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World’s Most Prestigious Financial Agency – Called the “Central Banks’ Central Bank” – Warns of Bursting Bubble
Posted By admin On December 12, 2012 @ 6:15 am In Money Watch | Comments Disabled
Washington’s Blog 
Dec 12, 2012
Sky News notes :
According to the BIS’ latest Quarterly Review  financial markets are starting to behave in some of the ways they behaved before the crash. In particular, investors seem to be chasing riskier and riskier assets, despite the fact that the economic prospects are hardly all that great.
Here is the key passage from the BIS report: “Some asset prices started to appear highly valued in historical terms relative to indicators of their riskiness. For example, global high-yield corporate bond spreads fell to levels comparable to those of late 2007, but with the default rate on these bonds running at around 3%, whereas it was closer to 1% in late 2007.
Bond yields and economic growth forecasts
“The same was true of investment grade corporate bond spreads, but with respective default rates of a little over 1% and around 0.5%. Indeed, numerous bond investors said that they felt less well compensated for risk than in the past, but that they had little alternative with rates on many bank deposits close to zero and the supply of other low-risk investments in decline.”
Bond yields usually move in line with the wider economy’s growth prospects, but clearly these two lines have started to diverge in recent months. There is something going on.
At least part of the likely explanation – and this is my interpretation rather than the BIS’ – is that the flood of money being set loose by central banks, including the Bank of England and the Federal Reserve, through quantitative easing is pumping asset prices higher.
This is true. Before the 2008 crash, BIS warned of an imminent crash, explaining that central bank policy was blowing unsustainable bubbles  which would soon burst.
And BIS recently explained that it is necessary to write down the debt to the amount that can be paid – and to undertake structural reforms  to prevent the Bubble Economy from recurring.
The Federal Reserve is largely responsible for destroying the economy . Indeed, many current and former high-level Fed officials  and other top economic officials  have slammed the Fed as well … and the Fed is thoroughly corrupt .
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URLs in this post:
 Washington’s Blog: http://www.washingtonsblog.com/2012/12/worlds-most-prestigious-financial-agency-called-the-central-banks-central-bank-warns-of-bursting-bubble.html
 notes: http://news.sky.com/story/1023326/new-crash-warning-comes-from-proven-source
 BIS’ latest Quarterly Review: http://www.bis.org/publ/qtrpdf/r_qt1212.pdf
 explaining that central bank policy was blowing unsustainable bubbles: http://www.washingtonsblog.com/2009/08/bis-slammed-federal-reserve-and-other-central-banks-for-blowing-bubbles-and-then-using-gimmicks-and-palliatives-which-will-only-make-things-worse.html
 write down the debt to the amount that can be paid – and to undertake structural reforms: http://www.washingtonsblog.com/2012/07/most-prestigious-mainstream-financial-agency-the-central-banks-central-bank-slams-u-s-economic-policy.html
 largely responsible for destroying the economy: http://www.washingtonsblog.com/2011/06/bernanke-is-either-not-very-bright-or-not-very-honest-he-admits-he-doesnt-know-why-we-have-a-weak-economy-but-hes-the-one-who-weakened-it.html
 top economic officials: http://www.marketwatch.com/story/crony-capitalism-strikes-again-2011-04-06
 thoroughly corrupt: http://www.washingtonsblog.com/2012/07/fed-independence-is-a-scam-and-no-reason-to-prevent-a-full-audit.html
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