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Another "Worst Since Lehman" Moment: 70% Of The "Developed" World Has Inflation Less Than 0.5%

Tyler Durden's picture




 

Things are going from bad to worse not only for the "Chinese growth is stable at 7%" but the "US is decoupling from the rest of the world" false narratives. But while we have been pounding the table on both for years, only last week did the Fed finally admit US growth was slowing down rapidly (and will slow down much more once the 0.3% Atlanta Fed GDP forecast becomes mainstream), but it is China that will be the wild card.

Overnight Bank of America finally acknowledged just this "wildcard" and not only cut its outlook on Chinese stocks to "neutral", but had this to say:

Our recurrent theme is that most of the world is “old, indebted and unequal”. In our view this is a recipe for debt deflation and weak nominal earnings/economic growth. Proactive central banks figure this out early and fight the inevitable slowdown by implementing QE and weaker currencies. They grab the other guy’s pizza slice. Their asset markets soar. As Figure 5 shows, 70% of the world’s developed markets have inflation below 0.5% – almost as high as the depths of the 2008 financial crisis. So the USD8.6tn in central bank balance sheet expansion (from the Fed, ECB, BOE, BoJ, and PBoC, which amounts to 130% growth over Dec-07 to now) has been unable to get inflation going. Remember: most of the planet is Old, Indebted and Unequal – a recipe for slow nominal growth. That failure to ignite inflation is unlikely to stop central banks from trying QE/QE variants. Asset prices should be well supported by their (fruitless) endeavor wherever it is undertaken, like Japan and Europe currently. Emerging markets are not much better – as Figure 6 shows, about 70% have deflation in their PPIs. According to McKinsey, overall debt has increased by USD57tn in mid-2014 from USD142tn in 2007. China’s total debt has nearly quadrupled, rising to USD28tn by mid-2014, from USD7tn in 2007, fueled by real estate and shadow banking. Debt plus d

eflation is equal to debt deflation.

Needless to say, as the two charts below confirm, this is merely the latest "worst since Lehman moment." It is only fitting that the global market trades at all time highs to commemorate this.

 

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Mon, 03/23/2015 - 09:07 | 5917698 Jonesy
Jonesy's picture

No inflation?  Shit!

Mon, 03/23/2015 - 09:12 | 5917710 y3maxx
y3maxx's picture

...Obama's 2008 platform of Hope and Change

 

...70% Of The "Developed" World Has Inflation Less Than 0.5%

 

Which is the biggest lie since 2008?

Mon, 03/23/2015 - 09:18 | 5917727 GetZeeGold
GetZeeGold's picture

 

 

Visit Walmart.....you'll find your inflation. Most of it will be in the form of smaller packaging.

Mon, 03/23/2015 - 09:29 | 5917763 LawsofPhysics
LawsofPhysics's picture

If the Fed really wanted you to experience the same "no inflation" they would allow anyone with a job and good credit access to billions of dollars for zero interest, just like the bankers and financiers!

 

Tick tock motherfuckers....

Mon, 03/23/2015 - 09:50 | 5917802 TruthInSunshine
TruthInSunshine's picture

Inverse new relationship - "Doomier" ZH gets, trying to call breaking point, higher "markets" go.

News flash redux x88 - It's ALL rigged.

It'll eventually all crash again, but not for any suddenly "realized" reason related to (lack of) fundamentals.

Mon, 03/23/2015 - 09:38 | 5917782 Marco
Marco's picture

The necessities are getting more expensive, the luxuries are getting cheaper.

Mon, 03/23/2015 - 10:06 | 5917850 Took Red Pill
Took Red Pill's picture

Although inflation is down, it's still much higher than the gov't (or BofA) says;

http://www.shadowstats.com/alternate_data/inflation-charts

Mon, 03/23/2015 - 09:18 | 5917733 junction
junction's picture

Gilead's drug treatment for hepatitis C costs $1,000 a pill and you usually need to take 84 pills, a pill a day.  $84,000.  That drug price, and other very high priced medications, such as Pfizer's Zyvox antibiotic, costing $100 a pill, are ignored by the number crunchers.  As are who knows how many expensive products.  Pringles artificial potato chips (which give many people the runs) and Big Macs are the sort of goods government drone economists use.

Mon, 03/23/2015 - 09:36 | 5917777 headhunt
headhunt's picture

Those high drug costs are primarily due to our own FDA and the socialists of the world. the FDA makes it an extreme obstacle course of time and money to bring any drug to market. Then you add the fact that you as a US taxpayer subsidize the cost of any US developed drugs for the rest of the world. For example, Canada has laws which set the 'acceptable' price for a drug sold in their country, so the Canadians get their drugs for much less than a US citizen and we subsidize that by paying more for our drugs in the US. It's easy to be a benevolent government when someone else foots the bill.

Mon, 03/23/2015 - 11:08 | 5917998 UselessEater
UselessEater's picture

Don't worry the protected big Pharma corps got to write what they want into the TPP and TTIP so Aust/Canada etc will get to pay the same extreme prices.

As for the 'regulatory hurdles' big corp writes these as well, so just assume its intended to block competition and not much else. Pretty much the same as HS&E regulations in every industry which crucify small players but let the preferred corps do as they wish....think Gulf of Mexico.

Mon, 03/23/2015 - 09:10 | 5917707 _ConanTheLibert...
_ConanTheLibertarian_'s picture

No inflation, no boner.

Mon, 03/23/2015 - 09:13 | 5917719 jmcadg
jmcadg's picture

We deflated some folks.

Mon, 03/23/2015 - 09:17 | 5917728 Caviar Emptor
Caviar Emptor's picture

I'm still singing Bi-Bi Miss American pie as in Bi-flation

Mon, 03/23/2015 - 09:28 | 5917758 mtl4
mtl4's picture

Bi ladies are certainly more fun anyways.........

Mon, 03/23/2015 - 09:19 | 5917736 ShorTed
ShorTed's picture

How is "no inflation" bad?  No debt, no worries.

Mon, 03/23/2015 - 09:19 | 5917737 Never One Roach
Never One Roach's picture

"If you want to keep your deflation, you can keep your deflation."

Mon, 03/23/2015 - 09:20 | 5917738 spastic_colon
spastic_colon's picture

so lets start jawboning more QE since it has been such a rousing success.

Mon, 03/23/2015 - 09:28 | 5917760 TeethVillage88s
TeethVillage88s's picture

What if they continued ZIRP and QE for many years until finally threatened with Criminal Charges after passing a bill making these actions illegal?

Man wouldn't the guy on Main Street be smacking himself in the Forehead.

Mon, 03/23/2015 - 09:25 | 5917750 napper
napper's picture

Are we supposed to believe what Bank of America has to say about the economy?

 

We don't even give a damn about what the US government has to say about the economy. In fact, we often automatically put a negation sign in front of official statements.

 

Low inflation Bank of America's ass. Anyone who regularly shop at grocery stores will tell you it's about 10% inflation or more per year.

Mon, 03/23/2015 - 09:27 | 5917756 LawsofPhysics
LawsofPhysics's picture

BULLSHIT!!!!!    I see plenty of inflation in anything required to maintain a high standard of living!

 

"Markets" are at "all time highs" and there's "no inflation"?!?!?  LOL!

tick tock motherfuckers...

Mon, 03/23/2015 - 09:33 | 5917771 TeethVillage88s
TeethVillage88s's picture

Yeah ain't it funny when we can ask Obama:

- How much will it cost me this year to get appointed as an Ambassador in your Administration

- How much will it take in 2016 to Win Election as President of the USA

- How much does it take to get Elected to Either Senate or House?

- How much for a .gov Energy Contract for Solar or Wind Power in 2015... say a big one $300K Contract

Mon, 03/23/2015 - 09:54 | 5917809 LawsofPhysics
LawsofPhysics's picture

Boy the NSA trolls are out today.  Fuck em, tick tock motherfuckers...

Mon, 03/23/2015 - 13:24 | 5918451 Arnold
Arnold's picture

every day,  24/7

for your protection.

Thanks for your participation.

Mon, 03/23/2015 - 10:10 | 5917835 sessinpo
sessinpo's picture

Hate to tell you but the flaw in your statement "BULLSHIT!!!!!    I see plenty of inflation in anything required to maintain a high standard of living!"

is "high standard of living". A progressive or even a communist agenda is to reduce the standard of living to a mean. There is no high standard of living but for the 1%. There is no guarantee of a high living standard ( at least I didn't see it in the Constitution).

For the majority that worry about higher food prices are shopping at Walmart and very few of them have that much money in the markets.

People that actually have lots of money in the markets aren't sweating some price increases. But they sure are enjoying the lower gas prices.

Companies are in a situation of trying to squeeze as much profit margin by reducing portion size while charging the same price or by raising prices.  This is a balancing act because many consumers don't have the extra cash to pay for higher prices. Companies are cash strapped too when using legitimate accounting which includes their debt. Quickly and quietly we are in the death throws of a deflationary collapse.

 

Mon, 03/23/2015 - 10:29 | 5917910 JRobby
JRobby's picture

Referring to a 2 - 3 tier economy.

That has been quite obvious for some time.

Mon, 03/23/2015 - 11:00 | 5917979 sessinpo
sessinpo's picture

Actually, it has always existed.

There are always those that have and those that have not in any stage of an economy.

My post referred to the entitlement state of mind that I or you should have a higher standard of living. I certainly wish for one and I wish you a higher standard of living.

Am I entitled to the finest beef cuts? Or shall I substitute that meat with something I can afford? I can certainly wish and bitch about it. But in reality, I will deal with it in "real" terms with my wallet.

I have yet to see or historically read of a society that didn't have multi tiered classes where there were those that had and those that did not have.

Yet those that did not have still went on. Not much has changed.

Mon, 03/23/2015 - 11:04 | 5917990 JRobby
JRobby's picture

"for some time"

Thank you for elaborating

Mon, 03/23/2015 - 09:28 | 5917759 Callz d Ballz
Callz d Ballz's picture

Come on folks, it's "Worst Since LehmanTM"

Get it right already

 

 

 

Disclaimer:  No Debt owns all trademark rights to Worst Since LehmanTM, any and all references to how bad things are and continue to be must be followed by the Worst Since LehmanTM trademark.  Violators will be verbally slapped by ND himself. 

Mon, 03/23/2015 - 10:36 | 5917926 GMadScientist
GMadScientist's picture

Would "Worst Since 2008" or "Worst Since Those Fucking Idiots at Lehman Blew It For All Us Hustler Bitches" be in violation?

Mon, 03/23/2015 - 11:32 | 5917834 withglee
withglee's picture

As Figure 5 shows, 70% of the world’s developed markets have inflation below 0.5% – almost as high as the depths of the 2008 financial crisis.

Inflation has only one achievable and proper level ... that being zero. But it is "not" measurable.

Knowing that, all these phony inflation numbers should be taken for what they really are ... propaganda ... fake knob twisting and meter readings to divert attention from what is really going on ... a conventional farming operation by the financial kingpins.

Try your own basket of goods. Go to a grocery store or a gas pump. The cost of your TV set and computer are not good indicators right now because an enormous amount of effort to eliminate labor in the cost of those items is now being realized.

Cost reductions in the food chain and the energy chain have been realized for a long time now and prices there are as close to accurate and responsive indicators as we have. So what do they do? Eliminate them from the basket of goods. Go figure!

And of course the cost of gold is not a usable indicator either. It's been manipulated so badly even the miners and computer grinders (where the rubber really meets the road in terms of value) won't even go after it at the prevailing prices.

They're giving us the illusion "we" are driving the car .... but like the kiddy ride at the carnival, our steering wheel isn't connected to anything  ... and like the flight simulator, what we see isn't real.

Mon, 03/23/2015 - 10:03 | 5917837 GMadScientist
GMadScientist's picture

https://www.youtube.com/watch?v=MF5fQXVZGug

"I believe I'm sinking down..."

Mon, 03/23/2015 - 10:38 | 5917930 dogismycopilot
dogismycopilot's picture

Hey, and as a side benefit of the high inflation you will get young, angry, disadvantaged Islamic youth throughout the world flocking to ISIS like moths to a flame. Can't feed your family in Libya, Tunisia, Yemen or Somalia? No problem, just join the IS and there will be plenty to go around.

I bet those retards at the Fed haven't thought about what inflation is going to do to the Middle East have they (or maybe they have and that is the intent).

Mon, 03/23/2015 - 11:16 | 5918011 Raging Debate
Raging Debate's picture

We only want see inflation through rising wages. Since they are still stagnant, prices falling is a good thing.

Mon, 03/23/2015 - 11:19 | 5918024 BlowsAgainstthe...
BlowsAgainsttheEmpire's picture

Oh, dear God! The prices of things aren't going up as fast as PhD's with big salaries want them to.  The horror!!

Mon, 03/23/2015 - 11:58 | 5918124 Debugas
Debugas's picture

prices have been pumped up by cheap credit so high that noone can afford anything anymore

one is offered a credit to buy a TV or a washing machine? OMG this is ridiculous

 

Mon, 03/23/2015 - 12:30 | 5918225 SMC
SMC's picture

How is that "centrally planned service economy" working out?

 

  1. Low aggregate wages, lower demand
  2. Low demand, lower production
  3. Low production, lower aggregate wages...

Duh.  Oops I forgot...

  1. Government bailouts and protection for cronies, increased moral hazard
  2. High moral hazard, reward/risk ratio approaches “divide by 0” leading to foolish business decisions
  3. Foolish business decisions, more government bailouts and protection for cronies...

Bottom line: In a free society, there is NO business or government that is too big to fail.

Mon, 03/23/2015 - 13:28 | 5918476 Arnold
Arnold's picture

Lame.

Wed, 03/25/2015 - 09:02 | 5924786 thecrud
thecrud's picture

Citizens dont want inflation and like me if something cost to much guess what You want it worse than I do and I just dont buy it and find a replacement Like I dont buy steak or pistachios.

High priced crack shake houses.

new cars.

And you cant make me.

Embrace deflation and let the retirees love you.

Fri, 03/27/2015 - 18:31 | 5935594 kelley805
kelley805's picture

Time for the Kelley Monetary Policy Rule

http://michaelekelley.com/2015/03/27/the-kelley-monetary-policy-rule/

QE and higher rates simultaneously.

Thanks

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