Something major is happening with nation states, and the finance ministers that make monetary policy.
Indeed we have discussed currency & trade wars in the past; the sanctions against Russia, along with the wars in Ukraine, Syria, Libya, Yemen, and elsewhere are symptoms.
The previous international monetary consensus is dust, and the U.S. Dollar as the major balancing mechanism is now a failure.
Trillions of Bank bonds (debt) are held by institutional investors and negative interest rates makes the problem worse.
How Exposed are Sovereign Wealth Funds (SWF) and other institutional investors to Negative Interest Rate Policy (Japanese Government Bonds)?
The evidence is very revealing, and bank officials appear to be in a panic.
Brazil (the largest country in South America in Land, Population, and Economy) and Canada reports to be in a recession.
The Bank of Japan last month (Jan. 2016) joined a growing number of central banks in Negative Interest Rate Policy (NIRP) and the Federal Reserve faces the pressure to respond.
I choose not to attempt to categorize what is happening, as some are reporting “Collapse” and worse.
Because the ailing economic markets has persisted for years and could continue this anemic condition for more years. If this illness continues, then what would it mean?
It could mean a combination of several harmful events for the coming years:
Wars, inflation & deflation simultaneously (food price hikes while oil and bonds decline), governments slash social programs, more capital controls, more corruption revealed, more workers become unemployed, more homeless and social unrest…
I recall what happened to the Japanese economy and how its illness persisted for so long.
From that example, I can see the possibility for what could become the length of years ahead for the international monetary system.
Yet, the worldwide economy is not Japan.
The citizens in various countries are diverse and I expect some will oppose the official plans.
Click on the research links below, then see the comment section and share your thoughts.
Please Follow the Money and find the deception. ~Ron
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Deutsche Bank Rallies On Modest Debt Buyback Plan, Schaeuble Proclaims “Strong, Resilient Bank”
…Deutsche Bank announces a public tender offer to purchase certain series of EUR and USD-denominated senior unsecured debt securities.
[I See buyback plan as a desperate move…]
Read: Zero Hedge
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Japan Post Bank cut JGB holdings by $78 billion
* Japan Post Bank manages $1.8 trln investment portfolio
* Portion held in JGBs drops to 40.8 pct end-Dec vs 45.2 end-Sept
* BOJ’s negative interest rates makes it harder to secure returns (Recasts, adds breakdown of portfolio changes)
[…] The Bank of Japan’s surprise decision to introduce negative interest rate last month is likely to add to the difficulty of managing the bank’s massive portfolio, as it has been building up reserves at the central bank amid a general lack of attractive investment alternatives.
[…] The bank is one of the biggest institutional investors in the world, with a portfolio valued at 205 trillion yen ($1.8 trillion).
Its investment has traditionally been made up mostly of JGBs but ultra-low interest rates have encouraged it to seek assets offering higher yields.
“This financial year, there’s not going to be much in the way of an impact on earnings but if the situation continues then there will be an impact, not just on us but for all financial institutions,” Noboru Ichikura, a Japan Post managing executive, said.
Read: Reuters
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China recalibrates GDP target; BOJ looks into possible policy leaks; Ukraine economic minister resigns charging graft …
Read: institutionalinvestor.com
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Eurobanks: The Probable Point of Failure as Systemic Stress Rises
Posted on February 12, 2016 by Yves Smith
As all major financial markets – stocks, currencies, commodities, and bonds – continue to be highly volatile and risk averse, investors’ mood, and even that of real economy players, is getting nervous and gloomy. Both the masters of the universe at Davos and corporate CEOs have an uncharacteristically subdued outlook for the upcoming year.
But the open question is how much financial market stress transmits into the financial system and/or the real economy.
[…] A near term risk is a Chinese currency depreciation. China is spending nearly $100 billion a month defending its currency. Experts vary on how long it can keep this up. Even though China reported $3.2 trillion in foreign exchange reserves at the end of January, it may be closer to a breaking point than most observers realize. From Forbes:
…the central bank has been trading derivatives, especially forwards, to mask the decline in its currency position, much like Brazil did in 2013. The stratagem permits the PBOC, as the central bank is known, to effectively sell dollars without reporting a decrease in its holdings of foreign currency. When these short-dollar positions are unwound, as they eventually must be, China’s reserves will plunge dramatically.
And tightening of capital controls may not be as effective as they appear either:
At this moment, there has been a “surge” in China’s “errors and omissions” entry. Charles Collyns of the Institute of International Finance told the Telegraph that the increase is “ominous.” That suggests, despite everything, many in China are getting their money out through illegal channels.
According to Bloomberg’s Fielding Chen and Tom Orlik, if capital controls work, China needs only $1.8 trillion in reserves, according to an IMF formula that suggests countries hold in their reserves an amount equal to 10% of annual exports, 30% of short-term foreign debt, 20% of other foreign liabilities, and 5% of M2. At the current rate of depletion and assuming Beijing has reserves in the amount reported, the central bank can defend the renminbi for more than a year.
If, however, China’s restrictions begin to fail, then Chen and Orlik calculate the PBOC needs $2.9 trillion in reserves. In this case, China could fall below this level before the end of Q2.
A fall in the renminbi would send another deflationary pulse through financial markets, and would show up in the real economy over time through even lower demand for commodities. This has to blow back to the already fragile Eurobanks. How badly is anyone’s guess.
And we need to underscore a bigger set of issues looming behind all of these problems. With the new set of EU banking rules and gee-whiz fixes like coco bonds, the European officialdom has taken the public position that it has fixed its banking problems. And due to Germany’s anathema for having the ECB engage in anything that might be stealthy fiscal action, or in having Eurozone member states stray outside their spending limits, the Europeans are not set up ideologically or operationally to respond to a crisis, even the sort of slow-motion crisis now underway.
Read: nakedcapitalism.com
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RELATED:
UK becomes the first G7 country outside Asia to ratify the articles of agreement of the AIIB
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Ronmamita's Blog 
Brazil In Crisis
Cost of doing business in Brazil…
Title: Cause of the Depression in Brazil Video 2015 03 12 145704
Video posted: 18 Jan 2016
Andy Hoffman: “Global Financial Panic”
Title: BREAKING UPDATE: GLOBAL FINANCIAL PANIC -Andy Hoffman
Video posted 11 Feb 2016
Fed May Lack Legal Authority for Negative Rates
Title: Feds Admit the “Internet of Things” is for Spying on You – #NewWorldNextWeek
Video posted: 11 Feb 2016
NewWorldNextWeek Headlines: Fed May Lack Legal Authority for Negative Rates
http://bit.ly/1o6uPUl
Microsoft Drops a Cloud Data Center Under the Ocean
http://bit.ly/1QtQOLx
Obama Quietly Unveils 4.1 Trillion Dollar Budget with More for Pharma, Military and Cyberwar
http://bit.ly/23YVVNt
While Americans Prepared for the Stupor Bowl…The-Powers-That-Shouldn’t-Be Signed The TPP And the TTIP is Next
http://bit.ly/1TexpE9
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If the Federal Reserve decides to confiscate assets from customers at banks the law will not stop them.
Credit Suisse Reported $5.8 Billion Loss
Credit Suisse Group AG plunged to a 27-year low as a selloff across the industry compounded … Credit Suisse CEO says it’s `not a great time to be a bank’.
Read: http://www.bloomberg.com/news/articles/2016-02-11/credit-suisse-slides-to-17-year-low-amid-selloff-overhaul-woes
Title: Banking Landscape on Fire, Dollar Tumbles, as Gold and Silver Sparkle
Video posted 05 Feb2016
The Walking Dead: Something is Rotten in the Banking System
February 8, 2016 | Author Pater Tenebrarum
A Curious Collapse
[…]
Deutsche Bank CoCos: these convertible bonds have special features that allow for “automatic” conversions and the suspension of coupon payments, making them eligible as tier 1 capital under Basel 3. Investors have liked this instruments – until they suddenly stopped liking them.
Mr. Tchir agrees that the arbitrary manner in which bail-ins have been pursued – especially the overnight bail-in of senior creditors of BES by the Portuguese government’s decision to reassign five different bonds from the “good bank” to the “bad bank” ad hoc – must have contributed to investors getting cold feet.
However, he also argues that Mr. Draghi can surely be relied upon to keep Europe’s zombie banks in a state of suspended animation, and that the surge in CDS spreads is so far not much to worry about, at least if compared to where they went in the last crisis period
Read: http://www.acting-man.com/?p=43141
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Reblogged this on UZA – people's courts, forums, & tribunals and commented:
Thanks Ron, at some point we going to have to cash in the chips and re-shuffle the cards of this Ponzi scheme; in peace
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Absolutely!
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FULL ARTICLE Benjamin Fulford 2-8-16… “First meeting between Pope and Russian Patriarch in 1000 years aimed at Khazarian Satanists”
08 Feb 2016
Read: kauilapele.wordpress.com
[* NOTE: Warren Buffett said something about the choice between bailing a sinking ship and boarding a different ship…
Indeed major events are happening! ~Ron]
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Rob Kirby: Economic Collapse Happening Now
One of the many lies Kirby points out is the Fed’s recent rate hike because the economy had improved. Kirby disagrees and says, “My analysis says nothing could be further from the truth. . . . U.S. dollar reserve holdings have dropped close to $1 trillion in the last eight or nine months, and that’s on a global scale. What happens when reserves drop means that foreigners have been selling U.S. government securities. They are abandoning the dollar, and if foreigners are abandoning the dollar, the question is who’s buying them? The answer to who is buying the reserves is the U.S. Treasury itself. Specifically, it is the Exchange Stabilization Fund (ESF) within the U.S. Treasury.”
Kirby goes on to explain, “Because the ESF is buying all these Treasuries that foreign countries are pitching . . . with off-book money these Treasuries do not show up in reserve accounts. This creates a real dichotomy. You’ve got these global U.S. dollar (USD) reserves dropping, but you have this illusion or gimmickry of a strong dollar. Remember, the dollar has been strengthening for the last 9 months. The dollar can’t keep getting stronger if the world is bailing on dollars. The drop in the USD reserves doesn’t support the narrative of a strong dollar. So, something had to be done to put reserves back into the system. . . . The Fed had to give the illusion of tightening and tighten once. . . . This is their attempt . . . to make their narrative sound believable that the dollar is strong and the world isn’t abandoning U.S. government securities.”
Kirby contends that a collapse isn’t coming but is “already happening now.” Kirby explains, “I believe we are in the process.” How has this financial collapse been put off so long? Kirby says, “I have been known as a conspiracy theorist, a tin foil hat wearing conspiracy theorist for the last ten years of my life because I said the markets are rigged. Now, a former Fed President has come out and said ‘yes, we rigged the markets.’ So, how are you left? Of course, they have rigged the markets, and the sad thing is the rigging is going to get more extreme because these people are acting and operating like cornered rats. Cornered rats are very, very dangerous animals and can inflict a lot of damage. . . ”
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And now:
Central Banks Will Flood Their Exchange Markets With Liquidity Again!
We are witnessing institutions acting like Tyrants and Ruffians, Nations are making a Bizarro World!
The Federal Reserve is tasked with rescuing the stock markets, through market manipulation:
“Only the Fed can save stocks now: Deutsche Bank”
See: http://finance.yahoo.com/news/only-fed-save-stocks-now-124627175.html
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Stephen Roach: “Central Banking Has Lost Its Way, Is In Crisis”
Authored by Stephen Roach, originally posted at Project Syndicate,
In what could well be a final act of desperation, central banks are abdicating effective control of the economies they have been entrusted to manage. First came zero interest rates, then quantitative easing, and now negative interest rates – one futile attempt begetting another. Just as the first two gambits failed to gain meaningful economic traction in chronically weak recoveries, the shift to negative rates will only compound the risks of financial instability and set the stage for the next crisis.
The adoption of negative interest rates – initially launched in Europe in 2014 and now embraced in Japan – represents a major turning point for central banking. Previously, emphasis had been placed on boosting aggregate demand – primarily by lowering the cost of borrowing, but also by spurring wealth effects from appreciating financial assets. But now, by imposing penalties on excess reserves left on deposit with central banks, negative interest rates drive stimulus through the supply side of the credit equation – in effect, urging banks to make new loans regardless of the demand for such funds.
This misses the essence of what is ailing a post-crisis world. As Nomura economist Richard Koo has argued about Japan, the focus should be on the demand side of crisis-battered economies, where growth is impaired by a debt-rejection syndrome that invariably takes hold in the aftermath of a “balance sheet recession.”
Such impairment is global in scope. It’s not just Japan, where the purportedly powerful impetus of Abenomics has failed to dislodge a struggling economy from 24 years of 0.8% inflation-adjusted GDP growth. It’s also the US, where consumer demand – the epicenter of America’s Great Recession – remains stuck in an eight-year quagmire of just 1.5% average real growth. Even worse is the eurozone, where real GDP growth has averaged just 0.1% over the 2008-2015 period.
All of this speaks to the impotence of central banks to jump-start aggregate demand in balance-sheet-constrained economies that have fallen into 1930s-style “liquidity traps.” As Paul Krugman noted nearly 20 years ago, Japan exemplifies the modern-day incarnation of this dilemma. When its equity and property bubbles burst in the early 1990s, the keiretsu system – “main banks” and their tightly connected nonbank corporates – imploded under the deadweight of excess leverage.
Read more: https://peoplestrusttoronto.wordpress.com/2016/02/19/stephen-roach-central-banking-has-lost-its-way-is-in-crisis/
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