Central Banking Tsunami

[pandora's box]

Bernanke et al. haven't really saved the system; they've simply kept it afloat. And what have they accomplished? The banking industry simply remains cocooned inside the world's biggest bubble. Central banking itself is a bubble though people don't think of it that way, but those who print the money decide which industries expand – and no self-respecting central banker is going to let the central-bank distribution system (commercial banks) deflate. And so the banking business just gets bigger and bigger.

Daily Bell link

[pandora's box]

I am taking inordinate pleasure in seeing the world of the banksters unravel as I reduce my spending. It gives me a feeling of great power.

{edited to include a fancier word}

Edited January 15, 2011 by pandora's box

[The Masked Tulip]

Comment below a bullish DOW article.

A lot of investors out there say that they can get out in time. They talk about having tight stops. If everyone has tight stops, then when the market does have a correction, it will be just like May 4th flash crash but without the recovery on the same day.

http://seekingalpha.com/article/246633-why-a-market-correction-isn-t-coming?source=hp_wc&wc_num=2

[scepticus]

Bernanke et al. haven't really saved the system; they've simply kept it afloat. And what have they accomplished? The banking industry simply remains cocooned inside the world's biggest bubble. Central banking itself is a bubble though people don't think of it that way, but those who print the money decide which industries expand – and no self-respecting central banker is going to let the central-bank distribution system (commercial banks) deflate. And so the banking business just gets bigger and bigger.

incorrect.

The banking business profits derive from the gradient of the credit expansion the last 40 years.

Despite all the QE, aggregate debt/GDP levels in the west have hardly budged.

Banking profits are already down in 2011 versus previous, and have been trending down.

That is not to say banker bonuses are down, which mainly means that the people losing out here are the bank shareholders and senior creditors, and I guess, the taxpayers if they get bailed out again (and outcome which seems unlikely).

My point is, that a steep yield curve makes banking easy, and a flat yield curves makes it really difficult. The yield curve should flatten as we move forward, which should constrain bank profits to the point where its a straight choice between bonuses and dividends.

That said, I 100% agree would should be taxing the bonuses far far more heavily now, and further, we should be aiming to keep that yield curve as flat as possible to take the wind out of their sails.

[pandora's box]

incorrect.

The banking business profits derive from the gradient of the credit expansion the last 40 years.

Despite all the QE, aggregate debt/GDP levels in the west have hardly budged.

Banking profits are already down in 2011 versus previous, and have been trending down.

That is not to say banker bonuses are down, which mainly means that the people losing out here are the bank shareholders and senior creditors, and I guess, the taxpayers if they get bailed out again (and outcome which seems unlikely).

My point is, that a steep yield curve makes banking easy, and a flat yield curves makes it really difficult. The yield curve should flatten as we move forward, which should constrain bank profits to the point where its a straight choice between bonuses and dividends.

That said, I 100% agree would should be taxing the bonuses far far more heavily now, and further, we should be aiming to keep that yield curve as flat as possible to take the wind out of their sails.

This is a non-argument scepticus. The financial system is bust and you know it. To make a difference you need to start offering some solutions.