Now there's a coincidence! My post from yesterday..



..does that deserve a 'MUHAHAHAHA!?'

Yes.

Yes because it was equivalent to stating that it's either heads or tails.

Pitiful sitting-on-the-fence-before I-told-you-so-after commentary from your side.

Actually, now that I read your ridicolous comment again, it's even worse

Government bonds anyone?

Bondholders = Bagholders

If you haven't already dumped, it's starting to look very silly to hold bonds OF ANY KIND IN ANY CURRENCY.

This is 100% correct, guaranteed.

And by the way, dropping bonds = higher yields which, far from easing credit concerns at all, will make them even worse.

Treasuries Decline as Fed, Central Banks Seek to Ease Credit Concerns Treasuries fell the most in 11 years after central banks led by the Federal Reserve agreed to a coordinated effort to break a logjam in credit markets.


Canada's Bonds Fall the Most in Three Years as Central Banks Cooperate
Canadian government bonds fell by the most since 2004 as global central banks including the Bank of Canada announced plans to stem a surge in borrowing costs.

European Government Bonds Extend Losses as Fed, Central Banks Offer Funds
European bonds extended losses after the Federal Reserve said it is coordinating measures with central banks to ease a credit squeeze.

Gilts Decline as Central Banks Act Jointly to Alleviate Credit Squeeze
U.K. government notes fell after the Federal Reserve announced a plan with other central banks to bring down ``elevated'' short-term funding costs.

Right I am officially scared now.

"Why, oh why didn't I take the blue pill? After nine years, you know what I realize? Ignorance is bliss.
I don't want to remember nothing. Nothing...

... reinsert me into the Matrix, I'll get what you want."

Let's keep it in perspective everyone. We all knew (and said) that there would be moves like this because the anti-deflation playbook has been lying in the central bank vaults waiting for this moment of trial.

The question is: will it work in the longer term? That still remains to be seen. I stick to what I've always argued - they're about to meet the Law of Unintended Consequences.

Yeh - the glup in the real world does'nt tast as good as the steaks in the matrix.

I have often refered to my wife as the 'real world' as most people see it is the matrix - she thinks I'm mad.

Turn on the telly now - what we are seeing is the MAJOR issue of today in the matrix "will the police get a 2.5% pay award or 1.9%" FFS!!! Who really cares.

What is important is that the banks are collaboratively eroding all our saving and putting the tax payer in hoc because as a group they have failed in their duties - why? because they all got to greedy and now they want their bonus and they want the public to pay for it.

This market ain't free at all - its rigged - its only free when its going up. That is what happens when fiat currency is used.

Great shame - when someone out there manages to get this point across we willget hyperinflation.

What to do? Gold = no brainer; Stock?

HAL

Unhappily I think WE'RE about to meet it.

Whoa CG! no need to get start poking! I'm a goldbug/hyperinflationist too. Which is why I didn't bother answering the question which do you think they would choose? - its rhetorical.



So you think house prices are going up in the near future then? Is it not possible to have nominal inflation in one asset class and deflation in another? ..At least until hyperinflation really kicks in anyway?

You are probably right ( I need to calm down).

I am in a good position to take advantage of this - but its hard to see what the concequences will be.

I expect that this loosening will create the next bubble - will it be stocks and share or gold or something else?

HAL

More turbo fuel for the gold rocket.

The longer they try to hold it back, the louder the explosion and the higher it will go.

http://www.bloomberg.com/apps/news?pid=new...id=a8dhKVSfrNfQ
Gold Gains on Speculation Fed's Credit Plan to Spur Inflation

Dec. 12 (Bloomberg) -- Gold rose after U.S. and European central banks joined to add cash to the banking system, boosting the appeal of the precious metal as hedge against inflation

I would try and exit the paper financial system. There is two sides to every paper transaction - and one side is always paper fiat.

Pitiful, incoherent, schizophrenic spin. Shouldn't easing lending drive yields lower?

MUHAHAHAHHAHAHAHAHHAHAHHAHAHAHHAHA

http://www.bloomberg.com/apps/news?pid=206...&refer=home
Treasuries Fall Most Since 1996 as Central Banks Ease Lending

By Sandra Hernandez

Dec. 12 (Bloomberg) -- Treasuries fell the most in 11 years after central banks led by the Federal Reserve agreed to a coordinated effort to break a logjam in credit markets.

Yields on two-year notes rose more than a quarter of a percentage point on speculation that central banks will do what is necessary to ensure that banks have adequate access to capital through the end of the year, when demand is typically the greatest.

Nothing serves to emphasise the crazy world we live in more than this comment from Bear Stearns' chief currency strategist Steve Barrow:

"If the market is convinced that central banks are finally doing enough to ease the liquidity situation we are likely to see the funding currencies (the yen and the Swiss franc) fall back, and higher-risk currencies like the Aussie and Kiwi currencies, rally,"

Sheesh. "The funding currencies". Party on, dudes.

Its a common mistake by hacks reporting on Gilts/Gov Bonds.
The report should state that treasuries are no longer regarded as the safe haven as they were a month ago. Wonder where this cautious money will go now? Au methinks

Yes, a telling slip there.

What gets me is why the central banks think any of this will work. The "market" knows all it has to do is "thcweam and thcweam and thcweam" until it's sick like a spoilt child and mummy comes to the rescue everytime. "There there dear, have another 100 billion."

Spare the rod, spoil the investment banker

http://biz.yahoo.com/ap/071212/fed_credit_crunch.html




The Mummies are coming to the rescue, no need to thcweam. Everything will be fine now diddums.

Herding sheeple from one piece of paper to another. Has anyone noticed how the currency markets have been acting the last couple of months? It seems like there is a memo that goes out every day on what currency to ramp the following day. All that is happening is traders get herded from one fiat to another, and none of it is based on any fundamentals at all. Is this what happens before meltdowns take place?

doesn't the term Irrational Exuberance fit the current state of affairs ?

Yes, here's one already.

Today's move is going to be the catalyst for the next gold movement. The public are asking questions and awareness is being raised.

The central banks have made a significant move today signalling that they are about to ramp up the printing press no matter what the cost.

Definately 100% correct, guaranteed.

Headless chickens can live for quiet a while.
http://www.miketheheadlesschicken.org/story.html

I think you guys are all over reacting somewhat. Compare the liquidity injections to the sizes of the write downs at the big banks. This is in round 1. The crash has hardly begun this side of the pond. This is just an alternative to the super-SIV. It's somewhere for the banks to park the toxic shit to avoid going under short term. I'm all for the free market, but letting banks topple like dominos is the 100% guaranteed way to get a protracted depression and misery for all. It's an attempt to stabilise the banks. I hope it works, with a teeny bit of deflation thrown in to give the profligate a smack upside the head.

On the other hand, I hope it fails. I'd be happy to lose my STR fund (a few years earnings) to see this corrupt ******** system collapse.

MUHAHHAHAHAHHAHAHHHHAHHAHAHAHHAHAHHAHA

Unexpectedly large, exponentially spiralling losses. This is the mark of the derivative beast.

http://www.bloomberg.com/apps/news?pid=206...&refer=home
Bank of America, Wachovia, PNC Report New Loan Losses

By David Mildenberg and Hugh Son

Dec. 12 (Bloomberg) -- Bank of America Corp., Wachovia Corp. and PNC Financial Services Group Inc. said losses tied to bad debt will be worse than expected, providing fresh evidence that credit markets aren't returning to normal.

That's a sunbeam of common sense that deserves to be repeated.

an extraordinary amount of money does seem to be disappearing

The currently ongoing bank bailout is the 100% guaranteed way to get runaway hyperinflation and misery for all, leading to depression and even more misery for all, for longer than would have been the case had the bailout not been arranged.

This was pretty much the prevailing view in 1929, and that worked out just fine.

Would hyperinflation be worse?

Will they eventually get to the position where its a straight choice between one or the other, or is the die cast already?

A heavy dose of inflation without currency collapse seems to me to be best for them - the US and its banks escape debts but keep control.

Any inflationary situation is going to be ugly for sure.

At least in the 1970's, workers were able demand pay rises with support of the unions. Do you think that would happen now?

Extending short term funding to credit institutions to shore up their capital requirements isn't monetary hyperinflation.

In my opinion, we've had the credit hyperinflation. All that is to come now is the price inflation that goes with it, and it will follow a similar pattern (10-15% pa).

I only THINK this... I don't discount your opinions. In fact I am most grateful for them because noone else seems to talk about it much. I just don't think that it's on the cards. If it does happen, then I will know one thing for sure, there really is a global conspiracy Then I'll go and sign on the dole because working is pointless

No chance this is going to lead to massive reductions in consumption.

We are overconsuming at a rate never before seen in history.

We have the potential to massively reduce our consumption.

If prices of goods can hyperinflate as demand slumps then please enlighten me.

That depends... if you believe that "they" want us to stop using £ stirling, join the Euro and march into a New World Order, then hyperinflation.

If you think "they" are just greedy and have lost the control, stagflation for a few years. We'll just get poorer as we are competing with more people for resources.

If they really have lost control, deflation.

I'm erring between stagflation/deflation. But I'm not sure. Crazy things have happened in this world many many times.

Does anyone know what collateral the banks are willing to accept for these liquidity injections?

Pretty much any old rubbish.

A pair of old knickers? Any old toxic waste appears to be acceptable.

You assume the other parts of the world are going to take up the slack even though they derive wealth from our credit and consumption bubble.

Will our retailers be whacking in orders to Chinese factories in the new year? I doubt it.

I am not saying that Asia won't be able to take up the slack but the more I look in to it the more I see bubbles and non performing loans over there as well.

You have been living through a credit driven hyperinflated bubble that has been masked by the offshoring of everything our Grandparents used to do. ( but I coud be wrong )

Don't like the rules? Change em' simple init.

Federal Deposit Insurance Corp Chairman Sheila Bair said in prepared remarks to be delivered in London that supervisory guidance on managing liquidity risk might be needed. "Short of rewriting Basel II, we'll need to make some mid-course adjustments," Bair said in a speech to risk managers and an international swaps and derivatives group.

http://www.reuters.com/article/marketsNews...20071212?rpc=44

Very amusing, but this seems to be the crux of the matter.

The article on the BBC implies that they will accept only a slightly lower grade of collateral than the exceptionally high one that they insisted upon previously.

If they are prudent (ok I admit its hard to have faith) then by definition they wont be risking (or at least minimising the risk) that the taxpayer take a hit and therefore hyperinflation.

Arent the inflation figures due tomorrow? Lets see what they bring.

Sterling hasnt plummeted yet, although its a fair chunk down from the 1.47 I enjoyed earler this year.

Fact is, if this so-called collateral is not saleable on the open market, it may just as well be a pair of old knickers. There could be a few fetisists left who might be interested in buying the stuff, but apart from that the stuff is unsaleable, so any move by the B o E to accept it as collateral, in the face of market rejection, is just back-door nationalisation at the taxpayers' expense.

I understand this, but I can see other implications:

* By accepting mortgage debt as collateral at the central bank, the government's arm is twisted to make it harder for the debts to be written off.
* There must have been enough money available to be loaned in the markets prior to the credit crunch - so there must be other bonds out there for which there is less utility... which, I guess, means that bond yields will be driven up - making future borrowing more expensive.
* The acceptable assets against which central bank borrowing is acceptable can still be managed (in principle) by regulation - if the ratings on bonds are downgraded, they can't be used.

Are any of these plain wrong?

I think that you're thinking what the B o E is hoping for. Personally, I think that this type of thinking is not only optimistic, it is stark raving off with the fairies! Money loaned via the fractionl reserve banking system
is as ephemeral as any fairy, and can disappear in a pouff just as quickly as it was waved into existence by the magic wand of fractional reserve banking. Through clever marketing, I can drive up the value of my 1970 Ford Capri until eventually some eejit will give me 10 grand for it (even though it only cost £100 new, or whatever). But sooner or later some clever little lad is going to spot that the emperor has no clothes and will rightly suggest that 10K is a lot to pay for a rusting heap of steel that wasn't a particularly good buy when it was first made. It's all about sentiment......You can fool all of the people some of the time, and some of the people all of the time, but you can't fool all of the people all of the time. There's been a lot of kiddology going in in the financial world, as far as I can tell, but don't take too much notice of me, I'm just an interested bystander.

http://www.telegraph.co.uk/money/main.jhtm...cnconway312.xml
Central banks release $100bn into money markets to ease credit crisis

The world's central banks have joined forces for the first time since the September 11 terrorist attacks in bid to ease the financial crisis that has gripped markets.

The Dow has just lost all faith in it ... -3 pts ... HA HA

DOW just turned negative. Market says no.

Dive, Dive, Dive....ey, ey, Captain.

DOW down 100 points and falling like a stone. Market really says no.

Maybe... and, by the way, I don't claim my ideas are anything other than "off with the faries"... However... The effects I listed, I think will be felt.

We need to ask if the implication of these central bank "liquidity injections" will be to raise the fractional reserve of tier-1 banks, or if it will make the tier-1 banks less risk adverse. I can't imagine AAA ratings will be anywhere near as easy to acquire in future - hence leaving mortgage originators constrained.

I agree that this kind of tactic shrieks danger - but, I remain to be convinced that inflation (in a retail/stock-market/real-estate sense) is inevitable from events so far.

I would be worried if the liquidity exceeded anticipated write-downs. I suspect that banks are only admitting their sub-prime losses when they've managed to secure alternative funding... so, I'd expect to see the liquidity injections trigger a whole load of new write-downs rather than cheap credit.