[MONEY] Risk Parity Funds Just Suffered The Biggest Loss In History - when hedge arbitrage breaks down - [PEACE]
There are a few bell weathers starting to make the rounds, here's one: "X suffers Biggest Loss in History!" In this case, the X in the headline is "ALL risk parity funds" where risk parity funds are a type of hedge funds which apparently arbitrage stocks and aginst bonds. Risk Parity Funds Just Suffered The Biggest Loss In History https://www.zerohedge.com/markets/risk-parity-funds-just-suffered-biggest-lo... When your fud-durr-durr-mentals are brokensaw - 'member the Fed' - your houses of cards built on those fundamentals will at some point come crashing down. You see there's a funny little thing with usury - the mathematical fundamental of this very Jewish banking system is exponential - forever growth or infinite growth (unlimited "economic expansion"). Now fictitious "assets" can in fact grow in unlimited numerical terms, but when "the real economy" is tied to fictious exponentially growing "financial assets", then there is a basic imbalance which must, inevitably, appear - one could say this is the ultimate arbitrage, between exponential maths and reality. One consequence of this rollercoaster of financial death is that every mechanism designed on this exponential (thus broken) system, must itself be in essence, an exponentially growing system - so hedge funds must grow exponentially, every tool of financialization will, eventually, demonstrate exponential growth (such as stock buy backs etc), and the real economy needs to also grow exponentially to prop all the financialization up - and this is in fact achieved with things like real estate and business price growth. (Those who are somewhat familiar with real estate from a lowly "investor" perspective, will be aware that there are expanding ripples of price inflation over time, which hit different geographic regions at different times (different years, sometimes different decades) - and once the "investor" crowd hits a new geographic area which was once relatively dormant (Australia's a big country ok), then the key growth metric is the time period for (real estate) price doubling - which is usually around the 6 to 8 years mark.) So, real estate doubling in price every X years? Yes, that's exponential "asset valuation increases" and real estate is a fundamental of "the real economy" which supports the house of fictious cards above it. But this exponential is gonna bite, because to support exponentially rising real estate prices, you need exponentially rising incomes to pay the interest rates. So one signal of the imbalances of all this coming to the fore is usurious interest rates plummeting. Is this a good thing? No, because a) this demonstrates we are in a fundamentally messed up money system, b) real estate prices are way out of whack with real (average person) incomes, c) real estate price inflation has itself caused a bunch of system imbalances, wealth divide etc., and surely other reasons still. Now, the summary and line punch: 0) our present money system is, mathematically, exponential; for the time being we are bound by this, and we see some of the effects of this quite starkly today 1) every aspect of our system must therefore also be exponential (in growth or decline); e.g. every "emergency intervention system" (such as QE) must also be eponential, that is, each QE (on average) must grow exponentially with respect to the previous intervention (corporate share buybacks are a pooman's (poor CEO's) intervention mechanism) 2) eventually the Fed's QE intervention must be larger than the entire market; in other words, at some point, if the goal is to sustain the system's existence, the Fed shall be mathematically bound, literally, to buy every asset everywhere, or the system will literally collapse if they fail to do so - i.e. to buy every bond (gov and corp), every business, every stock/share, every real estate title This is of course the basic mechanism of an exponential debt based system, and one can fairly say this is in fact the intention of this system - Atlas Shrugged - no matter who you are, how ethical, how successful, how well intentioned, how contributory to society at large, except that you are the owner of the system (i.e. the BIS - 'member the Fed), then you are Atlas, and you are targetted, and eventually, in order to merely survive financially, you will have to sell to the Fed/BIS. This is the nature, and intention, of "the Federal Reserve Banking system: your gibs, are mine!" Exponential Growth and the Legend of Paal Paysam http://www.singularitysymposium.com/exponential-growth.html The rice and the chessboard story – The power of exponential growth https://purposefocuscommitment.com/the-rice-and-the-chess-board-story/ There was once a king in India who was a big chess enthusiast and had the habit of challenging wise visitors to a game of chess. One day a traveling sage was challenged by the king. The sage having played this game all his life all the time with people all over the world gladly accepted the Kings challenge. To motivate his opponent the king offered any reward that the sage could name. The sage modestly asked just for a few grains of rice in the following manner: the king was to put a single grain of rice on the first chess square and double it on every consequent one. The king accepted the sage’s request. Having lost the game and being a man of his word the king ordered a bag of rice to be brought to the chessboard. Then he started placing rice grains according to the arrangement: 1 grain on the first square, 2 on the second, 4 on the third, 8 on the fourth and so on. Following the exponential growth of the rice payment, the king quickly realized that he was unable to fulfill his promise because on the twentieth square the king would have had to put 1,000,000 grains of rice. On the fortieth square, the king would have had to put 1,000,000,000 grains of rice. And, finally, on the sixty-fourth square, the king would have had to put more than 18,000,000,000,000,000,000 grains of rice which is equal to about 210 billion tons and is allegedly sufficient to cover the whole territory of India with a meter thick layer of rice. It was at that point that the sage told the king that he doesn’t have to pay the debt immediately but can do so over time. And so the sage became the wealthiest person in the world.
Headlines hotting up: "The Market Is Broken" - Why Nobody Is Trading Any More https://www.zerohedge.com/markets/market-broken-why-nobody-trading-any-more .. "We were just trying on Monday to trim a long position in the 30-year Treasury because it had moved so far in our favor, and were unable to get bids from several major dealers. We’ve never seen that before." .. "I’ve never seen that before, the inability to trade a U.S. Treasury." .. "“We heard there were some issues in off-the-run Treasuries,” Treasury Secretary Steven Mnuchin said on CNBC Friday morning. “We are working on that"... but apparently not enough, and the result was the biggest VaR shock of all time as risk parity funds launched a crushing deleveraging which has crippled conventional correlations, and left traders speechless at the bid or offerless Treasury markets. ... Nomura: "The Market Has Only Just Begun Staring Into The Abyss" https://www.zerohedge.com/markets/77-sigma-move-nomura-says-market-has-only-... .. The plunge in US equities yesterday (12 March) pushed weekly returns down to 7.7 standard deviations below the norm. In statistical science, the odds of a greater-than seven-sigma event of this kind are astronomical to the point of being comical (about one such event every 160 billion years). Setting aside legitimate quibbles over the statistical significance of this, we can say with confidence that we are witnessing a history-making market disaster in real-time. Looking back at the performance of the DJIA since 1900, market shocks have exceeded the current rout in magnitude on only three occasions: in 1914 (when a growing financial crisis caused trading in US equities to be halted), in 1929 (the historic market crash that led to the Great Depression), and in 1987 (the Black Monday event). US stock market sentiment has also seen a jarringly swift collapse, as equity sentiment has now gone beyond the low point marked during the 2015 renminbi shock. In little more than the blink of an eye, the situation has come to look like the 2008 Lehman Brothers crisis all over again. ...
Ominous signs, biggest swings in history, and scary headines all continue: The Last Time This Happened Was October 1929... https://www.zerohedge.com/markets/last-time-happened-was-october-1929 .. Top 20 biggest daily gains and losses back to 1926. 3 of 5 days this week made the list! 29, 32, 33, 87, 08, 20 had weeks with multiples. .. But even more unusual this week was the fact that the market had back to back 9% swing days... The last time this occurred was the three days ending October 30, 1929... .. But it could never happen again right?
On Sun, Mar 15, 2020 at 10:22:57AM +1100, Zenaan Harkness wrote:
Ominous signs, biggest swings in history, and scary headines all continue:
The Last Time This Happened Was October 1929... https://www.zerohedge.com/markets/last-time-happened-was-october-1929
.. Top 20 biggest daily gains and losses back to 1926.
3 of 5 days this week made the list!
29, 32, 33, 87, 08, 20 had weeks with multiples.
.. But even more unusual this week was the fact that the market had back to back 9% swing days... The last time this occurred was the three days ending October 30, 1929...
.. But it could never happen again right?
Just blink for a few days, and we've gone from 7.7 sigma, to 8 sigma! In statistics, this is literally once in a lifetime stuff. Enjoy the view while it lasts, folks :D "We're Not Sure What's Going On": Markets Hit "Sell Everything" Moment After "Largest On Record" 8-Sigma Crash https://www.zerohedge.com/markets/were-not-sure-whats-going-markets-hit-sell... Last week, following a series of unprecedented, shocking market moves, we explained that a big reason behind the decorrelated cross-asset rollercoaster was due to an unprecedented, the biggest ever VaR shock, that forced risk parity funds, which until 2 months ago were the most levered ever, to engage in an unprecedented liquidation and delever to levels that were more suitable for the current, well, market crash. We thought there was no way this market-dislocating move could ever be repeated. We were wrong, because as we showed yesterday, on Wednesday markets just suffered the biggest balanced portfolio drop in history, surpassing both the insanity of last week and the global financial crisis. This morning, in a detail postmortem of just this move, Nomura's Charlie McElligott writes that the move shown above in the model "60/40" balanced portfolio may have marked the peak "sell everything" moment, with a record 15.5% drawdown in 18 days, which represents an 8-sigma move, and is the largest on record. Drilling into this historic move which saw the conventional "bonds as your hedge" trade going completely wrong-way, especially for risk parity funds in-light of what McElligott notes is the "liquidate financial assets/cash at all costs" environment—and a potential “paradigm shift” of unprecedented and experimental fiscal stimulus in-the-pipe, "we now see the past 18d period of returns for our model “World 60/40” fund -15.5%, greater than a -8 SD move and truly unprecedented dating-back to our model’s 1999 start-date" Why does this matter? Because "the feedback loop of forced deleveraging/stop-outs in light of the extreme realized volatility mechanically “triggering” and de-risking is best seen by the "remarkable slashing" of gross-exposure within Nomura's Risk Parity model, where there has been a reduction from the 100th percentile, a reading of 555% on Feb 10th, to this morning’s 240%/0th percentile estimated gross-exposure reading. Digging through the market plumbing, McElligott points out the "kitchen sink" of central bank emergency announcements overnight... - Fed announced a new emergency program (MMLF) to aid money markets - ECB “no limits” bazooka (“Pandemic Purchase Program w/ $820B of QE) - RBA 25bps cut to ELB, introduces QE and targeted YCC - Japan discussing $276B packed including “cash payouts” to households - S Korea new $40B package - Brazilian 50bps rate cut - US Senate passes 2nd stimulus bill and negotiating the 3rd ($1.3T) - Fresh headlines from Bloomberg *GERMANY MAY AUTHORIZE EMERGENCY DEBT AS SOON AS NEXT WEEK - BOE emergency rate cut to 0.1% and GBP200BN QE expansion ... and notes that all these extraordinary policy measures roll-in alongside the abovementioned liquidation into cash and "stop-out" behavior, flows from UST/Rates business which have been “…decisively bearish for the last week, with heavy selling from foreign and domestic RM, deleveraging in basis/off the runs/tips from hedge funds (RV/Macro/RP strats etc)” Worse, the Nomura quant believes that it is nowhere close to done...
On Fri, Mar 20, 2020 at 01:50:39PM +1100, Zenaan Harkness wrote:
On Sun, Mar 15, 2020 at 10:22:57AM +1100, Zenaan Harkness wrote:
Ominous signs, biggest swings in history, and scary headines all continue:
The Last Time This Happened Was October 1929... https://www.zerohedge.com/markets/last-time-happened-was-october-1929
.. Top 20 biggest daily gains and losses back to 1926.
3 of 5 days this week made the list!
29, 32, 33, 87, 08, 20 had weeks with multiples.
.. But even more unusual this week was the fact that the market had back to back 9% swing days... The last time this occurred was the three days ending October 30, 1929...
.. But it could never happen again right?
Just blink for a few days, and we've gone from 7.7 sigma, to 8 sigma!
In statistics, this is literally once in a lifetime stuff. Enjoy the view while it lasts, folks :D
"We're Not Sure What's Going On": Markets Hit "Sell Everything" Moment After "Largest On Record" 8-Sigma Crash https://www.zerohedge.com/markets/were-not-sure-whats-going-markets-hit-sell...
Last week, following a series of unprecedented, shocking market moves, we explained that a big reason behind the decorrelated cross-asset rollercoaster was due to an unprecedented, the biggest ever VaR shock, that forced risk parity funds, which until 2 months ago were the most levered ever, to engage in an unprecedented liquidation and delever to levels that were more suitable for the current, well, market crash.
We thought there was no way this market-dislocating move could ever be repeated. We were wrong, because as we showed yesterday, on Wednesday markets just suffered the biggest balanced portfolio drop in history, surpassing both the insanity of last week and the global financial crisis.
This morning, in a detail postmortem of just this move, Nomura's Charlie McElligott writes that the move shown above in the model "60/40" balanced portfolio may have marked the peak "sell everything" moment, with a record 15.5% drawdown in 18 days, which represents an 8-sigma move, and is the largest on record.
Drilling into this historic move which saw the conventional "bonds as your hedge" trade going completely wrong-way, especially for risk parity funds in-light of what McElligott notes is the "liquidate financial assets/cash at all costs" environment—and a potential “paradigm shift” of unprecedented and experimental fiscal stimulus in-the-pipe, "we now see the past 18d period of returns for our model “World 60/40” fund -15.5%, greater than a -8 SD move and truly unprecedented dating-back to our model’s 1999 start-date"
Why does this matter? Because "the feedback loop of forced deleveraging/stop-outs in light of the extreme realized volatility mechanically “triggering” and de-risking is best seen by the "remarkable slashing" of gross-exposure within Nomura's Risk Parity model, where there has been a reduction from the 100th percentile, a reading of 555% on Feb 10th, to this morning’s 240%/0th percentile estimated gross-exposure reading.
Digging through the market plumbing, McElligott points out the "kitchen sink" of central bank emergency announcements overnight...
- Fed announced a new emergency program (MMLF) to aid money markets - ECB “no limits” bazooka (“Pandemic Purchase Program w/ $820B of QE) - RBA 25bps cut to ELB, introduces QE and targeted YCC - Japan discussing $276B packed including “cash payouts” to households - S Korea new $40B package - Brazilian 50bps rate cut - US Senate passes 2nd stimulus bill and negotiating the 3rd ($1.3T) - Fresh headlines from Bloomberg *GERMANY MAY AUTHORIZE EMERGENCY DEBT AS SOON AS NEXT WEEK - BOE emergency rate cut to 0.1% and GBP200BN QE expansion
... and notes that all these extraordinary policy measures roll-in alongside the abovementioned liquidation into cash and "stop-out" behavior, flows from UST/Rates business which have been “…decisively bearish for the last week, with heavy selling from foreign and domestic RM, deleveraging in basis/off the runs/tips from hedge funds (RV/Macro/RP strats etc)”
Worse, the Nomura quant believes that it is nowhere close to done...
So US total market cap to GDP ratio is finally touching 2008 housing bubble levels - but on its way down! As the article says, this shows the ridiculous valuation levels that the US stock market was at, and how much further this steamroller can go down. Impressive movements moving.. Stocks Suffer Worst Week Since Lehman Despite Biggest Fed Bailout Ever https://www.zerohedge.com/markets/stocks-suffer-worst-week-lehman-despite-bi...
And some of us thought this QE5 would "be lucky to last 6 months." Welp, how's 1 (as in, ONE) week grab ya? Wow. $1.2 trillion in past two weeks, $2 trillion "stimulus/ COVID rescue" bill, and infinity $$ printing going forward. Global martial law in two weeks is now looking possibly optimistic, as in, we might be in for escalation by next week even... possibly, but quite possibly probably it seems. This is end game (reset time), folks, we're talking may be a few weeks. If you failed to hedge any real wealth with some physical gold purchases, you're most likely S.O.L. right about now... So grab any physical asset you can. Does not matter that real estate prices may collapse 10 fold in the coming couple of months, a debt free R/E title is a hell of a lot more physical that some numbers in "your" bank's computers. "Bail in" and all... Good luck with any substantial asset purchase in this climate -> at this point, it's safe to say, if you haven't done what you "always knew" you should do, you are well behind the 8 ball, and probably too late. Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate https://www.zerohedge.com/markets/fed-buys-587-billion-bonds-past-week-27-gd...
On Thu, Mar 26, 2020 at 08:18:48PM +1100, Zenaan Harkness wrote:
And some of us thought this QE5 would "be lucky to last 6 months."
Welp, how's 1 (as in, ONE) week grab ya?
Wow.
$1.2 trillion in past two weeks, $2 trillion "stimulus/ COVID rescue" bill, and infinity $$ printing going forward.
Global martial law in two weeks is now looking possibly optimistic, as in, we might be in for escalation by next week even... possibly, but quite possibly probably it seems.
This is end game (reset time), folks, we're talking may be a few weeks. If you failed to hedge any real wealth with some physical gold purchases, you're most likely S.O.L. right about now...
So grab any physical asset you can. Does not matter that real estate prices may collapse 10 fold in the coming couple of months, a debt free R/E title is a hell of a lot more physical that some numbers in "your" bank's computers. "Bail in" and all...
Good luck with any substantial asset purchase in this climate -> at this point, it's safe to say, if you haven't done what you "always knew" you should do, you are well behind the 8 ball, and probably too late.
Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate https://www.zerohedge.com/markets/fed-buys-587-billion-bonds-past-week-27-gd...
And just like that, $400 billion, became a trillion, became $2.3 trillion, became $6.3 trillion! Another 2 weeks, another doubling - this time to (of course) $4 trillion moar. And in another short time period it shall be $8 trillion, and Goldman's estimate of the Fed's "$10 trillion financialization asset book by the end of this [2020] year" goes up in a puff on conservative "shit, it's bigger ain't it?" smoke. What's $4 trillion between a government and its interest payments anyway? What the bankers don't seem to understand, and really ought to understand, is that an insanely wealthy top of the pyramid, to be sustainable over time (the whole point of the banking exercise), requires a strong base to the pyramid/hierarchy - we lowly folks (your extremely highly opinionated scribeler included of course) need dollars. Why do we need dollars you ask? Because we don't have many, of course. And no, that's NOT meant to be funny, stop chuckling already :) And what good is it to bankers, for lowly plebes like "we truly" to have abundant dollars? Because I/we spend those dollars of course - on a home, perhaps a vehicle, a tractor for those who would like to grow potatoes, a new laptop to replace my ageing 10 yr old clunker, a cool "libre laptop" assembling business, etc, etc, etc. But again, I hear you ask, why is this useful to wealthy bankers? Because (since yes, I know it's hard to understand simple things), that money which we deplorables spend, is being spent ultimately into bank accounts, on interest, on credit card repayments, on rent, and on crazy real estate prices -- thus propping up all your stupid banker financialization. Oh how one who would hope to find God doth cringe at pointing out the obvious and necessary steps required by greedy people to prop up their stupid greed! Did I mention greed is stupid? Because, cringe! And just like that, with a snap o tha fingers, he justifies UBI. I didn't want to justify UBI - really, truly! Bin holding out on that one for a couple years now - ever since some serious thought was put to the matter and the self evident so rudely encroached upon that lonely neurone. This is actually a sad day for humans, since UBI shall likely template the majority into being satisfied with their golden cages in this world - "peace begets slothfulness" and all... One can justify this with a "you get what you firetrucking deserve" or a "well it has been this way since time immemorial - only the few ever sought their maker within anyway" etc. Cest la vie.
Here's that extra $4 trillion for ya :) Gold Soars Along With Everything Else As Fed Ends Capital Markets As We Know Them https://www.zerohedge.com/markets/stocks-gold-surge-fed-announces-end-capita... .. Simple! - The Fed injected $440BN in last week, total is now $6.3 trillion On Fri, Apr 10, 2020 at 11:05:33AM +1000, Zenaan Harkness wrote:
On Thu, Mar 26, 2020 at 08:18:48PM +1100, Zenaan Harkness wrote:
And some of us thought this QE5 would "be lucky to last 6 months."
Welp, how's 1 (as in, ONE) week grab ya?
Wow.
$1.2 trillion in past two weeks, $2 trillion "stimulus/ COVID rescue" bill, and infinity $$ printing going forward.
Global martial law in two weeks is now looking possibly optimistic, as in, we might be in for escalation by next week even... possibly, but quite possibly probably it seems.
This is end game (reset time), folks, we're talking may be a few weeks. If you failed to hedge any real wealth with some physical gold purchases, you're most likely S.O.L. right about now...
So grab any physical asset you can. Does not matter that real estate prices may collapse 10 fold in the coming couple of months, a debt free R/E title is a hell of a lot more physical that some numbers in "your" bank's computers. "Bail in" and all...
Good luck with any substantial asset purchase in this climate -> at this point, it's safe to say, if you haven't done what you "always knew" you should do, you are well behind the 8 ball, and probably too late.
Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate https://www.zerohedge.com/markets/fed-buys-587-billion-bonds-past-week-27-gd...
And just like that, $400 billion, became a trillion, became $2.3 trillion, became $6.3 trillion!
Another 2 weeks, another doubling - this time to (of course) $4 trillion moar. And in another short time period it shall be $8 trillion, and Goldman's estimate of the Fed's "$10 trillion financialization asset book by the end of this [2020] year" goes up in a puff on conservative "shit, it's bigger ain't it?" smoke.
What's $4 trillion between a government and its interest payments anyway?
What the bankers don't seem to understand, and really ought to understand, is that an insanely wealthy top of the pyramid, to be sustainable over time (the whole point of the banking exercise), requires a strong base to the pyramid/hierarchy - we lowly folks (your extremely highly opinionated scribeler included of course) need dollars.
Why do we need dollars you ask?
Because we don't have many, of course. And no, that's NOT meant to be funny, stop chuckling already :)
And what good is it to bankers, for lowly plebes like "we truly" to have abundant dollars?
Because I/we spend those dollars of course - on a home, perhaps a vehicle, a tractor for those who would like to grow potatoes, a new laptop to replace my ageing 10 yr old clunker, a cool "libre laptop" assembling business, etc, etc, etc.
But again, I hear you ask, why is this useful to wealthy bankers?
Because (since yes, I know it's hard to understand simple things), that money which we deplorables spend, is being spent ultimately into bank accounts, on interest, on credit card repayments, on rent, and on crazy real estate prices -- thus propping up all your stupid banker financialization.
Oh how one who would hope to find God doth cringe at pointing out the obvious and necessary steps required by greedy people to prop up their stupid greed!
Did I mention greed is stupid? Because, cringe!
And just like that, with a snap o tha fingers, he justifies UBI.
I didn't want to justify UBI - really, truly! Bin holding out on that one for a couple years now - ever since some serious thought was put to the matter and the self evident so rudely encroached upon that lonely neurone.
This is actually a sad day for humans, since UBI shall likely template the majority into being satisfied with their golden cages in this world - "peace begets slothfulness" and all...
One can justify this with a "you get what you firetrucking deserve" or a "well it has been this way since time immemorial - only the few ever sought their maker within anyway" etc.
Cest la vie.
UBI: - Universal basic income. - Universal banker's' insurance (literally). - Ungodly bloody institute. On Fri, Apr 10, 2020 at 11:07:44AM +1000, Zenaan Harkness wrote:
Here's that extra $4 trillion for ya :)
Gold Soars Along With Everything Else As Fed Ends Capital Markets As We Know Them https://www.zerohedge.com/markets/stocks-gold-surge-fed-announces-end-capita... .. Simple! - The Fed injected $440BN in last week, total is now $6.3 trillion
On Fri, Apr 10, 2020 at 11:05:33AM +1000, Zenaan Harkness wrote:
On Thu, Mar 26, 2020 at 08:18:48PM +1100, Zenaan Harkness wrote:
And some of us thought this QE5 would "be lucky to last 6 months."
Welp, how's 1 (as in, ONE) week grab ya?
Wow.
$1.2 trillion in past two weeks, $2 trillion "stimulus/ COVID rescue" bill, and infinity $$ printing going forward.
Global martial law in two weeks is now looking possibly optimistic, as in, we might be in for escalation by next week even... possibly, but quite possibly probably it seems.
This is end game (reset time), folks, we're talking may be a few weeks. If you failed to hedge any real wealth with some physical gold purchases, you're most likely S.O.L. right about now...
So grab any physical asset you can. Does not matter that real estate prices may collapse 10 fold in the coming couple of months, a debt free R/E title is a hell of a lot more physical that some numbers in "your" bank's computers. "Bail in" and all...
Good luck with any substantial asset purchase in this climate -> at this point, it's safe to say, if you haven't done what you "always knew" you should do, you are well behind the 8 ball, and probably too late.
Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate https://www.zerohedge.com/markets/fed-buys-587-billion-bonds-past-week-27-gd...
And just like that, $400 billion, became a trillion, became $2.3 trillion, became $6.3 trillion!
Another 2 weeks, another doubling - this time to (of course) $4 trillion moar. And in another short time period it shall be $8 trillion, and Goldman's estimate of the Fed's "$10 trillion financialization asset book by the end of this [2020] year" goes up in a puff on conservative "shit, it's bigger ain't it?" smoke.
What's $4 trillion between a government and its interest payments anyway?
What the bankers don't seem to understand, and really ought to understand, is that an insanely wealthy top of the pyramid, to be sustainable over time (the whole point of the banking exercise), requires a strong base to the pyramid/hierarchy - we lowly folks (your extremely highly opinionated scribeler included of course) need dollars.
Why do we need dollars you ask?
Because we don't have many, of course. And no, that's NOT meant to be funny, stop chuckling already :)
And what good is it to bankers, for lowly plebes like "we truly" to have abundant dollars?
Because I/we spend those dollars of course - on a home, perhaps a vehicle, a tractor for those who would like to grow potatoes, a new laptop to replace my ageing 10 yr old clunker, a cool "libre laptop" assembling business, etc, etc, etc.
But again, I hear you ask, why is this useful to wealthy bankers?
Because (since yes, I know it's hard to understand simple things), that money which we deplorables spend, is being spent ultimately into bank accounts, on interest, on credit card repayments, on rent, and on crazy real estate prices -- thus propping up all your stupid banker financialization.
Oh how one who would hope to find God doth cringe at pointing out the obvious and necessary steps required by greedy people to prop up their stupid greed!
Did I mention greed is stupid? Because, cringe!
And just like that, with a snap o tha fingers, he justifies UBI.
I didn't want to justify UBI - really, truly! Bin holding out on that one for a couple years now - ever since some serious thought was put to the matter and the self evident so rudely encroached upon that lonely neurone.
This is actually a sad day for humans, since UBI shall likely template the majority into being satisfied with their golden cages in this world - "peace begets slothfulness" and all...
One can justify this with a "you get what you firetrucking deserve" or a "well it has been this way since time immemorial - only the few ever sought their maker within anyway" etc.
Cest la vie.
Remember: the entire debt based usury money system we slave under, is exponential in nature, and every "intervention" (e.g. Q.E.), on average shall (must, mathematically) be exponentially larger than the previous "intervention". And so is it, it is so ... literally half a trillion dollars of IMF/BIS/Fed bailout over the last six months ("repo crisis liquidity injection"), is not quite enough, and so "due to COVID-19", the next bailout is ... literally a trillion dollars (close to a doubling): 23 September 2019 - ~$400 billion+ : Why the Repo Market Is Such a Big Deal—and Why Its $400 Billion Bailout Is So Unnerving https://fortune.com/2019/09/23/repo-market-big-deal-400-billion-bailout-unne... .. A $1 trillion market springs a leak .. We estimate that over the first year, the Fed would need to buy roughly $400bn of Treasury securities to achieve an appropriate level of reserves, plus a buffer,” the Bank of America wrote in a research note. ... [ Whoopsie, did we say $400 billion over 1 year? What we really meant was 6 months, then we shall reassess. . . . Oh shirt! Oh dear me! Yes yes, it's been 6 months, we've pumped the firetruck outta the money printing press and whaddaya know? - we gotta double down, this time a trillion dollars, and fer surely we'll be lucky to make even THAT stretch to 6 months: ] 16 March 2020 - ~ $900 billion+ : IMF Prepares $1 Trillion [officially $900 billion] Bazooka https://www.zerohedge.com/geopolitical/imf-prepares-1-trillion-bazooka .. In a blog post published minutes ago, IMF Director Kristalina Georgieva .. declaring that the IMF has $1 trillion in loan capacity ready to put to work to salve the economic damage caused by the outbreak .. "The IMF stands ready to mobilize its $1 trillion lending capacity to help our membership. As a first line of defense, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs." ... Who could pothibly have predicted thith? Feel free to enjoy the gluttonous superiority trip from smarmily expounding such deep mathematical truths to the ignorant laity sheeple pleble. Or actually, perhaps try practicing a little humility instead. We're gettin' close, muffas . . . On Sat, Mar 14, 2020 at 11:30:51AM +1100, Zenaan Harkness wrote:
There are a few bell weathers starting to make the rounds, here's one:
"X suffers Biggest Loss in History!"
In this case, the X in the headline is "ALL risk parity funds" where risk parity funds are a type of hedge funds which apparently arbitrage stocks and aginst bonds.
Risk Parity Funds Just Suffered The Biggest Loss In History https://www.zerohedge.com/markets/risk-parity-funds-just-suffered-biggest-lo...
When your fud-durr-durr-mentals are brokensaw - 'member the Fed' - your houses of cards built on those fundamentals will at some point come crashing down.
You see there's a funny little thing with usury - the mathematical fundamental of this very Jewish banking system is exponential - forever growth or infinite growth (unlimited "economic expansion").
Now fictitious "assets" can in fact grow in unlimited numerical terms, but when "the real economy" is tied to fictious exponentially growing "financial assets", then there is a basic imbalance which must, inevitably, appear - one could say this is the ultimate arbitrage, between exponential maths and reality.
One consequence of this rollercoaster of financial death is that every mechanism designed on this exponential (thus broken) system, must itself be in essence, an exponentially growing system - so hedge funds must grow exponentially, every tool of financialization will, eventually, demonstrate exponential growth (such as stock buy backs etc), and the real economy needs to also grow exponentially to prop all the financialization up - and this is in fact achieved with things like real estate and business price growth.
(Those who are somewhat familiar with real estate from a lowly "investor" perspective, will be aware that there are expanding ripples of price inflation over time, which hit different geographic regions at different times (different years, sometimes different decades) - and once the "investor" crowd hits a new geographic area which was once relatively dormant (Australia's a big country ok), then the key growth metric is the time period for (real estate) price doubling - which is usually around the 6 to 8 years mark.)
So, real estate doubling in price every X years? Yes, that's exponential "asset valuation increases" and real estate is a fundamental of "the real economy" which supports the house of fictious cards above it.
But this exponential is gonna bite, because to support exponentially rising real estate prices, you need exponentially rising incomes to pay the interest rates.
So one signal of the imbalances of all this coming to the fore is usurious interest rates plummeting. Is this a good thing? No, because a) this demonstrates we are in a fundamentally messed up money system, b) real estate prices are way out of whack with real (average person) incomes, c) real estate price inflation has itself caused a bunch of system imbalances, wealth divide etc., and surely other reasons still.
Now, the summary and line punch:
0) our present money system is, mathematically, exponential; for the time being we are bound by this, and we see some of the effects of this quite starkly today
1) every aspect of our system must therefore also be exponential (in growth or decline); e.g. every "emergency intervention system" (such as QE) must also be eponential, that is, each QE (on average) must grow exponentially with respect to the previous intervention (corporate share buybacks are a pooman's (poor CEO's) intervention mechanism)
2) eventually the Fed's QE intervention must be larger than the entire market; in other words, at some point, if the goal is to sustain the system's existence, the Fed shall be mathematically bound, literally, to buy every asset everywhere, or the system will literally collapse if they fail to do so - i.e. to buy every bond (gov and corp), every business, every stock/share, every real estate title
This is of course the basic mechanism of an exponential debt based system, and one can fairly say this is in fact the intention of this system - Atlas Shrugged - no matter who you are, how ethical, how successful, how well intentioned, how contributory to society at large, except that you are the owner of the system (i.e. the BIS - 'member the Fed), then you are Atlas, and you are targetted, and eventually, in order to merely survive financially, you will have to sell to the Fed/BIS.
This is the nature, and intention, of "the Federal Reserve Banking system: your gibs, are mine!"
Exponential Growth and the Legend of Paal Paysam http://www.singularitysymposium.com/exponential-growth.html The rice and the chessboard story – The power of exponential growth https://purposefocuscommitment.com/the-rice-and-the-chess-board-story/
There was once a king in India who was a big chess enthusiast and had the habit of challenging wise visitors to a game of chess. One day a traveling sage was challenged by the king. The sage having played this game all his life all the time with people all over the world gladly accepted the Kings challenge. To motivate his opponent the king offered any reward that the sage could name. The sage modestly asked just for a few grains of rice in the following manner: the king was to put a single grain of rice on the first chess square and double it on every consequent one. The king accepted the sage’s request.
Having lost the game and being a man of his word the king ordered a bag of rice to be brought to the chessboard. Then he started placing rice grains according to the arrangement: 1 grain on the first square, 2 on the second, 4 on the third, 8 on the fourth and so on.
Following the exponential growth of the rice payment, the king quickly realized that he was unable to fulfill his promise because on the twentieth square the king would have had to put 1,000,000 grains of rice. On the fortieth square, the king would have had to put 1,000,000,000 grains of rice. And, finally, on the sixty-fourth square, the king would have had to put more than 18,000,000,000,000,000,000 grains of rice which is equal to about 210 billion tons and is allegedly sufficient to cover the whole territory of India with a meter thick layer of rice.
It was at that point that the sage told the king that he doesn’t have to pay the debt immediately but can do so over time. And so the sage became the wealthiest person in the world.
Eventually, QE will be so large, the Federal Reserve will buy everything. Here's a classic example of the Fed setting the stage to be the holder of everything, in this case stocks, which must of course be preceded by becoming the lender of last resort (he who lends the money, calls the shots, ultimately collecting the collateral). So: 1) offer cheap credit to everyone, for everything (anything can be used as collateral) 2) to "strengthen the economy", possibly after "the worst of the Coronavirus pandemic" has passed, raise interest rates, thus eliminating liquidity 3) profit: aka, seize the collateral for the loans which can no longer be repaid (real estate, corporation, or as in this case, shares) A simple and dastardly plan comes together: Fed Launches Primary Dealer Credit Facility Which Will Accept Stocks As Collateral https://www.zerohedge.com/economics/fed-launches-primary-dealer-credit-facil... Earlier today, when discussing the launch of the "Lehman crisis playbook" in response to the Global Covid Crisis, we listed the alphabet soup of measures the Fed may launch which are a replica of the measures adopted in the aftermath of the Lehman collapse. These included the AMFL, the MMIFF, the TAF and last but not least, the PDCF, or Primary Dealer Credit Facility, which as Rabobank said "would provide overnight funding to primary dealers, similar to the way the discount window provides a backup source of funding for depository institutions." Just three hours later, at 6pm ET, the Fed, as expected, announced the establishment of a Primary Dealer Credit Facility (PDCF) "to support the credit needs of households and businesses." What the Fed really meant is that it is now launching a way for dealers to monetize the stocks they own, as the facility will be collateralized, among others, by "equity securities." https://www.federalreserve.gov/newsevents/pressreleases/monetary20200317b.ht... ... Aka, the Fed buys (literally) everything. What a world...
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Zenaan Harkness -
Zig the N.g