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Debt Security holdings rose SAAR $174bn and Repos surged SAAR $328bn. Security Brokers/Dealer holdings expanded SAAR $301bn (strongest quarter since Q1 2012), up from Q1’s SAAR $195bn and Q2 2015’s SAAR $135bn contraction. Total Business (including financial) debt growth dropped to 4.1% from Q1’s 9.4% pace (and vs. Total (Debt and Equities) Securities ended Q2 at $76.693 TN, or 416% of GDP. Total Debt Securities expanded $9.635 TN, or 31%, since the end of 2007. Over this period, Treasury Securities increased to $15.385 TN from $6.051 TN, for growth of 154%. The increase in Treasuries accounted for 84% of the growth of Total Debt Securities. Like Old - 2006 and 2007 - Times. Well, at least here, it makes me feel like I've traveled the world. Here as well, Q2 saw the strongest expansion in GSE Securities since Q3 2008. For perspective, GSE Securities increased $293bn in (bond crisis) 1994, $474bn in (Russia/LTCM) 1998, $593bn in (Y2K) 1999, $642bn in (tech crash) 2001 and $547bn in (corporate Credit crisis) 2002. The big buyers of Agency securities during Q2?

I argued at the time that going forward only the Fed would retain the wherewithal to engineer market liquidity backstop operations to counter a serious de-risking/de-leveraging episode, though this would require a major expansion of Fed’s holdings. GSE holdings enjoyed their strongest quarterly expansion since Q2 2008. The second quarter saw FHLB (Federal Home Loan Banks) Loans increase SAAR $168bn (up from Q1’s $51bn), the biggest quarterly growth since Q3 2008. (Worth noting from FHLB financial statements, Advances to Member Banks expanded almost 9% in the year’s first half to $690bn). Loans from sources such as online lenders for equity purchases have plunged by at least 700 billion yuan ($113bn), a drop of 61% from this year’s peak, after authorities banned them from funding stock buying in July, according to a Bloomberg survey… Contemporary Central bankers have been operating with blank checkbooks only because it was never contemplated that they would actually exploit their capacity to print “money” with reckless abandon. Who cannot see that these central bankers need clear rules and well-defined restraints?

‘The euro as it exists today doesn’t work and we need to consider other alternatives such as a euro 2 or alternative currencies,’ Luigi Di Maio, a party leader in the lower house of parliament, said Tuesday night… ‘The impression is that the BOJ is starting to pull back some of its troops from the battlefront,’ said Katsutoshi Inadome, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities. Private Depository Institutions (banks) increased Debt Securities holdings SAAR $316bn, up from Q1’s $148bn and Q2 2015’s $142bn. The Yellen Fed has begun methodically laying the analytical foundation for a Federal Reserve (and global central banks) balance sheet of unthinkable dimensions. The BOJ's increasingly radical stimulus efforts are being closely watched by other global central banks which are also struggling to revive growth… A third of these are state-backed companies that stand behind more than 60% of China's guaranteed loans. Imbalances in China's financial system are increasing as the economy slows, complicating challenges facing policymakers as they try to clamp down on riskier lending practices without roiling markets. This tank would be great for a home containing a large family where the shower, washing machine and dishwasher are constantly in use. Thus, the use of such tools could result in even better outcomes for unemployment and inflation on average.

It shows simulated paths for interest rates, the unemployment rate, and inflation under three different monetary policy responses--the aggressive rule in the absence of the zero lower bound constraint, the constrained aggressive rule, and the constrained aggressive rule combined with $2 trillion in asset purchases and guidance that the federal funds rate will depart from the rule by staying lower for longer… While the BOJ reassured markets it would continue to buy large amounts of bonds and riskier assets, the policy reboot appeared to open the door for an eventual winding down of its huge asset purchases, and tried to repair some of the damage caused by its shock move to negative rates early this year. Corporate (and Foreign) Bond issuance slowed to $90.5bn during the quarter, down from Q1’s booming $494bn and Q2 2015’s $591bn. This compares to 200% to end 2007. Equities ended Q2 at $36.112 TN (down $1.415 TN y-o-y), or 196% of GDP.

The ratio of Household Net Worth to GDP increased two percentage points to 483%. Net Worth to GDP peaked at 379% (1989) during the eighties Bubble; 435% (Q4 1999) during the “Tech” Bubble; and 473% (Q1 2007) during the mortgage finance Bubble period. For comparison, Loans increased $261bn in 2013, $579bn in 2014 and $676bn in 2015. Notably, mortgage loans, held as bank assets, jumped SAAR $390bn during Q2, the strongest mortgage lending since Q3 2007 ($433bn). With Household Liabilities increasing $163bn during Q2, Household Net Worth jumped $1.075 TN during the period to a record $89.063 TN. Liabilities jumped SAAR $1.061 TN, led by a SAAR $383bn increase in Repos. Having ended 1993 at $1.9 TN, GSE securities (debt and MBS) in just ten years more than tripled to $6.0 TN. Total Mortgage Debt expanded SAAR $521bn, the biggest mortgage debt increase since before the crisis (Q1 2008). Total Home Mortgage Debt increased SAAR $259bn (up from Q1’s $205bn and Q2 2015’s $215bn), matched by an almost equal amount of Multifamily and Commercial mortgage debt growth. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt last week declined $13.0bn to a six-month low $3.301 TN. greatwall 99 -quality Duct tapes last longer and work much better than cheaply made tape found at the 99 cents store.