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Fear Of "Surge In Debt Defaults, Business Failures And Job Losses" Means Many More Chinese Rate Cuts
If admitting you have a problem is the first step toward recovery, then China is making progress. The question is progress to what, because the generic answer, "another debt-fueled boom" is no longer applicable. Recall that as we noted here initially in the summer of 2013, the very reason why China finds itself in a reformist quandary is that the traditional method of Chinese "growth" - issuing a little under $4 trillion in aggregate system debt per year - no longer works as the bad debt portion of the Ponzi scheme is rising at a faster pace than the total notional of debt itself.
Which means the PBOC, which cut rates for the first time in two years on Friday, will have its work cut out for it. And in the worst tradition of "developed world" banks, Beijing will now have no choice but to double down on the very same bad policies that got it into its current unstable equilibrium, and proceeds with a full-blown policy flip-flop, leading to a full easing cycle that reignites the bad-debt surge once more.
And sure enough, today Reuters reports citing "unnamed sources involved in policy-making" (supposedly different sources than the unnamed sources Reuters uses to float trial balloons used by the ECB and the BOJ), that "China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions" due to concerns deflation "could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making." In other words, China has once again looked into the abyss once... and decided to dig a little more.
The story is well-known: "Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent - a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak."
Of course, in modern economics, deflation simply means deleveraging, which as we showed last weekend, is precisely what is happening to China's shadow banking sector every month in the prior quarter.
And so, since deleveraging in China, which at least on goalseeked paper is growing a little over 7%, the Polibturo has no choice but to join all the other central banks in going all in on stimulative monetary policy.
"Top leaders have changed their views," said a senior economist at a government think-tank involved in internal policy discussions.
The economist, who declined to be named, said the People's Bank of China had shifted its focus toward broad-based stimulus and were open to more rate cuts as well as a cut to the banking industry's reserve requirement ratio (RRR), which effectively restricts the amount of capital available to fund loans.
"Further interest rate cuts should be in the pipeline as we have entered into a rate-cut cycle and RRR cuts are also likely," the think-tank's economist said.
Friday's move, which cut one-year benchmark lending rates by 40 basis points to 5.6 percent, also arose from concerns that local governments are struggling to manage high debt burdens amidst reforms to their funding arrangements, the sources said.
The good news for China, if only in the short term, China's housing bubble is about to be rekindled. "Top leaders had been resisting a rate cut, fearing it could fuel debt and property bubbles and dent their reformist credentials, but were eventually swayed by signs of deteriorating growth as the property sector cooled. Until then, they had persisted with targeted policy steps, such as cuts in reserve ratios for selected banks and liquidity injections into the banking system. But these failed to bring down borrowing costs for the corporate sector."
it also means the natural conduit of Chinese excess liquidity, the luxury segment of the US housing market, which as we have been tracking for the past 6 months is best exhibited by the Y/Y tumble in San Francisco home prices...
... is about to supercharged once again, as Chinese "investors" rush to the US to park the latest batch of hot Chinese money.
Alas, it means China's brief experiment with reflation by way of the stock market is now over, as the central-planners give up in their attempt to recreate US wealth allocation, and revert to the traditional Chinese housing bubble paradigm.
As to what it will mean for the economy, the jury is clearly out: the problem is that not pursuing bubble policies will eventually lead to mass social upheavals, something Beijing can not afford: "Employment still holds up, but corporate profits have been squeezed as producer price deflation bites, and it's unreasonable for banks to have hefty profits."
China's leaders also worried that a sharp economic slowdown could hurt employment and undermine public support for reforms. "Employment still holds up now, but it will definitely be affected if growth slows further," said Yin Zhongli, senior economist at the Chinese Academy of Social Sciences, a top government think-tank.
The central bank does not have the final word on adjusting interest rates or the value of the yuan. The basic course of monetary and currency policy is set by the State Council, China's cabinet, or by the Communist Party's ruling Politburo.
One other thing that China will also have to address now is the collapse in the Yen: as discussed here months ago, Asia is on the verge of a full-blown currency war involving a retaliation by both South Korea and China to Japan's monetarist lunacy. And since China just admitted it has a problem, why not go full-bore and devalute the Renminbi as Albert Edwards is convinced it will have to soon?
Of course, the rational readers out there will point out: what madness is this, for China trying to fix a problem by using the same policies that led to the problem in the first place? Well, that's true, however it hasn't stopped the Fed, the ECB or the BOJ yet. So China is merely joining the party.
Curiously, and paradoxically, one place that will suffer first as a result of the rate cut are China's banks. According to another Reuters update, "China's latest interest rate cut is set to dent the profitability of domestic lenders, especially mid-sized banks, which are already suffering from higher bad loans and a slowdown in profit growth."
The narrowing of interest rate margins will eat into lenders' profitability, with Cinda Securities' chief strategist, Jiahe Chen, predicting it will cut profits by up to 5 percent.
Interest margins generated from lending have already been shrinking for second-tier lenders, which have been squeezed by competition from online financiers and a rise in funding costs stemming from an industry tussle for deposits.
Fitch Ratings downgraded its credit rating of China Guangfa Bank, a medium-sized lender, two days before the rate-cut announcement, and said the level of off-balance-sheet lending among second-tier banks was a concern.
The squeeze on profits will make it tougher for lenders to raise capital to meet new international rules designed to protect depositors from banking collapses. Retained profits are one way in which banks can build up regulatory capital.
"In the past when Chinese banks disburse loans, they mainly relied on profits from their own capital to replenish their capital," Jiang Jianqing, chairman of China's biggest commercial bank, the Industrial and Commercial Bank of China Co Ltd 601398.SS 1398.HK, told a conference in Beijing on Saturday.
Another unidentified source is hardly as enthusiastic about the prospects for Chinese growth:
While the measures may ease the financing costs of these firms' existing loans, it is unlikely to encourage banks to write new loans to lower-rung borrowers, bankers said.
Smaller companies are considered high risk and banks do not want to increase their exposure to weaker borrowers, they said.
"At the moment banks have a lot of problems with them, they have higher rates of default ... we're suspicious of their creditworthiness, so we're very careful about lending to them," said a senior loan officer at a top-10 bank.
He declined to be identified because he was not authorised to speak to the media.
In a note released earlier today Barclays reaches the same conclusion:
Further interest rate liberalization squeezing NIMs: The more important action, in our view, was the PBOC further lifting the deposit rate ceiling from 1.1x to 1.2x the benchmark rates (BMRs). The PBOC also simplified the BMR categories by removing the BMR for 5-year deposits and reducing the benchmark lending rate categories to three from five. We expect that the banks may adopt differentiated deposit strategies with the larger banks likely to not fully float up to the new 1.2x deposit ceiling while the mid- and small-size banks are likely to immediately raise deposit rates to the new ceiling. Bank loans will likely also move to the new BMRs at repricing dates or at maturity when renewed.
Negative impacts likely on 2015 NIMs and profits: We analyze the impacts of the BMR cuts and the lifting of the deposit rate ceiling under two scenarios: 1) if banks all move to the new ceiling, we estimate that their 2015 NIMs and net profits would fall by 19bps and 12% on average but 2) if banks keep their deposit rates at 1.1x, the rate cuts would only reduce NIMs and net profits by 13bps and 9%. For individual banks, we expect BOCOM and CITIC Bank to be most negatively affected and BOC to be least negatively affected.
Market reaction: We expect the overall market to react positively to the PBOC’s actions, but China bank shares are likely underperform given the now lower NIM and profit growth outlooks. In fact, rate cuts and deposit rate ceiling increases in 2012 and 2008-09 mostly led to banks’ share prices declining on the day after the announcements. In the recent 2012 cycle, large banks’ shares underperformed the HSCEI in the next four months while those of mid-size banks underperformed for seven months before catching-up.
In short: the Chinese remedy will only make the underlying condition worse. But this is to be expected from an economy which, as Morgan Stanley observed, has already crossed into the "Minsky Moment" singularity.
Just don't tell that to the algos, for whom the only thing more bullish than good news, is bad news.
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well, the good news is that drill bits are a lot cheaper now.
Black Friday Sale on Nail Guns!
we all ought to buy a few framing guns for our favorite bankers.. :-)
Oh well, China has over $4 Trillion in reserves and no external debt, excluding official Gold reserves. So, perhaps, there should be greater worry about certain other countries? Isn't this all getting a little silly and should ZH be publishing such S**t? Even on a weekend?
One, if you believe in their numbers. Two, reserves in fiat currency and bonds which are highly subject to deflation and devaluation. Three, reserves encumbered by a massive build out of overvalued assets and materials no one may want or need. Four, a population of 1.4 billion people leaves the reserves looking very thin- especially when they are incapable of feeding their people. Five, once you build infrastructure, you must maintain it or lose it. People without jobs or businesses are incapable of paying the kind of fees and taxes necessary.
These reasons and more might be why ZH bothers...
heres the real story that should have been posted here today regarding the United States new masters....
(Reuters) - "China's Industrial and Commercial Bank (ICBC) signed a pact with the Los Angeles city government to promote cross-border yuan trade and set up an offshore renminbi center in California, the bank said on Saturday. The move to create an offshore RMB center in the largest state in the United States would lay the foundations for greater yuan trade with China, ICBC said in a statement. The agreement comes at a time when many other countries are ahead of the United States in establishing cross-border trade in yuan.
The United States has lagged other markets in seeking to set up offshore yuan trading hubs because the U.S. dollar remains the world’s dominant currency (yeah, right…ha, ha, ha!: my emphasis) and U.S. firms are reluctant to accept the yuan, a Chinese bank executive said. Beijing wants to promote its currency to more international investors and eventually turn the "redback" into a global reserve currency, while at the same time expanding its already considerable political and economic clout. About 15 percent of China's trade was settled in yuan in the first nine months of 2014, up from less than 1 percent in 2009.
In the first nine months of 2014, cross-border payments between the United States and China reached more than 160 billion yuan, ICBC data show. During that time, ICBC's cross-border business was worth nearly 28 trillion yuan, up more than 80 percent from the corresponding period last year.”
http://www.reuters.com/article/2014/11/22/us-china-los-angeles-yuan-idUS...
game, set, and match - bye bye, debt coupon dollar.
Having a multiple number of reserve currencies, similar to the west in the 1900's would be beneficial to the US economy, as it would no longer need to maintain high debt to credit ratios to fund reserve currency status. Reserve status comes with benefits and losses- one of which is the requirement to create more debt than assets via exports.
Second, all currencies are debt coupon until someone actually starts redeeming them in something substantial. This would require a revaluation of the intended asset (gold, oil, silver, ???) and I have a hard time seeing that happen.
It is an important article though. I'm sure some were not aware of it. Thanks!
"Second, all currencies are debt coupon until someone actually starts redeeming them in something substantial."
this is exactly why they have been dumping them as fast as possible and buying REAL assets and resources all over the fucking globe...they know what the FED and the US goverment they control have been doing...the chinese plan way ahead and allow their enemy's to bask in their hubris and stupidity.
"This would require a revaluation of the intended asset (gold, oil, silver, ???) and I have a hard time seeing that happen."
do u really think after acquiring every last fucking ounce of Gold and Silver courtesy of the scum of the earth MoneyChangers phony paper dumps, the Chinese r gonna allow the same said scum of the earth to set the VALUE of that which is has been money for 5,000 years????
i think not..."HE WHO HAS THE GOLD MAKES THE RULES...."
The US will debase its currency against gold, say 10 folds (ounce around $12 thousand dollars), and then tax the gold sale at 80%.
US will also write off most of its debt then blame the IMF.
By the way: I did not say this. Rickards did.
One, what makes you think the Chinese or Russians or anyone for that matter are the only ones which think ahead and plan? This is common amongst all intelligent planners everywhere.
Two, if you have all the gold and silver, what makes you think all your trading partners will give it value to their detriment? The Chinese still have to have markets for their exports. This implies they must have an exchange material acceptable to all their trading partners.
There are things more precious than gold, ie oil, energy and power to influence (military, economic, etc.)
"One, what makes you think the Chinese or Russians or anyone for that matter are the only ones which think ahead and plan? This is common amongst all intelligent planners everywhere."
please make note of anything recently the central "planners" of this shit hole of a country have planned economically, geo-politically, or monetarily that can be described as "intelligent"...
i fucking dare u.
"There are things more precious than gold, ie oil, energy and power to influence (military, economic, etc.)"
what has been recognized for 5,000 years as money???
what has stood the test of time as empires have crumbled, wars have been raged, and economies based on the fractional reserve debt based currency paradigm have been destroyed???
u wanna argue - then argue with HISTORICAL FACTS not me who is simply citing the record.
Have they not convincingly run up the stock market, printed currency in ungodly amounts (without inflation being accepted by the mainstream), transferred greater amounts of wealth via education and health care, begun an effective elimination of the middle class while hynotizing an entire series of generations on the importance of social media? Is not the 1% wealthier than any other time in history?
Silver has been recognized as money as has social debt. Gold is a store of wealth, FOR THE ENTIRE TIME, until about fifty years ago. While the past 5000 years is interesting, we are living in the past 70 years and the near future.
I am the first one to see the value of real currency, especially gold and silver (silver being the only legal dollar the Government can produce or use with gold being valued in relation to silver). However, the Constitution has been soiled and The People are imbeciles incapable of coherent reason outside their educational specialty (if that). The People are effectively managed via media to hold the views and values of their overlords.
I choose reality over history.
Reserve status comes with benefits and losses- one of which is the requirement to create more debt than assets via exports.
Where is the international document requiring the USA to run a trade deficit?
In order to be a reserve currency, there must be more currency than your economy can produce goods and services to allow for the use of dollars by other economies. Thus, your debt must always exceed your assets. If all the dollars came home, how would other countries use the dollar?
No document needed.
Article: “The good news for China, if only in the short term…”
Then, Kaiser Sousa: “heres the real story that should have been posted here today regarding the United States new masters.... game, set, and match - bye bye, debt coupon dollar.”
Now, the real news that are never posted
By Nate Hagens
Twenty (Important) Concepts I Wasn’t Taught in Business School – Part I
17. Cheap energy, not technology, has been the main driver of wealth and productivity
One barrel of oil, priced at just over $100 boasts 5,700,000 BTUs or work potential of 1700kWhs.
At an average of .60 kWh per work day, to generate this amount of ‘labor’, an average human would have to work 2833 days, or 11 working years.
At the average hourly US wage rate, this is almost $500,000 of labor can be substituted by the latent energy in one barrel of oil that costs us $100.
Unbeknownst to most stock and bond researchers on Wall Street, this is the real ‘Trade’. — Nate Hagens
http://www.themonkeytrap.us/twenty-important-concepts-i-wasnt-taught-in-business-school-part-i
Yep, it all comes down to energy as work and kWh can't be manipulated in a high energy economy......
Exactly!
They can make gold to $100 thousand dollars.
They can tell us that “Market or Government Knows Best” until the cows come home.
They can go to wars. Heck. They can even create a new God; to justify it.
But, we will run out of oil, and there are NO substitutes, because it can not be created.
And without the 'triple-dip' recession stifling demand that we have today
sooner rather than later
There are replacements but they require R&D and large capex along with the construction of dependable baseload power like thorium salt reactors. Unfortunately things are set up where the only the next quarters profits are important and not investment that will come online 10 or 20 years down the line. http://www.engadget.com/2014/11/22/water-to-fuel/?ncid=rss_truncated
There are so many problems with your statement, and thorium, that I don’t even know where to start.
That’s the problem with endless misinformation and delusion. It’s very hard to overcome.
1) Thorium is not oil but, electricity
2) US spent billions of dollars, and years developing it. Now the whole world is trying. China has three power plants working on thorium. Good luck to them!
3) US is bankrupted. Cannot write a check to pay its bills; it has to borrow. US private sector is even more bankrupted than the government. Then, you hear, “Private Sector Knows Best”, Go Figure!
4) Remember that, what we will run out is the ability to extract these resources because of Labor and Technology cost. The easy resources we're finishing using it.
Here’ an example:
Steven Kopits: Between 1984 and 2005 the world had a 25% oil surpluses. Since 2006, global oil production is declining.
From 2005 to 2013, the world spent $4 trillion dollars on upstream [not including pipelines, refinery, transportation, wholesale] exploration and production. And another $3.5 trillion dollars to maintain current legacy [fields]. Result: Oil production has fallen by 1 million barrels per day [mbpd].
For Comparison: Between 1998 and 2005, $1.5 trillion dollars spent added 8.6 mbpd.
To put into perspective: Germany GDP: $3.5 trillion dollars. So if you compare to 1998/2005 period, the world ‘vaporized’ the GDP of Germany on oil production. And the world still came up short 1 million barrels a day.
How challenging is the situation: 2014 Capex [upstream] Expenditures Trend: About $300 billion. Current forecast Capex: $193 billion. Over 30% decline. Shell, 2nd largest oil company in the world, not only cut capex by 20% but, since 2013, it has been borrowing money to pay dividends.
5) Then, we will always need one form of mineral to extract another mineral; and we will need more and more minerals as we extract less and less minerals.
Example:
Dr. Joseph Tainter: No, and that is one of the recurrent theories about why societies collapse, that they depleted their resources. I don’t see that in looking at the historical record. What I see, instead, is that you have a situation where societies grow more complex and more costly. They reach a point of diminishing returns, and it becomes essentially impossible to solve future problems. They become weakened fiscally because the population is taxed beyond its limits, the population of subsistence farmers becomes taxed beyond what they are capable of supporting, and so the society becomes weakened fiscally and the population ultimately loses its loyalty because they pay, for example, very high taxes, and yet don’t see an adequate return to that cost.
http://thebulletin.org/search?search_api_views_fulltext=Thorium
https://www.youtube.com/watch?v=dLCsMRr7hAg
http://mcalvanyweeklycommentary.com/october-1-2014-dr-joseph-tainter-the-collapse-of-complex-societies/
You really need to take a look at the laws of Thermodynamics. That barrel of oil; only a small portion is turned into work. A petrol engine is only 10% efficient; the rest of the energy is lost as heat to the surrounding environment. Your calculation is based on 100% effacy.
You also don't take into account the capital cost of machinery and its up keep.
That’s not my math, but Nate Hagens.
Nate Hagens was the lead editor of The Oil Drum
"Oh well, China has over $4 Trillion in reserves and no external debt, excluding official Gold reserves. So, perhaps, there should be greater worry about certain other countries?"
In the 1920's the U.S. was a creditor nation and that didn't prevent a Great Depression in the U.S.
China might have 4 trillion in reserves, but they ran up some 25 trillion in debt, building anything and everything.
who cares about debt if ur intent is to default, and youve already replaced the debt coupon dollar with ur new reserve currency backed with the largest fucking Gold reserves which is.......wait for it -
REAL MONEY.
as the fucking Anglo-American shit bag MoneyChangers have done by destroying the debt coupon dollar and China's investment in this shit hole of a country, so shall the chinese...
i would stop trippin off China and start learning some fucking Mandarin...bitchez.
No demand, no deposit insurance, no income producing assets, prices are falling....what is their bankruptcy code again?
who knows???
whats the US's bankruptcy plan???
oh yeah, i forgot...
FEMA internment camps for all of its citizens when their standard of living has been completely destroyed by the fucking Federal Reserve...
remember, the debt coupon dollar has lost 98% of its value since 1913 - and what happened in that year????
only 2% to go until WORTHLESSNESS...
happy trails American's.
The USA could still nationalize the actual industries instead of the debt. It doesn't do this so as to constrict demand and try and drive up prices. Venezuela, China, Russia...always producing more even as prices fall. Since the value of the yuan is fixed to the dollar that says to me "more of everything." Still...haven't solved the problem of final demand.
In short...if you have real money here you want to avoid the debt at all costs. How do I "back" final demand when all I and everyone else is producing is more debt?
Can't be done. Prices must fall and indeed they are. As Henry Ford famously said "you can have your car in any color so long as its black."
Money, whether it is fiat or PM's only has value in trade. If their is nothing to trade for it has no value.
"whats the US's bankruptcy plan??"
War with Russia, silly.
The final frontier.
Yeah.. And we've only rung up $17 trillion in Treasury bonds since 1981. And what about the QE on the Fed's balance sheet? Does that count as debt or Tooth Fairy money?
We're much more fucked up than China, except we have 20 aircraft carriers.
China has no external debt??? When did you make that up? China has a number of sovereign bond issues outstanding, including a 100 year 'century bond'. Not to mention China's defaulted full faith and credit external sovereign debt (est. at $4tr.). Not to mention bonded debt sold by Chinese corporates to foreign buyers (suckers).
The race to a global (banker) currency is now in high gear.
Who knows which apple, when it is removed, will topple the cart...
What? Ever increasing leverage and credit dependent on ever increasing sales of goods and services is not the best economic model? Whudathunk?
My favorite part is the part some economists, politicians, and financeers claim that setting the market transmission mechanisms (interest rates), and debauching the currency (inflation to infinity), are the best ways to combat it.
I mean sure, they work until they don't. Suppression of underlying fundamentals is going to be horrendously destructive, because eventually those fundamentals are going to steamroll the suppression (and an [un?]healthy portion of humanity with it).
Yes, common sense went out the window a looooong time ago.
Yep, and when Common Sense left, it took along with it any concern for our fellow man, or even our progeny.
must be bad for Chinese to reverse course....fear of social unrest to bring about a larger social upheavel down the road
when do the adults get to take charge?
Most people don't know that half their military budget is for internal security and the thing that scares the Chinese leadership is the rise of a regional warlord, hence the 'corruption' investigations but their are a few they dare not touch.
Just wait until the Central banks want all their credit back and sovereign citizens are on the hook for it- especially as deflation hollows out the value. Thank goodness central banks were created to insure these types of events never happen!
There are few things better than sitting back on hard to seize assets as the banksters dial up a revolution in response to their greed and avarice...
"Fear Of "Surge In Debt Defaults, Business Failures And Job Losses" Means Many More Chinese Rate Cuts"
And still it won't matter. 100% of booms end in a bust.
Popquiz!
There's 1 billion chinese
300 million of them are working in factories making plastic crap
But nobody buys that plastic crap anymore...
Quiz one: what will those 700 million think when they're told not to expect what those 300 million have?
Quiz two: how will those 300 million react when they're told 1 in 2 can go home and doesn't have to come back on monday?
The world costs as much for everybody everywhere on this planet.
And chinese only have 1/4 at best of what we have on average.
And there's no historic riches like in Europe where's there's a lot of old money.
"And there's no historic riches like in Europe where's there's a lot of old money."
Doesn't even matter man. Money has been proven to just be a series of electronic digits that some asshole can happily shave numbers off. There will be a total scorched-earth policy on all savings. In a few years, all that will matter is national capital stock, and (from an individual wealth perspective) real equity.
In the words of Doug Stanhope: "You better strengthen up your s*^t-p*ssy baby, 'cause this economy is going down."
Edit: Though I agree there are different magnitudes of fucked. See- the strengthening US dollar and rallies in high-end real assets right now. Accidental? Yeah right.
Maybe tomorrow we are fucked, but today is a beautiful day. I have a nice terrine in the oven, the trails are drying out after all the blessed rain, and I don't live in Nazi Germany where they still confiscate guns in 2014. You think the German people would have learned a lesson the last time the German government confiscated guns?
No. He is merely a student of history.
Heil Merkel!
Gabriel doesn't believe more sanctions are the way to go
http://www.reuters.com/article/2014/11/16/us-ukraine-crisis-germany-gabr...
Foreign minister Steinmeier is on better terms with Putin and talking.
Could be Merkel and Steinmeier are engaging a good cop / bad cop strategy with Putin. I hope not. Putin will see through this and really start taking names and notes. So far Putin is very moderate and constrained. Let's everyone piss on his name and walk all over him.
Steinmeier could be the guy to make big changes in Germany and Europe. He would need more support though. Germans are idiots for cowtowing to the US and kissing Obama's butt.
Merkel is in a corner
Merkel was much nicer in her 20s, she lived in an orderly world : East Germany, Stasi land, and she went for nude bathing with her friends who liked her slim butt and sweet smile.
Now all thats changed. Life is an itch that never stops bitching.
She must have fond memories of just being a bright physicist who could nude on week ends.
Now the dudes are soooo rude! But then the butt is not the same. ach soooo !
+1 SD.
This more likely a mean reversion in a sense that most people outside of certain circles can even fathom. At the base of the current human ponzi is the basics. Potable water and calories. Most of which today are transported over great distances - just in time - supported by highly complex systems of human interaction - fueled by high EROEI - etc.
Yeah, it ends well.
If the SHTF in an uncontrolled manner, areas with more local resources (more sustainable) will be overwhelmed by the mass exodus from the less sustainable areas. Billions of people suddenly migrating anywhere, en masse like a locust horde. The most probably reaction to this is extreme violence.
It is possible that this can end in free.
For the survivors. Yes. Trick is getting there my friend. Like the old saying... life is a journey, not a destination. Sage advice for everyone.
Mid to long term I remain an optimist, actually. I am just not going to kid myself about what is coming in the short term.
cl
I didn't realize there was a controlled way of doing that.
So far, that is what has been happening. Boot on head. Frankly, I am not sure what is worse. Think about it.
Indeed, thre you have it!
In hisptry, the country with he most resources has never been a superpower or even a rich country.
The countries with the biggest resources will be invaded.
And for most Americans here, if the dollar would implode, a breakup of the country is possible, very possible.
And well, devide and conquor for the best pieces.
South America, africa, they'll meet new colonial powers if everything would break down. No big power just sits down and dies, they always go down kicking and screaming and the claws will be in a lot of read meat.
We are currentry rooking for man who ignore infration data. Who refuse to raise interest rates.
A man who drinks kooraid. Do you know of sich a man? Pay big money. Can you help prease? Time is Yuan.
Sincerery,
Chinese Business
Yes, he koo when drinking raid.
the chart
Looks a lot like the formation of a head and shoulders bottom to me.
Where did I put my check book?
rolling over old debt into cheaper new debt /yawn
debt that can barely get serviced and will surely never get repaid
unless hyperinflation allows for a total reset
not sure if TPTB will use the hyperinflation detour to achieve the reset or start jubilee right away without the wheelbarrows
there is no solution.
so why don't they just quit this slow grind to the bottom and collectively jump into the abyss
chess pieces are all in place and the timing looks promising
capitalism today means free money for the rich. Period.
AS socialism means free money for the poor. Since forever, since Jesus !
When you have both capitalism and socialism its an ideal world ! Free money for all.
I think neo-Keynes is a genius: just keep printing !
Grumpy and Grouchy are all Austrians; but then who cares, Snow White loves to hand out free apples.
And that is better than KK who makes you pay to see her in her birthday suit cavorting with Black knight in mate on a blind date.
When the perfume of sex stays free it stays innocent. And the philosopher king looks like Magnus Carlsen!
Let em eat an Austrian a day to keep the doctor away.
capitalism today means free money for the rich. Period.
LOL.
Pretty accurate.
"Off balance sheet" loans. That is some funny shit! Will default if you don't rewrite at lower rates. Fixed!
So what happens when *ALL* the Central banks have their rates stuck at ZERO??
Does the magic convergence of Economics move into the realm of physics, where all is then a dance of:
Frictionless Elephants of Negligable Mass??
Sydney based AMP Capital fear Australian TBTF banks would need to raise around 70% of their market cap should Aussie house prices fall by 40% if you risk weight tier 1 capital, the regulator that recently passed the domestic banks doesn't think thats necessary: Fears Australian banks ill-prepared for housing-induced crisis
Good thing the Chinese are gonna keep BTFATH in the round-eye housing market.