Why Chinese Growth Forecasts Just Crashed To A Paltry 3.9% - And Are Going Even Lower - In One ChartSubmitted by Tyler Durden on 10/20/2014 11:11 -0500
Sadly for China's social instability, Chinese growth is going not only to 3.9% but much, much lower. The reason? Quietly, over the past 5 years, China raked up an epic debt load, which by 2015 is expected to hit a whopping 252% of GDP, or a 100% of GDP increase in debt, just to keep its growth dynamo running. A dynamo which has now fizzled, as can be seen best in the Chinese housing bubble which as we have reported previously, has now burst, and China is desperate to keep imminent hard landing, as controlled as possible. Here is Exhibit A...
Janet Yellen is a career academic. This is not necessarily a bad thing. However, unlike most career academics, Janet Yellen is in charge of the US economy. In this light, one has to ask aloud, “why would you put someone with absolutely zero experience in creating jobs, growing a business, lending money, hiring, firing, etc. in
The European status quo and EU elites are becoming increasingly concerned by popular calls in Italy for Italy to leave the European Monetary Union and the euro "as soon as possible" and return to the lira.
And the overnight futures ramp started off so promising.
The lofty leaders at the ECB, and Berlin, Paris, Brussels, pretend they can make everything right that’s wrong inside their toy monetary union through asset purchases, sovereign bond purchases, and anything that falls in the ‘whatever it takes’ category. But it’s all just bluff. Because, what it all boils down to, they can’t keep buying Greek bonds with German taxpayer money until the end of time. And the markets know this.
The level of micro-management by the Fed appears to have reached a new shockingly high plateau. Recently prices have been driven more by liquidity, fear, greed, and Fed policy, than by valuation. It is time that the Fed stops being a source of interference and confusion. There are also two less obvious or less discussed economic reasons why the Obama administration may be urgently focusing more on the Ebola crises.
With a combined position of nearly $2 trillion in US government debt, against which they hold little or no capital buffer, US banks are now extremely vulnerable to a bond market sell-off.
"I see deflation flirting with America." Retail sales equals consumer spending equals velocity of money. And unless the money supply is rising, hardly likely in the taper, less spending is deflation by definition. Forget about PMI and all that kind of data, it’s much simpler than that. Central banks can do all kinds of stuff, but they can’t make us spend our money on things we don’t want or need. Let alone make us borrow to do so. And if we don’t, deflation is an inevitable fact. That doesn’t mean prices for some items won’t go up, but that’s not what counts. It’s about how fast we either spend the money we have – if we have any left – or how much we borrow. And if time is money, then borrowed money is borrowed time. So we really shouldn’t.
This is all only the beginning. When the smoke clears, stocks could be 30% lower than where they are now, if not more.
What's French for 'sacre bleu'? While the fundamental reality of France's record unemployment, plunging industrial production and economic growth, and treaty-busting deficits are all fact, for many months now, the 'market' has been convinced at Draghi's omnipotence and enabled French bonds to trade as if they are 'in the core'. But... on the heels of Sapin's slap in the face of Schaeuble, shunning of Brussels, the market appears to be changing its mind about France's credit worthiness (risk is up over 30% in the last week). Across Europe, we are witnessing a 2012 replay as re-denomination risk rises and risk spreads between the periphery (which means everything but Germany) and Germany surge...
Here is why the center will hold.
- Dallas County May Declare State of Disaster From Ebola Virus (BBG)
- Markets on edge after worst turmoil in four years (Reuters)
- Central bankers may have no quick fix as markets swoon, economy weakens (Reuters)
- Risk of Deflation Feeds Global Fears (Hilsenrath)
- U.S. health official allowed new Ebola patient on plane with slight fever (Reuters)
- Texas Hospital Fights Allegations About Ebola Protocols (BBG)
- Treasuries Gain as Oil Drops Below $80 While Stocks Slide (BBG)
- Greek Bonds Slump on Bailout Concern as Spain Misses Sale Target (BBG)
- White House shifts into crisis mode on Ebola response (Reuters)
- Obama Confronts Slippery Slope as Islamic State Advances (BBG)
“Unemployment down, jobs up,” President Obama exclaimed, adding gloatingly that "manufacturing growing. Deficits cut by more than half. High School graduation up. College enrollment up. Energy production up.” As Spectator's Ralph Reiland points out, Obamanomics, allegedly batting a thousand - everything that should be up was up and everything that should be down was down. “By every economic measure, we are better off now than we were when I took office,” declared President Obama... so why, if everything is ponies and unicorns, is President Obama's approval rating at record lows. 61% of Americans disapprove of Obama's foreign policy with only 42% approving of the President overall.
We know low interest rates and QE hasn`t worked, or they wouldn`t have to be re-initiated in the form of additional QE Programs, and we wouldn`t still be having this entire conversation 7 years after ZIRP began.
With each new piece of legislation being proposed in the Land of the Free, Atlas Shrugged seems to be ever more prophetic. While even the most terrifying elements of the book are coming true, so are the reactions. People and companies are leaving, refusing the put up with the looting of their efforts any longer. Despite politicians’ desperate attempts to stop it, Atlas is already shrugging.