Posts Tagged Djent
The Federal Reserve plans to scale up its Quantitative Djenting program in the second quarter of 2014, Chairwoman Janet Yellen announced at an appearance before the House Financial Services Committee Monday. “We still predict slack in the economy going into the Summer, so we will continue with the program to try and cut it off at the pass,” said Ms. Yellen.
“Quantitative Djenting”, or “QD,” is a subsidiary initiative of the Fed’s controversial Quantitative Easing program. Since the beginning of the financial crisis in 2008, the Fed has been injecting money into the financial bloodstream to purchase things like treasuries, securities, and mortgage-backed securities. Although meant to stimulate job growth and economic recovery, the program has come under intense scrutiny by critics who claim that the program could lead to inflation, while providing cheap money to Wall Street firms.
Included in the program, but buried in a subsection of dense legalese, was a plan for Quantitative Djenting. “QD” is a rather convoluted financial process whereby the central bank bankrolls recording contracts, studio fees, publicity, merchandising, and tour support for the structured investment vehicle known as “Djent.” As the output of these “bands” tends towards “0000” sub-prime Guitar Riff Derivatives, the Fed was able to achieve synergy with the program by lowering interest rates to near-zero.
“QD was really a response to a financially-strapped metal landscape, following the collapse of the Neo-Thrash and New-Nu-Metal bubbles,” claims Trafferson Foster, of the statistical research firm, Foster & Fosterson Global Markets. “The Fed pretty much caved to pressure from Major and independent labels alike to do something in the wake of the crash.”
Although former chairman Ben Bernanke claimed that QD was never intended to expand beyond its initial investments – which included Wall Street-owned companies like Animals as Leaders, Periphery, Tesseract, and Textures – the subsidiary program has expanded each year since its inception. This has led Wall Street analysts to speak affectionately of “QD-infinity,” which speculates that like a Djent Guitar Riff Derivative product, QD has become so enmeshed in the U.S. financial system that it could seemingly go on forever.
Several prominent economists have become particularly concerned with the evolution of the products that Djent companies are selling. Like credit default swaps and collateralized debt obligations, these firms have begun throwing together Guitar Riff Derivatives in baskets, and then selling that packaged basket.
“In practical economic terms, there really isn’t a difference between these Guitar Riff Derivatives and the Collateralized Debt Obligations that brought down the financial system in 2008,” argues Simon Carufsky, president of Fairer Markets, a non-partisan regulatory reform non-profit. “These companies are selling sub-prime 0000 guitar riffs within sub-prime 0000 guitar riffs, within sub-prime 0000 guitar riffs, and then calling that package a AAA-rated security.”
The apportioning of cash to Djent companies works kind of like a bartender pouring a pitcher of beer into five mugs lined up on a bar. The beer in the pitcher is the cash generated from royalty payments that companies like Emmure receive each month, while the mugs represent the different pools of Guitar Riff Derivatives. The bartender fills the highest-rated mug first, then the second highest, and so on down the line until either all five mugs are full or the pitcher runs out of beer. If there are enough defaults on royalty payments, the fifth, fourth, third, or even second mug might go dry – and if writers’ block happens in the studio, even the first mug might not get filled. If the mugs become too dependent on being filled by the pitcher, says Carufsky, then the progression of heavy metal could be brought to a sharp standstill.
“The whole thing is like a financial Inception. It’s absolute insanity, even before you factor in the Fed’s allotment of easy cash to companies like Animals as Leaders.”