Oct 312014
 October 31, 2014  Posted by at 10:56 pm Finance Tagged with: , , , , , ,

Marion Post Wolcott Works Progress Administration worker’s children, South Charleston, West Virginia Sep 1938

You can jot down Halloween 2014 in your calendar, and it’s unfortunately too tragic to make proper use of the irony involved, as the day Japan committed suicide. The sun is no longer rising. Not that the vital signs weren’t bad before, indeed it might not have survived regardless, but this lethal blow announced today is still quite the statement.

That financial markets interpret it as a reason to cheer and party and make lots of dough is yet one more proof of how shallow and single-minded the people operating in these markets are, lacking all insight in historical context, longer term consequences, wars and politics, and the human mind.

Because the ‘QE as morphine’ concept introduced today by the megalomaniac Shinzo Abe and his central bank raving mad puppets will change the world in ways that make financial gain less than even an afterthought, except perhaps for those of us who cannot see beyond today, or beyond the one single lonely dimension money is of any use in.

If and when a country resorts to having it central bank buy up – the equivalent of – all sovereign bonds it issues, the snake truly eats its tail, and not in a metaphorical sense. Japan eats it children, most of them as yet unborn, to keep its rapidly ageing population contented and in relative wealth, because the alternative would cost Tokyo’s financial-political power cabal their jobs and heads.

Japan’s problem is, and has been for many years, twofold: first, the Japanese people lost the spending power to keep the domestic real economy growing some 20 years ago and never got it back, and second, a whole slew of successive governments refused to restructure the debts in the financial sector, and instead put those debts on the public tally.

The negative growth announced today in US consumer spending should be a warning sign, as should similar numbers that have come from across Europe for a while now, a sign that we need to think about how to run our societies and economies without everlasting growth, and without the ever more failing and ever more costly policies aimed at constructing and maintaining that growth.

However, the worse the policies are for the real economy and the people who depend on it for survival, the more money the financial markets, and the banks, make. It truly is QE as morphine, and Japan has shown us today that morphine can alleviate pain, but it is also in the end the ultimate killer.

It may already be too late, but we can still make the effort to not fall into the same trap Japan has fallen in. Which in essence is simply trying to recreate a past world that is long gone, by applying measures that ‘wise men’ say are sure to bring back the past, and then more.

We must look at ourselves and wonder why we want more. And realize that if we don’t take that look, and we continue on our present path, we will all end up like Japan, guaranteeing that our quest for more will leave us with less, much less. We cannot build our world with credit, we need to work in order to build it. And we cannot borrow our way into growth, nor do we need to grow.

Halloween 2014. A day we could have learned something.

Home Forums Japan: QE As Morphine For A Terminal Patient

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    Marion Post Wolcott Works Progress Administration worker’s children, South Charleston, West Virginia Sep 1938 You can jot down Halloween 2014 in your
    [See the full post at: Japan: QE As Morphine For A Terminal Patient]


    If the rich and powerfull were harmed by printing they would have put a stop to it.


    Ah, what the heck, works in Argentina. Over and over again.


    Someone commented: “If printing was a bad short-term thing for those with wealth, it would not have happened. Long term, it is bad for them.” Maybe the U.S. is starting to see the light by watching, in horror, the deer in the headlights in Japan. Put a fork in it! Here, Kuroda, you’re going to be needing this:


    Karl Denninger said, “Remember, folks, QE works. It works so well that it has be repeated. Time and time again. Every time. All the time.”


    And David Stockman says, “Madmen and Morons are Raging”:

    “Needless to say, in an even quasi-honest capital market, the GPIF’s announced plan would unleash a relentless wave of selling and price decline. Yet, instead, the Japanese bond market soared on this dumping announcement because the JCBs are intended to tumble right into the maws of the BOJ’s endless bid. Charles Ponzi would have been truly envious! […]

    Whether it attains its 2% inflation target or not, its is blindingly evident that the BOJ has destroyed every last vestige of honest price discovery in Japan’s vast bond market. Notwithstanding the massive hype of Abenomics, Japan’s real GDP is lower than it was in early 2013, while its trade accounts have continued to deteriorate and real wages have headed sharply south.

    So there is no recovery whatsoever—-not even the faintest prospect that Japan can grow out if its massive debts.”

    The BOJ Jumps The Monetary Shark—–Now The Machines, Madmen And Morons Are Raging


    Doug Noland:

    “There’s always been an arrogance surrounding Bernanke’s view of deflation and the power and omnipotence of contemporary central bankers. He blames inept central banking and associated insufficient Fed money printing for the Great Depression. He places blame for the 1929 crash on the “Bubble poppers” and excessively tight monetary policy. He apparently has little issue with the 1920s Bubble. In general, Bernanke is dismissive of risks associated with Bubbles, convinced that aggressive “mopping up” policies can simply inflate away problematic debt loads and shortfalls in aggregate demand. It’s been an incredibly dangerous six-year experiment: “Sufficient injections of money will ultimately always reverse a deflation.” Well, we do have evidence that injections inflate securities market Bubbles. […]

    I have for years argued that Bubbles – rather than deflation – were the prevailing risk to global financial and economic stability. Deflation and faltering demand are certainly risks that I associate with protracted Credit and speculative Bubbles. Dr. Bernanke has referred to understanding the forces behind the Great Depression as the “Holy Grail of economics.” I am instead convinced that understanding this protracted Bubble period is the real “Holy Grail.” And once we come to a more coherent understanding of this period we can attempt to go back and correct the historical revisionism that made such a phenomenal mess out of 1920s and 1930s analysis. […]

    I feel quite comfortable stating that more QE – from the ECB, Fed, BOJ, Bank of China and others – will in no way stabilize the situation. Air needs to come out of dangerously inflated global securities markets.”


    Parties end!


    Party on, dudes!

    “Cyprus-style confiscation of depositor funds has been called the “new normal.” Bail-in policies are appearing in multiple countries directing failing TBTF banks to convert the funds of “unsecured creditors” into capital; and those creditors, it turns out, include ordinary depositors. Even “secured” creditors, including state and local governments, may be at risk. Derivatives have “super-priority” status in bankruptcy, and Dodd Frank precludes further taxpayer bailouts. In a big derivatives bust, there may be no collateral left for the creditors who are next in line. […] Rather than banks being put into bankruptcy to salvage the deposits of their customers, the customers will be put into bankruptcy to save the banks.”

    This is the problem, isn’t it: the bankrupt unwilling and refusing to go bankrupt. So they turn it around and make you go bankrupt instead. Every criminal’s dream! I hope they’re fast runners.

    V. Arnold

    Why anybody would still be doing business with “banks” is quite beyond me.
    I gave up on “banks” more than 20 years ago; credit unions are the only viable alternative, IMO. Being a member is way different than being a “customer” (translation=one-to-exploit).
    As long as one plays the game, one is in the game; withdraw consent by not playing the game.

    John Day

    The game will go on as it is, until there is suddenly nothing left in the game.
    We should do what we can to get our little “dachas” and grow some veggies, and figure out how to get water, beans and some cooking fuel.
    It’s strange that the west has become so complacent, and Russia jumps into action to increase domestic agriculture, manufacturing, and self reliance.
    Russia has a good spot now, in an otherwise bad 25 (or more) years, and sees the opportunity to avoid ruin. This is uniting Russia, and it’s impressive.
    That’s not happening in Austin, Texas.
    We’ll have to find ways to work on self sufficiency on a much, much smaller scale.

    V. Arnold

    @ John Day

    The passivity of Americans is vexing. I have never understood it; having been active in anti-Vietnam war demonstrations (I barely escaped being drafted[but that’s another story]).
    Frankly, I do not believe the U.S. citizens know or understand what’s being done to them. Provincialism extracts a very high price in the end. It may be that simple.

    Self sufficiency probably is not possible for most; but sufficiency will be imposed and those without “community” will be fucked (there’s no polite way to put it).
    In fact that’s exactly the situation extant as I type this. The U.S. has lost all sense of community. Of course there are exceptions; but they are far and few between.
    My view from afar is that most are not really looking for answers or solutions. Too close to the elephant’s leg…

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