The Crisis Is Spreading: China, Australia, Brazil, Canada, Sweden...

Tyler Durden's picture

Earlier today, we posted an excerpt from IceCap Asset Management's latest letter to investors focusing on the farce that is the Greek bailout #3, which can be summarized simply by the following table...

... and Keith Dicker's assessment which was that "for Greece, it’s mathematically impossible to repay its debt" and that the Greek "economy continues to plummet to deeper depths and is now -33% less than where it was in 2008."

But the truth is that for all the endless drama, Dicker continues, "the Greek debt crisis isn’t THE crisis. Rather it is simply a symptom of a much larger global debt crisis."

The problem is that the "larger global debt crisis" is finally metastasizing and spreading to more places, all of which are large enough that they can not be simply swept under the rug, like Greece.

* * *

IceCap's Keith Dicker continues:

We’ve written before that governments all around the world have borrowed too much money and the weight of these debts are choking economic growth.

And to make matters worse – these very same governments and their central banks have implemented various plans that have only made matters worse.

Our view has not changed – the global debt crisis has escalated to a point where the government bond bubble has inflated itself to become the mother of all bubbles. It’s going to burst, and when it does it wont be pretty.

Further evidence to support our view is as follows:

Canada – the collapse in oil and commodity markets has pushed the country into recession and the Canadian Dollar to decline to levels lower than that reached during the 2008 crisis.

Oil dependent provinces Alberta and Newfoundland remain in deep denial. Since everyone in these provinces have only ever experienced a booming oil market, many naively believe things will bounce back – and quickly.

Meanwhile, both Toronto and Vancouver housing markets also remain in denial as they continue to go gangbusters. Buyers today are likely buying at all-time highs.

And as we predicted last year, the Bank of Canada has cut (not raised) interest rates twice in the last 6 months.

We fully expect the Bank of Canada to eventually cut interest rates to 0% and start a money printing program as well. And for the stunner - NEGATIVE interest rates will not be that far behind.

Australia – Over the last 20 years, China has been viewed as the growth engine of the world, and justifiably so. With annual growth rates between 8% to 15%, China’s economy was literally eating every rock, stalk and barrel of practically every commodity in the world.

And naturally, any country or company that produced these commodities made a tonne of money – including Australia.

Today, China’s growth rate has slowed to about 3% which is a dramatic slow down compared to what it achieved in the past. This slowdown and China’s effort to even maintain these rates, will have significant repercussions around the world.

And the first up to bear the brunt of this slowdown is its closest supplier of raw materials – Australia.

With dark clouds on the economic horizon, the Australian government and central bank is doing everything possible to prevent the unpreventable recession.

Interest rates have been reduced to all-time historical lows, meanwhile the Australian Dollar has plummeted -25% over the last year. Yet – the negative outlook has not improved.

Brazil – Like Australia, Brazil has benefitted immensely from China’s growth. And now, also like Australia, it too is feeling the affects of the dramatic Chinese slowdown.

The economy has now declined for 12 consecutive months making it both the longest and deepest recession in 25 years.

But wait – it gets worse. Despite declining growth, inflation continues to soar higher causing interest rates to rise as well.

And if that wasn’t bad, also know that the Brazilian currency has fell off the cliff at -53%.

Sweden – Unlike Australia and Brazil, Sweden relies very little on China as a buyer of last resort. Yet, the Swedish economy is also not very hot these days.

In fact, instead of spectacular and dramatic declines in anything, it is doing the exact opposite – it just isn’t moving.

While Sweden isn’t in the Eurozone, it is smack dab next to it and that in itself is reason enough for the lack of growth. We’ve written before how the debt crisis in the Eurozone is acting like a giant, slow moving tornado that is sucking the life out of the economy and everything near by. And unfortunately for Sweden, it is very near by.

While economic growth in the Nordic state hasn’t declined, it hasn’t accelerated either – and this is what has many worried.

So worried, that the central bank shocked everyone not once but twice, by first announcing that they would begin to print money, and then when they announced that interest rates would be NEGATIVE.

These actions are so severe, that we need to repeat them:

1) MONEY PRINTING
2) NEGATIVE INTEREST RATES

It is hoped that these actions will cause people and companies to loosen their wallets and start spending again. Yet, what the government and the central bank doesn’t understand is that these actions will actually make the problem worse.

As the global economy continues to move as we expect, there is nothing Sweden can do to change what is coming – a global recession and a significantly weaker Krona.

China, Australia, Brazil, Canada, Sweden - it is beyond us how anyone can declare the crisis isn’t spreading. Be prepared – there are going to be lots of opportunities to both make and lose money.

But first, you have to recognize what is happening.

* * *

IceCap's full letter below

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mickeyman's picture

Canada for the win

Carpenter1's picture

I live in Canada and I can tell you the denial in Alberta is fading fast. Food banks are empty, pet shelters are full, new car sales have fallen off a cliff and non-oil businesses in Calgary are seeing their revenues down 50%,.

 

All this while a massive commercial building boom is underway, which is adding to millions of sq. ft. vacant properties piling up. Energy companies are desperately trying to sublease their current space, with no luck.

 

In a word, it's ugly.

knukles's picture

Q: Why don't Jehovah's Witnesses celebrate Halloween?
A: They don't like random strangers knocking on their door.

jeff montanye's picture

gold and silver make money in deflation.  see the action in homestake mining 1929 to 1936.  not many u.s. stocks matched it.  gold miners are as cheap as they were in 2000 and gold is six times higher. see also gold vs. fed balance sheet.

http://www.oilngold.com/analysis/research/gold-a-gold-stocks-during-peri...

http://www.macrotrends.net/1448/fed-balance-sheet-vs-gold-price

tocointhephrase's picture

Jeff, gold and silver do not have reproductive organs. It's a metal! What it does is protect against 'currency debasement'. If you have your eye on collecting more IOU's you might want to instead think about what your gold and silver is worth in terms of goods and services. The following link is a good place to start.
https://m.youtube.com/watch?v=ZVa7fBOvLxM

BaBaBouy's picture

"" The housing market needs a sharp correction up here, in 1995 $500k would buy a custom built mansion on a lakeside community, today $500k just gets you an Agenda 21 downsized single detached home. ""

Basically, RE Is Valued IN: "Paper FIATS Money", IE Banking Book Entry Of Asset, Nothing
Else.

So If You Value AND Trust Banks And Paper Fiats Assets, Housing May Be Overvalued.
Obversely, You May Put Your Trust In HARD ASSETS That You Can Actually Use, Then RE May Be
Yet Pacing For A Long Ride Higher (In Banking Paper Fiats ASSETS)...

i_call_you_my_base's picture

Gold is a play on the response to deflation, not on the deflation itself.

Joe Trader's picture

House prices in Alberta fell about 0.2% last month yet the media & realtors were quick to lable that as a "buyer's market". This type of spin isn't that far off from communist propaganda - most people just can't see it. A year ago, I warned a friend not to buy a $430,000 tiny starter home in Calgary, but to put it off for one to two years, I said just my opinion...& I haven't heard from the guy in a while this year..

The housing market needs a sharp correction up here, in 1995 $500k would buy a custom built mansion on a lakeside community, today $500k just gets you an Agenda 21 downsized single detached home.

And even if you're a landlord with a paid off property...with valuations so high any rental property would only produce 3-4% annual returns.

#PleasePassTheKoolAid

Pareto's picture

+1 for The housing market needs a sharp correction up here, in 1995 $500k would buy a custom built mansion on a lakeside community, today $500k just gets you an Agenda 21 downsized single detached home.

Its true, and its fucking goofy.  People are spending a fuck ton of money for places that require another fuck ton of money just to get them to where they should be.  I don't get it actually.  Mortgage rates while they have dropped some with Poloz's rate cuts still cannot possibly be compensating for what is essentially a hollowed out manufacturing and now eviscerated oil patch.

The question for me remains:  "who the fuck keeps buying up all this shit?"


i_call_you_my_base's picture

"People are spending a fuck ton of money for places that require another fuck ton of money just to get them to where they should be."

It is interesting. Where I live things are very odd because people who were never wealthy and generally didn't keep up their homes still have half a million dollar asset. And so now, when they are selling them, you have a home worth a ton that is in terrible shape. Crazy times.

Oldwood's picture

How much of this "fuck ton of money" is real money and how much is printed debt money?

Abbie Normal's picture

It's real only if it can be sold and the seller can walk away with the cash [and convert it to PM].  Paper gains are worth about as much as what they're printed on.

jerry_theking_lawler's picture

Ah, this is a symptom of cheap money. Probably the .fed is loaning cheap money to someone who is pushing the 'income' of rentals and they are buying the property.  RE is kinda like the oil patch, push valuations to the max and borrow as much money...otherwise the ponzi is seen and the unwind begins.

ThrowAwayYourTV's picture

People are poor and hungry because of their own laziness, not because of capitalism or socialism.

Theres no reason anyone cant grow, fish, hunt for enough food and water to sustain themselves.

The government wants you to believe that you need more junk and toys in your life so that they can keep taxing and spending. (keep oiling the machine so they can feed the banksters)

Imagine if everyone grew their own food and made their own funiture. Oly Shit Man! The tax money the taxman would lose out on.

Thats why they keep on yelling about all the money you need to make to be happy. Because they get 20% of it for nothing.

 

 

Oldwood's picture

While I can agree with your premise to some degree, what you are ignoring is skill. As someone who was raised by a green thumb and excellent cook I can do neither. As a builder of custom furniture for a living, I can say there are few if any that can do that either.

If, what you are suggesting that people will be satisfied eating what they can grow and living within what they can build, I would respectfully suggest there will be blood deep in the streets, before that ever happens again.

ThrowAwayYourTV's picture

What do you mean, "before that ever happens again." It will happen again, its just a matter of time.

As far as building furniture, a chair is a chair is a chair. You park yer ass in one. Any chair will do.

serotonindumptruck's picture

For those who would attempt a back-to-nature lifestyle, the largely forgotten skills that were taught in the Foxfire book series could prove to be invaluable. The book series is still available, both in print form and pdf format from certain torrenting sites.

http://www.amazon.com/Complete-Collection-Anniversary-Editions-Anniversa...

ThrowAwayYourTV's picture

Thanks for the link. Just let me say that I'm in no hurry to eat the weeds around my house. Although,I know every weed that I can eat if I have to.

 

GoinFawr's picture

hahahahaha! Oh knuks, that one has to be worth a turd in purgatory... but don't worry, after making me laugh so hard I'll smoke it for ya

americanreality's picture

Hahaha, yes,  ohhh. KNUCKS.  So funny.  Knucks.  Entertaining the lower intellect crowd on an internet message board.  Tell us again about the knuks family vacation to Hawaii when you saw some Samoan people.  That was so awesome,  Knuks!  

God do I hate people.

cdevidal's picture

Crisis # 1 - 2009 | $ 140 Billion | couldn't pay back - needed bailout

Crisis # 2 - 2012 | $ 240 Billion | couldn't pay back - needed bailout

Crisis # 3 - 2015 | $ 400 Billion | ???

Crisis # 4 - 2018 | $ 600 Billion | Profit

#UnderpantsGnomesForCongress

PN7's picture

Q: Why was Viagra the #1 prescription drug stolen during the riots in Ferguson, Mo?

 

A: Because Black Lives is impotent.

Uber Vandal's picture

Relax, the oil hedges are still in place until about October, then the real pain begins.

http://www.zerohedge.com/news/2015-07-02/shale-drillers-about-be-zero-he...

http://www.zerohedge.com/news/2015-07-03/fdic-sounds-alarm-insolvent-zer...

Also, refer to how the prior depression played out in the oil patch for reference:

http://www.bloombergview.com/articles/2013-05-06/when-the-great-depressi...

Some oilfield producers pumped more to sustain their revenue, but they only triggered price collapses.

shovel ready's picture

I am in Australia.

I think the possibility of a recession has entered people's minds here... but 'ya know... maybe... but she'll be right'.

There is no wide-scale concern that something bad is about to hit us for the 'average person' here. People are still paying record prices for Real Estate etc.

obelisks's picture

why do people continueto use the word "  recession "  when it's abundantly clear it is much worse than that? and if  people start using the words "  green shoots "  and " recovery " again before the real problems are solved once and for all I will go crazy !

shovel ready's picture

You may want to stock up on your medication now :)

Caught_Fish's picture

I'm also in Australia.

Worked for Dupont for half a dozen years, did some time in pharmacuetical engineering and some more in automotive. I can tell you that Australia imports all plastics as either raw polymer chip, semi finished material or finished material. That means everything you touch made of polymer/Plastic is imported.

From my time in pharmacueticals i discovered that Australia doesn't smelt 316L stainless steel, all pharmaceuticals are processed through this material, meaning all pharmacuetical production relies on imported 316L electropolished stainless steel.

Soon all car manufactoring in Australia will cease. Australia will not, in any meaningful numbers, produce an engine, Chainsaw, Motorbike, Car, Truck, Excavation and mining equipment.

G'day Mate

new game's picture

interest rates / housing / correlation?prices can rise enormously as our budgets were used to 6-8 percent. now in the 3-4 percent prices can nearly double and we buy that payment and are happy with a fucking place to live rather than renting next to renters(very depressing thought-low life fucking renters). so that is what drives real estate for now-LOW FUCKING ENGINERED INTERET RATES, cause buyers buy a paymnt and get a home....

imagine the price with 1 1/2 - 2 percent 30 yr rates, ha...

it is coming...

Ignorance is bliss's picture

Yes...you are right. The price tag is bigger, but the bankers rent is the same. In the end, I think we will see a depression followed by hyperinflation ignited by yellen and compromised government and corporate policies. They know it's coming, but just can't help themselves. It's probably not a bad idea to lock in a bankers rent. In the event of a default hand them the keys when the sheriff walks up to the door, or fight it and live several more years for free. Your fucking over the most criminal enterprise on the planet. I wouldn't shed any tears.

Oldwood's picture

which would you rather buy....a $500k house with extremely low interest rate, or a $200k home with high interest rate?

Both payments are the same and both houses are the same.

We are driven by our brains, which tells us that a 50% off sale is a good deal at Zales Jewelers. People jump at the chance of buying a $40k car for $60k when the payments are the same.

Inflation is a bait and switch game and we fall for it every time.

PT's picture

Low interest rates have their own problems but they are no cause of the housing problem.  The housing problem is caused PURELY by BANKS LENDING TO IDIOTS who bid up prices to unsustainable levels.  Interest rates can be as high as you like but that WILL NOT stop bankers from lending to idiots.  The banksters GOT BAILED OUT.  The threat of bankruptcy will not stop the banksters from lending to idiots.  Be sensible.  Write out a budget.  Stick to what you can afford.  But then when you go to buy a house, some idiot, who has not done the maths, will outbid you purely because some bankster said it is okay, and you will go homeless while the idiot will buy the house he can not afford to repay.

Then when you try and point out to the average yob that one plus one does not equal three they will parrot back to you, "Supply and Demand".  In a normal world, "demand" is limited by the amount of money in your pocket, not by what a bailed-out bankster is willing to lend.  And then the average yob, who is so happy to blabber "Supply and Demand" totally ignores the Supply side of the equation.  Where are the entrepreneurs taking advantage of high prices to increase supply?  Oh, but why would they supply affordable housing when they can make more money by supplying unaffordable housing?

FIAT CON's picture

 

"Low interest rates have their own problems but they are no cause of the housing problem"

I agree with most of was you wrote although it is the low interest that brings out all the idiots that think because of the low interest they can afford a bigger house or even a more expansive house as in here in Canada.

 Because of the low interest the youth trying to keep up with the jones buy a much bigger house/truck because Hey they can afford it with the low interest rates!

PT's picture

They don't think that hard.  They say "Low interest rates" because everyone else says "Low interest rates".

They may say, "Low interest rates" but what they mean is, "My banker said I can afford it" and "My banker is the professional.  Why would he lie to me?  If he doesn't think I can afford it then he loses too."  Time to teach them about CDOs, CDSs and bail-outs.

Be a good idea to take them through a budget.  (But who wants to do maths now they've left school? ... Whoever thought maths would have utility?  Oh, obviously maths doesn't work 'coz maths sez I can't afford to buy anything but my friend buys lots of things so obviously she can afford to buy stuff.  Your maths must be wrong!)

Socratic Dog's picture

Sounds like another country I know....you know, the exceptional one.

Omen IV's picture

Australia is facing a cyclical downturn with their reliance on Chinese business but the real problem is systemic - the relationship with the USA will force China to diversify their supply lines away from Australia just as Russia has done with food reliance on the EU.

The Aussies will face the true price of support for the insanity that US foreign policy represents - major dislocation coming in coal. iron, and many other commodities

DosZap's picture

Caught_Fish

 

Sorry to see you mates in that fix.Sorry to see any of us in the fix we are in, but had ZERO control over.Your country is the ONLY Western country with the  TESTICULAR fortitude to say hell no!, our way or highway!, when it comes to allowing Muslims to take over you nation.

As all others are doing.We worry about the Mexicans when we should be as concerned if not more so about the Muslims.According to the LAST Census report more Arabic language immigrants than any other have come in.

Talk about letting fox into the chicken house.And Obama is telling them to ALLOW MORE, MOAR!!!!!!!!!!!!!!.

  A TOTAL DOUCHE & FLUSH  OF D.C. needs to happen.

 

shovel ready's picture

I have wondered - if you scrape away mining and agriculture from the top of our (Australia) economy - what is left underneath? (other than the circle jerk of real estate and finance etc)

Do we make anything?

ali-ali-al-qomfri's picture

Heaps mate;

a right done bbq prawn,

a decent beer,

vegamite,

boots,

outback jackets....

heaps I tell ya....heaps

http://www.australianmade.com.au/products/

DosZap's picture

I warned,(along with many others at ZH, I am sure) when the housing bubble was goin full tilt.That Canada was a carbon copy of the US.

They would see the exact same results as the USA.

Sadly, it has come about, but like the DUMB Americans, they thought the DREAM could go on forever.The love of Mammon is such an evil taskmaster,is it not?.

Canucks here Pshawed me, and said THEY were not going to go the way of DoDo bird Americans.

But, alas,  Sadly your arse's are now in neck deep in the SAME but deeper septic tank with the rest of the ignorant and greedy.

michelp's picture

"I live in Canada and I can tell you the denial in Alberta is fading fast."

Alberta is not Canada, it is part of Canada.

 


Master Toms Dog's picture

Your point is difficult to discern, but I'll give it a try.  You are offended by non-Albertians commenting on Alberta (even though it may be based on first-hand observation)?

Abbie Normal's picture

Or maybe Alberta's oil & gas economic collapse is an anomaly and the rest of Canada will do just fine...hint, it's all connected.

bowel collapse's picture

you canadians complain too much.....come to Australia, put a sock on your cock and lay in the sun.  All good here/

SmokinMonkey's picture

The Tylers must post this as a top story. 

Internet sees Vladimir Putin's face in flock of birds over New York City

 http://www.cbc.ca/news/trending/internet-sees-vladimir-putin-s-face-in-f...

Is Big Brother Vladimir Putin watching us from above?

We've seen the Russian president shirtless on a horse, calmly stroking a leopard and flooring a Judo black belt. Has Russia's king of masculine poses found a way to get a swarm of flying birds to soar into a formation of his face? 

FreeShitter's picture

This shit is on like Yellen's thong, bitchez..

OldPhart's picture

The thing that totally pisses me off about Zero Hedge is that I'm compelled to read all the comments before I can hit Spankwire.com.

Damn you, damn you all to hell!