Did the “central banks’ central bank” just call for a stock-market collapse?

Don’t look now, but the Bank for International Settlements (BIS), which is often referred to as the “central banks’ central bank”, just advised the world’s central banks to stage a market collapse now rather than later.

Apparently there are some adults in the room.

Apparently there are some adults in the room.

For anyone claiming that the many global critics of central banks are a “bunch of doomers”, that argument has now been officially buried, as the world’s premier forum of central bankers just sounded the alarm themselves:

“The risk of normalising too late and too gradually should not be underestimated… The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on .”

So what was that about “bringing forward the downward leg of the cycle”?   For anyone who thinks collapses aren’t planned, let’s call that “Exhibit A”.  So much for free markets.  Let’s be clear:  The same forum of the world’s central bankers which recommended this monster bubble in the first place  and enriched the world’s top-1% to historic levels, is now discussing “bringing forward the downward leg of the cycle“.  Is there anything that isn’t planned?

Oh well, so much for our roaring equity markets. Those are apparently about to be sacrificed in a planned collapse — er, sorry, in a “bringing forward of the downward leg of the cycle“.   Not that our soaring markets were indicative of any underlying economic health anyway.   The BIS was kind enough to point out to it’s member central-banks that, markets are not only officially broken but the disconnect between markets and economic reality is your fault guys.

Financial markets have been exuberant over the past year, at least in advanced economies, dancing mainly to the tune of central bank decisions. … Growth has disappointed even as financial markets have roared:  The transmission chain seems to be badly impaired.   …  Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent”.


The BIS is worried about the bubble it recommended in the first place:

Well it’s all very nice that the BIS has warned that the world’s central banks have now officially broken markets and created a new bubble.    But there seems to be some serious double-speak involved in the language of “recovery” and “new bubble creation”.  Literally everyone in central-banking-land agreed that the bubble needed to be reflated after the housing-bust.  But now that it’s been reflated there’s a rather ironic concern that…uh oh… we reflated it.



No change in vector here.

No change in vector here.


Viva la collapse: BIS

But that’s where the humor ends.  Next on the agenda at the BIS is:  What to do about this dreadful bubble that we helped create and are now somewhat surprised that we actually have.

“Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …

“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”

Read that last sentence again, folks. “Start the journey”?  As in, the “collapse“?  If we may paraphrase:  This is going to be seriously ugly no matter what.  So we might as well bite the bullet and get on with the ugliness.

When the “central banks’ central bank” slaps central-bankers on the wrist and tells them to get on with the (planned) correction,  it’s certainly time to take notice.

We are listening… and watching, BIS.

  • ShovelThemOut

    There’s lots of money to be made with inverse ETFs if you’ve been tipped off WHEN the collapse is planned. (Of course that could never happen.)

  • Richard Ellicott

    where the hell do you get these quotes? seriously wtf

    • NotQuant

      BIS Annual Report is here: http://www.bis.org/publ/arpdf/ar2014e.pdf

      • Richard Ellicott

        thanks very much for that, i have to say however after a (brief scan), i do not think they really have any more control than we do

        everyone gazes in at the marketplace and has no control over it, furthermore they are not the first person to distrust rapid growth, everyone still takes the money the market itself is self correcting

        but yeah there where about 250 pages and what i did read i read the same thing about 3 times

        • I’mWithStupid

          Ha, they essentially control the flow of credit, swaps and the flow of gold globally. Nobody will listen to there advice though so now they can just watch as the rest screw things up.

          • Richard Ellicott

            So like if someone can convince people their WILL be a stock market crash, I can believe that their will be one then. Flock behaviour right?

            Anyway the pound is really up recently, i am british, dunno if this means something.

  • Dan Sanders

    Can you publish the original report?

  • GoldGlove

    1) Echoing Dan, it would be helpful to see the original BIS report – is that possible?

    2) Given the point of http://notquant.com/there-is-simply-no-way-out-the-fed-is-leveraged-771/

    it is not possible for the Fed to even start bringing forward the downleg of the cycle without causing its own insolvency.

    • Chris Cook

      Impossible for the Fed or any other modern central bank to become insolvent when they can simply print money to settle their ‘debt’.

  • cowboybob

    Telegraph said today,”Fed kicks off global dollar squeeze as Janet Yellen turns hawkish
    A vast wash of dollars flooded the global financial system when the Fed cut rates near zero and then bought $3.5 trillion of bonds. This may now go into reverse” It has started. Time to hit the lifeboats, as Capt Edward Smith would say.

    • NotQuant

      Watch what they do, not what they say.