens of the politicos. they enable their excesses by creating inflation to extinguish the excess debt created by the political class.
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No doubt. Approximately 150-200 billion of maturing fed holdings will be rolled over/re-invested into like treasury products this year. Thats significant demand in the treasury market
from the already largest owner of US treasuries(Fed) and is a stealth QE.
In addiion approx 100 billion income on their massive treasury holdings will be turned over to treasury reducing the approx. 225 billion debt service to an insignificant/ sustainable 100 billion net debt service pn about 19 trillion outstanding. Free money up to this point in time.
Add to this the beneficial( to corporates and government) trade deficit loop of short dollars to open then long treasuries to close(China) , and one can see that this is a worthy model to maintain.

felixbocharov · Mar 17, 2016

eurusdzn said:
No doubt. Approximately 150-200 billion of maturing fed holdings will be rolled over/re-invested into like treasury products this year. Thats significant demand in the treasury market
from the already largest owner of US treasuries(Fed) and is a stealth QE.
In addiion approx 100 billion income on their massive treasury holdings will be turned over to treasury reducing the approx. 225 billion debt service to an insignificant/ sustainable 100 billion net debt service pn about 19 trillion outstanding. Free money up to this point in time.
Add to this the beneficial( to corporates and government) trade deficit loop of short dollars to open then long treasuries to close(China) , and one can see that this is a worthy model to maintain.
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One day this bubble will burst... And this is going to be a bad day for the whole world.

fhl · Mar 23, 2016

Federal Reserve forecasts vs actual.

We place our trust in people who are flying as blind as a goose in a snowstorm.

der_kommissar · Mar 23, 2016

Nothing more than political cover...Just like when Bernanke proclaimed that "no one could have seen the housing/mortgage crisis coming"...

fhl · Jun 9, 2016

Central bankers are so far out in right field that I doubt seriously they'll ever recover after this is over.

Draghi Starts Buying Junk Bonds, “Means Business” (BBG)

Since a surprise interest-rate cut at his first meeting as ECB President, Mario Draghi has shown a penchant for pushing the envelope. The bank’s entry into the corporate bond market on Wednesday was no exception: buying bonds with junk ratings.

Nine_Ender · Jun 9, 2016

felixbocharov said:
One day this bubble will burst... And this is going to be a bad day for the whole world.
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I don't see it at all, there is no bubble it's just increased debt in countries like the US that has to be paid with higher personal taxes. I'd say baby boomers in the US have been the most under-taxed demographic in the world the last 30 years. And if the government takes on projects like the Iraq War, they have to pay for it, or they can be unethical and let their children's generation pay for it. So far, it's the latter unfortunately in the US.

Look, Canada had similar issues in the 1980s and in some ways the situation was more dire ( interest rates were quite high ). Did you hear about the bubble in Canada then and how bad it got for everyone ? No, you didn't, because it never existed. Personal taxes were raised, and the debt got under control. So much so that by the late 1990s it was in the rear view mirror and surpluses occurred here or there. Things change that fast. So given that I lived through all that, I can't take your bubble theories seriously at all.

nitro · Jun 13, 2016

felixbocharov said:
Since 2008 central banks around the world became a real catastrophe to the real sector. Governments changed their focus from the real economy to the money economy. But the problem is that central banks can't provide growth in a long-term, of course, they can inject money into the economy, but it works only in a short-term. Look at Europe: no one cares about the manufacturers, no one cares about farmers - all that they do is just raising and lowering (mostly lowering) interest rates. The real problem is much deeper, they need to make reforms, they need innovations. But no one cares, let's just cut interest rates. How far can it go? Honestly, I'm waiting for the next financial crisis, because the system did not learn its lessons. They cure non-financial problems with only financial manipulations.
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