Imf Raises Concerns Over Qe 'cold Turkey

[interestrateripoff]

http://www.telegraph.co.uk/finance/financialcrisis/9986853/IMF-raises-concerns-over-QE-cold-turkey.html

The IMF said accommodative measures adopted by the Bank of England and other central banks, such as low interest rates and quantitative easing, had helped to stabilise the financial system.

However, it warned that the longer these policies – dubbed "MP-plus" – were in place, the greater the risk that negative effects could spill over to other parts of the economy.

"Financial stability risks may be shifting to other parts of the financial system, such as shadow banks, pension funds, and insurance companies," the IMF said in a chapter of its Global Financial Stability Report.

"Despite their positive short-term effects for banks, these central bank policies are associated with financial risks that are likely to increase the longer the policies are maintained."

http://www.imf.org/external/pubs/ft/survey/so/2013/POL041113A.htm

Several years of exceptionally low interest rates and bond buying by some advanced economy central banks have improved some indicators of banks’ health while supporting the economy and financial stability, according to new research from the International Monetary Fund.

In its latest Global Financial Stability Report, the IMF analyzes the effects of central bank policies on banks and financial stability since the global crisis. Central banks have taken bold policy actions that have reduced banking sector vulnerabilities and stabilized some markets, such as the interbank and mortgage securities markets. But the policies may have undesirable side-effects that could put financial stability at risk the longer they are in place.

The IMF said so far these risks are not showing up much in banks, but could be shifting to other parts of the financial sector, such as to so-called “shadow banks.” There is also some concern that the prolonged period of low interest rates is encouraging banks to roll over nonperforming loans rather than repairing their balance sheets.

“So far, so good, but if the time that central banks have provided through their unconventional policies is not used productively by financial institutions and their regulators, at some point we can expect another round of financial distress,” said Laura Kodres, chief of global stability analysis in the IMF’s Monetary and Capital Markets Department and the head of the team that produced the analysis.

Potential risks

Despite the positive short-run effects for banks, there are financial risks associated with these central bank policies, which are likely to increase the longer they are maintained, according to the IMF.

The analysis found some aspects of this unprecedented monetary policy may be delaying balance sheet repair in banks and could raise credit risk over the medium term. This would explain the increase in market perceptions of bank default risk in response to central bank policy announcements, the IMF said.

The money has been used to generate a quick profit, what else did they think was going to happen?

[papag]

http://www.telegraph.co.uk/finance/financialcrisis/9986853/IMF-raises-concerns-over-QE-cold-turkey.html

http://www.imf.org/external/pubs/ft/survey/so/2013/POL041113A.htm

The money has been used to generate a quick profit, what else did they think was going to happen?

And how much tax free is Lagarde and her cronies paid to come up with the bleeding obvious :angry:

Edited April 11, 2013 by papag

[zugzwang]

Cold turkey? Benny running QE-infinity. The BoJ doubling its monetary base over two years. Carney with the freedom to print forever and pretend there's no inflation.

Surely it's an overdose we're in danger of succumbing to, not withdrawal.

[inflating]

Cold turkey? Benny running QE-infinity. The BoJ doubling its monetary base over two years. Carney with the freedom to print forever and pretend there's no inflation.

Surely it's an overdose we're in danger of succumbing to, not withdrawal.

Yes, sadly that would seem more likely.

[interestrateripoff]

Cold turkey? Benny running QE-infinity. The BoJ doubling its monetary base over two years. Carney with the freedom to print forever and pretend there's no inflation.

Surely it's an overdose we're in danger of succumbing to, not withdrawal.

They believe they have control and can print to infinity and it not cause a major problem..... A dangerous belief.

[OnlyMe]

Is this as far as their pathetic analysis goes?

They think they have printed their way out of trouble, not one iota of percetption of malinvestment, market rigging, price rigging effects on the rest of the economy. Bunch of firemen chasing fires which they themsleves help light in the first place.

[plummet expert]

They believe they have control and can print to infinity and it not cause a major problem..... A dangerous belief.

They are all dangerous, cannot know their economic history and will...in fact already are, causing serious distortions in the economy. I have pointed it out many times on here. Osborne & Carney will not escape the truth about monetary inflation and low rates. History will Judge them very badly for this. Mark my words.

The implosion of the bond market in western economies is on the way. The signs are now in place.

[long time lurking]

Have they actually stopped QE ? and not just renamed it for a while and it`s now masquerading as Funding for lending?

It just seems a bit to much of a coincidence that QE stopped just before FLS started

[zugzwang]

They are all dangerous, cannot know their economic history and will...in fact already are, causing serious distortions in the economy. I have pointed it out many times on here. Osborne & Carney will not escape the truth about monetary inflation and low rates. History will Judge them very badly for this. Mark my words.

The implosion of the bond market in western economies is on the way. The signs are now in place.

The models they use bear no relation to the reality they're meant to describe. Garbage in, garbage out. Central bankers micro-managing the world's economies, what does this have to do with capitalism? It's as if we've slipped through a door into an alternate universe in which the Soviet Union won the Cold War.

[scepticus]

They believe they have control and can print to infinity and it not cause a major problem..... A dangerous belief.

We've been printing money since we all started issuing insured government debt. LIke, two centuries at least.

Not to say it won't come to a head, merely that it is hardly a new phenomenon.

[wonderpup]

“So far, so good, but if the time that central banks have provided through their unconventional policies is not used productively by financial institutions and their regulators, at some point we can expect another round of financial distress,”

It's comical that these people somehow expect the Banksters to behave responsibly all of a sudden- why do they think that?

It's like they were mauled by an out of control dog and somehow expect that throwing it raw meat will cure the problem.

So my advice would be to stop feeding the beast and put it to sleep- until they pull the banker's fangs they will never stop.

[doomed]

I love the fact that they think printing money and increasing debt to the already over leaveraged has stabilised the system

[The Spaniard]

It's comical that these people somehow expect the Banksters to behave responsibly all of a sudden- why do they think that?

It's like they were mauled by an out of control dog and somehow expect that throwing it raw meat will cure the problem.

So my advice would be to stop feeding the beast and put it to sleep- until they pull the banker's fangs they will never stop.

Maybe the beast is running the whole show.

When it feels hungry it just takes chunks of fresh meat out of its stock of compliant debt slaves.

[Sour Mash]

We've been printing money since we all started issuing insured government debt. LIke, two centuries at least.

Not to say it won't come to a head, merely that it is hardly a new phenomenon.

Issuing debt and printing money are NOT the same thing (unless you are buying your own debt .. which the government is now doing through the BoE via third parties).