Faith in central banks' healing powers faltering: BIS

[Lodestar]

Source: Reuters

Financial markets' shaky start to the year shows they are losing faith in the "healing powers" of central banks, the Bank for International Settlements (BIS) said on Sunday while voicing concerns over sub-zero interest rates and emerging economies.

The Swiss-based organization, which fosters cooperation between central banks in the pursuit of monetary and financial stability, said that recent worries over China's economy, oil and commodity prices and some European banks had come as fundamental shifts take place in the global economy.

International bank-to-bank lending is contracting for the first time in two years, the use of dollar-denominated debt to drive growth in emerging markets has ground to a halt on a strengthening of the currency that has also served to send U.S. companies rushing to borrow in euros.

At the same time, world growth remains subdued, overall debt continues to rise and negative interest rates in large parts of Europe and Japan suggest that some leading central banks are running low on ammunition to quell market volatility that could pose a threat to the global economy.

Read more: http://www.reuters.com/article/us-bis-centralbanks-idUSKCN0W80E0

[Dont call me Shirley]

1. Invisible hands = Delusion.

[jalan48]

2. Healing? Maybe it's time to bring the big banks to heel. Hillary up for that?

[bemildred]

3. What sort of bizarre babble is this? Healing powers of banks? And they say we are nuts? nt

[JPnoodleman]

4. Paul Hodges (IEC guy) "global economy’s ‘Great Unwinding’, "

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Thus market developments seem to be confirming our long-held view that oil prices will return to their historical levels around $25/bbl. Our latest pH Report highlights three key implications of this development for investors and companies:

Deflation is looming in the major economies as commodity prices fall and China’s export prices are further reduced by its devaluation.
We fear that the end of the commodities super-bubble will lead to major corporate bankruptcies, as occurred at the end of the dot-com and subprime bubbles.
We worry that protectionism is likely to spread, as governments become concerned to protect employment.
The position is not helped by the high levels of margin debt now existing on the New York Stock Exchange. In real terms, these are higher than at previous margin peaks in 2000 and 2007 – neither of which proved to be good times for buying stocks.

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