Even The Big Banks Now Admit It: "This Is How The Fed's 'Massive Manipulation' Broke The Market"

Tyler Durden Blog | Even The Big Banks Now Admit It: "This Is How The Fed's 'Massive Manipulation' Broke The Market" | Talkmarkets



From Bank of America

Central bank’s risk manipulation well explains local tails

A good way to explain why we have seen local tail risks arise so
frequently since central banks began to heavily manipulate asset prices
is with the following analogy, illustrated in Exhibit 1. Essentially
central banks, by unfairly inflating asset prices have compressed risk
like a spring to unfairly tight levels. Unfortunately, the market is
aware the price of risk is not correct, but they can’t fight it, and
everyone is forced to crowd into the same trade. By manipulating markets
they have also reduced investors’ inherent conviction by rendering
fundamentals less relevant.


This then creates a highly unstable (fragile) situation that breaks
violently when a sufficient catalyst causes risk to rise – overly
crowded positioning meets a market with little conviction.

Catalysts can range from a “valuation scare” similar to Oct-14 or
Aug-15 to a prominent investor stating that assets (e.g. bunds) are not
fairly priced and are the “short of the century”.

The unwinds from these crowded positions are violent, but
almost equally violent in some cases are the reversals, which are driven
from investors crowding back in when they realize central banks are
still there providing protection.


So, Gary here. How can one be an economist or make sense of the financial economy when the Fed is allowing banks to crowd in and push up asset prices! This is a verified globalist conspiracy to manipulate asset prices up and down. 

I posted this at the talkmarkets article:
 
Also, this means, Tyler, that the Fed mispriced risk in the housing market by defrauding with their Gaussian Copula. The MBSs that went bad were mispriced as to risk.

This means the housing bubble was premeditated as I have argued from the beginning. 

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