Wednesday, August 19, 2009

When Monetizing 12% Percent Of GDP Isn´t Enough.......

Not quite an "Exit Strategy"....... This Cartoon on "Green Shoots" is spot on..... :-) As long as the pound & gilts are not crashing this will continue.....I´m pretty sure Bernanke is watching the market reaction very closely UPDATE: Fed’s Kohn on Lessons From Buying Government Bonds… in Britain .... Especially with the Fed running low on ammo..... Read A 300-year-old example of quantitative easing.... John Law, Alan Greenspan, Ben Bernanke... via The Mess That Greenspan Made as a reminder what can happen.......

Das ist wohl das Gegenteil der dank der tagtäglichen "Green Shoots Visionen" diskutierten Exitstrategie der Notenbanken......Die Lage muß wirklich KLASSE sein......Dieser Cartoon trifft den Nagel auf den Kopf...... Aber solange das Pfund & Gilts nicht crashen wird dieses in der Vergangenheit mehrmals massiv fehlgeschlagenes "Experiment" ( siehe A 300-year-old example of quantitative easing...... John Law, Alan Greenspan, Ben Bernanke... ) weitergehen...... Bernanke dürfte die Marktreaktion sehr genau verfolgen UPDATE: Fed’s Kohn on Lessons From Buying Government Bonds… in Britain ..... Das gilt umso mehr als die Programme der Fed auf "Reserve" ( siehe Running low on ammo via R.Winkler ) laufen......

The governor’s insatiable appetite for QE FT Alphaville
The Governor invited the Committee to vote on the proposition that:

Bank Rate should be maintained at 0.5%;

The Bank of England should finance a further £50 billion of asset purchases by the creation of central bank reserves, implying a total quantity of £175 billion of such asset purchases. The Bank should seek to complete the additional purchases within the next three months.

Six members of the Committee (Charles Bean, Paul Tucker, Kate Barker, Spencer Dale, Paul Fisher and Andrew Sentance) voted in favour of the proposition. Three members of the Committee (the Governor, Tim Besley and David Miles) voted against, preferring to increase the size of the asset purchase programme by £75 billion to a total of £200 billion.

Yep, Mervyn King, together with Besley and Miles wanted the rate of monetary stimulus increasing, not just extending at the current rate of £50bn-a-quarter. That was good for half a cent off sterling versus the dollar and a third of a cent v the euro on Wednesday morning. Gilts, of course, spiked higher.

Somebody stop me Alice Cook from the great blog UK Bubble

The extraordinary thing about UK monetary policy today is how close it is shadowing fiscal policy. This year, the Bank of England printing presses will produce roughly the same amount of new money as this year's fiscal deficit. Or to put it more bluntly, the private sector have, on a net basis, stopped lending money to the government.


The Casey Report

> The estimated issuance is based on this "optimitic" forecast.... Especially compared to the IMF, OECD, Bloomberg etc..... No surprise to see the BOE also out of touch....... Good to know that at least this leads to a "review" of the AAA rating.... Hallelujah! :-) After watching this & this chart it should be clear to anybody not working at an rating agency that an AAA is more or less history.....

> Die o.g. Emission der Gilts basierd auf der unten aufgeführten "wenig konservativen" BSP Prognose...... Vergleicht diese mal mit denen von IMF, OECD, Bloomberg..... Überflüssig zu erwähnen das die BOE ebenfalls jenseits aller Realität prognostiziert..... Immerhin wird "gedroht" das AAA Rating einer ernsthaften Prüfung zu unterziehen..... Was wären wir nur ohne die Ratingagenturen....... Spätestens nachdem man sich diesen & diesen Chart vor Augen führt dürfte jedem der nicht gerade für eine Ratingagentur arbeitet klar sein das ein AAA wohl auf Jahre hinaus nicht mehr als ein feuchter Traum von Brown & Co sein wird.....

FT Alphaville

The Chancellor has forecast that the economy will contract by 3.5% in 2009, followed by GDP growth of 1.25% in 2010 and 3.5% in 2011. He sees long-term trend growth at 2.75%

UK GDP forecasts - RBC (amended)

> While i´m still in the deflation camp for some time to come but i´m pretty sure down the road the central banks will once more cause massive inflation ( read Inflation: What the heck is it? from Mish). If you want to know the details why i think this will happen i would like to refer to the podcast with Chris Martenson. Couldn´t have said it better.....H/T Pension Pulse.... One of many reason why i´m a "Goldbug" ( regardless of the timing - H/T Zero Hedge). The best "insurance"( relatively speaking ) you can buy to protect yourself from the "wisdom" of King, Bernanke & Co.. :-)

> Obwohl ich die nächsten Jahre noch dem Deflationscamp zuzuordnen bin steht zu befürchten das die Notenbänker Ihr Ziel einer stark "erhöhten" Inflation nicht verfehlen wird. Wichtig zu wissen das ich mit der Definition von Mish ( siehe Inflation: What the heck is it?.) übereinstimme die mit den Veränderungen der Konsumentenpreisen nur sehr indirekt etwas zu tun haben. Für alle die die Logik hinter dieser Einschätzung erfahren möchten die verweise ich gerne auf den erstklassigen Podcast mit Chris Martenson. Kann es beser nicht formulieren..... Dank an Pension Pulse..... Einer von vielen Gründen warum ich ein Freund des Goldes bin ( und das unabhängig vom timing / Dank an Zero Hedge ) Auf Dauer gesehen die zumindest relativ beste Absicherung gegen die "Weisheit" von Bernanke, King & Co .....

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7 Comments:

Blogger jmf said...

With close to 300 percent yoy credit exlosion no wonder.....

Chinese Pig Farmers Speculating On Metals
Zero Hedge

Copper, nickel and other base metals stockpiled by speculative Chinese investors including pig farmers may be sold when “market sentiment turns,” said Scotia Capital Inc.

Pig farmers in Guangzhou province were buying copper or nickel, Liu wrote, citing CCTV. Residents in Wenzhou city of Zhejiang province, “famously investment savvy,” are reportedly using bank loans to stockpile copper scrap, with one merchant saying he has stored 20,000 tons, Liu wrote.

Metal traders have reported incidents when “a rich man walked into our office and asked us what had been the lowest and highest prices of nickel,” Scotia’s Liu wrote. “After telling him those prices, he said the current price was low and he placed an order.”

6:28 AM  
Blogger jmf said...

"Somewhat" related.... ;-)


Zimbabwe’s Hyperinflation: #2 in world history
R. Winkler / Reuters

8:58 AM  
Blogger jmf said...

CPI


Deflation or Inflation?
Ritholztz

The one question I seem to get more than any is on (Hyper) Inflation versus Deflation. As previously noted, we clearly are in a Deflationary party of the cycle now.

While inflation may occur ion the future, and the possibility exists for Hyper-Inflation, these are merely potential issues down the road.

As these two charts show, we now have Deflation, are likely to see it continue for some time into the future:

8:35 PM  
Blogger jmf said...


A bit of a floppy gilt auction
FT Alphaville

Last but not least the just published PSNB/PSNCR data are to say the very least GROTESQUE: PSNB GBP 8.0 Bln deficit vs. a 5.22 Bln surplus in July 2008, and the PSNCR posting an GBP 182 Mln deficit against a GBP 14.54 Bln surplus in July 2008.

Methinks the call is “Gentlemen of the rating agencies, time to load your downgrade guns!!”

5:56 AM  
Blogger francois-guillaume said...

why are you the only guy commenting your blog ???

isnt there anyone reading it ????

6:21 AM  
Blogger jmf said...

Moin,

i´m too lazy to put up a daily link posting...

Historically there has never been huge "action" in the comment section....

On top of this i had to shut down the section several times due to spam problems....

6:48 AM  
Blogger jmf said...


UK Debt Statistics

7:26 AM  

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