Curve control

  By Mystic | August 23, 2012 - 05:27 |

We may be seeing the end of the era of `rate setting` and are moving into central bank `curve control`.
This would be a win for the `easy money` side.
Groups affected would be -
1. Pension funds (who will be ruined)
2. Governments (who will love it)
3. Central banks / banks (who will hate it)
4. Da People (savers screwed, debtors eased)
5. Anyone else you can think of~?
Audio -

14:26 min.

Written by: Mystic on August 23, 2012.
Pages: 1 2
Tagged . Bookmark the permalink.
  • John_by_the_creek

    “Would I take the 2% loan?”
     
    Probably not.  Two reasons:
     
    1) Deflationary Environment.  Investment opportunities that look dirt cheap now, will most likely get dirt cheaper in the future.  Do we think the target audience will have any better luck servicing their ”cheap” new loans?  My guess is it’s best to wait till the Great Deleveraging (in what ever form it takes) has had its way with us all.
     
    2) The “Powers That Be” are actively engaged in “management of the domestic herds”.  Most domestic herds I know of eventually end-up on the dinner plate.  It’s fine to visit the feed lot from time to time, when you can sneak a few easy morsels.  But don’t linger….
     
    I think you are correct with your assessment regarding the repatriation of debt.  The only hope of “saving the system”, is enabling the ”healthy” to quarantine the “infected”.   Regardless of how flowery the talk, it will all get very Darwinian before the final chapter is written.

    • http://overthepeak.com/wordpress/ Mystic

       I am thinking that the banks are going to get shafted by the central banks.
      The CB’s will work for the government.
      People with saving must lose.

      • John_by_the_creek

        Agree.  People with “paper” savings will be bled.  I’m guessing that eventually, people with “physical” savings (tangible wealth) will be targeted for “fair contributions”.
         
        Do you think ALL banks will be shafted, or just the non – “to big to fail” banks? 
        I think the second and third tier banks are already getting molested.

        • http://overthepeak.com/wordpress/ Mystic

          I am thinking that the Fed will push for the breaking up of the TBTFs.
          (they, after all, have been a nuisance to everyone~!)

  • Lcbaudar

    I think there’s various feedback loops that will conflict with this plan. Utility companies using dividends to entice investors will have to raise rates to compensate. Poor performing pensions will bring pressure on the states to raise various taxes (including property taxes). Congressional infighting and fiscal measures will put pressue on home purchase incentives like deductible interest & FHA qualifications. ZIRP may seem alluring to debtors, but I think the burden of interest gets passed on in other ways. Investors want their cake.

  • safeinsuburbia

    I’m not sure if I’d take the 2% loan, but the person buying my house will.  Seems there’s optimism in home ownership in my area.

    I’m more partial to Harry Browne’s “Permanent Portfolio” strategy, given all the uncertainty.

  • CSArichardo

    5.  Gold Speculators (will love it)

    • http://overthepeak.com/wordpress/ Mystic

       Yeah ….. So far so good~!