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Will The Fed Follow The BoJ Down The NIRP Rabbit Hole?
Will The Fed Follow The BoJ Down The NIRP Rabbit Hole?
“Overall, we believe the latest package is far from a game changer,” Matejka opined.
What was especially interesting about that particular note was the following graph and set of tables which show just how “effective” NIRP has been for the five central banks that have tried it so far.
As you can see, once you go NIRP, it’s pretty much all downhill from there whether you’re talking inflation, the economy, or even equities.
Given that, and given that the entire idea is absurd on its face for a whole laundry list of reasons, one wonders why any central banker would chase down this rabbit hole only to find themselves the protagonist in the latest retelling of “Krugman in Wonderland”.
In any event, for those wondering whether the Fed will join the ECB, the BoJ, the Riksbank, the SNB, and the NationalBank in this increasingly insane monetary experiment, below, courtesy of Bloomberg, find a chronological history of Fed and analyst commentary on NIRP in America.
FED COMMENTARY
- March 16: Yellen said during post-FOMC press conference Fed isn’t actively considering negative rates, studying effects in other nations
- March 2: San Francisco President Williams said “we’re not doing negative interest rates”; Williams Feb. 25 said negative rates are “potentially in the toolbox” but may have “unintended consequences”
- March 1: Former Fed Chairman Alan Greenspan said on Bloomberg Radio and TV negative interest rates, if pursued for an extended period of time, will eventually distort saving and investment…click on the above link to read the rest of the article…
“It’s All F**ked”: Brazil Descends Into Chaos As Rousseff, Lula Wiretaps Trigger Mass Protests
“It’s All F**ked”: Brazil Descends Into Chaos As Rousseff, Lula Wiretaps Trigger Mass Protests
We said that on the way to noting that central bank chief Alexandre Tombini looked set to resign for fear that former President Lula’s new cabinet position and attendant promise to “turn the economy around” would lead invariably to government interference in monetary and FX policy.
As regular readers and Brazil watchers alike are no doubt aware, the BRL has been on a veritable rollercoaster ride of late and it’s all thanks, one way or another, to Lula. The currency rallied on his arrest, sold off when he was offered a position in Rousseff’s cabinet, and now, is headed sharply higher after a court injunction blocked his nomination as chief of staff.
The injunction appears to stem from some 50 audio recordings released to the media on Wednesday by Judge Sergio Moro, the lead prosecutor in the car wash probe. At least one of the recordings seems to suggest that Rousseff did indeed offer Lula the ministry post in order to shield him from prosecution.
The most damning call was recorded on Wednesday afternoon, when Rousseff can be heard telling Lula that she is sending him his ministerial papers “in case of necessity.” Obviously, that sounds a lot like an attempt to make sure Lula has proof of his new position in case authorities come to arrest him before he’s sworn in. In Brazil, ministers can only be tried in the Supreme Court which, as you might imagine, could take virtually forever compared to lower courts.
Lula was questioned earlier this month in connection with the possibility that he received luxury properties in exchange for favors tied to the Petrobras scandal.
…click on the above link to read the rest of the article…
Is It All Just A Publicity Stunt? Apple Unlocked iPhones For The Feds 70 Times Before
Is It All Just A Publicity Stunt? Apple Unlocked iPhones For The Feds 70 Times Before
As reported previously, Judge Sheri Pym of U.S. District Court in Los Angeles said on Tuesday that Apple must provide “reasonable technical assistance” to investigators seeking to unlock data on – in other words hack – an iPhone 5C that had been owned by Syed Rizwan Farook, one of the San Bernardino shooters.
So far Tim Cook has refused to comply, saying said his company opposed the demand from the judge to help the FBI break into the iPhone. Cook said that the demand threatened the security of Apple’s customers and had “implications far beyond the legal case at hand.”
He added that “the government is asking Apple to hack our own users and undermine decades of security advancements that protect our customers — including tens of millions of American citizens — from sophisticated hackers and cybercriminals,” he said. “We can find no precedent for an American company being forced to expose its customers to a greater risk of attack.”
Cook’s summary:
“The implications of the government’s demands are chilling. If the government can use the All Writs Act to make it easier to unlock your iPhone, it would have the power to reach into anyone’s device to capture their data. The government could extend this breach of privacy and demand that Apple build surveillance software to intercept your messages, access your health records or financial data, track your location, or even access your phone’s microphone or camera without your knowledge.”
…click on the above link to read the rest of the article…
NATO Is Harboring ISIS, And Here’s The Evidence
NATO Is Harboring ISIS, And Here’s The Evidence
For the better part of a year, Turkey remained on the sidelines in the “fight” against ISIS.
Then, on July 20, a powerful explosion ripped through the town of Suruc. 33 people were killed including a number of Socialist Party of the Oppressed (ESP) and Socialist Youth Associations Federation (SGDF) members who planned to assist in the rebuilding of Kobani.
The attack was promptly attributed to Islamic State who took “credit” for the tragedy the next day.
To be sure, the attack came at a rather convenient time for President Tayyip Erdogan. A little over a month earlier, the ruling AKP party lost its absolute parliamentary majority in part due to a strong showing at the ballot box for the pro-Kurdish (and PKK-aligned) HDP. What happened in the wake of the Suruc bombing was nothing short of a largely successful attempt on Erdogan’s part to use fear and violence to scare the electorate into restoring AKP’s dominance in snap elections that took place earlier this month.
In short, Erdogan used Suruc as an excuse to begin a “war on terror.” Part and parcel of the new campaign was an invite from Ankara for Washington to use Turkey’s Incirlik air base. Subsequently, Erdogan reminded the world that the PKK is also considered a terrorist organization and as such, the anti-ISIS campaign would also include a crackdown on Kurdish militants operating in Turkey. Erdogan proceeded to focus squarely on the PKK, all but ignoring ISIS while simultaneously undercutting the coalition building process on the way to calling for new elections. Unsurprisingly, AKP put on a much better showing in the electoral redo, and with that, Erdogan had succeeded in using ISIS as a smokescreen to start a civil war with the PKK, in the process frightening voters into restoring his party’s grip on power.
…click on the above link to read the rest of the article…
Treasury Warns Of “Humanitarian Crisis” In Puerto Rico If Congress Does Not Agree To Bailout
Treasury Warns Of “Humanitarian Crisis” In Puerto Rico If Congress Does Not Agree To Bailout
“Puerto Rico is not Greece“… but it increasingly looks like it will be in a few weeks, thanks to US taxpayers who are about to foot the bill for yet another creditor bailout.
As we reported last night, creditors of the insolvent commonwealth, hoping to get a bailout and the highest possible return on their bond investment courtesy of the US taxpayer, have been pushing to portray the fiscal situation in Puerto Rico as beyond repair, hoping to force the administration and Congress to act. As The NY Times reported, on Wednesday, Puerto Rico took the unusual step of announcing that talks over restructuring about $750 million of the island’s debt had broken off, a move that some creditors saw as posturing to Washington for help.
Then, all day today, Puerto Rico’s leadership, realizing its interests are suddenly alligned with those of its creditors as a bailout is in everyone’s best interest, took the rhetoric up a notch when the island’s Governor Alejandro Garcia Padilla said in written testimony for Senate Energy Committee that Puerto Rico will have negative cash balance of $29.8 million in November 2015, and then added that the Puerto Rico Government Development Bank may be unable to make its $355 million debt service. “These GDB bonds are supported by a guarantee from the Commonwealth, and the GDB, which faces its own liquidity crisis, is not expected to be able to make the payment on its own based on current information.”
Others quickly chimed in: Puerto Rico Senate President Eduardo Bhatia said he would be in favor of “including everything” in a broad, comprehensive restructuring of the debt.
In short: bail us out now or face the consequences of a domino effect of defaults which puts not only the creditors, but the island itself, in dire straits.
…click on the above link to read the rest of the article…
China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge
China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge
Here is a brief sample of some of the measures the Chinese government and the PBOC have unleashed in just the past ten days to prop up the crashing market include:
- a ban on major shareholders, corporate executives, directors from selling stock for 6 months
- freezing more than half (1400 at last count per Bloomberg) of the listed companies from trading,
- blocking fund redemptions, forcing companies to invest in the market,
- halting IPOs,
- reducing equity transaction fees,
- providing daily bailouts to the margin lending authority,
- reducing margin requirements,
- boosting buybacks
- endless propaganda by Beijing Bob.
The measures are summarized below.
But it wasn’t until last night’s first official threat to “malicious” (short) sellers that they face charges (i.e., arrest), as Xinhua reported yesterday:
[Ministry of Public Security in conjunction with the recent Commission investigation of malicious short stock and stock index clues ] correspondent was informed on the 9th morning , Vice Minister of Public Security Meng Qingfeng led to the Commission , in conjunction with the recent Commission investigation of malicious short stock and stock index clues show regulatory authorities to the operation of heavy combat illegal activities.
… that the wall of Chinese intervention finally worked. For now.
And since this is all about one thing, the stock, market, it is worth noting that the Shanghai Composite Index had dropped as much as 3.8% to a 4 month low before the news that the cops were going to arrest anyone who used a wrong discount rate in their DCF, when everything suddenly took off, and the SHCOMP closed a “Dramamine required” 5.8% higher, the biggest daily increase since March 2009!
“As China beefs up its efforts to rescue the market, with even the public security ministry involved, market sentiment is recovering slightly from a panicky stage earlier,” Shenyin Wanguo analyst Qian Qimin says by phone
…click on the above link to read the rest of the article…
