Today’s visualization breaks down $59.7 trillion of world debt by country, as well as highlighting each country’s debt-to-GDP ratio using colour. The data comes from the IMF and only covers external government debt. Combining the debt of the United States, Japan, and Europe together accounts for 75% of total global debt.
Six years ago, hardly anybody outside financial circles had any idea what Quantitative Easing was – hell, many within financial circles had no idea what QE entailed. The success of the narrative created around QE; that it is the mythical ‘free lunch’ that we all intuitively know can’t exist but secretly hope does, has played perfectly to the public and now, having endured for two electoral cycles, the next wave of politicians also believe it will have no consequences and are actually using it when planning the message they feel will endear them to the electorate. What plays better than free money?
- Trump at center stage as Republicans square off in first debate (Reuters)
- Cleveland Debate Offers GOP Hopefuls a Chance to Break Away from the Pack (WSJ)
- Bank of England Keeps Key Interest Rate at 0.5% in 8-1 Vote (BBG)
- Emerging stocks submerged, UK gears up for 'Super Thursday' (Reuters)
- No IMF decision on Greek bailout until autumn, Swedish rep tells paper (Reuters)
- Japan Heads Toward Nuclear Unknown With Post-Fukushima Restarts (BBG)
- Activist Ackman Takes $5.5 Billion Stake in Snacks Giant Mondelez (WSJ)
"What can we do?"
There are so many parallels between the current period since 2007 in the U.S. (The Great Recession), the period since 1990 in Japan (Japan’s 2+ lost decades), and the period after 1929 in the US (The Great Depression) because they are all periods of a ‘balance-sheet recession’ (or similarly, ‘secular stagnation'; that it is next to impossible to dismiss the comparison. Using this, there is an important lesson for the Fed to consider now in weighing whether to raise rates.
Debt is a fickle witch. When left to its own devices, which it has been for nearly seven years with interest rates at the zero bound, it tends to get into trouble. Unchecked credit initially seeps, and eventually finds itself fracked, into the dark, dank nooks and crannies of the fixed income markets whose infrastructures and borrowers are ill-suited to handle the capacity. Consider the two flashiest badges of wealth in America - cars and homes...
Will there be a financial collapse in the United States before the end of 2015? An increasing number of respected financial experts are now warning that we are right on the verge of another great economic crisis.
It wasn’t until the Americans were free to issue unlimited amounts of ‘dollars’ that these claims lost their soundness in a rambunctious belief in the never-ending global supremacy of US manufacturing. Now the damage is done. The gross misallocations that have plagued the world economy for well over four decades cannot be corrected without a cataclysmic event that will dramatically change living standards as the US realign their manufacturing and service sectors. But it cannot continue indefinitely either. Something will have to give.
- Turkey says coalition to launch 'comprehensive battle' against Islamic State (Reuters)
- Buffett’s Celebration Tempered by 50th Anniversary Stock Slump (BBG)
- SEC Set to Approve CEO Pay-Gap Disclosure Rule (WSJ)
- Greece wants full bailout, not bridge loan, ruling party says (Reuters)
- Stocks Rise Fueled by Strong European Corporate Earnings and Chinese Data (WSJ)
- JPMorgan Reclaims Place Among U.S.'s Top 10 Biggest Stocks (BBG)
- Eurozone retail sales fall sharply in June (MW)
Futures Rebound On Ongoing Dollar Strength; Commodities Rise, China Slides, Greek Banks Continue PlungingSubmitted by Tyler Durden on 08/05/2015 06:51 -0400
In many ways the overnight session has been a mirror image of yesterday, with the dollar accelerating its Lockhart-commentary driven rise, which curiously has pushed ES higher perhaps as a result of more USDJPY correlation algos being active and various other FX tracking pairs. Indeed, the weak yen is all that mattered in Japan, where the Nikkei 225 (+0.5%) rose amid JPY weakness, despite opening initially lower as index heavyweight Fast Retailing (-4.5%) reported a 2nd consecutive monthly decline in Uniqlo sales. Elsewhere in mirror images, China slid 1.7%, undoing about half of yesterday's 3.7% jump, and is now down for 4 of the past 5 days.
The reality might just be that the collective "we," and quite possibly sooner than we think, really will need a bigger boat. That is, as it pertains to the global debt markets, which have swollen past the $200 trillion mark this year rendering the great white featured in Jaws which can be equated with past debt markets as defenseless and small as a small, striped Nemo by comparison. The question for the ages will be whether size really does matter when it comes to the debt markets...
A Japanese citizens’ judicial committee has overruled government prosecutors and forced them to bring three former executives of the Tokyo Electric Power Co. (TEPCO) to trial on charges of criminal negligence for their inability to prevent the 2011 nuclear disaster at the Fukushima Daiichi nuclear power plant.
Japan's all important real wages, even those including bonuses and special payments, once again failed to keep up with inflation, and in June crashed by a whopping 2.9% reflecting a 0.5% yoy increase in the CPI excluding imputed rent. As the chart below shows, there has now been 24 consecutive months without a single Y/Y monthly increase in real wages. What's worse is that when one adjusts the inflationary surge from the consumption tax hike last April, which has now been fully anniversaried and is no longer part of the base effect, this was the largest decline in Japan's real wages since December 2009, or the biggest monthly plunge in 6 years!
"Increasingly concerned about the markets, I’ve taken more aggressive action than in 2007, the last time I soured on the equity markets. Let me explain why and what I’m doing to try to profit from what may lie ahead."
We have lived through a credit hyper-expansion for the record books, with an unprecedented generation of excess claims to underlying real wealth. In doing so we have created the largest financial departure from reality in human history. Bubbles are not new – humanity has experienced them periodically going all the way back to antiquity – but the novel aspect of this one, apart from its scale, is its occurrence at a point when we have reached or are reaching so many limits on a global scale. The retrenchment we are about to experience as this bubble bursts is also set to be unprecedented, given that the scale of a bust is predictably proportionate to the scale of the excesses during the boom that precedes it. Deflation and depression are mutually reinforcing, meaning the downward spiral will continue for many years. China is the biggest domino about to fall, and from a great height as well, threatening to flatten everything in its path on the way down. This is the beginning of a New World Disorder…