The Bank for International Settlements (BIS) is the current situation on the financial markets as worse than before the Lehman bankruptcy. The warning of the BIS could be the reason why the U.S. Federal Reserve decided to continue indefinitely to print money: Central banks have lost control of the debt-tide and give up.
The Spaniard Jaime Caruana is the Chief of the secretive Bank for International Settlements (BIS). The BIS fears that central banks are no longer able to avoid the crash in the global debt crisis. Ben Bernanke has supplied the evidence on Wednesday. (Photo: Reuters)
The decision by the U.S. Federal Reserve to continue indefinitely to print money (here ) might have fallen on "orders from above".
Apparently, the central banks dawns that it is tight.
Very narrow.
The most powerful bank in the world, the Bank for International Settlements(BIS) has published a few days ago in its quarterly report for the possible end of the flood of money directly addressed - and at the same time described the situation on the debt markets as extremely critical. The "extraordinary measures by central banks" - aka the unrestrained printing - had awakened in the markets the illusion that the massive liquidity pumped into the market could solve the fundamental problems (more on the huge rise in debt - here ).
This clear words may have meant that Ben Bernanke and the Federal Open Market Committee, the Fed got cold feet. Instead, as expected, which is now formally announcing the end of the flood of money, the Fed has decided to just carry on as before.
If one is to the BIS experts believe that no single problem is solved.
All problems are only increasing.
Because the BIS but apparently does not know how they get the genie back in the bottle, it pays to listen to those who were part of the system - but now have no official functions and therefore more able to find clear words.
The former chief economist of the Bank for International Settlements (BIS), William White, was also reported to be parallel to the BIS word.
His statements are nothing more and nothing less than an announcement of the big crash.
White warned in unusually clear form of a huge, global credit bubble.
The share of "leveraged loans" or the extreme form of credit risk by mid-2013 at an all time high of 45 percent. This is ten percentage points higher than at the height of the financial crisis in 2007. A year later, in September 2008, Lehman Brothers went bankrupt.
Thus, the current situation is much more dangerous than before the Lehman bankruptcy.
"All previous imbalances are still there. Total public and private debt is 30 percentage points, as measured by the gross national product of developed countries. And we have a whole new problem with bubbles in emerging markets, which will end in a boom-bust cycle, "William White writes in the BritishTelegraph .
Cause is the global hunt for high-risk financial products. The collective behavior remember the phenomenon of "exuberance" that led to the global financial crisis.
Is key, says White warns that no one knows how to climb the global borrowing costs, whether the U.S. central bank tightened its monetary policy, or "how the process may be disordered, and the challenges to be prepared."
This means: It is an illusion to believe that the market would remain liquid under stress. The BIS is concerned for some time about the runaway development, only a few months BIS chief Jaime Caruana had warned of a serious crisis ( here ).
Remarkably, criticized the BIS, which is also often described as a bank for central banks, which clearly inadequate actions of the central banks. In particular, the BIS took the Governor of the Bank of England, Mark Carney and his colleagues, ECB chief Mario Draghi ago.
Trying to certain "guidelines" ("forward guidance") to define, to maintain long-term government bond yields low, either alone rhetoric that essentially failed."There are limits to how far the good communication can control markets. These limits are too obvious, "said Claudio Borio, responsible for research and development at the BIS. The guidelines consist of the ECB's announcement, unlimited to buy government bonds (OMT). The Fed and the Bank of England had their gekopppelt measures the number of unemployed.
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