Ok, Cards on the table

[Mega]

Massive write downs
Dash for Cash
"dark" money getting drawn out of the system
How far to go?

Your thoughts guys?

Mike

[Mega]

Re: Ok, Cards on the table

[Woodsman]

Re: Ok, Cards on the table

...Your thoughts guys?

Mike

I'll tell you what I think. I think something isn't kosher here. The media is treating this virus like it's the Zombie Apocalypse, but it's no such thing. And we've been debating the structural crises in the financial system for more than a decade, waiting impatiently for Ka's and Pooms, but it's always a case of not quite yet. And now after an extended hiatus, EJ shows up.

No doubt, Covid-19 is the real deal, a virus spread by droplets that persists over time and is shed by asymptomatic persons. But outside the impact on elderly folks, the mortality rates don't justify the over the top response, not the panic being ginned up by the media, certainly not the global shutdown of commerce afoot, and most certainly not the unprecedented REPO response we've seen from the Fed - which, by the way we never seem to talk about here (at least outside the paywall).

Could it be that this panic is a cover for a much more serious action orchestrated behind the curtain to deal with these longstanding structural crises? The ECB must realize they are trapped by their idiotic negative interest policy. And as the Dollar rallies in a flight to safety, we're starting to see that the Fed isn't as all powerful as they want us to believe. They want a weak dollar, but it just keeps on ticking.

The Repo Crisis has emerged because of a collapse in confidence among banks. And nobody's talking, except for nonsense about this being a stealth QE. But look it, the EU (meaning, Germany) categorically refuses to bailout (Italian, Greek, etc.) banks. So any bank dealing with a European bank that fails will get a 100% loss. In a "normal" environment, rates would rise to account for the risk, but central banks are pulling all the stops out to keep them down. Only it's not working and REPO is the canary in the coal mine. Maybe we'll soon start seeing an official rate set by the central banks and a real-world rate for everyone else, which will reflect the actual risk. Or maybe something more drastic is afoot? Because even though everything they've tried thus far hasn't worked, they will never admit that NIRP was a mistake. And they cannot now allow rates to rise without collapsing themselves.

So what to do? How to "fix" things in a way that preserves their authority? Well, Legarde and Draghi before her persist in the view that the only reason negative interest rates have failed is because we the people have failed our central banker betters by hoarding our cash. Lo and behold, Corona shows up. In the spirit of never letting a crisis go to waste, why not use this once in a lifetime opportunity to good effect? So what's the answer?

Crypto.

Laugh if you want, but we've seen the Chinese burn and try to disinfect contaminated Yuan notes. Legard has come out many times stating that countries should create their own digital currency. Even the Bundesbank authorized German banks to act as custodians for cryptocurrencies (for safety, dontchaknow). The BoE is sending around reports to the press by way of planting the seed that this is the solution (https://www.bankofengland.co.uk/rese...tal-currencies) to our problems and Sweden has published similar papers. The explosion in the popularity of crypto has been a sight to watch, but despite the utopian-talk associated with it, I could never help but wonder what these crypto evangelists think the central banks will do about it? Shrug their shoulders, admit defeat, and get a real job? Yeah, fat chance of that. When it suits them, they'll create their own crypto and confiscate the rest. Anyone who balks winds up with a worthless pile of digital bits. And maybe they get a few years in the lockup, too?

But how to get us rubes to bite? How to get at all those Euros and Dollars stuffed under the mattress? Easy peasy. Create a central bank crypto, give folks notice of their intent to cancel the currency and force people to deposit their Euros. And what prey tell would they use as a justification? Howsabout a global media-driven panic over pandemic flu as a for instance? Feed a hungry the press with disinformation and create a panic about Corona that spooks the markets and corporations so as to deliberately collapse the economy. Use the double-whammy of a zombie apolcalypse flu-driven economic collapse justify their solution. Eliminate paper currency and adopt the central bank's crypto.

And when cancelling the currency fails - which it will as it has always done - all the easier it will be to enact forced loans, bail-ins, extend 90 day paper to 10 years, and run a few keystrokes so as to encourage folks to spend their crypto before the value diminishes. It's a central banker's wet dream! And don't bother with the Bitcoin stuff. It's honey for hackers and we're keeping you safe by confiscating cryptocurrencies from the bad actors and converting them to government digital currencies. You wouldn't want to get laid down by Corona from that dirty, filthy, infected lucre, would you?

Too bad for the wizards of smart that it won't work. First of all, because king Dollar continues to reign and the Golden God-Emperor Trump will never go along with it. And least of all because it really will precipitate the mother of all financial crises.

Bottom line, whenever the media-government-corporate-educational complex line up 100% behind something, you gotta know that something is rotten.

[shiny!]

Re: Ok, Cards on the table

Bottom line, whenever the media-government-corporate-educational complex line up 100% behind something, you gotta know that something is rotten.

Dude, I have missed you!

[shiny!]

Re: Ok, Cards on the table

Trump made the mistake of taking credit for a booming stock market. A crashed stock market and tanked economy will make it harder for him to get re-elected. If the healthcare system gets overwhelmed by Covid-19, it'll give a push to the dems' drive for universal health care.

The Repo crisis is key here, like Woodsman says, but there's no news coverage about it. The Fed keeps giving trillion$ to the repo market but the money just keeps evaporating. The Fed can't create inflation no matter how much it pumps. Deflation is happening now.

Feels like a big, spinning gyroscope is in its last, crazy wobbles. Maybe it isn't, but it feels like it is.

[Woodsman]

Re: Ok, Cards on the table

Dude, I have missed you!

Aww Shucks, Ma’am.

Anyway, it's "Coronagate." No way all of this is organic, popping up out of the ground like mushrooms after a rainstorm. Too pat, too organized, too coordinated. In less than 24 hours since Trump's address, the market pukes a hairball, the final four gets nixed, NHL and the NBA too. Closer to home, they've shut down every college in the state, every school in the county, and the markets are packed to the gills with anxious shoppers stocking up on milk and toilet paper. We can't agree on what to serve for dinner, but all of a sudden there's universal unanimity that we need to shut down commerce and hunker down for the duration? That dog don't hunt.

"I have certain rules I live by. My first rule; I don't believe anything the government tells me."
- George Carlin

[shiny!]

Re: Ok, Cards on the table

I might agree with coronagate, but that would imply an intentional, co-ordinated conspiracy. Do you really think so many people have the collective intelligence to conspire such a thing and pull it off? Or is it just the culmination of years of sky-is-falling fear-mongering clickbait by the MSM that is resulting in a self-fulfilling prophecy? They yelled fire in a crowded theatre long and loudly enough that eventually they caused a panic. Once the herd gets sufficiently nervous it doesn't take much to set off a stampede.

Panic is good for MSM's business model. Panic causes a stock market crash and a stock market crash hits Trump where it hurts, because he foolishly took ownership of the raging bull market. If the economy goes into recession, well, even better from the MSM's POV. I think they would rather bring down the entire planet than give Trump another 4 years.

But the repo crisis has been going on longer than coronavirus. Perhaps having that come to a head now is just a bonus crisis. Did the stock market crash give Repo crisis the final push over the cliff, or did the Repo crisis trigger the stock market crash? Does it even matter anymore?

[jk]

Re: Ok, Cards on the table

repo crisis = banks don't trust each other. look at what's happened to european banks, with deutsche as exhibit 1. would you trust deutsche bank? or commerzbank? or monte de pesci?

also repo crisis = shortage of dollar liquidity. as finster has pointed up we are in a deflationary episode, i.e. the dollar is getting more valuable. shortage of dollar liquidity= dollar supply shortage => dollar becomes more valuable.

if you've been following the work of jeff sneider of alhambra, he's been documenting this process in the eurodollar market, where it has been happening in waves ever since the 2008 financial crisis. we are still dealing with the aftermath of that fiasco.

------------

re: why all the hysteria? - our hospital system can be easily overwhelmed by current case rates at current rates of spread. we don't know how many asymptomatic or mildly symptomatic cases there are, but we do know that of those who get noticeably sick, 20% need to be hospitalized, 5 % [i.e. a quarter of that 20%] need an icu for a period of weeks! i read somewhere that there are only 60k icu beds in the whole country. all the cancellations - sports, schools, entertainment, business meetings - can slow the virus spread and thus lower the peak demand for hospital services.

if you're interested in how this plays out in real life, here's an article on what's happening in italian hospitals:

https://www.theatlantic.com/ideas/ar...al-bed/607807/


if you get hit by a truck [never mind the virus] it would be nice for the hospital to have some capacity to take care of you.

[Woodsman]

Re: Ok, Cards on the table

I sure do.

[GRG55]

Re: Ok, Cards on the table

...re: why all the hysteria? - our hospital system can be easily overwhelmed by current case rates at current rates of spread. we don't know how many asymptomatic or mildly symptomatic cases there are, but we do know that of those who get noticeably sick, 20% need to be hospitalized, 5 % [i.e. a quarter of that 20%] need an icu for a period of weeks! i read somewhere that there are only 60k icu beds in the whole country. all the cancellations - sports, schools, entertainment, business meetings - can slow the virus spread and thus lower the peak demand for hospital services.

if you're interested in how this plays out in real life, here's an article on what's happening in italian hospitals:

https://www.theatlantic.com/ideas/ar...al-bed/607807/


if you get hit by a truck [never mind the virus] it would be nice for the hospital to have some capacity to take care of you.

A couple of thoughts come to mind:

1) Unlike many other nations, with their public funded basic health care systems, a lot of health care capacity in the USA seems to be allocated on ability to pay. That's going to have a potentially dramatic effect on low income sectors of the economy, including the gig Millennials.

2) Seems inconceivable to me that #1 isn't going to manifest itself in some potentially dramatic political ways later this year. Among other things, this crisis could reshape (revive?) the level of debate around a big component of the Sanders & Warren policy planks - Biden may have to swing "left" to a greater degree than many expected.

[GRG55]

Re: Ok, Cards on the table

I sure do.

I still struggle with that.

But so much of the stuff going on now is so blatantly self serving for the elites even I'm starting to wonder. Travel bans from Continental Europe, while excluding the UK (where Trump has golf courses) is just one example.

[kbird]

Re: Ok, Cards on the table

I have to admit wondering the same things that Woodsman has been wondering about. The timing of all this during an election year certainly seems suspicious.

But the first-hand accounts of doctors working in hospitals in Italy suggest to me that, regardless of how it started, the threat of this virus overwhelming U.S. hospitals is quite real.

[Mega]

Re: Ok, Cards on the table

I have some issues with the Virus, while not going all "Alex Jones" I have to say the handling of it was some what different from other out breaks.
In fact VERY different !

I also note that while stuggling to get much of a medical response going, boy where they ready with the Economic one!

Mike

[jk]

Re: Ok, Cards on the table

I also note that while stuggling to get much of a medical response going, boy where they ready with the Economic one!

that's what they know how to do. they've had a lot of practice.

[thriftyandboringinohio]

Re: Ok, Cards on the table

So does all this market support and emergency intervention end up on the FEDs balance sheet?.