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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Pogeu Mahone who wrote (198440)	4/29/2023 4:58:48 PM
From: sense	Respond to of 218068

Today, poking at the "underpinnings"... In 2008, the sudden emergent awareness of the frauds the banks practiced on each other in the mortgage market... as they were all packaging collections of "liars loans" into "AAA rated" mortgage backed securities and passing them on... caused the banking system to fail. They "fixed" it... not with an acknowledgement of the problem and tougher enforcement of rules punishing frauds... but with a rejiggering of the "rules" for banks that tried to avoid actual corrections and build in a "buffer" of capital sufficient to withstand "economic shocks"... So, the language has been "enriched" with new terminology in things like... "too big to fail"... and "systemically important"... being used to parse the nature of and degree in risk being assumed by officialdom failing in not enforcing rules against fraud... Banking, in the bottom line, is an inordinately simple business... with the introduction of "complexity" in the reality of it in practice largely a function of intent in fostering exploits enabled within the rules... and divisions in the rules are thus likely to be revealing of that intent as "channeled" by the "decision makers" in banking as they engage in "exploit enablement"... ie., "rule-making". The fostering of divisions in the "rules" that apply to banks is a natural place to look in parsing the "latest and greatest" in the "innovations" being enabled in banking... that will operate as a substitute for free market competition in a market that is not a free market. A key point I'll come back to... I've written often about the changes in rules occurring, as the BIS, post 2008, undertook to alter banks capital structure to foster greater resilience... by altering the required allocations in "tiers" of and types of capital. A key interest, for me... in their reallocation of relative value in types of capital... as enabled by "promoting" (actual, unencumbered) physical gold holdings into "tier one" capital... making gold "equivalent to" cash or government backed debt issuances. That effective "remonetization" of gold (if only within the "private" banking system) has gone largely unnoticed in the market... but, it was followed by a huge reversal in JP Morgan's positioning... shifting from being massively short gold and silver... to being the largest single holder of (theoretically?) unencumbered holdings. They accomplished that... in part... by transfer of their short contract obligations from JPM to Bank of America... Many have wondered why BIS driven "re-monitization" of gold... [and its fostering of accumulation "on the cheap" with an accompanying "waiver" of trading rules (from 2009 to Q1-2020) to allow banks continued participation in trading frauds (as price suppression imposed) in the market manipulation of gold and silver prices]... have not yet, following the expiry of those "waivers"... appeared to result in a "re-balancing" in metals prices... as reflected in the metals being "marked to market". More answers than that, only, perhaps are able to be gleaned... simply by reading the outlines apparent in the new "divisions in the rules"... not as "tiers of capital"... but as they apply to banks differently depending on their relative "systemic risk" profiles... That interest in "banking stability" and "the rules that apply" now account for a number of sources in variation in risk profiles... including using a measure of growth in lending versus growth in domestic GDP... Notably absent, though, are any risk metrics tied to... the rate of inflation of the currency as driven by the forced monetization of excesses in domestic spending... or, the rates of change in central bank imposed variations in the rates of interest imposed in lieu of free market functions determining rates... So, that, of course, is exactly what you see as the driver of "failure" in banks occurring now... the large and "systemically important" banks who control the (BIS and the) "rules" for banks, as well as ruling over the function of (the Fed, the ECB, the "central banks," IMF, etc.) the global monetization of national debts... appear to have arranged to have rates rise extraordinarily fast... in order to put the entire tier of the smaller (non-crony capitalist) banks out of business. Thus, rather than having to grow by acquisition of competitors in the market... while paying market prices... the large banks are instead "forced" to grow (in deals done at massive discounts to market value... for pennies on the dollar) as they are "required" to "acquire" others "failed" businesses... as if that outcome is "a public service" obligation being forced on them by the regulators... rather than "takings" from competitors enabled in result of a fraud being practiced on the public. It also perhaps answers why JPM and BOA have traded hands in the (risks in the) metals price suppression trade... as it is only JPM who fills that "top tier" in the U.S. banking system ? The rest, of course... is that by killing free market functions and replacing them with artificial "controls" (most of which remain deliberately hidden from the public)... while fostering that disconnect in "control" between (pure) drivers of monetary inflation (in spending and "fiscal" policy forcing monetization of public debts) and supposedly conservative (monetary and) regulatory "policy" requiring banks to manage and reduce (some aspects only of) their business risk profiles... the large banks preserve the ability to foster (and use) the boom and bust cycles they PRETEND to be working to prevent... while using financial stability "risk" as a targeted weapon against competitors... and the public. In end result... the banks end up holding the public hostage.... by "holding themselves hostage"... while threatening the public with a threat of inducing systemic failure as "give us what we want or we will kill ourselves... and destroy the financial system"... The free market advocates reply to which is... go ahead... and good riddance... problem solved. Allowing the banks to fail in 2008... actually correcting the problems... while also punishing those who were committing frauds... instead of protecting and rewarding them by putting them in charge of the banking system we have now... should be only more obvious as necessary... then, and now... ? The rest... is that the post 2008 "everything bubble"... persists. The linkage between "printing money" and market performance... is apparent enough in charts. The first two peaks are the 2001 "dot.com bubble" and the 2008 "housing bubble"... with everything after that the "everything bubble" tied to progressively increasing slopes in the rate of money printing... And, from the peak of that bubble... there has not yet been a correction... only a slowing in the pace of money creation enabled while that pace is kept sufficiently brisk... either by direct spending... or by the backdoor of QE round "X"... with that projected to infinity... only as required in order to sustain the bubble that has been inflated and prevent it bursting... The rate of money growth (necessarily including internalized carrying costs of QE as "replacement for previously printed money that disappeared"... otherwise known as "financing costs of the unaccounted for and ongoing accumulation of losses in the banking system") ... vs the rate of return on money growth in (inflation adjusted) real GDP growth... is a risk metric that seems to have slipped between the cracks in the banks management of their risks through their self regulatory apparatus... The same applies to "markets" in pricing of stocks, though... that in the "real value" of the market in terms that are not adjusted for both the pace of money creation / the rate of inflation... and the shrinkage in banks capital stock and the carrying cost of the financing enabling the shrinkage being sustained... Recently... the pace in money creation has slowed... but, it is still well above zero... while inflation is being significantly understated (by half or more under MOPE) while its hidden non-monetary / indirect drivers in "transfers" or systemic dislocations are not well understood, leading to major errors in expectations tied to its future impacts... but the pace in monetary inflation is greatly outstripping the rate of growth in (also inflated) GDP reported (everywhere) by large margins... The wild card in all that layering of excess on top of excess... is the purposefully hidden in the carrying costs of QE... the financing costs of the accumulated but unrecognized losses in the banking system... that is assumed to be zero... which has the bankers claiming to have invented an actually free lunch... that works for bankers, only... as the mass in QE continues growing. But, as in all such socialist redistribution schemes... in this instance transferring economic value from producers and the public to financiers... socialism only works until you run out of other people's money to spend on enabling it... and when the costs of sustaining that transfer mechanism exceed the mass of money made available to sustain it... it quits working. And, that's the story emerging here... is that the imposition of "controls"... [directly through rate setting, and other price controls imposed... and indirectly through various aggregates in accumulation of dislocated costs, as in MOPE policy costs, or as QE] enables deviation from "free market function"... in some degree... for some period of time. But, there is a financial and competitive cost to be paid for every deviation that veers the "actual" away from that "greater market efficiency" being avoided... and, if not paid, those costs accumulate... until they exceed, consume and over-whelm the entire mass. The system we have... is built on expectations that can't be met... including the requirement that "what is badly broken" remains hidden well enough... that market participants lack of awareness allows ignorance to outweigh awareness of reality in conditioning market participants behavior... Inevitability... still isn't an overly useful input in relation to precisely timing the arrival of recognition events... But, it does allow "positioning" in ways that avoids the larger related risks... including those in timing... by focusing trading on awareness of the market issues of most relevance... as "the inevitable" is realized in increments ?