Jeffrey Snider explains the decline in bond yields to The Wall Street Journal's Andy Kessler, tells a clueless Fed what must be done

The Fed Can’t See Its Own Shadow 

Its asset purchases are squeezing nonbank lending and sinking long-term bond rates. ...

Shortages of long bonds—good collateral—are causing “relentless” demand and therefore lower yields. That’s why German long bonds have negative interest rates: not because losing money is a great investment, but because negative interest is the cost of doing business to get “pristine collateral” to use in repos.

This is how the global credit system—what Mr. Snider labels the Eurodollar market—now works. The Fed has become the lender of last resort for the global market, including banks and shadow banks. It’s about time its governors figure that out.

So what should they do? Encourage the Treasury to issue more of the long bonds the market is demanding: 30- or even 100-year. Feed the beast. Then stop quantitative easing: It doesn’t work and soaks up collateral. Next, stop paying interest on reserves. Maybe even create a nontradable “Treasury-R” to act as reserve currency elsewhere, freeing up more bonds. If history repeats, there are about 90 days until China repos roll over again.

Martin Wolf for The Financial Times likes business historian Adam Tooze's important new book CRASHED: HOW A DECADE OF FINANCIAL CRISES CHANGED THE WORLD

See Martin Wolf, What really went wrong in the 2008 financial crisis?

Tooze has been making the rounds at places like Bloomberg (and especially here) and CNBC promoting the theses of the new book, and was notably interviewed yesterday on Bob Brinker's radio program "Money Talk" (the dismissive summary of the interview provided here is notably blind to Tooze's importance, weakly observing how Tooze maintains that "money has no tangible underpinning", which is about all that grabs the attention of libertarian fundamentalists).

Those more popular presentations give only a tantalizing hint of the narrative power this trained historian brings to the story of the 2008 panic.

To see that in action there is an important lecture available here which Tooze gave at the American Academy in Berlin earlier this year, on March 13th.

"Conservatives" will doubtlessly recoil at Tooze's characterizations of the role played by them during the financial crisis. That those conservatives are really the GOP's libertarians is a distinction the significance of which seems lost on Tooze.

That said, the value of Tooze's perspective goes far beyond the subject of the warring factions of libertarian fundamentalism and neoliberalism, however important those are for understanding our times.

For one thing, Tooze is almost unique in describing in such vivid detail the dominating role now played by the "dollar" in the global economy (American analyst Jeffrey Snider being the notable but obscure exception). It takes an historian. This is, of course, the eurodollar, the proper understanding of which permits Tooze to show how the financial crisis in the United States centered in the mortgage market was globalized via international banking through London and Frankfurt independently of the wishes of the state actors. It also reveals to him that the most important global economic relationship has not been the US with China but the US with London.

Same as it ever was. The king and his colonies still rule the world, with a little help from the Bank of England.

For another, Tooze's work shows the degree to which the global economy has been captured by the bankers in providing these eurodollars, who acted unilaterally behind the scenes, first in the US (Ben Bernanke) and regrettably only later in Europe (Mario "whatever it takes" Draghi), to provide liquidity swaps in the trillions of dollars during the financial crisis while politicians argued about how states should deploy mere billions.

One inescapable conclusion ten years after the financial crisis is that citizens of states are in larger measure no longer masters of their own destinies, and haven't been for a very long time. They are today really ruled by technocrats in charge of central banks who work now more, now less in concert with their host governments to manage economic flows. The danger of this global state capitalism is that it might one day slip back into the outright fascism it so closely resembles.

To the millions of unemployed who were not bailed out in the crisis and who lost their homes and their hope in the United States and in the PIIGS, or to the hundreds of thousands of Muslims now in Chinese reeducation camps, it already has.

The crisis for neoliberalism does not come from capitalist fundamentalism. It comes from its growing list of victims.

Atheist George Will conflates economy and stock market, remains oddly superstitious about deficits

George Will forgets we've had trillion dollar deficits quite recently but without a stock market crash. 

The trillion dollar deficits recently were in:

2009 $1.41 trillion

2010 $1.29 trillion

2011 $1.29 trillion

2012 $1.08 trillion.

These deficits triggered nothing in particular except fevers among Republicans, but are associated with the misallocation of capital which produces L-shaped instead of V-shaped economic recoveries. Meanwhile that it's an L-shaped recovery is a concept which eludes George Will, eyes fixed as they are on his towering S&P 500 idol. But we do agree the economy isn't the best it's ever been as the president insists. The gap is now about $5 trillion and rising.

Here:

When He, or something, decides that today’s expansion, currently in its 111th month (approaching twice the 58-month average length of post-1945 expansions), has gone on long enough, the contraction probably will begin with the annual budget deficit exceeding $1 trillion.

The irrelevance of real money to the global fascist banking cabal

Jeffrey Snider, here, fascist emphases added in red for your reading pleasure:

For as long as there has existed the dollar, there has existed the temptation to make it pliable enough to fit the fancy of its masters. In the context of the economic system as it has developed since the earliest stirrings of industrial transformation.

In the current age, there is no mistake about where the dollars strings attach. The Federal Reserve sets policy but does not really operate the "printing press", that is reserved for the global banking cabal including eurodollar participants. There are relatively persuasive arguments on both sides as to which end is in actual control, the banks or the Fed, but in my mind there is no degree of separation, at least not meaningfully in this setting. The banking system operates as the business end of policy. Banking interests have become fully aligned with policy directives as the banking system has been re-oriented in that direction by progression in the past six or so decades.

A full part of that changing systemic character has been the gradual reduction in the relevance of real money. Convention always marks 1971 as the end of the gold era, but it really began its demise far earlier. The Bretton Woods system was plagued almost from the start by this impulse toward dollar pliability, whether for US government purposes, US banking purposes or global trade. The formation of the London gold pool in November 1961 was a symptom of market forces attempting to re-assert authority over currency; and how far government control would be stretched to wrestle free of any competition over monetary monopoly.

The Fed's Dollar Swap Operation in Europe is a Sign of the Desperation of Monetarism

So says Jeffrey Snider, here:

Rising credit equals rising economic activity, so the advancement of the banking system necessarily and uniformly leads to advancement in the real economy. This is a pervasive belief that is accepted in too many places without critical questioning, especially in the political arena.

As I (and many others) have said numerous times, it is a deliberate prevarication. The Fed and central banks around the world coordinate dollar swap lines to save the banking system from its umpteenth moment of illiquidity simply because the banking system, through credit creation, equals control over the economies those central banks are supposed to serve. ...

The Fed, the economics profession and the financial media spread the idea that this unfettered credit creation paradigm is part and parcel to the basic economic philosophy of capitalism. It is not. Capitalism represents the free expressions of a free society, so leeching onto it achieves another shortcut to allow free people to accept a degree of economic central control. ...

The central control of modern economics seeks to control credit independent of actual demand; indeed, it seeks to create demand from nothing.

If a housing bubble achieves the philosophical aims of "stimulating" the economy to some predetermined target or range, then the political aims of the central bank are fulfilled no matter how shortsighted that may be. ...

The detachment of credit money from actual money demand to engage in productive transactions is both the glaring difference between capitalism and monetarism, and the ultimate weakness of superimposing the latter on the former. ...

As the façade plummets to earth in the messy aftermath of what it, not capitalism, has wrought, the central authorities cling desperately to their system. It matters little if bailing out the eurodollar market for the fifth time actually advances the real economy. All that matters is that the tools for maintaining the elitist utopia are preserved for future use. They just want us to accept that they know better, having already crowned themselves Lords of the global economy.

America's Chief and Most Deadly Export Has Been The Credit Bubble

Few have wanted to talk about it, but it is one of the chief consequences of decade-long Federal Reserve policy mistakes as mediated through the world's reserve currency, the dollar:

When the financial system collapsed in 2008, the eurodollar market was its epicenter. Banks in Germany and Holland failed because of overpriced real estate in Florida and California, yet hardly anyone questions the link between these incongruent geographical realities. For the most part, there was no housing bubble in Bavaria or Amsterdam, yet long established banking concerns were stricken, and then failed by one a world away.

For the most part, bank risk managers will prudently match their asset structure to their liability structure to the best of their abilities. In addition to managing overall durations and interest rate spreads, this also means a sensible policy of matching asset and liability denominations. So large funding exposures denominated in dollars leads to pointed acquisitions of dollar-denominated credit assets.

. . . [T]his explains the global spread of a dollar-based credit bubble . . .

Jeffrey Snider goes on to explain, here, how once stalwart Switzerland has become our latest victim.