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Sweden Central Joins The NIRP Club: Lowers Interest Rate To -0.1%, Launches QE
Sweden Central Joins The NIRP Club: Lowers Interest Rate To -0.1%, Launches QE
It’s a NIRP world and you are either in it, or are determined to lose the currency wars. And hours ago, the world’s oldest central bank, that of Sweden, announced that it too would join its NIRP peers in an attempt to preserve its currency’s fighting power in the global currency wars which make a mockery of what is going on in Ukraine, by lowering the benchmark interest rate to -0.1%, but also launch QE by buying SEK 10 billion of government bonds, thereby making sure that the stock of available debt in private hands is even lower and that central banks monetize even more than merely “all” of all net issuance in 2015.
From the press release:
Economic activity in Sweden strengthening but inflation is too low
…click on the above link to read the rest of the article…
ECB Pulls The Trigger: Blocks Funding To Greece Via Debt Collateral – Full Statement
ECB Pulls The Trigger: Blocks Funding To Greece Via Debt Collateral – Full Statement
Just what the market had hoped would not happen…
- *ECB SAYS IT LIFTS WAIVER ON GREEK GOVERNMENT DEBT AS COLLATERAL
- *ECB SAYS IT CAN’T ASSUME SUCCESSFUL CONCLUSION OF GREECE REVIEW
What this means simply is that since Greek banks are now unable to pledge Greek bonds as collateral and fund themselves, and liquidity is about to evaporate, the ECB has effectively just given a green light for Greek bank runs, as suddenly it has removed, both mathematically but worse politically, a key support pillar from underneath the already bailed out Greek banking system, (or merely a negotiating move to let Greece see just what kind of chaos this will create ahead of the big D-Day on Feb 25th when ELA could be withdrawn).
And now finally, after many years of investing in ECB repo collateral, pardon Greek debt, Greek banks finally will ask what the “fundamental” value of all that Greek government debt they bought really is. Judging by the Greek ETF’s reaction, the answer is lower.
The only question now is whether the Greek Central Bank, which the ECB said is now sufficient to meet bank liquidity needs (via the ELA which the ECB has not yanked… yet: it has given Greece until February 28 before this final prop is yanked and Greece is left to drown), is allowed to print Euros. If not, the Greek experiment at trying to stick it to Europe is about to crash and burn spectacularly.
…click on the above link to read the rest of the article…
Is Canada Headed For Another Recession? Eight Troubling Signs
Is Canada Headed For Another Recession? Eight Troubling Signs
A string of dire economic news since the beginning of 2015 has many observers worried about whether Canada could be on the brink of another downturn, but economists say it’s too soon to mention the “R-word.”
One month in, layoffs seem to be the dominant theme — the second-largest in Canadian history at Target and many more in the battered oil sector.
The Bank of Canada shocked Canadians with a surprise interest rate cut and the loonie has fallen to levels not seen since the Great Recession of 2008-2009.
The news pouring in about the end of last year has been a bit worrisome. The economy shrank in November — and that was before oil prices reached their current lows, something the central bank has determined is decidedly bad for the Canadian economy. Job creation estimates were also revised last month, and job growth for 2014 was slashed by a third, suggesting further underlying weakness in the labour market.
Canada’s situation doesn’t appear on the path to improving any time soon, with oil prices expected to remain low for the remainder of the year. In its rate decision, the Bank of Canada said the cut was insurance — but insurance against what?
…click on the above link to read the rest of the article…
Australian dollar skids to six-year low after RBA shock
Australian dollar skids to six-year low after RBA shock
(Reuters) – The Australian and New Zealand dollars weakened further in early trade in Europe on Tuesday after a sell-off following the Reserve Bank of Australia’s surprise decision to cut interest rates.
The outlook for both Antipodean currencies has worsened in recent weeks with concerns about growth generating expectations of generally looser monetary policy, but the RBA’s decision still came as a shock to many.
Another burst lower as Europe came on line brought the Aussie’s losses on the day to more than 2 percent. It hit an almost 6-year low of $0.7635 while the kiwi fell 1.5 percent to $0.7185, its lowest since early 2011.
“Its a big move and I think any bounce should be sold into,” said Graham Davidson, a spot trader with National Australia Bank in London.
“Generally when the RBA move, they tend to cut a handful of times. The feeling is of aneconomy where there is no source of growth, almost of despair.”
…click on the above link to read the rest of the article…
Canada GDP shrinks, stirring talk of another rate cut
Canada GDP shrinks, stirring talk of another rate cut
OTTAWA (Reuters) – Canada’s economy unexpectedly shrank by 0.2 percent in November, prompting market talk that the Bank of Canada will cut interest rates in March for the second time in six weeks.
Analysts had expected no growth from October. The month-on-month decline was the largest since a 0.4 percent drop in December 2013.
Gross domestic product shrank on weaker manufacturing, mining and oil and gas extraction, Statistics Canada said on Friday.
Last week the central bank shocked markets by lowering its key interest rate to counter plunging oil prices that have cut economic growth in this oil-exporting country and the value of the Canadian dollar.
“The data in hand do support the Bank of Canada’s very bearish interpretation of the impact of lower oil on the Canadian economy,” said Bill Adams, economist at PNC Financial Services Group.
“If economic data remain this weak in early 2015, it could justify another rate cut from the Bank of Canada at either the March or April rate decisions,” Adams said.
The central bank is due to make an interest rate announcement on March 4 and market operators have priced in a 76 percent chance of another cut then.
…click on the above link to read the rest of the article…
Australian dollar plunges as rate cut bets rise, commodity prices sink
Australian dollar plunges as rate cut bets rise, commodity prices sink
The Australian dollar plunged again overnight, as falling commodity prices dragged it to a fresh five-and-a-half-year low.
The local currency fell as low as 77.17 US cents, as a combination of strong US data boosting the greenback and falling commodity prices hurting resources exporters, before bouncing back to 77.85 by 10:30am (AEDT).
The Aussie dollar has now lost the best part of 3 cents against the greenback over the past couple of days, after having rallied on Wednesday afternoon due to higher-than-expected Australian inflation figures.
While US dollar strength has played its part, the Commonwealth Bank’s chief currency and rate strategist Richard Grace told ABC News Online that price slides for copper and other metals weighed more.
“All the commodity currencies fell last night – that is the New Zealand dollar, Canadian dollar, Australian dollar – so they fell much more than the European currencies.”
The other major factor behind the Aussie dollar’s rapid decline has been an article from Herald Sun economics columnist Terry McCrann saying that a Reserve Bank rate cut next week is all but certain.
…click on the above link to read the rest of the article…
Freedom, Where Are You? Not in America or Europe
Freedom, Where Are You? Not in America or Europe
When the former Goldman Sachs executive who runs the European Central Bank (ECB) announced that he was going to print 720 billion euros annually with which to purchase bad debts from the politically connected big banks, the euro sank and the stock market and Swiss france shot up. As in the US, quantitative easing (QE) serves to enrich the already rich. It has no other purpose.
The well-heeled financial institutions that bought up the troubled sovereign debt of Greece, Italy, Portugal, and Spain at low prices will now sell the bonds to the ECB for high prices. And despite depression level unemployment in most of Europe and austerity imposed on citizens, the stock market rose in anticipation that much of the 60 billion new euros that will be created each month will find its way into equity prices. Liquidity fuels the stock market.
Where else can the money to go? Some will go into Swiss francs and some into gold while gold is still available, but for the most part the ECB is running the printing press in order to boost the wealth of the stock-owning One Percent. The Federal Reserve and the ECB have taken the West back to the days when a handful of aristocrats owned everything.
The stock markets are bubbles blown by central bank money creation. On the basis of traditional reasoning there is no sound reason to be in equities, and sound investors have avoided them.
…click on the above link to read the rest of the article…
Kuroda Says BOJ to Mull Fresh Options in Case of More Easing
Kuroda Says BOJ to Mull Fresh Options in Case of More Easing
Bank of Japan Governor Haruhiko Kuroda signaled the central bank may need to look at fresh options if more stimulus is needed to propel inflation to levels unseen since stagnation set in two decades ago.
“If, really, our possible path to 2 percent inflation is significantly affected, then of course we can make adjustment to our monetary policy,” Kuroda said in an interview with Bloomberg Television in Davos, Switzerland, on Friday. Asked whether the BOJ will have to get more creative, he said “yes, I think so.” He declined to specify the options available.
Kuroda, 70, spoke days after the BOJ cut its inflation projection for the coming fiscal year, a move that reinforced forecasts for further stimulus by October. While Kuroda’s unprecedented scale of asset purchases has pulled the world’s third-largest economy out of 15 years of entrenched deflation, he’s confronting — like his European counterparts — mounting pressures depressing price gains, and subdued growth.
Kuroda and his colleagues have channeled most of their purchases into the government-bond market, sending yields on 10-year notes to a record low of 0.195 percent this week. The BOJ’s program also include exchange-traded funds and real-estate investment trusts.
…click on the above link to read the rest of the article…
How Do You Unmanipulate a Manipulated Economy?
How Do You Unmanipulate a Manipulated Economy?
Breaking the stranglehold of vested interests is the essential step to rebuilding an economy that isn’t totally dependent on manipulated money and statistics.
The word manipulated has the sour taste of officially sanctioned distortion in service of an Elite’s interests. At a minimum, manipulation smacks of intent to defraud. If there is no intent to defraud or mislead, then what’s the purpose of manipulating statistics, media coverage and official narratives?
As a result, the unsavory reality of our massively manipulated economy is masked by insipid words such as stimulus, easing and investing in our future–as if borrowing and squandering trillions of dollars to further enrich the few at the expense of the many is anything but blatant grift, fraud and embezzlement of taxpayer funds.
Regardless of what slippery words are deployed to mask the manipulation, it doesn’t change the reality that the U.S. economy remains a manipulated mess that is dependent on monetary and statistical manipulation. If you doubt the economy is dependent on monetary and statistical manipulation, then ask yourself what will happen to the economy should the Federal Reserve’s zero-interest rate policy (ZIRP) be rescinded, and interest rates return to historic norms.
…click on the above link to read the rest of the article…
Russia Abandons PetroDollar By Opening Reserve Fund
Russia Abandons PetroDollar By Opening Reserve Fund
2015 has not been good to Russia; the spread between Brent and WTI is gone in anticipation of US exports and both benchmarks have flirted with sub $45 prices. A hostage to such prices, the ruble has yet to begin its turnaround and the state’s finances are in extreme disarray. President Vladimir Putin’s approval ratings remain sky-high, but his country has not faced such difficult times since he took office more than 15 years ago.
Since the turn of the new year the ruble has fallen over 13 percent and Russia’s central bank and finance department are running out of options – to date, policy makers have hiked interest rates to their highest level since the 1998 Russian financial crisis and embarked on a 1 trillion-ruble ($15 billion) bank recapitalization plan to little effect. Their latest, and most dramatic, plan is to abandon the dollar – at least somewhat.
Related: Putin: Battered, Bruised But Not Broken
In late December, the Kremlin ordered five large state-owned exporters – including oil and gas giants Rosneft and Gazprom – to sell their foreign currency reserves. Specifically, the companies must bring their foreign reserves to October levels by the beginning of March. To comply, the exporters may have to sell a combined $1 billion per day until March. Private companies have not yet been hit by these soft capital controls, but have instead been advised to manage their foreign exchange maneuvers responsibly.
…click on the above link to read the rest of the article…
Turkey’s Central Bank Raises Ratio for FX Reserve Requirements – Bloomberg
Turkey’s Central Bank Raises Ratio for FX Reserve Requirements – Bloomberg.
Turkey’s central bank increased the foreign-currency reserve ratios required of banks and financing companies, after a month in which the lira was among the world’s worst-performing emerging-markets currencies.
The revision announced today is intended to make sure institutions can meet foreign-exchange liabilities. It would add approximately $3.2 billion to the central bank’s foreign currency reserves, the bank said in a statement on its website. The average reserve requirement ratio for foreign currency, now 11.7 percent, will rise to 12.8 percent, it said.
Turkish central bank Governor Erdem Basci warned Dec. 10 in Ankara that the bank would take measures against excessive short-term foreign currency borrowing by Turkish banks. The International Monetary Fund had urged Turkey to raise reserve requirements for foreign-currency liabilities in a report on Dec. 5, saying that reducing bank incentives to fund themselves in foreign currency would limit the risk of a balance-of-payments crisis.
Turkmenistan Devalues Currency By 18%, Armstrong Warns Of “Economic Collapse On A Global Scale”
Turkmenistan Devalues Currency By 18%, Armstrong Warns Of “Economic Collapse On A Global Scale”
The energy-rich former Soviet republic of Turkmenistan Thursday devalued its currency against the US dollar by 18%, as AFP notes, in the latest sign of contagion among Russia’s neighbors from the plunging ruble (following Krgyzstan’s 17% plunge in 2014 and Kazakhstan’s 14% tumble). However, as Martin Armstrong warns, this is symptomatic of a deflationary contagion that “will contribute to now force the dollar higher… We are in a major economic collapse on a global scale. Most people do not understand that this is the real threat we face.”
On Thursday, the website of Turkmenistan’s central bank published the rate of 3.50 manats to the US dollar, from 2.85 manats, a depreciation of 18.6 percent.
The devaluation came as the plunge in value of the Russian ruble, linked to Western sanctions over Ukraine and falling oil prices, sent shockwaves through former Soviet republics.
…click on the above link to read the rest of the article…
Nigerians ‘Crying for Money’ as Naira, Boko Haram Hit Trade – Bloomberg
Nigerians ‘Crying for Money’ as Naira, Boko Haram Hit Trade – Bloomberg.
At one of Nigeria’s busiest markets, Ndubuisi Benjamin Nweke complains about the toughest business environmentAfrica’s biggest economy has faced in years.
“Customers are not coming the way they’re supposed to,” said the 46-year-old, whose trade in Chinese-made fabrics at the Idumota market in the commercial capital, Lagos, like many Nigerian importers, is being squeezed by a plunge in the naira. “Everyone is crying for money.”
Nigeria is being hammered on two fronts as it heads toward general elections in February. In the face of plummeting crude prices, the central bank devalued the naira and the government proposed budget cuts. At the same time, Islamist militants of the Boko Haram group have stepped up attacks in their five-year insurgency, and the security forces in Africa’s top crude producer are struggling to stop them.
Northern Nigeria is faring even worse than the south. Cosmetics seller Madu Masa Fantami has witnessed a drop in business after suicide bombers killed dozens at the Monday Market in the northeastern city of Maiduguri last month.
Ukraine Central Bank Conned Into Swapping Its Gold For Lead Bricks | Zero Hedge
Ukraine Central Bank Conned Into Swapping Its Gold For Lead Bricks | Zero Hedge.
Just when one thought the story of Ukraine and its (now non-existant) gold could not get any more surreal, it did.
As a reminder, it was about a month ago when we learned courtesy of an interview on Ukraine TV with the country’s central bank head Valeriya Gontareva, that Ukraine’s gold was virtually all gone, when she made the stunning admission that “in the vaults of the central bank there is almost no gold left. There is a small amount of gold bullion left, but it’s just 1% of reserves.”
That in itself would have been sufficient to explain why just a few short days later, the Netherlands shocked the world when it announced it had secretly repatriated 122 tonnes of gold from the NY Fed, and had the story of Ukraine’s missing gold ended there (or even with the criminal probe launched by Ukraine whether the central bank head had abused her power and misused her office when she “intentionally committed an extremely unfavorable transaction for the gold and forex reserves of Ukraine”), it still would have been one of the most bizarre, surreal stories of 2014.
Luckily, the story just got far better, and far, far more bizarre and surreal.
As Bloomberg reports, Ukraine opened a criminal probe after several gold bars at the central bank’s storage in the southern city of Odessa turned to be painted lead.
BBC News – Belarus imposes duty on foreign currency purchases
BBC News – Belarus imposes duty on foreign currency purchases.
Belarus’s central bank has introduced a 30% duty on all purchases of foreign currency to try to protect its rouble.
Belarusian exporters will also be required to convert more of their overseas earnings into local currency.
The country is feeling the effects of the fall in the value of the Russian rouble, which reached new lows against the dollar this week.
The Belarusian economy is closely linked to Russia, which is its biggest trading partner.
The central bank said it had “adopted a number of measures aimed at preventing the development of negative trends on the currency and financial markets of Belarus.”
There were reports of some foreign exchange offices running out of money and queues forming at banks as people tried to withdraw money.
