Equity and fixed income prices have reached unusually high levels that don't reflect the current weakening in the global economy, according to the Bank of International Settlements, leading to concerns of a fresh credit bubble. Further quantitative easing (QE) by the major central banks appears to have encouraged investors to take on more risk to find higher yields, according to the BIS, and sales of riskier types of bonds have increased in the last three months. "Some asset prices started to appear highly valued in historical terms relative to indicators of their riskiness," it said in its quarterly review. "Market participants attributed a significant part of the rally in asset prices to further loosening by central banks, notably the Federal Reserve." – CNBC
Dominant Social Theme: We don't know how things got this far but we warned you.
Free-Market Analysis: Here's another example of how elite dominant social themes work. Often, these fear-based promotions are reinforced by reality.
In other words, if you want to explain to people that food-scarcity demands United Nations involvement in food production, you first actually have to create the scarcity.
The problem with some elite promotions – designed to frighten people into giving up wealth and power to specially prepared globalist solutions – is that they are hard to translate into action. Global warming is a good example of such a meme.
There likely isn't any global warming, or not comprehensively. Thus, the elites that want to promote the theme of global warming (now suddenly called climate change) are faced with the overwhelming challenge of creating something out of nothing.
This leads to bad science and cognitive dissonance where facts have to be made up to fit the plot. And in this era of Internet Information, making up statistics to support a pre-fabricated promotion is a risky business.
The global warming theme blew up several years ago when emails were posted online that revealed what we have suggested … that by planting only a handful of individuals at strategic choke points affecting world affairs, the top elites can effectively control the larger conversation and influence events as they choose.
Unlike such ambitious promotions as global warming, economic affairs are more easily influenced, as the current economy is not just man-made but created in an unstable way.
The power elite have created a seamless network of something like 150 central banks around the world that pump out fiat money in excess of what economies need. When times are going well, central banks print to fuel the boom. When times are bad, central banks print to ameliorate the bust. But central banks almost always print.
By printing, central banks create terrible bubbles. And this is what has happened yet again. Stocks markets have inflated around the world and the US stock market has expanded a great deal as a result of what is euphemistically known as "easing."
Easing is just more money printing and now the central bank supervising authority, the BIS, is calling attention to the bubble that its own facilities have created.
This is a purely cynical exercise. Central banks cannot know how much money is too much and inevitably they print more of it than is needed. The BIS is now warning us that too much money is available and circulating. Here's some more from the article:
The Fed announced on September 13 that it will buy $40 billion of mortgage-backed securities per month in an attempt to incubate a housing market showing flickering signs of recovery. Chairman Bernanke stipulated that the purchases be open-ended, meaning they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.
Similar measures have been used recently by the European Central Bank, the Bank of Japan and the Bank of England. The BIS warned that corporate bonds were near their pre-crisis levels but with default rates higher than they were in 2007.
"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," it said.
The Bank for International Settlements – noted to have predicted the financial crash back in 2006 – said that investment grade, sub-investment grade and emerging market bonds had fallen to their lowest levels since 2008. And mortgage bonds had reached their lowest level ever.
The International Monetary Fund trimmed its 2012 and 2013 global growth forecasts back in October. It now expects the world economy to grow 3.3 percent this year, down from the 3.5 percent growth it predicted in July. And projected growth for next year fell to 3.6 percent, down from 3.9 percent.
Despite this change in forecast the BIS say it hasn't caused a risk-on environment and the price of risky assets has risen in the three months to early December.
The BIS's cynical rhetoric, from our point of view, in issuing such statements is probably a precursor to more economic mayhem. This is one of the benefits of following the development of elite dominant social themes. You can anticipate the inevitably man-made disasters.
We also call these kinds of developments "directed history." By creating stock and bond bubbles – demand for paper instruments with no identifiable, specific, intrinsic value – the top elites are constantly in a position to trigger recessions and depressions over time, virtually on demand.
As a result of central bank money printing, gold and silver have maintained value amidst a blizzard of paper money devaluations. These events have also pushed up demand for paper products inevitably and dramatically.
Both stock and bond markets are being priced beyond what the risk/reward calculation warrants, according to the BIS. Hey, thanks for telling us, guys.
Last we knew, the BIS sat at the top of the central banking hierarchy. Couldn't it have done something sooner? Why is the BIS issuing such a warning now?
The tiresome thing about these warnings is that they merely confirm strategies that have been in place for years. Easing has been aggressively pursued because Ben Bernanke is theoretically in favor of it. Thus, easing has spread around the world.
This is more directed history, in our view. We had lots of questions long ago about the Great Depression and how it took place. But we've watched the current manipulations and it's increasingly evident to us that recent economic chaos is planned. "They" want it that way.
If there are violent crashes in the stock and bond markets, we'll have to live through another spate of breast-beating. And then, of course, we believe the media will rev up what is being prepared in Washington, DC, a special neo-Pecora hearing to do to the capital-raising mechanism of the US what the 1930s regulatory disaster failed to accomplish – sink the remaining financial markets by placing them firmly under the thumb of bureaucrats and technocrats.
It will seem eminently logical … cause and effect. But it will not be. It can be argued that it will be the further takedown of the world economy by a ruthless elite that is pursuing world government and control via any means necessary.