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Citi Previews How It All Ends, In One Chart
It doesn't get any simpler than this chart showing global monetary policy response to "secular stagnation", i.e., the situation the world finds itself in right now.
A few notes. The reason there is secular stagnation is because the economy crashed after the last, housing, bubble (which itself was a response to the dot com bubble preceding it) reached epic proportions and burst.
So what is going on now is merely the global central bank cartel reflating the next bubble, and final, bubble.
Central banks may be doing so with good intentions, "to get back to full employment", but the bottom line is the entire world is now gripped in what is without doubt the biggest asset bubble in history.
The good news: everyone will be able to top-tick the bubble and sell just before everyone else sells...
And yes, we admit the title was a little misleading: Citi shows us where we are, but it does not chart what happens after the final bubble bursts. We leave it to readers' imaginations to fill in the blank.
Source: Citigroup
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a double yard of Yen -= Trillion
"Bubbles" and "Blanchard" are the same course of action.
You can't inflate a bubble without inflation.
I strongly disagree.
How much fatter shall US citicens become? How much more TVs and iPhones should they buy with borrowed money? How much more finest chicken filet should be consumed as "snack"? How much more energy per capita shall be wasted? How longer shall the transportation distances for goods become? How further shall people move to their work? How much useless and unproductive work shall be created by creating absurd artificial needs? How much more (psycho)pharmaceuticals shall be consumed? How much more shall the water be poisioned?
The reason that there is stagnation: because the ponzi regime of money as debt with compound interest has reached the natural limits of our poor planet. It could be expanded as long as the world had huge amounts of unsaturated markets and billions of predators on a low level of living. The emerging markets were the last huge market reservoir of billions of human predators.
We are living on a limited planet. Either the insanity and crime against the creation, exponential growth, will be stopped, or the human species is indeed an evolutionary dead end: capable to develop stunning technical advance, tools, cultures, but incapable to recognize the most simple things (because of a severe genetic defect?): unlimited greed.
I think you actually do agree with the commentator. Good points you make nonetheless.
Slightly OT -
Find some additional comedy here:
http://finance.yahoo.com/news/social-security-and-natural-gas-saved-our-...
Social Security and natural gas saved our economy: James Galbraithdoes this post imply that inflation may start to ignite? this would be very bad for fiat money and good for stored value.
The single fastest way back to full employment is to eliminate minimum wage, unemployment benfits, and welfare.
Labor is like any other resource. If there is too much, the price must drop to a rate that is needed by the markets. In a traditional market, the Fed would have the rate of inflation higher to lower the real cost of labor. IT has not been happening rapidly enough because we are still in a recession/depresssion.
If they wanted things to get better, they would stop interfering with the markets. It's the problem when you are having the intellectual elites run the show, rather than millions of every day people making decisions in their own best interest.
Far too many people, not enough jobs. We're back in Grapes of Wrath Depression situation. Except we don't have Hoover-villes, we have section 8 housing; instead of soup kitchens, we have Electronic Benefit Transfers (which can be used to buy pot, alcohol, cigarettes, and ladies of the night, oh, and can be swapped for pennies on the dollar at the local convenience store for cash to be used at the local casino.
Winning.
The rest of us proud retards should just quit working, get on the government dole and live high on the hog.
It's not high on the hog, unless you have an entrepreneurial spirit.
In other words, DIMINISHING RETURNS.
It's one of my talking points.
Thanks for the set up. Upvote
Of course the U.S. has Hoovervilles; they are called RV parks.
Impossible.
Too many people screaming for them to "do something!"
My home owners insurance is going through the roof, "Do something!"
I can't afford gas for my car. "Do something!"
Health insurance eats up my paycheck. "Do something!"
My income is going down. "Do something!"
You get the picture. People are screaming for the crooks to take more of their money in order for them to "do something". They will never stop interfering.
you forgot de-regulate, get the tax code down to ten pages or less, deep six obummercare, and otherwise encourage small business creation. in short, get gubberment the fuck out of the way...
Will never work. It will only work if our nation eliminates all the financial fraud that is rampant throughout every corner of the economy. This must also occur throughout the world, as well. That's never going to happen, without a major reset. Capitalism only works if, and only if, there is a penalty to mal/mis investment. That penalty is bankruptcy. In 2008 there should have been massive bankruptcies. Nearly all Wall Street firms should have disappeared, as all were leveraged up beyond belief, and the survivors still are. What we have now is: privatizing of all profits and socializing any and all loses. It's called Crony Capitalism. Those in charge will fight to the bloody end to prevent any change in the current system. This will end very, very badly, and will make the Great Depression look wonderful. You are warned, and prepare for the worst your imagination can conjure up.
Totally agree. In the last depression 50% of the population were agraian and could feed themselves. Now on;y 3% are agrarian based and the rest havenlt a clue how to survive off the land. Oh yea. so many of the city boys/girls think they can survive off the land like on TV but........................thats television and this is real. NO one has a clue what real is, but they will soon.
Nah. All you need is a really, really expensive survival knife. Isn't it?
you forgot h1b visas.
The bubble bursts when the elites are short. Watching all these companies issue non-mark to market earnings in addition to stock buybacks to keep the party going.
A lot of folks have waited a long time for this bubble to burst and still it only gets larger. It is helped along by phony earnings, phony economic numbers, no rule of law and pure market manipulation.
Now we are seeing cracks in the phony earnings, world economic numbers can't be hid anymore and volume drying up. How are they going to stop this bubble from imploding? My guess is that they don't want to stop it. They will simply make more money on the downside when the time is right.........
You are somewhat correct, but... "non-martket earnings" are what non-GAAP earnings are right now. Not really sure what percentage of companies are currently reporting their earnings this way, but we should expect that in the next 2 years nearly 100% in a non-GAAP manner.
Ha ha.
I hate to tell you this but there will be no downside. At the top we cut immediately to Airstrip One and Miniluv.
After all what has Wall Street been telling us these past six years?
Big Brother loves you az, he really does.
Az, you are correct. They will short the market big-time and really clean up on those FRNs! The bad news for them is that when it does happen, it'll cost about $100,000 for a cup of coffee at McDonalds and a cool 1/2 million for a Big Mac.
Buffet was smart, he bought oil companies and a railroad. Hard assets all.
And who will be buying all the useless sock and derevatives that the elites will be shorting at the top?
The commenters at zh, I suppose.
But where are the likes of us going to get the trillions it will take to buy what the elites are shorting?
which reminds me. anybody seen jonnie corzine lately?
I suppose the FED and the banks will try to dump all the stock they have been buying but who is there to buy all that?
pish posh...buy em!
The only thing missing in this chart is at the end, when Citi ends up with alll of our money
don't blame the freeway for the traffic accident.
THE CURE IS
Take money from the villains.
Here is a start ... An example:
http://patrick.net/forum/?p=1249810
What? 90% of college endowment money is "remitted" to the government? What's that all about?
inflation is your friend. be the inflation. now breath inflate, inflate, inflate now exhale.........
Since nobody else has mentioned it (Maybe it's too obvious for most ZHers), Yellen and Kuroda, or as I like to call them, Mr & Mrs. Edward J Smith, are still reading extracts from Krugman's DSGE model. The phrase "Full employment" kind of gives them away.
DSGE and its analogies about a bathtub full of aggregate demand is perhaps the most insane piece of social engineering fantasy made real. Pretending to be in full employment, printing liquidity into the casino system to match, then pretending the population is miraculously all hunky dory with jobs, disposable incomes, and eating manna from heaven until the data comes in that the opposite is true, so they do it all over again.
The stern of $$ Titanic is 17+ trillion high over sea level and anyone who is not completely blind, deaf and lobotomised can clearly see the cracks along the ship that will eventually break and take her into her watery grave. Get your women and children into the lifeboats first because when the currency collapses, all the wealthy will already have scarpered off over the horizon to their tax havens and multinational corporate domains with the lifeboats.
And how long can the scarpering wealthy keep afloat on tax havens? You'll have a much better chance with a shopping cart full of rags at a freeway off ramp.
If everybody just went out and bought things they didn't need, we could keep this scam going another decade.
I think we've all noticed that US firms are on a buying spree across the world. Profitable companies in Europe & Asia are being aggressively snapped up by US fund managers, holding companies and conglomerates with zero interest on leverage. The sad reality is, often the companies are profitable and well managed. But as soon as they become merged into a group/have their board control relinquished, people lose jobs, business models that failed in the States are implemented and all the downsizing eventually destroy them, leaving the shell of a brand to be picked over by the next group of vultures. I've seen this all of my life in the UK and it is definitely worse than ever.
And that's the haven to which I refer. The wealthy, via third and fourth parties, keep buying up foreign companies with free money, so their wealth is sustained and grows as separate foreign entities. There is such fierce competition and so much liquidity in the system that whole countries are being pressured to sell pieces of their state properties to the hungry US giants of finance. Look to Ukraine and elsewhere to see how sons of US senators and 1%ers are popping up in the boardrooms of former state owned enterprises all over the world.
I got some bad news for you. I just had a few words with the capitain. The bad news: He told me that the elite have already left and took all the life boats with them. The good news: The elites were kind enough to leave us the dance band to enlighten our lives with music. Champagne anyone?
Let me throw one out there. It ended in 2009. The market isn't a market. It's just a bucket game scoreboard by the central planners. It's all false flags, and means to get you entirely dependent on the giverment. The giverment does really control all means of production, and their end game is one world order. Name a single free thinker in the world other than Ron Paul and Nigel farage. .. oh well time for me to get back to Leonardo Dicaprio telling me how faced the climate is....
LOL
Full employment went out with the bustle and the furbelow.
Gimme a break.
Fuck shitigroup and their analysis.
Now it can be told: The bank that exposed the federal government to the greatest potential loss during the government bailout was Citigroup, which received a grand total of $476.2 billion in cash and guarantees, according to a new report of the Congressional Oversight Panel which oversees the TARP program.
A couple of decades and 10% of $476b would be enough to cure aging.
I only clicked this post for the comments
Your first sentence made that click worth while
It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward. When this happens we are at the end game.
At some point the return on loaning money is simply not worth the risk! Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.
The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.
http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit...
I am pretty sure there would be full employment without central bank intervention. It is central bank intervention and the inflation that goes with it that causes people to be out of work.
We need an old pardigm, where people are needed ... not a new one where only banks are needed.
People create value through their work. Banks DESTROY value by the creation of fiat and substituting debt-fiat for value creating work.
It is very simple, intentional and diabolical.
Disability check = employment.
BLS just found full employment.
Fairy Tale Of The Day? "the... housing, bubble (which itself was a response to the dot com bubble preceding it)".
I have never seen any argument showing how the housing bubble was "a response to the dot com bubble preceding it".
In fact, I have never even read anything before that said, "the housing bubble was a response to the dot com bubble preceding it". (Of course, I don't have time to read EVERYTHING.)
Aren't we curious, though, what the housing bubble WAS a response to?
I think it actually started before the dot com bubble burst. When Glass-Steagall was removed, and "red-lining" was ended.
But I think that most of it was a response to Dubya's Wars. Citizens know wars result in inflation. So citizens who care about their families could try to protect them against war inflation, and the usual way to do that is by buying real estate. After all, real estate is probably the only investment a wage-earner citizen can buy that is tax-subsidized, and very probably the only LEVERAGED investment a wage-earner citizen can buy that is tax-subsidized.
Plus, Greenspan "helped" by lowering interest rates and otherwise making money as available as possible.
And Dubya said, "just go shopping".
So I think many citizens bought bigger houses than they would have otherwise, hoping they could sell them later for profits that would protect their families from the war inflation. But now very few people can afford those bigger houses.
By the way, real estate busted when the war had pretty much wound down, and Dubya therefore no longer needed the citizens to "just go shopping".
Well, it may not have been a direct response to it but (as you point out) Greenspan did engineer lower rates after the dot com crash (dare we say in response?) and kept them there for too long (because Bush's return to big governmentism/over regulation caused the recovery to lag). That and the fact that a lot of middle Americans had gotten burnt in the stock market when it fell led to the housing bubble (as demand for housing, fueled by easy money and a desire to find an alternative investment to stocks, combined with real estate tax breaks, made everyone view it as a "free lunch"). So in a way it was a "response."
Thank you. I still think the PRIMARY REASON Greenspan kept interest rates low was TO SUPPORT Dubya's wars. Can't prove it, of course. Low interest rates made it easier for the War Machine to fund the wars, and made it easier to muffle public antiwar outcries by giving wage-earning American savers "hope" that, if they just kept their mouths shut and kept their jobs, they could at least avoid the inevitable war inflation.
Also, I don't see how low rates helped wage-earning American savers who lost money in the Dotcom Crash. I believe that the natural (and in my opinion, wise) thing for those Americans to do would be to avoid doubling-down, to avoid throwing good money after bad, and instead simply put future savings in the bank for a while, until they recover sufficient peace of mind to sort things out and consider any more risky investments. And if their savings were in the bank, high interest rates would have helped them.
Instead, the combination of inevitable war inflation and low rates in the bank lured (scared?) those savers out of the safety of their bank accounts and into the risk of chasing a second bubble, real estate. It got them to double-down.
Maybe this was just all chance and maybe it wasn't, but the result was that those savers lost on all counts. They did not avoid the war inflation, and their inflation-hedge investments in houses did not protect them because they erred by overleveraging, buying bigger houses than they could actually afford, and then discovering, when the Great Recession hit, that high unemployment produced a shortage of families able to purchase the homes from them.
That's my opinion. I think I would call it one Main Street view, mine, and not a Wall Street view.
The low mortgage rates (and interest rates in general) post dot-com bust created perfect conditions for a feeding frenzy in spec real estate. A large number of our clients suddenly showed interest in rental props as a "safe" investment relative to the capital markets. Bidding wars broke out for properties based on:
i) "rates are going to go up so I'd better hurry"
ii) "this adorable duplex might DOUBLE in price again if I don't get it NOW!"
Wash, rinse, repeat 1,000,000,000 ..................
Sooner or later, whether you are a corporation or a family, you are going to need a family to buy that house from you. If no family can buy it, no profit can occur. As for renting them out, people don't have to rent, as long as houses are big, because people can simply stay in their parents' big house, or move back in with their kids in their kids' big house. Maybe homebuilders should have built smaller houses.
a teacher of chemistry in russia :)
there will be no more full employment in this machine made world.
not in this regulated globalist 1984 bureaucrazy scenario.
LATEST NEWS:
Soon there will be FULL EMPLOYMENT !!!!
When the value of the U.S. dollar declines in value to 3 cents (No, NOT the decline from 1913 to the presesnt - I mean ANOTHER decline soon to come); when the USD becomes worthless in terms of "purchasing power", THEN people will be "fully employed" as they beg for food; scramble through trash bins for food or anything else of value; sit at their homes and/or businesses with weapons in hand to ward off looters; etc. --- THEN we will ALL have plenty to keep us busy!
This is NOT the final bubble. That's just silly.
since the ussa was isolated from ebola is was the SUPER INTELLIGENT HARVARD GRAD GENIUS MENTALITY that said let's bring it here and let's in addition send trained killers to fight ebola.... does this fucking commie muslim mulatto have a brain, no..... this is more of the CHANGE he envisioned bringing the ussa down.... ebola in thewhite hosue ... precious
no jobs, no discretionary funds, no economy..... lots of commie climate change and useless parasitic bullshit = sideways stagnation to down economy for the next decade if another libtard gets the 2016 selection...$700 gold and $10 silver, 1400 s+p 2800 nasdaq 13000 dow.....electric rates 10x what they are now,....... happy days are here again,