In this week’s Off the Cuff with Mish & Chris podcast, Chris and Mish chew on:
Central bank liquidity
- The ECB, the Fed, the Banks of England, Japan, and others turn on spigot, and the stock market throws a party. Will this actually help the situation at all?
- Endgame options for dealing with all the debt
- 2008-style red flags are increasing. What risk is the banking system facing at this point?
- “Banker to the world”
- The Fed’s new name
Yesterday saw lots of central bank intervention to provide liquidity. Rather than a cause for celebration, this should be a big cause for worry — but don’t tell that to the equity markets, which rocketed higher on the news (the bond market seems unfazed at this point). This is a liquidity operation — which is different from money printing — designed to give cheap money to big players. Providing such liquidity is not going to solve anything, though, because the underlying crisis is one of insolvency.
At this point, analyst consensus is that QE III is inevitable. Mish disagrees; Chris thinks the Fed wants to issue QE but may not have the mandate to do so until the markets swoon harder.
China’s weaknesses are beginning to manifest more clearly.
by singlespeak