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The World Financial System Is Rife With "Stimulus" Junkies
Submitted by David Stockman via Contra Corner blog,
China’s Services PMI for August veered upwards, but that’s not the news. Noting that China’s massive but fracturing bubble in unused luxury apartments (upwards of 70 million are empty) is a serious headwind, analysts for HSBC were quick to plead for more stimulus:
The economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policy makers should use further easing measures to help support the recovery.”
Stunning.
Even the comrades in Beijing know that China’s credit tsunami has unleashed a dangerous speculative mania throughout the land that has no parallel in human history. For crying out loud, total credit outstanding (which Beijing’s red capitalists are pleased to call “social financing”) has exploded from $1 trillion at the turn of the century to $25 trillion today.
It goes without saying that there is nothing in the financial world more dangerous than easy credit. But when it multiples by 25X in just 14 years in an economy where there is essentially zero market discipline (because all debts are bailed-out and rolled-over when push comes to shove), you are dealing with a monumental catastrophe in the making. So China’s leaders now hop from one foot to the other, endeavoring to slow down the credit monster one week, while taking steps to goose the macro economy the next.
Beijing’s schizophrenia is at least understandable. If it allows the bubble to splatter, the historical anomaly of a collectivist one-party regime presiding over a wild-west casino would surely suffer a brutal demise at the hands of hundreds of millions of busted gamblers. So it continues to temporize and equivocate, hoping that China’s monstrously inflating bubble will keep on……well, inflating.
But why in the world would presumably financially literate analysts at one of the world’s premier banks egg them on? Why do they not, instead, warn investors to get out of harm’s way while its still possible?
The baleful reality is that the entire global financial system has been corrupted by two decades of central bank fueled credit inflation. At the end of the day, financial players and advisors survive by plying trades which work—at least for the time being. And credit inflation does work during its expansionary phase—funding a robust “bid” for rising financial assets and booming real investments in housing, industry and infrastructure, alike. So the inhabitants of the financial system learn to buy on the dips and pound their pans for more (credit) stimulus whenever short-term dislocations threaten.
The financial market stimulus chorus is now universal—-virtually identical from Hong Kong to London to New York, despite ostensibly deep differences in policy regimes. At the end of the day, however, there is not really a dimes worth of difference between the Bush/Obama/Bernanke model and the economic model employed by the politburo overlords in Beijing. Its all about insensible, contagious, addictive credit expansion, and the phony wealth and temporary prosperity which it breeds.
The tragedy is that when the global bubble finally reaches its breaking point, there will be no warning from the financial market gambling pits by the inside players who ought to know better. They have become trained seals who have no remaining vocabulary except to bark mindlessly for “moar” stimulus.
The zoo at HSBC is proof of the case. Its inhabitants sit up close and personal long side of China’s monumental house of cards, and can not even see it. So the “ort, ort, ort” of their stimulus barking reverberates around the world and through the canyons of Wall Street.
Call Goldman Sachs. They will tell you that China’s red capitalism is the great white hope of global growth and endlessly rising stock prices. All it takes is just another shot of “stimulus”.
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Sheeple do not understand that replacing financial assets with actual USD electronic cash, simply bogs down the system a lot more.
Cash is not tradeable.
There is more than $60 trillion reserves sloshing around like vulcano lava
At least $20 trillion must disappear for the world to accept USD as world currency from now on.
Lol....... yeah right. What do you think will happen when $20 trillion of debt is wiped out in a system that operates on a debt based currency? The only thing that prevents the world from rejecting the dollar now is the MIC, and it's proving to be a little more impotent with each passing day.
Reserves, not debt.
Debt is self destructive, reserves have to be destroyed by Fed or US Gov, or congress.
MIC actually wants extinguishing of those reserves.
MIC can bomb, but it can't force people to actually work and provide energy, commodities and output.
MIC wants financial wipeout and they will get it either peacefully or by asking Saudis to assassinate financial executives (in my view)
And reserves are........ ?
All USD created since early 70s, about $60 trillion, an not extinguished.
Got That right, Dr.!
Nobody cares about being bombed, if there would be no deal later to actually do some business.
This is not ancient times when nations were slaughtered into nothingness.
And that is not going to happen. Sooooooooooooo....
Watch it unfold......................
It is inevitable
POMO red special
peace ceasefire story of the day - falling apart
http://www.reuters.com/article/2014/09/02/us-ukraine-crisis-exercises-id...
yep Hang Seng up over 600 points last night! meanwhile Russell taking a bath here off 14 points from the earlier spike...are we selling off without realising it?
"It goes without saying that there is nothing in the financial world more dangerous than easy credit. But when it multiples by 25X in just 14 years in an economy where there is essentially zero market discipline(because all debts are bailed-out and rolled-over when push comes to shove) "
Are we talking abot China or the U.S?
Or Japan? Or Italy? Or Spain?
What for sake is the volume in the casino today? Have they taken an extended vacation in the Hampton's?
A concrete brick on the gas pedal is all that is needed at this point.
Well, Dave, I think it was Dick "The Dick" Cheney who said: Reagan proved deficits don't matter. Do you recall Reagan, Dave?
"ort, ort, ort"? I though it was snort snort snort.
Its a new era people! Fuck GDP fuck Macro econ fuck reality! Print - stimulate - print -stimulate - print - stimulate. DEBT is the NEW GOLD!!
Hedge accordingly!
And, don't forget, debt that can be rolled-over is really equity.
Is this like the dung balls (that the Dung Beetles create)? Good shit!
The System is predicated on growth. All the contracts, the pensions and all, w/o growth they collapse.
The time spent dragging this all along has been in pursuit of (finding) the next growth carrier. Given that "printing" is still continuing I can only conclude that no one is able to find the next growth carrier, which appears as though it signals the end of the game/System.
TPTB know that it's all going to collapse. Lots of activity bracing for civil disturbance..
OT. BUT I FIND INTERESTING, CONCERNING AND IMPORTANT.
I JUST GOT BACK FROM A NON EMERGENCY VISIT TO TAX COLLECTIRS OFFICE IN A WEALTHY , SLEEPY PART OF NEW JERSEY.
WHILE WAITING MY TURN. I SAW TAX COLLECTOR GETTING INTO A HEATED PHONE CALL WITH A TAXPAYER WHO WAS IN HIS WAY TO THE NEWSPAPER AND A TAX SALE !!! IT ENDED WITH ONE OF THE PARTIES HANGING UP ON THE OTHER. THE ANSWERS COMING FROM THE TAX COLLECTOR MADE MY STOMACH MUSCLES CLENCH. NOTHING HE CAN DO , STATE LAW, HANDS TIED, BLAH BLAH BLAH.
THE BEST PART OF THE 20MINUTE SHIT SHOW. AN ELDERLY LADY PUSHED HER WAY PAST ME WITH AN ELBOW AND THREW HER BILL AND CHECK IN THE TAX COLLECTOR FACE AND WALKED AWAY.
PEOPLE ARE VERY VERY PISSED OFF !!!!
Yeah, until their own tax-payer funded scam is cut. Then they DEMAND the government do SOMETHING. It has always been so.
The OldFart probably doesn't consider her Medicare socialism either. I'M ENTITLED to those new hips young man, and don't you forget it!
fortunately the unmitagated greed of those running the wall street casino of the world will lead to the same realization that they don't trust each other and it will self destruct. As there is no limit to the piles of cash they want....they will push it over the edge. Rehypotheicating profits is INSANE. I give it 2-3 years for full implosion, the cracks will appear shortly. Saw the same in the last bubble...this is worse...as the profit are so concentrated to the worst people. The 75% have been crushed...bankrupt states are going to follow the detroitification of many city. There is no fiscal discpline....everything is based on printing more profits for banks to carry off the fraud!
The cheer-leading continues:
Canada Dollar Rises as Poloz Says Export Gains Must Be Sustainedhttp://www.bloomberg.com/news/2014-09-03/canadian-dollar-rises-as-poloz-...
Growth can NOT be sustained perpetually! Test is, ask ANY of these ruling elite What If, what if we cannot continue growth indefinitely, what happens to Them and Their System? (the answer lies in their preparations for mass civil disturbance, which has been built up under cloak of "terrorism.")
Tylers et al! Please tell me you all saw this :
http://www.cnbc.com/id/101963821
St Louis Fed says policy has failed because we are...hoarding cash.
Stimulus worked great for Philip Seymor Hoffman.
Come on man, just give me one more taste, you know I'm good for it....
And our central banks currently running an oil burner habit. OD not far off. Any time now...................