ND MAR 28
19 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social +
Capit-compet in Eco
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they documented
with graphics
Brace for more fireworks in the repo
market.
…
Definition: Repo rate is the rate at which the central
bank of a country lends money to
commercial banks in the event of any shortfall of funds. Repo rate is used by
monetary authorities to control inflation.
In response to economic weakness, central banks often enact policy
that increases the money supply, promotes inflation and
reduces interest rates. This creates incentive for businesses to invest and for
consumers to maintain their purchase activities. The Phillips
Curve illustrates an inverse relationship between interest rates and
unemployment, and the Federal Reserve's mandate is to balance these two
important macroeconomic statistics. M2 provides important insight into the
direction, extremity and efficacy of central bank policy. https://www.investopedia.com/terms/m/m2.asp
M2 is a calculation of the money supply that includes all elements of M1
as well as "near money." M1 includes cash and checking deposits,
while near
money refers to savings deposits, money market securities, mutual funds and
other time
deposits. These assets are less liquid than M1 and not as suitable as
exchange mediums, but they can be quickly converted into cash or checking
deposits. https://www.investopedia.com/terms/m/m2.asp
...
Last year-end, so many banks had cut their balance sheets so that
there was insufficient cash to fund the Repo market and overnight rates spiked
to over 7.00%, and as Scott Skyrm writes, "the Repo market is worried that
the same scenario could occur tomorrow. As a result, the Repo market is "on edge."
Case in point, on Thursday - one day before
the end of the month and the quarter - the quarter-end General Collateral moved
from 3.50% this morning up to 3.85%, then down to 3.45% and now back up to
3.65%, just in the space of several hours.
See Chart:
Scott Skyrm, EVP at Curvature Securities said that "the cash never
came in". Skyrm is not sure the direction of rates tomorrow, he is sure
that "there will be volatility" and
predicts that "rates will trade anywhere between
5.00% and 2.00% during the day." In short,
it is very possible that in addition to the now familiar pension
rebalancing, the market may experience a severe, if
brief, liquidity shortage as banks scramble to soak up the repo flood with
increasingly scarce dollars.
Figure 4 shows what that day
could look like on your screens…
See Chart:
When the unexpected happens in
Forward FX Market
Tyler Durden waning reads: ‘keep a close eye on
repo GC tomorrow’ - if the financial system liquidity shortage has
gotten worse since Dec 31, and it likely has as the Fed's balance sheet
has shrunk by over $100 billion since then, THEN
EXPECT FIREWORKS. Just how big those
fireworks will be will indicate how bad the overall liquidity shortage in the
system is, which provides a critical glimpse
into the overall systemic weakness that exists on US bank balance sheets if one eliminates the roughly $1.5 trillion in Fed-created
excess reserves.
…
[[ IF MARKET ‘EXPEERTS’ SAID so WE ARE ON EDGE OF ECONOMIC COLLAPSE
]]
…
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"It
went from really, really bad
rates to just really bad rates."
Even though the Federal Reserve has been raising its benchmark
interest rate somewhat consistently – it at small increments – most
accounts are still not earning meaningful interest. In fact, as the chart below
from Bloomberg shows,
accounts at traditional money centers banks are earningnext to nothing: Citigroup is paying 0.04% and JP Morgan is paying just 0.01%
interest, despite rates rising.
This is mostly a result of clients not caring about getting paid more
- they continue to deposit new money, so banks haven’t felt pressure to raise
rates. It goes to show how attitude on yield for your money in this country has
shifted significantly from a focus on interest-bearing accounts to deploying
capital in investments like stocks and bonds. It's
almost as if, due to insane low rate Fed policy, the country has forgotten that depositors are supposed to be
"rewarded" for saving and putting their capital in a bank's hands.
See Chart:
But we digress. Because while the big banks, drowning in trillions of excess reserves
don't care about the incremental liquidity provided by deposits, that
doesn’t mean that there aren’t a rising number of banks out there, hungry
for new cash, that are eager to lure depositors with higher rates. Online
"banks" at American Express and Goldman's new Marcus consumer unit,
are offering savings account rates of 2% or more.
Historically, this isn't a lot, but when compared to the Fed's
benchmark rate, which is now at 2.5%, and the 2.4% you would get on a US 10
year treasury, it isn’t bad, especially in a "low inflation" economy.
As a result, some investors are taking notice and deposit growth at many of
these online banks is accelerating.
The flows into these new banks aren't of such a significant magnitude
that they are having a tangible effect on the nation's largest banks, but some
regional banks are feeling pressure as a result. For example, Citizen's
Financial Group and US Bancorp have both said in recent weeks that they’re
finding it harder to attract deposits due to the rates that competitors are
offering (maybe Citizen's and USB should consider raising their own deposit
rates).
See Chart:
FORGET THE FED
Allen Tischler, an analyst at Moody’s said that "First-quarter results probably will show a continued
rise in deposit costs. Even if the Fed’s on pause and rates aren’t necessarily
rising, not all depositors have taken advantage of rates that are higher today
than they were a year ago. So there probably will be continued catch-up,
particularly on the consumer side."
Across all depositor institutions, the average rate on a checking
account is just 0.29%, up from
just 0.24% or year ago. Ray Montague, Informa’s director of
deposit-product research told Bloomberg: "It went
from really, really bad rates to just really bad rates."
But ultimately, rates haven’t been high enough for consumers
to want to move their cash. Somebody with $1000 in savings would see a
difference of about $22 between a bank offering 0.05% and 2.25% for the
year. Then the question becomes whether or not it is worth it to move the
money.
See Chart:
Interest Revenue
RBC Capital analyst Gerard Cassidy said: “Is it worth it for $20
to move your money? The answer is no. If you have $100,000, it’s worth
it. I think what you’re
finding with Marcus and these other products is the average deposit is quite
large because it is that money that is moving to higher rates.”
Meanwhile, banks continue to be the
beneficiary of the Fed's rate hikes, which allows them to capture the
spread between what they charge on loans and what they give out on deposits,
also known as the net interest margin. Deposits
at banks like JPMorgan continue to rise, despite the low rates. That said, after the latest curve inversion, it is generally expected
that bank interest income is about to take a major hit.
Ironically, this perhaps best
indicates that despite Americans' ongoing complaints
about low interest rates, when rates do go up, few savers actually take
advantage. And now, that more are finally starting to take advantage of
better deposit conditions the Fed is preparing to start cutting rates again.
….
….
WE ARE ON EDGE OF ECONOMIC
COLLAPSE
Hugo Adan March 29 2019
The Title is the conclusion I got after
reading 2 articles:
1.
By Tyler Durden
Brace for
more fireworks in the repo market.
See Chart:
https://www.zerohedge.com/s3/files/inline-images/march%20quarter%20end%20GC.jpg?itok=u3YzpZZ2
THE warning of Tyler Durden in 1,
reads: “keep a
close eye on repo GC tomorrow “ :
IF the financial system liquidity shortage has
gotten worse since Dec 31, and it likely has as the Fed's balance sheet
has shrunk by over $100 billion since then, THEN
EXPECT FIREWORKS. Just how big those
fireworks will be will indicate how bad the overall liquidity shortage in the
system is, which provides a critical glimpse into the overall systemic weakness
that exists on US bank balance sheets if one eliminates the roughly $1.5
trillion in Fed-created excess reserves.
And, by same author:
2.
In the other article Tyler Durden describe a nasty game
between bankers & the FED
He concludes this way:
Banks continue to be the beneficiary of the Fed's rate hikes, which
allows them to capture the spread between what they charge on loans and what
they give out on deposits, also known as the net
interest margin. Deposits at banks like JPMorgan continue to rise, despite
the low rates. That said, after the latest curve
inversion, it is generally expected that bank interest income is about to take
a major hit.
Thasunda Duckett, who leads consumer banking
at JPMorgan, said:
“The incremental deposits we acquired in this time
alone would be enough to create the seventh largest U.S. bank. We’ve been
successful because we’ve won at both acquiring new relationships and satisfying
existing ones."
Ironically, this perhaps best indicates that despite Americans' ongoing
complaints about low interest rates, when rates do go up, few savers actually
take advantage. And now, that more are finally starting
to take advantage of better deposit conditions the Fed is preparing
to start cutting rates again.
My opinion:
WHAT A GAME.. in our false economy:
Now Interest rate is determining the
amount of savings to growth the
economy. Just what L von Mises said:
“Capital goods come into existence by saving. A part of the goods produced is
withheld from immediate consumption and used for processes the fruits of which
will only mature in a latter day” [[ when? Never, of course]].
So, nothing ironical in this game.
The fed now will return to the
Keynesian Economics where spending drives Econom growth. Here we have four actors: A- The consumer who will spend all his money in stores. IF s/he don’t
like this product the next day, the waste will
be donated to the poor in the world and they will feel compassion &
solidarity in their mind.. a game just welcome and
clapped by Corp media. But, is/he are just giving the crams of the table
not to cockroaches, not to the garbage bag but to the poor in VEN whose oil is
been blockaded worldwide.
B- The Govt expending will go back to the non-sense
process of creating more weapons & wars abroad while the Corp press will
continue hiding the damage to our soldiers in non-sense wars- abroad. The nation
demand that this spending should go to the best education and health for all.
C- The productive
investor will be again downplayed and obliged to surrender to US big
transnational monopolies.. if don’t wanted, they
will be taxed while the big ones exonerated. Middle investor are been forced to get
out of our country.. some of them are already investing
in China or elsewhere.
D- The NX, or
import-export balance .. the base for the power of USD.. is negative for
US. We tried to force deals by using nuke-war threats.. and this blackmail
doesn’t work any-longer. We forced other nations to create their own ballistic
and nuke power and that is a cul-d-sac about to be broken.. there are huge
chances of total world destruction. The survival of WW3 -if any- will retaliate
against all Americans in the world. Their companies and wealth will be
expropriated and vandalized everywhere.
In
Short: The five columns of US economy, including Keynesian
& Mises economics are condemned to fail ( Interest rate from Mises, followed
by 4 of Keynesian Econmics: C=Consumer
spending + G= Govt expending +I=productive Invest + NX =import-export balance).. all of them don’t work anymore.. WW3 is the only
choice for neoliberal expansion ant that will accelerate the collapse and
decomposition of this system
We have to re-think about post-neoliberal agenda.. and we wanted or not democratic socialism –as balance between capital and labor- is the only
choice we have for our future. We have to re-take the
unfinished plan of FDR : mixing both economics with a new set of NEW DEAL. But without
making his mistake: left alive the political-judicial
power of the by-polar system= Dems & Reps. We have to take them out
of the political game.. the Dems are already in the dump-trush of politics.
They both (dems & Reps) are already out
of the Economic game: the Keynesian-Mises approach
doesn’t work any longer. They have not program to offer, But they still have
bureaucratic political power .. more and more
people are abandonig both parties.
The Reps are expected to win with Trump. They are offering the best health system for all and
we know the ties of the nasty pharma conglomerate with Reps. The money need for new health system depend on
dismantling big Corp (Mili-Indust-Complex) profiting from weapon-manufacture
and wars abroad. Trump won’t touch them, he will
prefer to put the whole nation at risk of nuke war. A big Mov for peace must be
organized asap. Then he will be impeached (reasons
abound). The other way is depowering his rule with massive ABSTENTION and
then continue the fight to delegitimize his rule via REFERENDUMS
across the nation.. With him re-elected either
a REV from top-down or a Rev bottom up
will follow, that is for sure. He has not other choice
than legitimize the 3rd option .. with socialism as third one to
create a balance in power.. IF
he is unable to do so, the nation will be
explosively divided after elections. His hands full of
blood will create another scenario: NATION vs.
FASCISM. Then he will be forced to resign. That is what comes with him in
power –if re-elected- . Meanwhile people is getting ready for REV..either top down or bottom up.. but REVOLUTION.
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds &
corruption. Urge cambio
"We have failed...The truth is none of us are innocent, none of us escape blame."
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"The attempt to turn every subjectively felt personal issue into a collective cause with
a collective action has hatched a brutal form of identity politics
that has generated no end to social conflict, with vast carnage along the way."
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"The Trump administration’s foreign policy may
be easily deconstructed as a crossover
between The Sopranos and late-night comedy..."
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US-WORLD ISSUES (Geo
Econ, Geo Pol & global Wars)
Global depression is on…China, RU, Iran search for State socialis+K-,
D rest in limbo
"The
international community must urgently condemn Brunei's move to put these cruel
penalties into practice."
…
I guess
.. the sharia zealots will be stoned to death .. IF they go against the world claim: long live
the difference.. Que viva la diferencia!
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO ..Focus on
neoliberal expansion via wars & danger of WW3
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes & terrorist
imperial chaos
REBELION
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ALAI
ORG
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RT EN ESPAÑOL
- Naves de la Flota rusa escoltan a buques de la OTAN en el mar Negro
- Altos del Golán, la última avent de Trump y su comodín Netanyahu
- ¿Es beneficioso para Europa asociarse con Pekín pese a la presión USA?
- VIDEO: Se registra una nueva explosión del volcán Popo en México
- Deuda del Estado COL con "niños soldado": ¿Por qué el caso No. 007?
- American Airlines suspende indefinidamente sus vuelos a Venezuela
- Perú: Activistas indígenas en mina Las Bambas denunc abuso Policía
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal conflicts
that favor WW3
- Staring Into The Void By Paul Edwards
- EU is shifting its priorities to the East n China By Pepe Escobar
- U.S. Subverts Peace and by Affirming Land
Grabs of Israel By Hussein
Ibish
- The Democrats Are Self-Destructing By Paul Craig Roberts
- The Making of a Monster: We’re All Lab Rats
in Secret Experim By JW.
Whitehead
See B Garrison Image : The March of the Tyranny at: http://www.informationclearinghouse.info/march-of-tyranny-l.jpg
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
- Nick
Pemberton Russiagate:
Tragedy, Not Farce
- Kathy Kelly ‘Every
War Is a War Against Children’
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more business-wars
from US-NATO allies
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DEMOCRACY NOW
Amy Goodman’ team
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PRESS TV
Resume of Global News described by Iranian observers..
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