{"id":9877,"date":"2015-07-10T06:31:47","date_gmt":"2015-07-10T11:31:47","guid":{"rendered":"http:\/\/olduvai.ca\/?p=9877"},"modified":"2015-07-10T06:31:47","modified_gmt":"2015-07-10T11:31:47","slug":"losing-control","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=9877","title":{"rendered":"Losing Control"},"content":{"rendered":"

Losing Control<\/a><\/strong><\/h3>\n

Markets are beginning to signal that policy makers are losing control.\u00a0 Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest.\u00a0 There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized ‘benefits today’ over ‘consequences tomorrow’.\u00a0 ‘Tomorrow’ is approaching ever more quickly. There is no ‘free lunch’.<\/p>\n

Market damage and volatility due to policy interference, or due to the deliberate influence of security prices, are a shame.\u00a0 Markets should ideally operate with unencumbered fluidity. Markets should operate in a manner where adjustments to new information allow buyers and sellers to rapidly, and seamlessly, find a natural clearing price.\u00a0 Authorities and regulations should be like good referees in a soccer match; they provide the conditions for a fair match, and you rarely notice their presence.<\/p>\n

    \n
  • The beginning-of-the-end of official control happened earlier this year when the Swiss National Bank (SNB) retracted its currency-peg-promise, triggering a 40% move in the G-7 currency in 10 minutes.<\/li>\n
  • In early May, shortly after the SNB event and the launch of ECB QE and EU negative interest rate experiments, the EU bond market became dysfunctional.\u00a0 The absurdity of sustaining $4 trillion of negative rates came into focus. The German 10-year Bund moved from 0.05% to 0.75% in under a month.<\/li>\n
  • A series of Greek policy and troika bailout mistakes – actions that never resulted in a realistic and sustainable solution – are now culminating toward a tipping point (more tomorrow).<\/li>\n
  • Chinese authorities that have allowed and encouraged an equity bubble to manifest (and other central banks for that matter) are starting to see how \u2018bubble blowing\u2019 typically ends.\u00a0 Other central banks are hopefully watching.\u00a0 Chinese equities have lost $3.2 trillion in value in 30 days.\u00a0 To put this into perspective, this is equivalent to the entire stock market capitalization of Germany and France combined.<\/li>\n<\/ul>\n

    …click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

    Losing Control Markets are beginning to signal that policy makers are losing control.\u00a0 Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest.\u00a0 There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized ‘benefits today’ […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1719,124,130,1450,333,359,1167,2586,6768,4919,6048,1555,2773,4318],"class_list":["post-9877","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond","tag-central-banks","tag-china","tag-equity-markets","tag-france","tag-germany","tag-greece","tag-milton-friedman","tag-moral-hazard","tag-nasdaq","tag-none","tag-swiss-national-bank","tag-volatility","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9877"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9877\/revisions"}],"predecessor-version":[{"id":9878,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9877\/revisions\/9878"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}