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Peak Debt - Why The Keynesian Money Printers Are Done
Submitted by David Stockman via Contra Corner blog,
Bloomberg has a story today on the faltering of Draghi’s latest scheme to levitate Europe’s somnolent socialist economies by means of a new round of monetary juice called TLTRO - $1.3 trillion in essentially zero cost four-year funding to European banks on the condition that they expand their business loan books. Using anecdotes from Spain, the piece perhaps inadvertently highlights all that is wrong with the entire central bank money printing regime that is now extirpating honest finance nearly everywhere in the world.
On the one hand, the initial round of TLTRO takedowns came in at only $100 billion compared to the $200 billion widely expected. It seems that Spanish banks, like their counterparts elsewhere in Europe, are finding virtually no demand among small and medium businesses for new loans.
Many small and medium-sized businesses are wary of the offers from banks as European Central Bank President Draghi prepares to pump more cash into the financial system to boost prices and spur growth. The reticence in Spain suggests demand for credit may be as much of a problem as the supply.
The monthly flow of new loans of as much as 1 million euros for as much as a year — a type of credit typically used by small and medium-sized companies — is still down by two-thirds in Spain from a 2007 peak, according to Bank of Spain data.
On the other hand, Spain’s sovereign debt has rallied to what are truly stupid heights - with the 10-year bond hitting a 2.11% yield yesterday (compared to 7% + just 24 months ago). The explanation for these parallel developments is that the hedge fund speculators in peripheral sovereign debt do not care about actual expansion of the Spanish or euro area economies that is implicit in Draghi’s targeted promotion of business lending (whether healthy and sustainable, or not). They are simply braying that “T” for targeted LTRO is not enough; they demand outright sovereign debt purchases by the ECB - that is, Bernanke style QE and are quite sure they will get it. That’s why they are front-running the ECB and buying the Spanish bond. It is a patented formula and hedge fund speculators have been riding it to fabulous riches for many years now.
But don’t call these central bankers crooked patsies - they are just dimwitted public servants trying to grind jobs and growth out of the only tool they have. Namely, buying government debt and other existing financial assets in the hopes that the resulting flow of liquidity into the financial markets and the sub-economic price of money and debt will encourage more borrowing and more growth. This is the core axiom of today’s unholy alliance between financial speculators and central bank policy apparatchiks.
Stated differently, today’s Spanish anecdote is just another proof that central banks are pushing on a string; that is, aggressively and incessantly pumping money into financial markets even though the result is wildly inflated asset prices, not expanded business activity. But as is always the case with central bank created financial bubbles, the beneficiaries are happy to pocket the windfalls while the apparatchiks blunder on - pretending not to notice the drastic financial distortions, malinvestments and mis-pricings all around them.
Admittedly, Draghi is one of the dimmer tools in the shed of today’s central banking line-up. But surely even this monetary marionette might possibly wonder about a 2% Spanish bond yield. After all, virtually nothing has changed there since Spain’s 2012 fiscal and economic crisis. The nation’s unemployment rate is still above 20%, national output is still 7% below where it was six years ago and soaring government debt will soon slice through the 100% of GDP mark.
Moreover, Spain is still saddled with the wreckage of a massively bloated development and construction industry, its government is led by corrupt fools who apparently believe their own lies about “recovery”, and its most prosperous province is next for secession voting.
Needless to say, Draghi and his compatriots in Frankfurt have no clue that they are being played for fools by the carry trade gamblers who have piled into peripheral debt ever since the ECB chairman’s foolish “anything it takes” pronouncement. Yet it is only a matter of time before the growing German political revolt triggers a day or reckoning. When it becomes clear that Germany has vetoed once and for all a massive spree of government debt buying by the ECB, it will be katie-bar-the-door time. The violent scramble of speculators out of Spanish, Italian, Portuguese etc. debt will be a day of infamy for the ECB and today’s destructive central banking regime generally.
But pending that it might also be wondered why the apparatchiks who run our central banks seem to believe that the capacity of households and businesses to carry debt is virtually unlimited—–that there is no such thing as “peak debt” or a law of diminishing returns with respect to the impact of cumulative borrowing on economic activity. Thus, the Bloomberg article notes that the total stock of Spanish business loans (above $1m) is almost 470 billion euros or 25% below the 2008 record of 1.87 trillion euros. The implication is that there is plenty of room for lending to “recover”—-the exact predicate behind Draghi’s program.
But as shown below, that glib assumption simply ignores the history of what has gone before—-namely, that the temporary prosperity leading up to the 2008 financial crisis was a one-time Keynesian parlor trick that used up the available balance sheet headroom and then some. It resulted in a collision with “peak debt” that has fundamentally changed the macro- economic dynamics.
In the case of non-financial business debt, for example, the balance outstanding soared by a factor if 4X in Spain during the 9-year construction and investment boom that preceded the crash. About one-fourth of that unsustainable debt explosion has been liquidated since 2009, but even then business debt has grown at a CAGR of 8.0% since 2000—-a rate significantly higher than Spain 3.5% rate of nominal GDP growth over that 14-year period.
Likewise, household debt nearly doubled as a share of GDP in the 7 year boom before the financial crisis. The household debt ratio has now backed off marginally, but relative to history and the rest of the world it is still unsustainably high. The idea that there is major headroom for a robust recovery of household borrowing is simply wrong. Indeed, Spanish household debt today would amount to $14 trillion on a US scale GDP—a level that is 20% higher than the unsustainable burden still being lugged around by main street households in shop-until-you-drop America.
Needless to say, Spain is but a microcosm of a worldwide condition under which maniacal money printers in the central banks are smacking up against peak debt in their domestic economies. As shown in the graph below, outside of Germany the debt disease has been universal. During the eight years after the turn of the century, the leverage ratio for all industrial economies combined ex-Germany—-that is, total public and private credit outstanding relative to GDP—rose from 260% to 390% of GDP. That incremental debt burden in round terms amounted to about $50 trillion.
And despite all the official palaver about how economies have sobered up and begun to delever—-the data make clear that nothing of the kind has happened. Owing to massive expansion of government borrowing and debt ratios since 2009, total credit outstanding has now soared to 430 percent of GDP for the ex-Germany industrialized world. This figure is so far off the historical charts that it could not have even been imagined 15 years ago when worldwide central banks went all-in for money printing.
Nevertheless they have continued to push on a string. At the turn of the century, the six major central banks had combined balance sheets of $2 trillion. Today the figure is $16 trillion and is therefore 8X larger. That compares to world GDP growth of about 2X during the same period.
Self-evidently, all the major economies are saturated with debt. Accordingly, central bank balance sheet expansion has lost its Keynesian magic entirely. Now the great sea of freshly minted liquidity simply fuels the carry trades as gamblers everywhere load up with any asset that generates a yield or short-run capital gain, and fund these bloated positions with cheap options and repo style finance.
But here’s the obvious thing. Central banks can’t normalize interest rates - that is, allow the money markets to rise off the zero-bound - without triggering a violent unwind of the carry trades on which today’s massive asset inflation is built. On the other hand, they can no longer stimulate GDP growth, either, because the credit expansion channel to the main street economy of households and business is blocked by the reality of peak debt.
So they end up like the pathetic Mario Draghi - energetically pounding square pegs into round holes without a clue as to the financial conflagration lurking just around the corner. Yes, the era of Keynesian money printing is over and done. But don’t wait for the small lady at the Fed to sing, either.
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Deleveraging is good.
Deleveraging into full fiat? You NEVER go full fiat...
Maybe the Fed can start printing up deeds to "property" (which may or may not exist)--hand them out to everyone, and suddenly everyone has more collateral!
Then mortgage the deeds, slice up the mortgages then mix the pieces together with chunks of other properties which nay or may not exist and no one will ever know where the money came from. Make sure Uncle Sam winds up holding them.
money printing is finished
money printing is finished
money printing is finished
so many times I have said this
hugs,
gideon http://en.wikipedia.org/wiki/Gideon_Gono#Zimbabwe_Dollar_and_inflation
"In the Lord's hands, I commit this Monetary Policy Framework for our economic turnaround."
That is one of the nicest summaries of the past 14 years of finance in the US (and Europe) I have ever seen. The pile of paper these guys have allowed themselves to create is the greatest tribute to human-greed-saturated-blind stupidity that has ever been seen since the beginning of the experiment in Homo Sapien living. The crash (whenever it finally comes, hours or years from now) cannot help but be epic. Interesting times.
http://www.businessinsider.com/man-selling-real-estate-on-the-moon-2013-3
I just stopped paying for all unsecured debts.....Simple
Life is Good.
PS most likely your mortgage is unsecured debt as well.......shhhhhh
And that, ladies and gentlemen, is how money that was created into thin air (inflation) goes POOF back into thin air (deflation).
.
What mortgage?
Devaluing the currency, looting, and central planning sounds like such a great solution. Too bad it never works.
This is the way world fiat ends.
This is the way world fiat ends.
This is the way world fiat ends.
Not with a bang but a whimper.
People will just gradually find alternatives to these government debt scrips. They'll fall out of use slowly, and then maybe all at once. Already we see and applaud much of the world turning away from the USD, and frankly the same reason that USD is no longer respected, is the reason some kind of sounder money will take its place. I've been watching the "gradually" part for 2 or 3 years now, both in unrecorded markets and in watching geopolitics and global economics. I am interested to see if "all at once" comes next.
Government money has lost all semblance of real "faith and credit", when even so much "faith" is now gone. (This ain't the '30s, and most of us know on some level or another that the government is not here to help). More discredited scrip - even under a new name - will not be able to replace it, as Weimar Germany discovered when it too tried to replace one worthless fiat with another.
Renfield'
Your post has so many errors.... It's hard to even comment on it.
But I’ll leave you with this quote:
"All the perplexities, confusion and distresses in America arise not from defects in the constitution…, as much from downright ignorance of the nature of coin, credit, and circulation" — John Adams, August 25, 1787.
Then, look at Japan.
Wonder why?
Japan runs huge deficits, QE since 1980’s, Fiat currency, energy dependent, all kind of resources dependent, horrible demographics…., and I could go on.
But Japan still going....
Japan is still going....until it isn't.
You may be right about Japan right now, but it is a dead man walking. A combination of demographocs(an aging population) a steadily eroding currency, and massive amounts of debt that can never be repaid, and are only barely being serviced, will finish them off as a major economy. Notice he said go out with a whimper, not a bang. People aren't going to give them real energy for their worthless currency forever. Japan goes first, the rest of is follow. It might take a few more years, or even another decade, but it is inevitable none the less. All of this has been tried numerous times throughout history. It has always failed. This time is never different.
I almost bought into your arrogant claptrap. And then you mentioned Japan.
hungrydweller, Greenskeeper_Carl, McCormick No. 9,
Japan, Europe, and US societies will function as long as there is a chicken in every pot, a car in the garage, and a paycheck.
Once these societies stopping having enough to eat, and they can not move around anymore, it’s over!
Their paychecks? Irrelevant!
Please, read this post by Tall Tom that I pasted below. It’s all there. Check it out.
You are not Napoleon Hill or Dale Carnegie.
When the world is full of takers then you can give it all away and totally deplete yourself while doing so. At this point the returns for such "benevolence" do not exist.
There is a difference between financial problems and financial predicaments. Financial problems may have solutions (may being the keyword) while financial predicaments have absolutely no solutions.
Guess what, asshole? America is tapped out. Our Credit Limit has been reached and we are facing a predicament. THERE ARE NO SOLUTIONS BUT DEATH.
That is right. It is not JUST that the US Government is heavily encumbered by debt and can no longer afford to pay her bills BUT THE MASSES, MOST OF THEM, are in similar shoes. They are tapped out. There is no Job Market Recovery and the Housing Recovery is FICTION.
Whatever your Government has to say is FICTION. They never tell the truth.
They have NO MONEY TO SPEND. They have NO DISCRETIONARY INCOME LEFT. And there are no high paying full time jobs for most of them. Thus they STOP BUYING CRAP. They have NO CREDIT. They have NO MONEY. They have no Home Equity Line as they are entrapped in upsidedown mortgages.
That means that there is NO GROWTH or POTENTIAL FOR GROWTH. That affects Corporate Bottom Lines, which, in turn, destroy the value of STAWKS. (Yeah...Right...Even the FED buying up the Stocks and the Plunge Protection Team will not be able to stop the oncoming crash of the Financial Markets.)
Of course these Corporations DO NOT HIRE when they are experiencing SALES DECLINE and LOSS OF REVENUE. Thus the ever vicious spiral of unemployment or underemployment continues unabated.
Now you can convince yourself of your little fantasyland fairytale which you spouted here if you choose. But it does NOT CHANGE THE FUCKING FACTS of the PREDICAMENT WHICH WE HAVE PLACED OURSELVES.
But to attempt to pass off this "help" as something "valid" on this website is the epitome of being a supreme DOUCHEBAG.
It is fucking laughable at best.
The Growth Paradigm has ENDED due to the depletion of cheap energy.
Our goose is cooked. So...FUCK YOU.
(Damn. What is this shit? How many brain dead do we have to have on ZH today?)
http://www.zerohedge.com/news/2014-09-26/your-new-normal-life-pictures#c...
"How many brain dead do we have to have on ZH today?"
Not going to touch that one.
"Japan runs huge deficits, QE since 1980’s, Fiat currency, energy dependent, all kind of resources dependent, horrible demographics….But Japan still going"
I think you're on the right track, the US Debt2GDP is about 105% and the EU is about 94%. Japan is at 227%. I don't see QE ending in the US or the EU since Japan is able hang on well above 100% Debt2GDP. I also don't see them stopping anytime soon since all both the US and EU are insolvent. The only way to prevent a hard default is to go on printing. This game has some more time left to play out. I don't believe for one sec that QE is going to stop anytime soon. QE will end when currencies are worth less than Zimbabwe dollars.
The US may be able to stop QE for a short period because foriegners will like opt to park capital in the US since: 1. The EU has negative interest rates, 2. EU Financial wizards (/sarc) talk often about bank bail-ins, 3. Investors and savers are worry about stability of EU credit markets (ie PIIGS defaults/capital controls/nationalization/and the Ukraine war). While the US isn't a real safe haven, foriegn investors are looking to pick the prettiest of a group of ugly fat chicks. For the momemt the US has an illusion of safety for many. Of course the US will go on borrowing since it insolvent has has huge entitlement outlays to fund.
I think the US Dollar may start collapsing when the Federal Debt tops $20 to $24 Trillion. At some point investors will start to realize the US has dug its own grave and its likely that savers will run out of capital to lend to the US. The economy is likely to continue to decline as free capital available cash flow dries up (see plunging money velocity).
That which can't go on forever, won't. And the reason this can't go on forever, (besides the impossibility of extrapolating trends that math demonstrates are untenable) is that the key global producers of stuff civilization requires aren't going to sell their wares in exchange for currency that is vastly overvalued - overvalued against goods in the physical plane, that is- unless those same producers can simulataneously put their surplus into physical gold. And the flow of physical, i.e. available stock, is going to be very hard to come by going forward because mines will not produce enough physical to meet demand at these prices.
"That which can't go on forever, won't. And the reason this can't go on forever"
Yup, but its not coming to end tomorrow, or even next year. which is Stockman believes.
"global producers of stuff civilization requires aren't going to sell their wares in exchange for currency that is vastly overvalued"
Its more complicated in that, 1. Business that produce goods and services are getting paid in local currencies. 2. Foriegn Central banks continue to hold dollars since if they stopped their economy is going to take a hit. If China stopped accepting dollars for foriegn trade, its going to have an immediate impact on their economy as all of the Business will suddenly need to find new clients as Americans aren't going to be buying thier stuff anymore. China itself is insolvent and over extended, so its not going to drop the dollar until its forced to. The same is true with the EU.
Recall that back in 1987 Japan began dumping US treasures since they lost faith in the US credit worthiness. That ended up as the catalyst for Japans economic implosion as the Yen value began to soar causing its exports to fall. Assets in Japan began to fall and exporters became insolve as the main consumer of Japanese exports (US consumers) cut purchases since they were less competitve. Since then, Japan has been a mad-dog buying US treasures with Yen to keep its currency from rising to protect its exports. Snce 1987 the US did much better than Japan.
Today, All of the industrialized world is now Japan, as every nation is activity devaluing their currency to protect exports. At this time, the only countries that may switch over to a gold standard are the energy exporters. Few of the Energy Exporters have any manufacturing and don't depend on manufacturing for their economy. Oil is in depletion and they don't have to worry about another energy export dumping Oil or NatGas to steal market share. The only way I see China dumping the dollar is if the US consumer can't buy Chinese exports any more and China switches to Military expansion economy, where they go to war. Its unlikely that China can switch its econimy over to internal demand for its economy since the majority of its people have no money and most Chinese businesses are deep in debt.
At this time, I fear that the World is plunging into WW3. I have my doubts that the dollar will collapse before WW3 begins and once the Nukes start flying all of the gold in the world is irrelvant.
"Japan runs huge deficits, QE since 1980’s, Fiat currency, energy dependent, all kind of resources dependent, horrible demographics….But Japan still going"
Weak, weak logic. Mortally wounded, his heart is still beating. Time to take Econ or Logic 101 over again.
Japan had the advantage of using zero-bound interest rates for 20 or more years (to keep the yen from rising and killing their exports) because no other country was doing the same thing. Now the USD, the Euro and Renminbi are all mimicking Japan.
Will there be chickens in the pots? Most likely. Will paper wealth take a haircut? Take a course in the history of conjuring something from nothing. It is all an illusion.
The dollar is the last stop before the run to gold.
;)
Adams was referring to governments lack of understanding of fiat....not the people's understanding. Your reference does not in any way make us any more informed or discredit earlier references made by others.
"Not with a bang but a whimper."
Ohhh, there will be a bang alright...It's called the "Red Flag Event". As Kyle Bass said, War is just enconomic entropy played out to it's logical conclusion. (paraphrased)
Too long, didn't read. Anyone know where to find those leaked celeb photos?
in short bla bla bla same shit diferent story. they can print and print as much as they want. all this fear mongering is starting to read the same. collapse tomorrow and you better buy gold and silver. yes do like I did and buy the lie and watch your assets devalue every day. I think this shit story is getting old and I fell for it.
guess that makes me the sucker
Bossman1967,
Consider this, by Gerald Re, at Barrons.com:
In the movie, "House of Sand", 3 generations of women lived in Northern Brazil from 1909 to about 1969. In 1950(ish), the mother wanted to give money she had been saving since 1909 to a friend so he could take her daughter to the city.
He looked at the bills and said, "THEY ARE NOT WORTH ANYTHING...TOO OLD." Her rings and jewelry....HOWEVER were still worth something.
This is what the gold bugs have been saying all along. The media and the government want us to believe there is no inflation and that paper assets and the dollar are strong. What a joke.
Look up GDXJ and read some of the articles related to it. Soros and Jim Grant are buying GDXJ.
Interest rates have risen this week. Market is down. If this continues next week, mom and pop may panic out. Things will get ugly.
We may very well be headed to a depression worst than the first one. This one may destroy society as we know it. Only food and water will be of value.
Trust in paper or invest in hard assets. We will see who is right.
On the First Person
I said it before and I’ll say it again:
I believe gold will be the last bubble that we will ever see, before we having to face the coming humanity crisis
I believe shorting the dollar will be the trade of the century, even that most of these traders will go broken before the US
I believe that real wealth is:
1st) That you and your family understand reality as is… And not as our deluded mind tell us as how we wish
2nd) Arable land in Paraguay
3rd) If you stay in America, it needs to be away of both coasts and over undergrounded water. And this community/town has to be small, united, and heavily armed. Gold will mean nothing for these folks. Access to medication and doctors, that’s gold.
"f you stay in America, it needs to be away of both coasts and over undergrounded water. And this community/town has to be small, united, and heavily armed. Gold will mean nothing for these folks. Access to medication and doctors, that’s gold."
Medication and medical services would disappear. Without a functioning economy pharma will go out of business, and the stock will quickly deplete. Modern Doctors are nearly worthless without access to High-Tech Medical equipment and medicine. I doubt few doctors would even be able to set a broken bone with access to X-rays since they have no experience on how to do it with X-ray equipment. X-ray film is dependent on a functioning economy. FWIW: Medical services is already in early collapse stages as many antibiotics are no longer effective. the Diseases of pre-20th century medicine are all coming back. Now we are also facing new 21st century diseases that elude treatment (AIDS, SARS, Bird-Flu, Ebola, etc). It just a matter of time before we have another global pandemic.
"Arable land in Paraguay"
Not for Americans. Americans will be tortured and murdered by the locals in South America. Much like the Germans massacred the Jews, or the Turkish genocide of Armenians, South America will be pissed at gringos and they slaughter or enslave all Americans in their home countries. Perhaps you noticed that Genocide is also making a comeback. We have the begins of Genocide in the Middle East, and parts of Asia. It also coming the Europe and the Americas. When the global economy breaks down it, it will make a lot of angry people, people that will blame outsiders (it for either taking their jobs, their money, etc). There are articles in the papers every day about one group of people blaming another. Sooner or later the protests and riots will become more fundamental, turning to widespread violence and murder. Humans haven't changed at all.
AGuy
You have some good points in both of your posts. Personally, I would stop using debt to GDP percentage. Both metrics are flawed.
Now, the reason I said Paraguay, even that I was born in Brazil, and Brazil is a no no for foreigners during the coming societal collapse, are:
a) I feel much safer around the indigenous people of South America than most cultures. These indigenous know how to live with little.
b) The reasons of ‘getting curious’ about Paraguay are very simple: 1) External debt: #105 2) 100% hydroelectricity. Paraguay is the worlds’ largest exporter of electricity—even when its electricity distribution is the worse in South America. 3) Largest fresh water reservoir in the world. 4) Tropical weather—plenty of food and animals 5). More than half of its exports are food. 6] One of the least urbanized nation in the world—which will come handy during the coming [oil] humanity crisis.
Another Perspective
Africa: 1.1 billion people, with about 8.5 million barrels of oil a day, but declining fast
South America: 400 million people, with about 7.5 million barrels of oil a day.
http://peakoilbarrel.com/bp-statistical-review-world-energy-2014/
Good night.
"Personally, I would stop using debt to GDP percentage. Both metrics are flawed."
Yes, but its broadly used and people are familiar with.
"The reasons of ‘getting curious’ about Paraguay"
Which makes it a target. Perhaps Argentina, VZ, decides to invade (to take its resources and money). I also doubt Paraguay will be safe, it will be very difficult to secure its borders from golden hordes in the Socialists counties. Sooner or later Argentina or Venzuela is going to collapse and there will +100 thousand refugees fleeing to someplace, anyplace better.
"I feel much safer around the indigenous people of South America than most cultures"
Lots and Lots of violence in SA. Hondoras is the Murder capital of the world. Lots of gangs and thugs throughout south America. I don't think South America will be safe. South America has been plagued with centuries of civil war and unrest, even before the Europeans arrived. Unfortunately People don't change.
"400 million people, with about 7.5 million barrels of oil a day."
I suspect that South America Oil production is very dependent of US Oil technology. I suspect that most of the tooling, rigs, pipe, etc originate from the US. I very much doubt that South America can maintain anywere near 7.5 Mbpd without infrastucture support from US oil companies. South America is also in depletion and has turned to unconvential drilling to offset conventional oil depletion.
The bottom line is that there is no safe haven anywhere in the world.
AGuy,
You wrote:
- broadly used and people are familiar with
- golden hordes in the Socialists counties.
- +100 thousand refugees fleeing
- I suspect that South America Oil production is very dependent of US Oil technology. (You suspect? Well, here’s your answer: Not anymore).
- Hondoras is the Murder capital of the world. (Honduras is a nation; and it is in Central America. And most crimes in South America are drug related. New gangs killing old gangs for territory).
- South America has been plagued with centuries of civil war and unrest, even before the Europeans arrived. (Let’s be Clear: You have NO clue about South America geography; and its history under Spain and US imperialism).
So, anyway, after reading your post I realized that you’re not a serious person.
In the internet you can be whatever you want. Why you chose to write nonsense is beyond me.
Stick with reading!
Deep web. Easy.
Too long, didn't read. Anyone know where to find those leaked celeb photos?
This year we crossed the rubicon, never to go back. We are not and will not be another Japan, that manages to barely hold it together with duct tape and lies, as some hope.
No, it's over. You will watch as America and the world comes unglued over the course of the next 12 months.
Too long, didn't read. Anyone know where to find those leaked celeb photos?
The rare triple post. Well done, sir. Gold clap.
Is the "gold clap" ZH's version of the golf clap? Lol.
Oops.
No Serenity, its something you get from gold diggin whores.
s/
i just love this guy. i know plenty of you still blame him for his reagan years. and i know that very, very few people ever change. but i love this:
Needless to say, Draghi and his compatriots in Frankfurt have no clue that they are being played for fools by the carry trade gamblers who have piled into peripheral debt ever since the ECB chairman’s foolish “anything it takes” pronouncement.
Stockman always gives me a word to look up in his articles. Extripating: to root out and destroy utterly.
Talking about monetary policy is becoming a bit like talking about the weather. Everyone complains about it, nobody does anything about it.
Sorry, Dave, we're all a day late and a dollar short (so to speak) in fixing any of this. We had an opportunity in 2008 but squandered it. We put off the hangover by drinking the next morning. It worked so well, we just drink all day long now.
Everyone complains about it, nobody does anything about it, and almost every forecast is wrong. :)
extirpate is the correct spelling
WARNING GRAPHIC PHOTOS (RAW) - ISIS begins killing Christians in Mosul, CHILDREN BEHEADED
see:
http://homment.com/3qqsnjhNBj
How can I fap to this beheading shinanigans?
These photos are beyond sick.
I saw this two weeks ago...I said it once I will say it again...bring back the knights templar and impale these animals in the hot sun no mercy...knights unite...kill them all!!!!! they do not deserve mercy!!!! kill kill kill them all make dog food out of them grind them up alive feed their rotting flesh to their comrades...kill them all!!!!!
Photos of folks hit with US ordinance are fairly grim also.Not to mention considerably larger in number.
The US censors its "grim" videos (e.g. the torture tapes) and will not be publicizing the grim videos of activities by its allies in Gaza, Egypt, or the beheading in Saudi Arabia.
It is all horrible, but don't get played by deceitful appeals to your emotions (war propaganda) into supporting wrong-headed and counterproductive policies and actions.
Don't forget who created, trained, supplied, and originally financed ISIS, and created the conditions for mayhem by the deliberately deceitful and illegal invasion and destruction of Iraq.
Correcting one wrong with more wrongs. The Middle East is such a cesspool of religious and ethnic tribalism. There is no Hollywood solution. IS is Sunni, as is most of the Arab oil producers, aside from southern Iraq.
the article originates from catholiconline, a major supporter of the pope...need I say more?
No.
Not interested in your utter ignorance.
In the least.
Gaza people murdered by israel:
https://www.google.com/search?safe=off&hl=en&site=imghp&tbm=isch&source=...
Samar Hassan screams after her parents were killed by U.S. Soldiers in Tal Afar, Iraq.
https://www.google.com/search?safe=off&hl=en&site=imghp&tbm=isch&source=...
Catholic Online is the source so The NWO and the Catholic chruch are working together.....now that new........NOT
while it may be happening if it comes from the Catholic Chruch which is a vile, New World Order player then it can not be trusted.
Fuck the Pope and his faggot lover!
Francis the Flake is an antipope and the establishment in the Vatican has not been the Roman Catholic Church since the Second Vatican Council. Cf. Sedevacantism.
http://novusordowatch.org/index.htm
No, no, no. When you're the big boy you don't throw the match without betting against yourself first. On margin. Draghi and his compatriots are playing themselves for fools so they can get the big pay out.
Mr. Touchdown - cannot upvote your post when your 1st character is in italics. Known script problem. A ZeroHedge hidden gem.
Thank you for that
If the economy was healthy and balanced we would not be experiencing slow growth while massive amounts of money are being printed and poured into the system. The crux of our problem remains in the fact that both people and governments have lived beyond their means by taking on debt they cannot repay. Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances.
Promises were made on the assumption that the advantages we enjoyed would continue in both Europe and the US. Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Debt does matter and the following article delves deeper into why kicking the can down the road will ultimately fail.
http://brucewilds.blogspot.com/2014/08/modern-monetary-theory-is-wrong-d...
Keep that monetary heroin coming....because nothing spells insanity like trying the same thing over and over and over and expecting different results.
http://olduvai.ca
You know, I've seen a lot of people walkin' 'round
With tombstones in their eyes
But the pusher don't care
Ah, if you live or if you die
God damn, The Pusher
God damn, I say The Pusher
I said God damn, God damn The Pusher man
[/Steppenwolf]
LOL, why should Euro banks make loans when they charge interest ON DEPOSITS!
Real businesspeople with real businesses do not think like bankers think. When a business takes on debt, they assume that they have to pay it back. Therefore they are not going to take on this "money" unless they believe any investments are really going to lead to an increase in revenue (more paying customers). In a shitty economy, not going to happen. The bigger co's can take the money and do share buybacks but it's still like a dog chasing its own tail. The shit is not going to trickle down. Bankers don't get this because they see debt as an asset. When did we let the stupid people lead the class?
You know, I've seen a lot of people walkin' 'round
With tombstones in their eyes
But the pusher don't care
Ah, if you live or if you die
God damn, The Pusher
God damn, I say The Pusher
I said God damn, God damn The Pusher man
[/Steppenwolf]
+100. Love it!!
Peak debt is a fallacy. The central bank can monetise debt ad infinitum, since it is supposedly the extinguisher of all debts.
The key word is supposedly. When the 'market' realises the error, is not Stockman's perogative.
The banksters will just convert and denominate debt in an SDR currency, then force debtors to pay in the SDR, or gold, or lose the collateral, and reset everything in their favor.
And I am sure the bankster owned courts will concur.
An American, not the US subject.
"'Return' is just another word for abscond."
"The banksters will just convert and denominate debt in an SDR currency, then force debtors to pay in the SDR, or gold, or lose the collateral, and reset everything in their favor."
This won't work since the debtors don't have any money or gold. 99.99% of business need positive cash flow by selling goods and services --- to other indebted people and businesses. Very few people and business have any money only by borrowing can the economy limp along. Most people have mortgages and car loans, so they don't even own anything of value since the bank already owns it. There is nothing to "absond" with. The bankers already own it all!
Not withstanding, the "science of economics (sic)" and its adoption is flatly invalid. Mind you, economic theory has in reality become 'political expediency' which is also invalid and based on a leadership by the most incompetent and dishonest.
The global situation today is in mortal danger and the current status is dire and probably terminal for many.
I respect your right to say that I am wrong, but I am not wrong. And this false premise of those that rule and all that hangs off them, is an extremely serious error.
Ho hum
"Sometimes I wonder whether the world is being run by smart people who are
putting us on or by imbeciles who really mean it." Mark Twain
.
"Never argue with stupid people. They will drag you down to their level and
then beat you with experience." m.t.
But you are NOT Wrong...
Human Behavior is indeed the "Defining" element, subject to myriad Manipulations, but NOT Control....
This is a Distinction will ALL the Difference....
On an order of magnitude, correct though writers of such articles are on the ultimate usefulness of the policies they justifiably excoriate, they are more incorrect regarding how long such measures (or, more often, mere jawboning that tools are at the ready) can be endured by large systems before anything approaching the catastrophes they forecast occurs.
They key point they miss, as 2008 articles are re-worked with fresh figures, is that with respect to financial matters, and proper positioning amidst leaders’ bumbling, the pesky little matter of timing is rather important. Thus, we may have reached a crucial point where, while not disagreeing with any key analytics, we find ourselves for the first time wearier of the doomsayer’s mantra than actual finance minister chicanery. A sadder state of affairs could hardly be imagined . . . which could mean a major turn is closer than the nearest comet . . .
I'm in pain just by looking at Spain.
The pain in Spain falls mainly on the plain. (spelling correct).
Bet all the top 1% have Dachas and hidey holes all over England and New Zealand.
When this thing goes down they will be far away with precious metals, protected by their castles.
As much as I'd love to see them "done", I fear that they'll just reboot it with SDRs. If possible, i.e. If the rest of the world accepts them after said Reboot.
Peak Oil is a fabrication. Peak Debt, however, will bring down the Empire. Or the dollar anyways.
http://research.stlouisfed.org/fred2/series/MULT
For every dollar lent out, at interest, .70 dollars goes into the economy.
http://research.stlouisfed.org/fred2/series/EXCSRESNS
Can't believe it. Mainly because of another Bloomberg story -
http://about.bgov.com/health-reforms-cost-73-billion-counting/
I think Japan will be the first place that a true "escape velocity" will occur.
How a currency can fall as much as the yen has while interest rates remain that low is beyond my ability to understand.
Something has to give.
Stagnation seems to be the goal .
With Japa , EU and US in stagnation , that leaves only Russia and China .
And they have long histories of stagnation and elite domination .
It seems that the New World Order has won .
Stagnation is a favourite way whereby the elite propagates the imbalance between wealth and money necessary for their existence.
Get on top , stay on top by freezing everything .
See http://andreswhy.blogspot.com/2014/09/drowning-in-gold.html
I'm sure Krugman gets his best financial ideas from his wife. Same was true with Einstein and relativity.
That is just not possible! Remember when Spain went for a "green" economy? The world's leaders cheered and said the rest of us need follow Spain's example!
Then they voted for the socialist becuase of the Madrid Train Bombings?
If this story is true and Spain is an economic train wreck then everything our children learn in our common core schools is wrong. And you know that can't be...
... Seriously though.
I have written an article about how any nation could improve it's econpmy. You can see it here:
http://incapp.org/blog/?p=2337
peak debt is right. buried in it. before you even had a chance. thanks .gov/uncle sam. i will remember you when i finally get that job at mcdonalds so i can pay off my student loans, you know the ones that you and the ivory towers conspired to bury me under. and thanks for destroying all those good families, my kids thank you for that fair divorce court (" it doesn't say no fault anywhere it the law books") trial too. Wish you well kiddies, carry on the generational welfare state for me will ya?
snarky sarc
ya right
Peak debt is a reality. Who can take on more debt? Not me. Not even at 0% interest. Why? My cash flow is maxed out. How can I make another payment? What I do is expand into my own physical ability to work. That's the only wiggle room I have. if I could take out a loan and hire someone, I would, but... that's right, I can't. So what good does it do me if the Fed loans free money to Goldman, and Goldman uses that free money to buy stocks, and the nominal price of the stocks goes up? How many people can be employed building mega yachts or gold-plating i-phones? The rest of us have to do more mundane things, like produce food.
So, here's my scenario. Someone above said Peak Oil is not real, but Peak Debt is. I say, what happens if the fracking boom, which is built on the Fed free money bubble, suddenly runs out of free money? How much oil/gas will get pumped then? Yeah, we might see a Peak Oil/Peak Debt double header.
And another thought. If debt can be seen as a "peak" (rather than a hole), what happens when the peak is reached, and we slalom down the other side? Ohhhhh yeah... deflation, as all that debt is wiped away by the good old fashioned method of default. I won't say I told ya so, but...
Peak debt, but only if I think of a private small person on the street.
If I think of the deep state, then the debt will rise from average 80% to GDP to average 200% to GDP in the EUrope. They will reach the japaneese height.
Exactly...
"Zugzwang"....
......"Double Header" most likely....
in a fiat economy the only cure for the minsky moment is moar inflation. abe got the ball rolling, draghi has the eurozone behind it and now it is the usa's turn to accelerate it.
Whereas your banks and multinationals will get bail outs, your standard household and small medium business wont get bailed out.
So at these low interest rates we want to get out of debt, not into more. If we default we lose our homes, or our business. Thats a massive penalty.
What are there penalties. Special rules for special people
Maybe we aint as stupid as they think we are.
Yes. The carry traders/gamblers will get what they want with zero interest in EC (ex Germany). They have long viewed nations having twin economies i.e. the financial and the real that are disconnected. They have long viewed that price discovery across paper markets is dead. The prices lie in the power of the printing presses. In these voids, the entertainments from economists, analysts. etc go on. (The likes of DS are exceptions).
A lucrative market for a far less coordinated EC (ex Germany) than elsewhere to play.
Changes in trading strategies shall only take place when all debtor nations converge to zero rates.
Muppets are still abound and still not listening that rich means being debt free with assets in physicals. They are still having their fixes with yield chases and snake oils.
The real trick is forcing public money to pay seigniorage to private interests.
It don't matter if it is Full Fiat, or some form of gold standard, once money creation is out of the hands of the general public and restricted to private interests, the whole financial system and everything it touches exists only to serve the people creating the money, not the people that are forced to use it.
Debt is not the problem per se, a way-too-low gold price is. Any debt load could be covered even with only a tiny amount of gold. But that would expose the fiat ponzi scam for what it is. Either way, day of reckoning is approaching fast. Good luck to all.
<”…But don’t call these central bankers crooked patsies - they are just dimwitted public servants trying to grind jobs and growth out of the only tool they have. Namely, buying government debt and other existing financial assets in the hopes that the resulting flow of liquidity into the financial markets and the sub-economic price of money and debt will encourage more borrowing and more growth. This is the core axiom of today’s unholy alliance between financial speculators and central bank policy apparatchiks.
Stated differently, today’s Spanish anecdote is just another proof that central banks are pushing on a string; that is, aggressively and incessantly pumping money into financial markets even though the result is wildly inflated asset prices, not expanded business activity. But as is always the case with central bank created financial bubbles, the beneficiaries are happy to pocket the windfalls while the apparatchiks blunder on - pretending not to notice the drastic financial distortions, malinvestments and mis-pricings all around them…”>
Truer words have never been spoken. It would not be possible to more accurately summarize what we all know. An unholy alliance of the banker elites, Wall Street, and government. They would, of course, argue there was no choice. If they had done nothing the largest world-wide depression in history would now be here, and it likely has only been delayed. So far the wealth effect and “trickle-down” has mostly kept the peace. If the typical barely employed, or unemployed American, was not given government handouts to buy $300 basketball star shoes, the newest I-Phone and an SUV with illuminated wheels, our cities would all be burning. Massive government deficit spending enabled by the Fed and combined with super-loose credit, is all that prevents an immediate and total meltdown. At this point I think the oligarchs know the best they can hope for is a mild stagflation to keep the masses from revolting. Will millions be able to accept the much lower standard of living allowed by McD level pay? I see many people still very afraid, cutting back spending, and all believe they can sell their stocks before everyone else bails. We shall see
Just on a point of order RE Japan: The reason Japan has been able to survive for 3 decades without monetary disintegration has been via it's current account surplus (and within that it's trade surplus)...Japan has been a nation of savers and it's own institutions have funded it's fiscal massive deficits. (with inf @ -1.5% even a 100bp yld on 10y debt meant a real return of +250bp's ) That dynamic is now over....It's savings rate is 0 and it's current account is now in deficit with the trade deficit growing ever more negative as a weaker currency pushes up energy costs. The BOJ is now having to monetise Govt debt directly as a result...without that monetisation Japanese bond yields would of course surge and bankrupt the country.
Japan is finished..it's a textbook example of a slow and painful decline. japan will get the inflation it's been looking for soon enough but unfortunately it will be the type of inflation that kills it's society in it's current form
It's obvious that government needs to invest in diversity, immigration, infrastructure, education, and food stamps to ramp up spending creating demand in the economy.