Stacy Summary: What do you think about Tucker’s argument that he prefers not to target asset bubbles but to ‘strengthen resilience’ of the banking system during credit booms? By giving them more taxpayer money? If so then those taxpayers who will have to bailout the scheme when it busts would be chumps not to play the next ponzi scheme game because at least then they have a remote chance of winning.
[Tucker] said that, alongside inflation targeting, the Bank was considering whether to try to control asset price bubbles, credit growth or “strengthening the resilience of the banking system during credit booms”. He added he was minded to favour the final objective, which could in turn help control asset-price booms indirectly. Many had assumed that the Bank would embark on an asset-price targeting system, because the recent boom had at its heart increases in the price of houses.
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cannot comment
Wasn’t it already the objective of central banks to contain inflation/deflation and to prevent booms/busts? They set the economic policy by setting the interest rates to maintain stability? That’s atleast in theory in practise it’s a front of banks that benefit from booms and busts, always nice to hear the propaganda of ” inflation targeting” specially while they are responsible for “inflation”.
To “strengthen the resilience of the banking system during credit booms” is like max says; giving more matches to arsonists.
I think tucker said these things while being wined and dined by Barclays, which says it all really.
>>>>
Instead of splitting up banks now, Mr Tucker praised the idea of “living wills” to enable failing banks to be split up at death, something Mr King also supported but said would come at the cost of innovation and efficiency in the system.
Mr Tucker was keener on the idea, but added that since all proposals for future regulation “will sometimes prove flawed”, a system of taxpayer support as a last resort should explicitly be provided on the understanding that the banks would pay the exchequer back in future
<<<<
http://www.ft.com/cms/s/0/7281ba0e-bf6c-11de-a696-00144feab49a.html
Every word out from CB’s & the western Banks is a lead into:- “How do we restart the Casio again?”
They don’t seem to have notice that all the 3RD World & the “Bric’s” are NOT going to play.
Mike
interesting statement of celente (I believe it is of him) at ajex jones that devaluation of the dollar is related to the usa national depth to china etc (smart way to get rid of you depth). (anybody seen fall of the republic yet…. downloaded a torrent, but should pay this jones, because it is worth watching it)
UK Recession probably ended in 3rd quarter survey shows…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOT10AMC_15U
@y’all, anybody got the link to the site where one can see when the reports for different companies come out? Had the link but lost it somehow….
@sidney warburg … China’s 2 Trio$ and US Debt
Sidney,
it may look like that on the surface, but China’s 2 Tri.$ is the least of the US’s problems.
The amount of “paper money” ( toilet paper ) that the CBs ( especially the FED ) have “passed” onto the world is enormous .. probably in excess of 600 Trillion$ .. thanks to derivatives and deregulation.
The “China” problem is not the 2 Trio$, but the fact that the Chinese ( & Japs + others ) have woken up to the fact that they will probably only see a fraction of their money returned … thus raising the question of faith in retaining the US$ as the reserve currency.
phil I do not see it as a problem for china but for the usa!
China 2008 Net Gold Imports 112 Tons.
China’s gold mine production reached 282 tons in 2008, making the country the biggest producer in the world.
Dollar’s Decline Makes Oil ‘Too Cheap’ at $80
http://www.bloomberg.com/apps/news?pid=20601109&sid=a7RLuC_XEZ4Q
‘g-day y’all
I would not advise controling prices directly, that policy will be abused.
The way our government has handled it with for instance houses they sold onto the market, is to say that profit from any sale of the property within a number of years (4-5) would not go to the new owner, but to the previous owner (the government in this case).
Maxes recipy of inhibiting the ability of people to lend to speculate also sounds very elegant..
Australia is covering up their GM problem http://www.youtube.com/watch?v=c7N9ObsO8w8
@sidney … ” I do not see it as a problem for china but for the usa! ”
I did understand your post …. sorry if my wording was out of place !
Wat we have in the US is an example of : “Say one thing , do another”
I hope you watched the jessie’s Cafe 2-part video yesterday- the guest spoke the unspoken ( in MSM ) truth.
Here’s the link again
http://jessescrossroadscafe.blogspot.com/2009/10/global-perspectives-steep-market.html
9 + 9 minutes !
Worth the time IMO !
U.K. Recession Probably Ended ?mmmmmmm in the fantasy economy maybe?
Probably my lack of trust will return to blind faith again. If only there were some honest believable reporting.
You know, if I did not have a business connected directly to the crap we are in rather than this wealth fantasy, then I too could believe anything or everything that made me comfortable and profitable!
For the eugenicist reading this, then you will be made to swallow yet again the possibility that the human mind has evolved into a instrument that believes anything that makes it feel comfortable.
Your instrument that is your mind and with it your theory either believes in propaganda or has become delusional for some reason.
I’m quite sure that my list below encompass some groups where the recession has ended or was always imaginary / delusional.
This lucky deluded group may include:-
—–>The Remote Bankers
—–>The Remote Speculators
—–>The Remote Property Landowner
—–>The Remote Political Media Class
—–>The Remote economist, with his stupid mistaken religion of a philosophy. Go make yourself useful main stream economists and go read the stars and tell me my horror scope.
If I the idiot!! does not believe this crap dilution and / or propaganda, where are you who does?
So my bet remains on a reality check coming our way soon !
@ Stacy,
A significant article, sadly the BoE is already seeking to inflate asset bubbles, and even pretending that’s wealth creation:
FT Alphaville:
<a href="http://ftalphaville.ft.com/blog/2009/10/13/77471/moving-targets-qe-edition/."Moving targets, QE edition
Posted by Tracy Alloway on Oct 13 15:21.
Here’s a significant development in the Bank of England’s quantitative easing, we think.
Charlie Bean, the Bank’s deputy governor for monetary policy, has just made a speech called “Quantitative easing: An interim report”, in which he rather moves the QE goal posts. The policy, we are now told, is not so much about getting banks to lend. It’s more about pushing up asset prices to repair banks’ balance sheets.
Here’s the relevant bit from the speech:
Fortunately, increased bank lending is not necessary for Quantitative Easing to work. Indeed, it was precisely because the Monetary Policy Committee expected the additional monetary injection not to stimulate bank lending directly at the current juncture, that the Asset Purchase Facility’s purchases were targeted at assets held primarily by the non-bank private sector. So if the Asset Purchase Facility buys gilts from pension funds or asset managers, they will then have to look for another home for their money. As it is not very rewarding just to hold it on deposit, they are likely to look to put their money into other assets, including equities and corporate bonds. Thus not only does the price of gilts rise as a consequence of the Asset Purchase Facility’s initial purchases, but also the prices of a whole spectrum of other assets. That in turn lowers the cost of non-bank finance and encourages increased corporate issuance. Also the rise in asset prices increases wealth and improves balance sheets. In this way, Quantitative Easing helps to work around the blockage created by a banking system that is still undergoing a process of balance sheet repair.
—————
Fatal mistake. A rise in asset prices does not increase weath, it only concentrates it. As one commenter responded:
musing market Oct 13 16:21
“the rise in asset prices increases wealth”
Wow. The contention that asset prices are rising doesn’t take the Sterling weighted index into account. The idea that wealth increases thanks to the BoE using the printing presses is Zimbabwe-crazy. The Bank is distributing wealth to the asset rich and taking wealth from the asset poor, its as if Robin Hood was reincarnated as an estate agent.
That’s right:
Asia Times Online, May 27, 2009
Liquidity drowns meaning of ‘inflation’
By Henry C K Liu
“…When financial institutions deleverage with free money from the central bank, the creditors receive the money while the Fed assumes the toxic liability by expanding its balance sheet. Deleverage reduces financial costs while increasing cash flow to allow zombie financial institutions to return to nominal profitability with unearned income and while laying off workers to cut operational cost. Thus we have financial profit inflation with price deflation in a shrinking economy.
What we will have going forward is not Weimar Republic-type price hyperinflation, but a financial profit inflation in which zombie financial institutions turn nominally profitable in a collapsing economy. …
…Debt denominated in fiat currency is borrowed wealth to be repaid later with wealth stored in money protected by monetary policy. Bank deleveraging with Fed new money cancels private debt at full face value with money that has not been earned by anyone, that is with no stored wealth. That kind of money is toxic in that the more valuable it is (with increased purchasing power to buy more as prices deflate), the more it degrades wealth because no wealth has been put into the money to be stored, thus negating the fundamental prerequisite of money as a storer of value. …
…Thinking about the value of any real asset (gold, oil, and so forth) in money (dollar) terms is misleading. The correct way is to think about the value of the money (dollars) in asset (gold, oil) terms, because assets (gold, oil, and so on) are wealth. The Fed can create money, but it cannot create wealth. …
…Central bankers are savvy enough to know that while they can create money, they cannot create wealth. …The solution then is to make the working poor pay for the pain of inflation by giving the rich a bigger share of the monetized wealth created via inflation, so that the loss of purchasing power from inflation is mostly borne by the low-wage working poor and not by the owners of capital, the monetary value of which is protected from inflation through low wages. Thus the working poor loses in both boom times and bust times. …”
@ Stacy,
The first attempt didn’t work out so well, I’ll try again…hopefully the first can be deleted.
A significant article, sadly the BoE is already seeking to inflate asset bubbles, and even pretending that’s wealth creation:
FT Alphaville:
<a href="http://ftalphaville.ft.com/blog/2009/10/13/77471/moving-targets-qe-edition/."Moving targets, QE edition
Posted by Tracy Alloway on Oct 13 15:21.
Here’s a significant development in the Bank of England’s quantitative easing, we think.
Charlie Bean, the Bank’s deputy governor for monetary policy, has just made a speech called “Quantitative easing: An interim report”, in which he rather moves the QE goal posts. The policy, we are now told, is not so much about getting banks to lend. It’s more about pushing up asset prices to repair banks’ balance sheets.
Here’s the relevant bit from the speech:
Fortunately, increased bank lending is not necessary for Quantitative Easing to work. Indeed, it was precisely because the Monetary Policy Committee expected the additional monetary injection not to stimulate bank lending directly at the current juncture, that the Asset Purchase Facility’s purchases were targeted at assets held primarily by the non-bank private sector. So if the Asset Purchase Facility buys gilts from pension funds or asset managers, they will then have to look for another home for their money. As it is not very rewarding just to hold it on deposit, they are likely to look to put their money into other assets, including equities and corporate bonds. Thus not only does the price of gilts rise as a consequence of the Asset Purchase Facility’s initial purchases, but also the prices of a whole spectrum of other assets. That in turn lowers the cost of non-bank finance and encourages increased corporate issuance. Also the rise in asset prices increases wealth and improves balance sheets. In this way, Quantitative Easing helps to work around the blockage created by a banking system that is still undergoing a process of balance sheet repair.
—————
Fatal mistake. A rise in asset prices does not increase weath, it only concentrates it. As one commenter responded:
musing market Oct 13 16:21
“the rise in asset prices increases wealth”
Wow. The contention that asset prices are rising doesn’t take the Sterling weighted index into account. The idea that wealth increases thanks to the BoE using the printing presses is Zimbabwe-crazy. The Bank is distributing wealth to the asset rich and taking wealth from the asset poor, its as if Robin Hood was reincarnated as an estate agent.
That’s right:
Asia Times Online, May 27, 2009
Liquidity drowns meaning of ‘inflation’
By Henry C K Liu
“…When financial institutions deleverage with free money from the central bank, the creditors receive the money while the Fed assumes the toxic liability by expanding its balance sheet. Deleverage reduces financial costs while increasing cash flow to allow zombie financial institutions to return to nominal profitability with unearned income and while laying off workers to cut operational cost. Thus we have financial profit inflation with price deflation in a shrinking economy.
What we will have going forward is not Weimar Republic-type price hyperinflation, but a financial profit inflation in which zombie financial institutions turn nominally profitable in a collapsing economy. …
…Debt denominated in fiat currency is borrowed wealth to be repaid later with wealth stored in money protected by monetary policy. Bank deleveraging with Fed new money cancels private debt at full face value with money that has not been earned by anyone, that is with no stored wealth. That kind of money is toxic in that the more valuable it is (with increased purchasing power to buy more as prices deflate), the more it degrades wealth because no wealth has been put into the money to be stored, thus negating the fundamental prerequisite of money as a storer of value. …
…Thinking about the value of any real asset (gold, oil, and so forth) in money (dollar) terms is misleading. The correct way is to think about the value of the money (dollars) in asset (gold, oil) terms, because assets (gold, oil, and so on) are wealth. The Fed can create money, but it cannot create wealth. …
…Central bankers are savvy enough to know that while they can create money, they cannot create wealth. …The solution then is to make the working poor pay for the pain of inflation by giving the rich a bigger share of the monetized wealth created via inflation, so that the loss of purchasing power from inflation is mostly borne by the low-wage working poor and not by the owners of capital, the monetary value of which is protected from inflation through low wages. Thus the working poor loses in both boom times and bust times. …”
—————-
That’s why the BoE’s comment is such a deceit.
s***, I’ll stop now. Sorry!
@harry_w – and do you notice that all these government and quasi govt officials are walking back all the promises they made last year when they were asking, I mean telling, the taxpayers they were redistributing their wealth to the bankers?
@harry_w – what’s up harry? finger stuck on the trigger?
What a joker.
British banks have an average LTV of 106%. They are technically insolvent. This is called ‘trading whilst insolvent’ and under British law the Directors should be criminally prosecuted.
So, the Fascist regime must create another bubble, and raid the last semblance of the wealth of the downtrodden British worker, before the currency collapses and they abscond to places unknown.
Not that I’m negative or anything.
haha I’m shaking in anticipation of more QE/ZIRP since UK Great Recession goes on, so the asset inflation — the wealth redistribution to speculators — will continue:
U.K. Economy Unexpectedly Shrinks in Longest Slump (Update1)
By Jennifer Ryan
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoJTUKcx.E9A
It’s what Liu predicted, “not Weimar Republic-type price hyperinflation, but a financial profit inflation in which zombie financial institutions turn nominally profitable in a collapsing economy.”
phil thanks for that link, I´ll watch it some later. Of course I agree with max when he says, China is at war now with the US so the lost of that loan is not the first concern for china now!
so let me reflect on the aforementioned comments>>>>as long as the central banks( FED and BOE ) on both sides of the pond see the trillions( of $$$ and pounds) on the balance sheets at various banks : THAT’S ECONOMIC GROWTH??? wow! no need to study economics @ Oxford or Harvard then…what shall we call this Ponzi Clap Trap??? And yes, the Chinese $2 trillion once a huge factor may be the least amount the FED and US treasury have to deal with…as a matter of fact just because the Chinese hold that amount may give them the needed excuse to exit from future treasury auctions…as apparently they already have done…and, as monetization continues through the next several rounds of treasury auctions it may become clear that the only one to buy bonds is the FED!!!! At what point do the bond rating agencies step in and declare a state or the entire federal deficit in arrears may tell the tale…So far California has narrowly been saved from that axe..thanx to JPMorgan/Chase’s last minute rescue to invest in their bonds…But as many have stated ( yes Max too ) with the new year a new round of bailouts most likely will be required as the accounting scheme ( aka scam ) continues…After ENRON the SCOTUS exonerated the banks who provided financial advise to ENRON from any wrongdoing( they were sued by the creditors of the ENRON fiasco )…as always the banks get a pass….while the “hard working people” ( yes that was a Mick Jagger quote) take it in the buff….
@fib
Awesome… I have read your post twice I may go back and read it again… I sometimes think, it is really easy for people to make excuses for their actions when they are distanced from the effects… even happens to me sometimes!!!
“More broadly, all trade agreements need to be reviewed to ensure that they are consistent with the need for an inclusive and comprehensive international regulatory framework which is conducive to crisis prevention and management, counter-cyclical and prudential safeguards, development, and inclusive finance. Commitments and existing multilateral agreements (such as GATS) as well as regional trade agreements, which seek greater liberalization of financial flows and services, need to be critically reviewed in terms of their balance of payments effects, their impacts on macroeconomic stability, and the scope they provide for financial regulation. Macroeconomic stability, an efficient regulatory framework, and functioning institutions are necessary preconditions for liberalization of financial services and the capital account, not vice versa. Strategies and concepts of opening up developing economies need to include appropriate reforms and sequencing. This is of particular importance for small and vulnerable economies with weak institutional capacities. But there has to be a fundamental change in the presumptions that have guided efforts at liberalization. As noted in previous chapters, one of the lessons of the current crisis is that there should be no presumption that eventually there should be full liberalization. Rather, even the most advanced industrial countries require strong financial market regulations.”
http://citizen.typepad.com/eyesontrade/2009/10/stiglitz-commission-calls-for-wto-financial-services-reform.html
It’s time we stop focusing on currency because the big boys are setting up a regulatory trade structure based on balancing trade deficits and surpluses. Central banks will not retain the eminence of previous times, unless the banks are operating the carbon-credit exchanges.
@ Supergeek Thanks, Its how a feel, just a second read, needs a few more, commas …well if were being monitored then we might as well try and entertain and put it up them.
So lets put it up and entertain.
@ Stacy and larrymagicpony might like this joke more than others.
So Look At Gold its a bit too well straight up..
http://images.google.co.uk/images?hl=en&resnum=0&q=phallic&um=1&ie=UTF-8&ei=KKjhSp2FHd-ZjAf08_G0AQ&sa=X&oi=image_result_group&ct=title&resnum=4&ved=0CCQQsAQwAw
you better ban it from your site.
Where that pony fellah he might like this joke..
@Fibon11235:
I thought your link was cool!
Deputy dog Paul Tucker lol and his nebulous interest rate policy?
“Britain is on the cusp of a new era of monetary policy, in which targeting price stability is no longer the sole and primary objective of its economic decision-makers. The structure of the system will have profound implications for the way inflation, interest rates and the broader economy behave in the coming decades.”
////Translation\\\\ for my entertainment, am I wrong here lol !
1. Britain is on the cusp———> Yes like a shelf on a cliff?
2. Price stability is no longer –> What, run away inflation?
3. Structure of the system —–>What structure, its not a bridge?
4. Doubtful that macro-prudential –> Models don’t work any more
5. Coming Decades ————–>Were forever screwed.
6. surgical restraints—> Money management, tight lending in a complex world we no longer bully or own, booo hooo were in the shit now.
SMALL BEER maybe people should home brew away from government hogwash
Here one …24000 new Sky customers as UK population are staying at home watching TV as the pubs close….
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/5883902/Pubs-closing-at-record-rates.html
QUOTE
” lol lol lol
Some U.K. companies are weathering the slump. British Sky Broadcasting Group Plc, the U.K.’s biggest pay-television provider, said today that first-quarter profit rose. “We have won more clients despite the tough economic environment and I’m confident that we will continue to grow,” Chief Financial Officer Andrew Griffith said in an interview on Bloomberg TV. lol lol lol “
“The inflationary policies of the US government and Federal Reserve have damaged the US dollar to the point that it is increasingly seen as a destabilizing force in the world economy.”
http://news.goldseek.com/GoldSeek/1256317200.php
Here’s an example of the perspective that everyone is taking except the people in control. The common perspective is that the dollar itself is causing havoc in the world trade system. The power boys are claiming that trade imbalances are the culprit and that a new regulatory structure for the international financial system is needed. The common perspective derives impetus through a desire of the common man to find a safe store for wealth and a continued go at prosperity. The power boys perspective derives impetus from the desire of the elite to incise the competition from the capital body and monopolize or own everything.
The big boys are devaluing the currencies for a reason.
“In the near term, the end of the petrodollar standard will cause a sharp decline in the value of the US dollar and a marked increase in the prices of oil and of gold measured in US dollars.” (from goldseek link)
This sentence is stupid. If the value of the dollar is declining then the price of the item being considered is not an indication of the value of the item priced in dollars. Gold will hyperinflate as well.
@frances thats one hell of a chart
Richard Fisher of the Dallas fed was on BNN.ca and he said that the fed should target asset bubbles.