The Chart Of Doom: When Private Credit Stops Expanding...
Submitted by Charles Hugh-Smith of OffTwoMinds blog,
Once private credit rolls over in China and the U.S., the global recession will start its rapid slide down the Seneca Cliff.
Few question the importance of private credit in the global economy. When households and businesses are borrowing to expand production and buy homes, vehicles, etc., the economy expands smartly.
When private credit shrinks--that is, as businesses and households stop borrowing more and start paying down existing debt--the result is at best stagnation and at worst recession or depression.
Courtesy of Market Daily Briefing, here is The Chart of Doom, a chart of private credit in the five primary economies:
Why is this The Chart of Doom? It's fairly obvious that private credit is contracting in Japan and the Eurozone and stagnant in the U.K.
As for the U.S.: after trillions of dollars in bank bailouts and additional liquidity, and $8 trillion in deficit spending, private credit in the U.S. managed a paltry $1.5 trillion increase in the seven years since the 2008 financial meltdown.
Compare this to the strong growth from the mid-1990s up to 2008.
This chart makes it clear that the sole prop under the global "recovery" since 2008-09 has been private credit growth in China. From $4 trillion to over $21 trillion in seven years--no wonder bubbles have been inflated globally.
Combine this expansion of private credit in China with the expansion of local government and other state-sector debt (state-owned enterprises, SOEs, etc.) and you have the makings of a global bubble machine.
In other words, the faltering global "recovery" and all the tenuous asset bubbles around the world both depend on a continued hyper-velocity rocket rise in China's private credit. What are the odds of this happening? Aren't the signs that this rocket ship has burned its available fuel abundant?
Three out of the five major economies are already experiencing stagnant or negative private credit growth. Three down, two to go. Helicopter money--government issued "free money" to households--is no replacement for private credit expansion.
Once private credit rolls over in China and the U.S., the global recession will start its rapid slide down the Seneca Cliff: The Global Economy Could Fall Farther and Faster Than Pundits Expect.
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This has been happning for a long time, and it's exactly why governments need to start borrowing on our behalf. When aggregate demand increases and the velocity of money speeds up, this will stimulate spending and the economy will take off. It's simple economics, for someone who has an education.
Excellent bone dry sarcasm there, thanks.
Always fun to see the down arrows on MDB or people responding as if that's his actual position. Without the /s tag, people just don't get it.
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I LOVE MDB 1 and 2. Their sarcasm is not far from how many sleepers and takers think. Keep it up. It is good to know your opposition.
Quaker meeting has begun. No more laughing. No more fun. No more chewing chewing gum.
Tis the dour hour with Mother's children, dammit.
-_-
I dunno. MDB seems OK to me, Thyme (though I admit I didn't get him at first when I came to ZH). He's one of the few here, like me, who does his satire & sarcasm without a stupid /sarc tag.
Way I see it is this: Once I put my words out in a post they're not my problem any more. They stand on their own from that point forward. You either get it or you don't.
How long before MDB has to rename himself BDB?
Need to start borrwoing on our behalf? LOL Where have you been, they've been doing that for decades.....you can't fix stupid
On the bright side, you may be able to monetize the gene that prevents you from recognizing sarcasm.
Yes, I know it's /sarc. I just don't give a shit that it is. THanks anyway though.
What it is, is the Keynesian view that ALL central bankers, politicians, and academics like Krugman hold to be true, and the reason we are where we are.
Kinda the reality based inverse of "To help the children."
(And as though the damage its doing, and done, is not intentional.)
Do you REALLY believe the horse hockey you are spewing?
It's caleld 'Reaganomics'
It's called the "socialization of PRIVATE LOSSES" and BOTH parties have been enabling this for 40+ years you stupid fuck.
Maybe the plebs have had enough and are telling shit-ass politicans and the pecuniary banking parasites to take their private credit and shove it up their asses.
Look around at the "average" person...
Believe me when I say, you sir, are an optimist.
You could be right although optimism is not one of my strong points. I tell you though, every single person I talk to in real life has expressed a belief that evrything we see is pure, utter fraud.
Every. Last. Thing.
In keeping with my semi-obsession with the goings on in Burns Oregon and general off-topickiness, I tried to click into Oregon Live. That site is populated by people who seem ecstatic over the murder of Lavoy Finecum. I specifically wanted to inquire about the lack of indictment for Mark McConnell. Recall that he was the one, featured by MSM, that made the claim that Finicum had charged the cops and behaved aggressively, something we now know to be false. It turns out I can not log into that POS at all so I believe all the comments are FAKE and FRAUD.
It's ALL FRAUD.
His name was Robert Lavoy Finecum.
http://www.hughesmortuary.com/notices/Robert-Finicum
What Reagan was for ..
Was bringing down the FED and the CIA (joined at the hip with the MISSC) ..
In same manner as Johann Eck gave the name Lutheran to followers of Luther ..
Whoever coined the term Reaganomics for Reagan's policies, was no fan of Reagan. And, I will give a further hint as to who/whom we are talking about. His real name (birth name) is not -- Bush ..
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (Read Me First)
BTW, Paul Craig Roberts never knew Reagan. Never got close enough to him. Was never allowed. He certainly did not have backdoor access to the Oval Office. Was never entrusted of $150,000,000,000 of the People's money .. (of which was returned back to the US Treasury within 6 months of being granted it.)
I'm always on the fence with you and I'm not alone.
You deserve a -1 for your nonsense and a +1 for your humor.
This is why it is so important to increase you cash savings.
Cash
Bullets
DONE !!
NEXT !!
We have missed you so, MDB.
why the fuck are you on this site!?!? go over to huffington post and suck hilary clintons dick!!!!!!!!!
Why make loans when people have been trained to recieve gifts.
Be like a Wall Streeter is what I hear. Everyone wants bailouts like WS
Banks no longer perform loans.
Simple economics: helicopter$.
It was Oscar Wilde who coined the phrase 'Sarcasm is the lowest form of wit- but the highest form of intelligence'.
I suspect MDB is quite the intellectual- but.....sarcasm as a one-trick pony can become tedious.
Right, someone else spending your money - great idea, if you are a masochist.
Get out there and buy that new car and 300,00$ house! You deserve it for making 14$ an hour as assistant manager at Flingers!
Charge it bitchez! It's for the children.
Apply for 20 credit cards in one day. When Approved, max out cash advances
BOLT
Why just use the cash advance portion? Max out by buying gold, guns, storable food, farming implements. Then bolt.
Problem is, you have to drag all that crap with you and the Danes are going to confiscate most of it at the border anyway.
Coke Hookers and a weekend in Vegas is a viable option also.
Lookout Weezy this is the big one!
'bolt' only works if you have no where to go....for most of us they will just come to our homes to collect.
Staying home?
Never considered it. Back country has been the plan for some time.
EBT...be all youz need!
When the Chinese one rolls over, all hell is going to break loose.
Hell, in 08 when the USA's did, I remember all the talk about tanks in the streets. That may actually happen in China.
pods
America, soon to be renamed Venezuela north.......
Or Canada South
China already rolled over. Did you think those vacant cities were really private investment?
Private, Public, what is the difference?
Yeah. And it's not just about credit creation. The rate of credit creation is what really matters. Is possible to have a positive rate that still isn't enough. A negative rate is an "oh shit" thing.
yes, where is tht criminl fuck Hank "tanks in the streets Paulson" these days anyway?
my guillotine is hungry!
That's roughly a 25% CAGR for Chinese private credit since 2009. That's pretty fucked up.
Govt wont allow credit to stop, Credit creation is the only thing keeping the ponzi going.
Americans live in debt without it people would starve to death in the streets and dead citizens dont pay taxes (for long)
They do continue to vote Democrat though.
Liquidity trap/crisis. Oh yeah and Bitchez!
I haven't received my $4 million tax-free check from the FED yet so please don't talk about "helicopter money to households" until then. Should be QE4. I'll tip well, I promise.