Debt Rattle Feb 1 2014: Meanwhile Back Home The Thumbscrews Are Tightened
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Arthur Rothstein “Low-cost housing, Saint Louis, Mo.” March 1936 It’s been quite the emerging week in the financial markets, but we shouldn’t let that
[See the full post at: Debt Rattle Feb 1 2014: Meanwhile Back Home The Thumbscrews Are Tightened]Is this another warning sign…. Germany must use its military more https://www.cnbc.com/id/101382198…. Will the banks be bailed out again this time? If the equity markets cease to be productive for banks will they start to lend out the money they have. I can’t understand the language of the FED they say they will keep interest rates at zero but how can they do this…..sorry for the convoluted message….
ted,
Will the banks be bailed out again this time?
The major ones, yes, they’re in charge of the whole circus, not the Fed or the government. And they’ll gobble up a bunch of smaller banks in the process, certainly European ones, now the EU is about to start their next stress test. The centralization into ever bigger banks will simply continue until some country decides to have a Glass-Steagall-‘R-Us.
If the equity markets cease to be productive for banks will they start to lend out the money they have.
Lend it out to whom? Everyone will see lots of “assets” go poof in the night, what collateral will be left to secure loans with?
I can’t understand the language of the FED they say they will keep interest rates at zero but how can they do this?
The Fed’s control over interest rates is hot air entirely dependent on faith. Markets will let the illusion stand as long as the Fed feeds them for free, and as long as all parties confidently believe it will keep on doing it going forward. When it threatens to stop, real asset values must and will come into focus once more, and the markets will set interest rates.
“How did we ever get here?”
Moral Hazard?
” as long as the Fed feeds them for free”…
…there will be no deflation.
“American crude now sells at a discount because of a massive surge in production in Texas and North Dakota.”
Ah! So oil becomes non-fungible? Now, if gold production in the US exceeds domestic demand, and an export ban is put in place, will it’s price be lower at the exchanges here than in international markets? Could the dollar become non-fungible as well, through a ban on it’s export?
Trade wars, and resultant regulatory mispricing of resources, will certainly have bad consequences. But they would be good for the defense industry because when goods stop crossing borders, bullets do. And that’s where this ends.
“The Fed’s control over interest rates is hot air entirely dependent on faith. Markets will let the illusion stand as long as the Fed feeds them for free, and as long as all parties confidently believe it will keep on doing it going forward. When it threatens to stop, real asset values must and will come into focus once more, and the markets will set interest rates.” While I agree with you on this one, when we get to this point it will be game over and all hell will break loose. At this point we have no idea what will happen, like a nuclear reaction we just don’t know how far everything will go. I don’t mean to be American centric but with everything based in U.S dollars we will be the last straw before the collapse. Nicole is right we are the best horse in the glue factory.
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