The Truth Comes Out: "This Is The Worst Global Dollar GDP Recession In 50 Years"

Tyler Durden's picture




 

The following brief summary of the global economic situation should, once and for all, end all debate about whether the world is "recovering" or is now mired deep in a recession.

From DB's 2016 Credit Outlook

Debt has continued to climb since the crisis with Global Debt/GDP still on the rise, with no obvious sign of when this rise stops for many major countries. Indeed much of the post GFC increase in debt has been raised on the back of the commodity super-cycle which is currently unraveling in EM and the US HY market. Outside of this, the US overall has de-levered to some degree but even there debt levels remain very high relative to all of history excluding the GFC period.

 

With limited tolerance from the authorities to see defaults erode the huge debt burden, the best hope for a more normal financial system is for activity levels to increase so we can slowly grow the economy into the debt burden. However this requires strong nominal GDP growth and we continue to see the opposite. The left hand graph of Figure 6 looks at a global weighted average of Nominal GDP growth in the G7. On this measure we are still seeing historically weak activity.

 

In dollar terms the situation is even worse. The right hand chart of Figure 6 shows a much more volatile global NGDP series which converts the size of each economy in dollar terms and then looks at the growth rate YoY. With the recent strength in the USD we are seeing a huge global dollar nominal GDP recession - the worst since the 1960s. Whilst this might not be a series that is followed, it does show the sharp contraction of dollar activity levels in the global economy over the last year or so which has to have ramifications given it’s the most important global financial market currency.

 

What DB did not point out but is obvious, is that the synthetic dollar squeeze of the past year has made the global collapse now even worse than what was experienced during the great financial crisis, and it is getting worse by the day.

And so, with the world trapped in the worst USD-based GDP recession in 50 years, here is the question for Yellen: with every other central bank easing and the Fed tightening, what happens to i) the USD in the future and ii) to future world growth in USD.

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Mon, 12/14/2015 - 16:08 | 6922833 I AM SULLY
I AM SULLY's picture

Well ...

(that just means raise rates even HIGHER!)

Mon, 12/14/2015 - 16:23 | 6922884 El Oregonian
El Oregonian's picture

Crushed into the dust...

Justice cries mercy!

Mon, 12/14/2015 - 16:11 | 6922839 Bay of Pigs
Bay of Pigs's picture

The Douche Bank speaks...

Mon, 12/14/2015 - 16:20 | 6922872 Baby Bladeface
Baby Bladeface's picture

The half-truth comes out.

This is worst depression since 80 years.

Mon, 12/14/2015 - 17:07 | 6923075 Omen IV
Omen IV's picture

I agree - what was so bad about 1965?

Mon, 12/14/2015 - 16:13 | 6922847 Xatos
Xatos's picture

You've really got to give it to them for how well they've dragged this out. It's insane.

Mon, 12/14/2015 - 16:14 | 6922854 arbwhore
arbwhore's picture

about to get worser as the $ climbs to 120.

Mon, 12/14/2015 - 16:16 | 6922861 nuubee
nuubee's picture

If the world reserve currency suddenly deflates, does it make a gurgle sound?

Mon, 12/14/2015 - 21:54 | 6924095 PaperTaperFakerCaper
PaperTaperFakerCaper's picture

@arb whore ... That's ... kewl, dude.  heh heh  Did you jus' say "worser"?  Heh heh. 

Mon, 12/14/2015 - 16:27 | 6922865 ThroxxOfVron
ThroxxOfVron's picture

A Depression ?!

Ya think so?

...Really?  

How the fuck did THAT happen??

 

...So, ALL of us that have been screaming that this has BEEN a depression all along were/are right?

 

Couldn't be that the corporate globalists and international bankers looted every 1st world economy on the entire fucking planet using labor arbitrages and fraud and counterfeiting while corrupt and captured politicians looked the other way or even helped out by destabilizing dozens of nations could it???

 

Maybe you assholes shouldn't be left in charge of anything any more and we should roll back everything you've ever done since the last depression since you can't seem manage anything for shit.

... Thanks for the transparent bullshit and propaganda and lies -green shoots and all- motherfuckers...

Mon, 12/14/2015 - 17:14 | 6923101 BiPolarFrenchman
BiPolarFrenchman's picture
I never thought about offshoring jobs to Asia as "Labor arbitrage", but it totally is! Thanks for the insight.
Mon, 12/14/2015 - 22:00 | 6924115 PaperTaperFakerCaper
PaperTaperFakerCaper's picture

ThroxxOfVron ...  dude, that's ... kewl.  heh heh.  Haven't heard so much aching talk fer awhile now.  Did you jus' say "motherfucker"?  That's kewl.  heh heh  Them 'green shoots' is gonna turn right quick inta them burnt chutes ah reckon.  Chuting down ta hell on a shutter. 

Mon, 12/14/2015 - 16:24 | 6922870 Rainman
Rainman's picture

In other words , moar growth requires moar debt ...fuggitabout GDP .

GDP is just a brand of weed .... or a fuel additive.

Mon, 12/14/2015 - 16:21 | 6922876 Winston Churchill
Winston Churchill's picture

Why would they give a shit about the RoW?

This is about the survival of the USD,and therefore their necks are on the line.

Mon, 12/14/2015 - 17:22 | 6923140 J Jason Djfmam
J Jason Djfmam's picture

Roll out the guillotines!

Mon, 12/14/2015 - 16:24 | 6922885 Johnny Horscaulk
Johnny Horscaulk's picture

WWKD?

What would Krugman do?

Moar printings, Precious! Moar taxes!!!!

And early in 2016 - negative rates. Those nasty, tricksey savers are the problem! How dare they save the post tax fruits of their labor?

All hail the 'economy'!

Mon, 12/14/2015 - 16:26 | 6922893 Climb
Climb's picture

I wish I understood all the acronyms.... better yet, I wish I understood why no one else [seems] cares.

Mon, 12/14/2015 - 16:42 | 6922973 o r c k
o r c k's picture

Climb?  It appears the traitor presstitutes have moar power than we knew. Welcome to the secret depression.

Mon, 12/14/2015 - 18:02 | 6923257 GhostofBastiat
GhostofBastiat's picture

This is a private club with the inmates pedaling their own wares...However, there is often lucidity in the rantings...

1.  Use Google...

2.  Connect brain or read some other threads and comments...EM=European Markets, GFC=Global Financial Crisis(08-09), BTFD= Buy the F~[king Dips, etc.  

Mon, 12/14/2015 - 19:42 | 6923614 Stormtrooper
Stormtrooper's picture

EM=Emerging Markets

Read some other threads or check ZeroHedge glossary.

Wed, 12/16/2015 - 14:06 | 6931300 Climb
Climb's picture

I've been reading here for a year.  thanks for GFC... what about HY market?

Mon, 12/14/2015 - 16:40 | 6922964 NEOSERF
NEOSERF's picture

Question is how much breathing room is afforded if the Fed punts on the hike (ie. how much of this is frontrunning a hike?)

Mon, 12/14/2015 - 17:07 | 6923073 BiPolarFrenchman
BiPolarFrenchman's picture

Depends on the whales.  

 

If they continue to clamour for the exits, compounded by the proles tightening their credit belts, could be a matter of months.  

 

If they keep the oligarchy onboard, then they'll have room.

Mon, 12/14/2015 - 17:01 | 6923042 WTFUD
WTFUD's picture

Never saw any of this coming! s/c

Mon, 12/14/2015 - 17:02 | 6923049 Duc888
Duc888's picture

...

 

 

Obvious as all hell now this was "the plan" all along.

 

They've had since 1913 to game these theories.  With each passing year they've gotten more control.  So now it's time for the big squeeze..., maybe the dollar will vaporize, or maybe the Euro, or maybe even the yuan... it really does not matter to them as they're mostly all compromised by the same exact parasitic system.  We're on the side lines reading tea leaves trying to figure out how high the dead cat will bounce when in reality... they're calling the shots.  it's right there.  Plain as day.  Now the new handlers will push the old aside and manage the human farm to their liking...

Mon, 12/14/2015 - 20:16 | 6923737 robertocarlos
robertocarlos's picture

I'm sorry master. I admit I'm not as productive as an American.

Mon, 12/14/2015 - 21:25 | 6923968 TheMerryPrankster
TheMerryPrankster's picture

wait you mean the oil glut and dropping oil prices is caused by a lack of demand because so many people are out of work?

jeez I thought it was the surpluses created by fracking and technological improvements like using earthquakes to loosen up the oil in Oklahoma.

Depression you say? I wonder if they know about this in Washington D.C? I'm sure Obama is all over it......

Tue, 12/15/2015 - 02:39 | 6924812 401K of Dooom
401K of Dooom's picture

The reason why no one is worried about something like this is because of the Kardashians!  I blame network television!  Screw  you Chuck Lorre!

Sat, 01/02/2016 - 13:38 | 6988218 kotfare17
kotfare17's picture

My prediction made in 2013 on this portal is now fulfilled even officially.

The real data is far, far, far worse

Do NOT follow this link or you will be banned from the site!