Crumbling BRICs... And Why The Developed World Is Not "Taking Off" Either

Tyler Durden's picture

The problem with self-reported economic data by various countries, especially those which are supposed to be at the forefront of economic growth, now that the "developed" world is groaning under consolidated debt/GDP ratios which will soon be the 4 digits, is just that - that they are self-reported: a main reason for the development of such governmental offshoot programs as the "Ministry of Truth." Which means that when the investing public hears of an updated Chinese GDP, or Brazilian inflation, or Russian industrial production, most roll their eyes but go with it, as this is the data that the greater fool down the street will also be using for investment decisions. Luckily, there are secondary indicators which present a much more realistic picture of what is truly happening in this fringe growth markets. A few days ago, we presented the "stock" view of the world's two biggest housing bubbles: China and Saudi Arabia, when demonstrating the epic outlier nature of these two countries in the context of cement consumption relative to GDP per capita: a snapshot which showed just how unsustainable the regional construction bubble in these two countries is. But since this is a snapshot in time, and hence "stock", how about the "flow", or the perspective of the economy from a continuous basis. For that we once again go to Goldman, which has conveniently compiled two alternative yet very critical data sets which go to the core of the BRIC economies: Chinese electricity consumption, as well as Brazilian toll road traffic. The picture(s) is (are) not pretty.

First, a brief reminder of the perilous state of Chinese over expansion - i.e. "stock"

And here is how Chinese electricity consumption has been faring recently, or economic "flow"

Brazil is not doing that much hotter either...

But don't worry: the developed world isn't taking off anyewhere in a hurry soon - as the following chart showing business jet travel shows (until of course the chart goes parabolic at some point in the near future...)

What does this mean? That the world is slowing down everywhere. And since conventional theory means that much, much, more debt will soon be unleashed to restart growth, and since everyone already is full to the gills with debt, the only realistic buyers remain central banks. And they know it. Which, incidentally, is why the market is tumbling: after all, as we have been claiming all along, there must be some pretext for global coordinated QE. Well, another 10-15% drop in the global capital "markets" will get us there in no time.