Central Banks Now Own Stocks And Bonds Worth Trillions – And They Could Crash The Markets By Selling Them - Michael Snyder THE ECONOMIC COLLAPSE BLOG

Central Banks Now Own Stocks And Bonds Worth Trillions – And They Could Crash The Markets By Selling Them

Posted: 07 Jun 2017  Michael Snyder  THE ECONOMIC COLLAPSE BLOG

Have you ever wondered why stocks just seem to keep going up no matter what happens?  For years, financial markets have been behaving in ways that seem to defy any rational explanation, but once you understand the role that central banks have been playing everything begins to make sense.  In the aftermath of the great financial crisis of 2008, global central banks began to buy stocks, bonds and other financial assets in very large quantities and they haven’t stopped since.

In fact, as you will see below, global central banks are on pace to buy 3.6 trillion dollars worth of stocks and bonds this year alone.  At this point, the Swiss National Bank owns more publicly-traded shares of Facebook than Mark Zuckerberg does, and the Bank of Japan is now a top-five owner in 81 different large Japanese firms.  These global central banks are shamelessly pumping up global stock markets, but because they now have such vast holdings they could also cause a devastating global stock market crash simply by starting to sell off their portfolios.

Over the years I have often been asked about the “plunge protection team”, but the truth is that global central banks are the real “plunge protection team”.  If stocks start surging higher on any particular day for seemingly no reason, it is probably the work of a central bank.

Because they can inject billions of dollars into the markets whenever they want, that essentially allows them to “play god” and move the markets in any direction that they please.
But of course what they have done is essentially destroy the marketplace.  A “free market” for stocks basically no longer exists because of all this central bank manipulation.  I really like how Bruce Wilds made this point…

One indication of just how messed up and flawed the global markets have become is reflected in the way central banks across the world are now buying stocks. This has become a part of their response to correcting the forces of past excesses. Their incursion into this bastion of the free markets signals we have entered the era where true price discovery no longer exists. The central banks are often viewed as price-insensitive buyers, so this incestuous influx of money is in some ways the ultimate distortion.

According to Business Insider, global central banks are on pace to purchase an astounding 3.6 trillion dollars in stocks and bonds in 2017.

Overall, the five largest global central banks now collectively have 14.6 trillion dollars in assets on their balance sheets.

You can call this a lot of things, but it certainly isn’t free market capitalism.

The Swiss National Bank is one of the biggest offenders.  During just the first three months of this year, it bought 17 billion dollars worth of U.S. stocks, and that brought the overall total that the Swiss National Bank is currently holding to more than $80 billion.

Have you ever wondered why shares of Apple just seem to keep going up and up and up?
Well, the Swiss National Bank bought almost 4 million shares of Apple during the months of January, February and March.

And as I mentioned above, the Swiss National Bank “now owns more publicly-traded shares in Facebook than Mark Zuckerberg”…

Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.
The tech giant’s founder and CEO has other ways to control his company: Zuckerberg holds most of his stake in a different class of stock. Nevertheless this example illustrates how the Swiss National Bank has become a multi-billion-dollar equity investor due to its campaign to hold down the Swiss franc.
It is now the world’s eighth-biggest public investor, data from the Official Monetary and Financial Institutions Forum show.

But as shameless as the Swiss National Bank has been, the Bank of Japan is even worse.

Today, the Nikkei is essentially a giant sham.  The Bank of Japan regularly goes in and just starts buying up everything in sight, and according to Bloomberg they are on pace to become the largest shareholder in dozens of the most prominent Japanese corporations by the end of 2017…

Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings.

If global central banks have the power to pump up these markets, they also have the power to crash them.

Why would they want to do such a thing?

I can answer that question with just two words…

Donald Trump.

If the Comey angle doesn’t work, the elite could try to destroy Trump by engineering an absolutely devastating stock market crash.  Close to half the U.S. population dislikes Trump anyway, and so it would be fairly easy to get them to believe that Trump’s policies have caused a new financial crisis.  Of course that would be complete nonsense, but in our society today the truth often doesn’t really matter.

And without a doubt, evidence continues to mount that the real economy is starting to slow down substantially.  For example, we just learned that bankruptcies surged once again in May.  The following comes from Wolf Richter…

So here we go again. Total US business bankruptcies in May rose 4.7% year-over-year to 3,572 filings, according to the American Bankruptcy Institute. That’s up 40% from May 2015 and up 10% from May 2014.
And there’s another concern: Bankruptcy filings are highly seasonal. They peak in tax season – March or April – and then fall off. The decline in April after the peak in March was within that seasonal pattern. Over the past years, filings dropped in May. But not this year.

Without unprecedented intervention by global central banks, financial markets would have crashed long ago.

And if they keep increasing their purchases of stocks and bonds, the central banks may be able to prop things up for a while longer.

Who knows?  Perhaps with enough financial engineering they would be able to keep this bubble going for years.  Of course things would start to get really awkward once they eventually owned virtually everything, but I have a feeling that things will never get that far.

I have a feeling that global central banks will eventually find an excuse to start “unwinding their balance sheets”, and I have a feeling that it will be at a time that is highly inconvenient for President Trump.

Watch Japan – For All Is Not Well In The Land Of The Rising Sun - Michael Snyder THE ECONOMIC COLLAPSE BLOG

Watch Japan – For All Is Not Well In The Land Of The Rising Sun Posted: 05 Apr 2016 Michael Snyder  THE ECONOMIC COLLAPSE BLOG One of the epicenters of the global financial crisis that started during the second half of last year is Japan, and it looks like the markets in the land of the rising sun are entering yet another period of great turmoil.  The Nikkei was down another 390 points last night, and it is now down more than 1,300 points since a week ago.  Why this is so important for U.S. investors is because the Nikkei is often an early warning indicator of where the rest of the global markets are heading.   For example, the Nikkei started crashing early last December about a month before U.S. markets started crashing really hard in early January.  So the fact that the Nikkei has been falling very rapidly in recent days should be a huge red flag for investors in this country. I want you to study the chart below very carefully.  It shows the performance of the Nikkei over the past 12 months.  As you can see, it kind of resembles a giant leaning “W”.  You can see the stock crash that started last August, you can see the second wave of the crash that began last December, and now a third leg of the crash is currently forming… And of course the economic fundamentals in Japan continue to deteriorate as well.  GDP growth has been negative for two out of the last three quarters, Japanese industrial production just experienced the largest one month decline that we have seen since the tsunami of 2011, and business sentiment has sunk to a three year low. The third largest economy on the entire planet is in a comatose state at this point, and Japanese authorities have been throwing everything but the kitchen sink at it in an attempt to revive it.  Government stimulus programs have pushed the debt to GDP ratio to 229 percent, and the quantitative easing that the Bank of Japan has been engaged in has made the Federal Reserve look timid by comparison. But none of those extraordinary measures has been successful in stimulating the Japanese economy, so now the Bank of Japan has been been trying negative interest rates.  Unfortunately, these negative rates are also having some unintended consequences.  According to the Wall Street Journal, the negative interest rate program is putting additional stress on the Japanese financial sector… The Bank of Japan started imposing a minus 0.1% rate on some deposits held by commercial banks in February, meaning that those banks now have to pay a small fee when they add to their money parked at the central bank. The financial sector has suffered amid worries that banks can’t pass on negative interest rate to their depositors and therefore will take a hit to their profits. I would keep a very close eye on the big banks in Japan.  It is my conviction that there is a lot more brewing under the surface than we are being told about so far. In addition, many analysts in Japan are complaining that all of this manipulation by the BOJ is essentially destroying normal market behavior.  The following comes from Bloomberg… Nobuyasu Atago, who also had worked at the BOJ and is now the chief economist at Okasan Securities Co., pointed out that instead of serving as a important source of cash for borrowers, the credit market has become a profit center for dealers looking to buy securities from investors and sell them to the central bank. While the strategy may be lucrative now, financial institutions face the risk of massive losses, he said. “By making the trade with the BOJ the only source of profit, markets are exposed to unexpected volatility when that trade ends and the BOJ moves toward the exit,” Atago said. “Markets are being destroyed.” The more global central banks try to “fix things”, the more they make our long-term imbalances even worse. To me, it makes no sense to have a bunch of unelected, unaccountable central planners constantly monkeying with the financial system.  In a true free market system, we would allow market forces to determine the course of events.  But of course we don’t have a free market system anymore.  Instead, what we have is a heavily socialized system that is greatly manipulated by the central planners. That is why global financial markets gyrate wildly if Janet Yellen so much as sneezes.  They know who holds all the power, and investors are constantly on edge as they wait for the latest pronouncement from our central banking overlords. At this point, 99 percent of the global population lives in a country with a central bank.  Our world is more deeply divided than ever, and yet somehow everyone in the world has agreed to adopt this insidious system. It sure is quite a coincidence, isn’t it? Getting back to Japan, things are so bad now that the Japanese government is actually considering giving gift certificates directly to low-income young people.  The following originally comes from Bloomberg… The Japanese government plans to include gift certificates for low-income young people in its fiscal 2016 supplementary budget, Sankei reports, without saying who provided the information. Recipients would be able to use them for daily necessities. The government sees gift certificates as more effective in stimulating consumption than cash handouts, which may be deposited. This is what the end of democracy looks like. When the government just starts handing out money like candy, you might as well turn out the lights because the party is over. Since 2008, global central banks have cut interest rates 637 times and they have injected approximately 12.3 trillion dollars into the global financial system through various quantitative easing programs. Has all of this monkeying around solved our problems? Of course not. Instead, our long-term problems have grown progressively worse and now a new financial crisis has begun. Keep an eye on Japan, and also keep an eye on Europe.  Huge problems are bubbling right under the surface, and when they come bursting into the open they will deeply affect the United States as well. *About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*