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A.steve

Fed officials fret over yield curve, warn on pace of hikes

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https://uk.reuters.com/article/uk-usa-fed/fed-officials-fret-over-yield-curve-warn-on-pace-of-hikes-idUKKBN1DW02M

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"It is unlikely that long-term rates will move higher on their own to keep pace with the Fed’s moves on short-term rates, he said, which he felt should make the Fed slow down. The Fed has little influence over longer-term rates." -- St. Louis Federal Reserve President James Bullard

That's a funny claim, that one is.  I find it difficult to believe that the Fed has little influence - when it increased QE, it had a MASSIVE influence.  It's as if he's complaining that there is no market influence... as if everything is made up by the central bank - yet the central bank can't just make up something sensible.

Since 2008, we've had "extra-ordinary" monetary policy... why should anyone assume that the old rules-of-thumb about an inverted yield curve make any sense after a decade of near-zero interest rate policy.

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There are a lot of savers out there who need to start seeing returns I reckon. Houses rising in price is one thing but incomes that retired people can live on are another. Maybe a lot are rattling round in their really expensive houses but actually don't have a bean.

Despite the boomertastic high house prices they are sitting on, there must be a lot of pension-age people whose pensions need to start earning a return they can live on or else the demographic timebomb will be more of a burden on governments. Maybe the rising interest rates from the Fed are trying to address that nightmare as a new priority.

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3 hours ago, A.steve said:

https://uk.reuters.com/article/uk-usa-fed/fed-officials-fret-over-yield-curve-warn-on-pace-of-hikes-idUKKBN1DW02M

That's a funny claim, that one is.  I find it difficult to believe that the Fed has little influence - when it increased QE, it had a MASSIVE influence.  It's as if he's complaining that there is no market influence... as if everything is made up by the central bank - yet the central bank can't just make up something sensible.

Since 2008, we've had "extra-ordinary" monetary policy... why should anyone assume that the old rules-of-thumb about an inverted yield curve make any sense after a decade of near-zero interest rate policy.

The significance or otherwise of QE is a very interesting question and one I don't pretend to have the answer to. My own sense is that it's been a case of diminishing returns. Very effective in the early days in providing the liquidity necessary to unwind a lot of derivatives positions non-destructively, much less so as the banking system has become progressively saturated. It's also essentially impossible to distinguish the impact of Western QE from the impact of China, I think. Chinese banks/shadow banks are responsible for introducing at least $20 trillion of credit into global money markets since 2007.

Jeffrey Snider examines the changes wrought by Draghi's $2 tn QE on the performance of the EU economy (below), and is astonished to find there really haven't been any!

Quote

The net of all these hundreds of billions and trillions is actually unclear. I don’t mean that in an accounting sense, for all the euros are there in the various statements. Rather, what these massive transactions have produced where it counts is truly negligible.

Economists, central bankers, and the mainstream media will all protest that characterization, of course, but they do so with a clear absence of what was supposed to happen (and when). That starts with the very fact that there is any debate at all, given that €2 trillion of so-called money printing doesn’t show up anywhere it should have.

None of these results bear any resemblance whatsoever to any ECB action going all the way back to the original monetary problem in August 2007. It doesn’t matter what type or quantity of transactions the central bank undertakes, the results change only those numbers quoted at the outset. From inflation to lending, there is simply no trace of European monetary policy.

http://wallstreetexaminer.com/2017/11/just-absence-acceleration-synchronization-none/

 

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5 hours ago, zugzwang said:

The significance or otherwise of QE is a very interesting question and one I don't pretend to have the answer to. My own sense is that it's been a case of diminishing returns. Very effective in the early days in providing the liquidity necessary to unwind a lot of derivatives positions non-destructively, much less so as the banking system has become progressively saturated. It's also essentially impossible to distinguish the impact of Western QE from the impact of China, I think. Chinese banks/shadow banks are responsible for introducing at least $20 trillion of credit into global money markets since 2007.

Jeffrey Snider examines the changes wrought by Draghi's $2 tn QE on the performance of the EU economy (below), and is astonished to find there really haven't been any!

 

Money printing....never ends well..

Qe=Money print=theft.

 

Hope for the best....the best ain't happening...prepare for armegedon.

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On 02/12/2017 at 1:42 PM, A.steve said:

https://uk.reuters.com/article/uk-usa-fed/fed-officials-fret-over-yield-curve-warn-on-pace-of-hikes-idUKKBN1DW02M

That's a funny claim, that one is.  I find it difficult to believe that the Fed has little influence - when it increased QE, it had a MASSIVE influence.  It's as if he's complaining that there is no market influence... as if everything is made up by the central bank - yet the central bank can't just make up something sensible.

Since 2008, we've had "extra-ordinary" monetary policy... why should anyone assume that the old rules-of-thumb about an inverted yield curve make any sense after a decade of near-zero interest rate policy.

I never agreed with LTRO and then QE less so, watching what they do this month with great interest

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On 12/2/2017 at 1:42 PM, A.steve said:

https://uk.reuters.com/article/uk-usa-fed/fed-officials-fret-over-yield-curve-warn-on-pace-of-hikes-idUKKBN1DW02M

That's a funny claim, that one is.  I find it difficult to believe that the Fed has little influence - when it increased QE, it had a MASSIVE influence.  It's as if he's complaining that there is no market influence... as if everything is made up by the central bank - yet the central bank can't just make up something sensible.

Since 2008, we've had "extra-ordinary" monetary policy... why should anyone assume that the old rules-of-thumb about an inverted yield curve make any sense after a decade of near-zero interest rate policy.

what they really mean is:

we've jacked everybody p on financial heroin for the last decade,and the supply is running out. we can either do a gentle weaning-off(hard enough afetr 8 years on a bender),or go cold turkey and end up like the bloke from trainspotting locked in his mums bedroom until the effects wear off.

 

THIS is what the economy will be like.we didn't start this b0llocks!, we did warn you, but N00000!

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=video&cd=1&cad=rja&uact=8&ved=0ahUKEwiu5sfm1O7XAhUEKMAKHbBsCB0QtwIIKTAA&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DFgPgumQYxUs&usg=AOvVaw3JDIJc4WTm9dbiy9Y8gUrm

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On 02/12/2017 at 4:38 PM, Thorn said:

There are a lot of savers out there who need to start seeing returns I reckon. Houses rising in price is one thing but incomes that retired people can live on are another. Maybe a lot are rattling round in their really expensive houses but actually don't have a bean.

Despite the boomertastic high house prices they are sitting on, there must be a lot of pension-age people whose pensions need to start earning a return they can live on or else the demographic timebomb will be more of a burden on governments. Maybe the rising interest rates from the Fed are trying to address that nightmare as a new priority.

4

I can confirm that this is indeed the case.

I find it admirable that someone who has had a bog standard job, not spent anything on their house and by all means is skint looks at you straight in the eye and tells you that they will not give away their poorly maintained hovel for less than 450,000£.

I even visited a house where the sprightly old bugger had ruined one side of the house to fashion a holiday let/bedsit.   Such savvy naturally in his opinion added 50k value to the place you would have a source of unpredictable holiday income.

Problem is the house was 600k+ so you have to be that rare person who earns over a hundred K a year and also wants to be at the beck and call of strangers in your family home.

If the house was 150k then that may have made sense.

The prime minister knows this that's why they cannot take action the house is the pension, the ISA the career all rolled into one. 

Edited by Fromage Frais

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4 minutes ago, Fromage Frais said:

I can confirm that this is indeed the case.

I find it admirable that someone who has had a bog standard job, not spent anything on their house and by all means is skint looks at you straight in the eye and tells you that they will not give away their poorly maintained hovel for less than 450,000£.

I even visited a house where the sprightly old bugger had ruined one side of the house to fashion a holiday let/bedsit.   Such savvy naturally in his opinion added 50k value to the place you would have a source of unpredictable holiday income.

Problem is the house was 600k+ so you have to be that rare person who earns over a hundred K a year and also wants to be at the beck and call of strangers in your family home.

If the house was 150k then that may have made sense.

I viewed no end of houses that look great on the outside, then  you go in and you can tell the public sector owners have spent nothing on upkeep/decoration either by lack of funds or know how.

 

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I think the gameplan is to expand equity withdrawal schemes for older homeowners as they reach economic inactivity and would have become reliant on the traditional retirement savings or pension annuities. Crucially, since governments and central banks have all but destroyed the traditional model of income and savings over a lifetime with manipulation of bond values (taken the "capital" out of "capitalism"), this route no longer holds as it had for millenia. The "dementia" tax was the first think-tank salvo to get the idea into public consciousness but you can see a whole raft of neurolinguistics chipping away at this future social policy (ever wondered why all these government adverts "what is your future pension worth?" have been running across the media for the past year?). The UK banking system is still insolvent. It is only the fanatsy QE valuations of the UK property market that keeps the banking system balance sheets "viable". If property valuations fall significantly inline with incomes and industry finance, the political voter bribe unravels, together with a whole raft of the UK banking system.

As long as retirees think they are sitting on 500% wealth returns on their home, no political party will want to tackle that at the ballot box, until forced. That is until QE, term funding, tax-payer props into the property market, etc., can no longer be sustained due to  a currency run or internal social chaos (like the croydon/tottenham style riots that are coming again soon...). So, if you can slowly unwind these leveraged and subprime valuations over a generation or two, the situation can be avoided. Just takes conditioning of the population that retirees must borrow against their homes to fund retirement and healthcare and that everyone else face a slow, grinding diminution of living standards with no home ownership and minimal pension and healthcare provision.

If the economic or social collapse is held off, they could pull it off. Just needs lots of propaganda. Like the one you hear "oh yes, in Europe they all rent and love it". Even though, according to eurostat and OECD figures, the UK has now the fourth lowest home ownership rates in Europe and is way down into the 40's for worldwide homeownership. With the smallest homes and least secure rental tenancies in Europe. And even considering German home ownership (the one that is always highlighted) is only around 2% lower than the UK but, more importantly, rises to around 85% when people reach retirement. In general, German folk buy property late in life for cash and during the working life, they have secure tenancies and much lower rents (or mortgage repayments). Those are the stats but ask any guy down the pub and they will trot out "yeah but your Germans all rent blah blah blah.....

The yield curve and regional crime stats are the two barometers I follow closely at the moment. It's only the bond markets or social unrest that will divert the multi-party policy to maintain banking system balance sheets via property inflation.

 

 

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7 hours ago, frankvw said:

I think the gameplan is to expand equity withdrawal schemes for older homeowners as they reach economic inactivity and would have become reliant on the traditional retirement savings or pension annuities. Crucially, since governments and central banks have all but destroyed the traditional model of income and savings over a lifetime with manipulation of bond values (taken the "capital" out of "capitalism"), this route no longer holds as it had for millenia. The "dementia" tax was the first think-tank salvo to get the idea into public consciousness but you can see a whole raft of neurolinguistics chipping away at this future social policy (ever wondered why all these government adverts "what is your future pension worth?" have been running across the media for the past year?). The UK banking system is still insolvent. It is only the fanatsy QE valuations of the UK property market that keeps the banking system balance sheets "viable". If property valuations fall significantly inline with incomes and industry finance, the political voter bribe unravels, together with a whole raft of the UK banking system.

As long as retirees think they are sitting on 500% wealth returns on their home, no political party will want to tackle that at the ballot box, until forced. That is until QE, term funding, tax-payer props into the property market, etc., can no longer be sustained due to  a currency run or internal social chaos (like the croydon/tottenham style riots that are coming again soon...). So, if you can slowly unwind these leveraged and subprime valuations over a generation or two, the situation can be avoided. Just takes conditioning of the population that retirees must borrow against their homes to fund retirement and healthcare and that everyone else face a slow, grinding diminution of living standards with no home ownership and minimal pension and healthcare provision.

If the economic or social collapse is held off, they could pull it off. Just needs lots of propaganda. Like the one you hear "oh yes, in Europe they all rent and love it". Even though, according to eurostat and OECD figures, the UK has now the fourth lowest home ownership rates in Europe and is way down into the 40's for worldwide homeownership. With the smallest homes and least secure rental tenancies in Europe. And even considering German home ownership (the one that is always highlighted) is only around 2% lower than the UK but, more importantly, rises to around 85% when people reach retirement. In general, German folk buy property late in life for cash and during the working life, they have secure tenancies and much lower rents (or mortgage repayments). Those are the stats but ask any guy down the pub and they will trot out "yeah but your Germans all rent blah blah blah.....

The yield curve and regional crime stats are the two barometers I follow closely at the moment. It's only the bond markets or social unrest that will divert the multi-party policy to maintain banking system balance sheets via property inflation.

 

 

Interesting angle for sure. Like there's control.

Despite the efforts of all concerned, I don't think there's anybody really in charge though and so I don't believe this time it's different.

Not sure what the next Black Swan will be, but I'm pretty sure it will be a Black Swan because they always are.

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  • 407 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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