The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over

The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over

23 June 2013, by Tyler Durden (zerohedge)


Excerpt:

BIS: "Consider what would happen to holders of US Treasury securities (excluding the Federal Reserve) if yields were to rise by 3% across the maturity spectrum:

they would lose more than $1 trillion, or almost 8% of US GDP.

The losses for holders of debt issued by France, Italy, Japan and the United Kingdom would range from about 15 to 35% of GDP of the respective countries.


Yields are not likely to jump by 300 basis points overnight; but the experience from 1994, when long-term bond yields in a number of advanced economies rose by around 200 basis points in the course of a year,

shows that a big upward move can happen relatively fast.

And while sophisticated hedging strategies can protect individual investors, someone must ultimately hold the interest rate risk.

Indeed, the potential loss in relation to GDP is at a record high in most advanced economies.

As foreign and domestic banks would be among those experiencing the losses, interest rate increases pose risks to the stability of the financial system ..."


BIS says ‘pull the plug’ but Bernankesan can’t stop his QE because rates can’t rise and foreign wars have to be funded trough the printing press.

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Comment by truth on June 24, 2013 at 12:42am
Clarke and Dawe - Quantitative Easing -
Comment by Nobody Will Observe on June 24, 2013 at 12:12am

Spike the Koolaid with Gin. Makes the BS more palatable and the crash more bearable.

Smoke-um if ya got-um, but I resent the 'I smoke so I'm better than a drunk' crap around here ;)!

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