AuthorTopic: Do Central Bankers Recognize there is NO GROWTH?  (Read 16182 times)

Offline RE

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Do Central Bankers Recognize there is NO GROWTH?
« on: April 26, 2015, 02:05:22 AM »









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Published on the Doomstead Diner on April 26, 2015



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Everywhere in the Political World you hear the phrase "Return to Growth", the Holy Grail for resolving the economic woes of the world.



http://gujarati.oneindia.com/img/250x90/2014/06/17-himalayas-glaciers.jpgWith Growth, the Greeks got no problems, they can pay off the Mole Hill of debt they owe to everybody.  With Growth, the FSoA can pay off the MT. EVEREST of debt owed to everybody.  Growth is GOOD.  It solves all problems.



Sadly of course, Infinite Growth on a Finite World is impossible, and as vast as the resources of the Earth may have seemed a century or two ago, an Exponentially growing population of Homo Saps has managed to burn through most of the good easy to get at stuff, and while burning through it load up the environment with the waste such consumption produces.  We are essentially DIGESTING the Planet, and leaving it loaded with the excrement from said consumption.



Problem in the Near Term here though is that the Monetary System we used to access and distribute all these resources itself is also predicated on perpetual growth, and when the growth stops, so also stops the Monetary system.  Except, not quite right away.  Everybody and every thing DEPENDS on the monetary system to keep functioning, and we have Geniuses up there at the top running the show who endeavor to make SURE it keeps functioning, no matter what reality is telling us here.



How ARE they keeping this running?  Two acronyms for you here which tell it all, ZIRP & NIRP.  Those are the modern bankstering acronyms for ZERO INTEREST RATE POLICY and NEGATIVE INTEREST RATE POLICY.



From Zero Hedge:




Earlier today, we were quite shocked when we heard two statements by central bankers uttered during a press briefing in Washington. The first comes from the ECB's Mario Draghi:



DRAGHI: LOW RATES FOR LONG PERIOD INCREASE FINANCIAL STABILITY RISKS



The second: from his supposed nemesis, if only for public consumption and not during the BIS' bimonthly meetings in Basel, Bundesbank head Jens Weidmann, who said a carbon copy replica of what Draghi had said minutes prior:



WEIDMANN SAYS LOW INTEREST RATES INCREASE FIN STABILITY RISKS



We were "shocked" because for once, we agree with central bankers. And to get a sense of just how right the two central bank heads are we go to Bank of America which overnight released a report in which it said that as of this moment, "53% of all global government bonds are yielding 1% or less (Chart 3)."






Let that sink in for a second.



And while you are contemplating that, here is another fact from Bank of America:



The global narrative remains maximum liquidity (Chart 2) & minimal interest rates. And it’s impossible to be max bearish with such an extravagant monetary backdrop.






Central bank assets now exceed $22 trillion, a figure equivalent to the combined GDP of US & Japan



So yes, low rates for a long period of time most certainly "increase financial stability risks" – the central planners are certainly correct about that. But next time they make that remark, perhaps someone from the media can ask Messrs Draghi or Weidmann the following question:



does the fact that central banks now collectively own nearly a third of global GDP in government bonds and equivalent assets – an amount that is greater than the GDP of first and third largest global economies, have anything to do with "low rates" and the fact that "financial stability risks" as of this moment have never been higher?



Oh, and good luck with that "renormalization."




Now, EVERYBODY KNOWS Money is supposed to "Make Money" in some kind of virtual perpetual motion machine.  If you save a small pile of the stuff for your retirement, your supposed to get a "decent return" which in the olden days was something like 5-10% depending on how much "risk" you were willing to take on your "investments".  Real risk averse people like my Mom who was a child during the Great Depression wouldn't invest in the Stock Market, too risky.  She put her little pile into CDs, considered one of the safest places to park your cash, which gave a slightly higher return than a typical Savings Account.  She probably collected an average return of around 3% over the years she was retired for this pile.



These days though, nobody including the Central Banks that issue out the money expects to get any return on it, they expect to LOSE money. If you are well connected enough, the Bank will PAY YOU to borrow money from them.  That's what a Negative Interest Rate means.  On the other side of the coin, if you happen to be someone with enough surplus income to actually save some of it, if you drop it in the bank for them to keep it "safe", they'll charge you for the priviledge of keeping your money "safe" with them.



So, basically the whole monetary system we have come to believe in is completely ass-backwards now, and what this really is is a recognition that Growth has stopped, and in fact reversed to contraction.  I hate that Newzspeak term "degrowth".  We're not "degrowing", at best we're shrinking and maybe DIEING.



Obviously, the super smart folks running the monetary system KNOW that there is no growth here in any real terms, but to keep the monetary system operational they need to present the ILLUSION of Growth.  Every last Politician and Technocrat…Wait!  Let me digress here for a moment on this "Technocrat" thing!



"Technocrat" is another nice Newzspeak Euphimism for a Fascist Apparatchik.  Prior to about 1930 this word didn't even fucking EXIST, and it didn't get much play after it was invented until the 1960s



technocrat_ngramFrankly, if Google's nGram stat system was updating this term from 2008 to today, I bet you dollars to doughnuts that "Technocrat" has reached still more dizzying heights in the world of NewzSpeak.  Notice how the word is a confabulation of the Positively Held notions and words of Technology & Democrat?  Technology is GOOD.  A Technocrat  must be SMART too.  Democratic principles are GOOD.  A Technocrat must care about Democracy, because it's right there in the name, right?  Here's a typical Technocrat:



http://images.bwbx.io/cms/2012-09-05/0905_mario_draghi_630x420.jpg



Super Mario Dragon



Do you think this former Goldman Bankster gives a flying fuck about "democracy"?  Of course he doesn't.  All he gives a shit about is keeping the system running here so he can stay at the top of the heap.  Far as his Technical Knowledge goes, he's as fucking clueless as everybody else running this show.   They don't have a solution to the problems we face, because short of a massive dislocation, probable World War and copious Death & Destruction, there really isn't a solution that works for everybody.  SOMEBODY (or really many somebodies) will get completely FUCKED here!  Super Mario's job is to make sure that isn't himself or any of his friends at Goldman.



He's not a stupid guy of course, so he certainly knows by now that there is no real Growth anywhere on the horizon for anybody, but in order to keep the system running, the ILLUSION of Growth must be maintained at all costs, and the costs are steep indeed.  So Super Mario and the rest of the CB Apparatchiks out there jawbone Growth, but even with all the Free Money dished out to the well connected, they tacitly acknowledge there is no Growth with a Zero Interest Rate.  How can you "grow" your personal little pile of Savings if you get no interest on it?  If the Bank or Bonds you use to park your money have a NEGATIVE interest rate, your pile doesn't grow over time, it shrinks.  Currently both Swissie and Kraut Goobermint Bonds are Negative Interest Rate "investments".  So why does anybody drop their money into this dogshit?  Because these Bonds are perceived as a "safe haven" when the inevitable Crash that Everybody Knows is coming arrives and the Magically Levitated Stock Market finally faces The Last Margin Call TM.



The evidence that there is no Growth is all over the place of course, all you have to do is look at the declining number of people in the Labor force…



http://www.ritholtz.com/blog/wp-content/uploads/2012/12/part1202121_big.gif



…or the total Miles Driven and Gas Konsumed by the no longer working…



http://www.ritholtz.com/blog/wp-content/uploads/2012/02/3ilesgas0213121_big.gif



…or the CRASHING count of Oil Rigs across Frackerville



Oil_Rig_Collapse



Watch Four Years of Oil Drilling Collapse in Seconds (Bloomberg)



Click the link to view the full Interactive Map



http://www.whatamimissinghere.com/wp-content/uploads/2010/08/Bubble-Debt-Crisis-500x354.jpgHow was all that drilling financed to begin with?  With a lot of DEBT, that's how, which is about the only thing left that IS Growing, and Growing Exponentially.




Since the "Investors" out there couldn't get any kind of return on anything else, they started pitching out funny money at the drillers, "chasing yield"  as the saying goes.  Problem of course with this is that the folks who borrowed this funny money are in the process of Going Outta Biz.  Those loans aren't going to be paid back anymore than the pile of Student Debt will be paid off either.



Currently, of the somewhere around $1.3T in Student Debt, fully 1/3rd is currently delinquent or in arrears.



From Zero Hedge:




It’s no secret that America has a $1.3 trillion student debt problem and as we’ve outlined on a few occasions recently, the actual delinquency rate for student borrowers is far higher than the (also high) 18% that’s generally reported because as The St. Louis Fed recently pointed out, it’s important to look not at delinquencies over total student loans but at delinquencies over loans in repayment and when you do the math on the latter you discover that once America’s best and brightest come out of deferment and forbearance, one in three quickly fall 30 days or more behind on their payments. In other words, the real delinquency rate (i.e. the rate for those who are actually required to make payments) is closer to 30%.



And while the Obama administration debates more “efficient” ways to allow for the discharge of this mountainous pile of bad loans in bankruptcy proceedings, some folks saw their student debt ABS put on review for downgrade at Moody’s which cites default risk on nearly $3 billion worth of paper. As a reminder, these are the deals and tranches affected:







http://www.hyde.edu/wp-content/uploads/2012/04/churchill.jpgNow, since this nonsense of ever escalating levels of debt and ever decreasing quantities of available resource has been ongoing and working (sort of, for .01% of the Population), clearly TPTB have deluded themselves into believing they can keep this Ponzi running in perpetuity.  Just KEEP ISSUING OUT MORE DEBT!



Problem of course is that the debt is only being issued out to .01% of the population, so consumption is shrinking and until they start issuing out the Funny Money to J6P to buy the junk on sale at Walmart at Low, Low Prices Every Day, it will keep shrinking.  The Central Banksters can Jawbone growth from now until the cows come home, but it won't get J6P increasing consumption, which represents about 70% of the GDP.



Eventually, as already is the case with the oil price, you get a crash in the prices and the losses get recognized.  Oil isn't like the Housing market, where you can keep all the unsold and foreclosed on McMansions in hidden inventory for years on end while you wait for a "rebound" in demand.  There's a limited amount of above ground storage space for Oil, and once it is all filled up you have to dump inventory at whatever price you can get for it until you can get all the production shut in to limit the supply to match the ever decreasing demand.



The Saudis are taking advantage of this situation to try and drive everybody else outta biz faster, by INCREASING rather than decreasing their production.  They're aware the prices are never going to go back up, so they're doing a Final Liquidation Sale. "Everything Must Go! 90% off all Merchandise!"



The ETP Model developed by the Hill's Group has been remarkably accurate in predicting the downward pressure on the price of Oil, and the conclusions drawn are inescapable.  Below, from the 4th Update to the ETP Model:




The price of petroleum is controlled by two factors:1) The cost of production.

2) The $ amount that the end consumer (the NEGs) can afford to pay for it.What the end consumer pays must be sufficient to cover the cost of production. All production cost must be borne by the end consumer, who includes the end buyer, and the societal cost required to produce petroleum, and its products.The Petroleum Price Curve, shown below, reflects the two factors that have, and will continue to control petroleum prices. The ETP derived Cost Curve is constructed from the ETP model, and has mapped the price of petroleum since 1960 with a correlation coefficient of 0.965. It is the most accurate pricing model that has ever been developed, (see report)*.The Maximum Consumer Price curve was also developed from the ETP model. It represents the maximum price that the end consumer can pay for petroleum. It is based on the observation that the price of a unit of petroleum can not exceed the value of the economic activity that the energy it supplies to the end consumer can generate.


A more complete explanation of how the Maximum Consumer Price curve was formulated is show in chart# 160 below:


depletion2022003.jpg



The two Maximum affordable price curves labeled 71% (black), and 62% (light blue) are skewed logistic curves. There is no explicit mathematical equation to describe them. They are derived numerically, and the dots represent values for specific years. The 71% curve is the maximum theoretical energy that can be extracted from a unit of 37.5° API crude. Its value is derived from the combustion equations of hydrocarbons. The 62% curve is the average energy extracted from the same hydrocarbon by the end user. It passes through the  ETP derived price curve at the inflection point of the ETP curve in year 2012. 2012 was the energy half way point for petroleum production. It was the year when it required one half of the energy content of petroleum to produce the petroleum, and its products.


The individual points are generated from the equation:  $/barrel = (Energy delivered – ETP value/ BTU/$) * 42.Energy delivered = 140,000 BTU/gal *0.62 (140,000 BTU/gal – the energy content of 37.5° API crude)

ETP value is derived from the ETP function

BTU/$ is taken from the BTU/$ graph – Graph# 12



The Maximum Consumer Price curve is curtailed at 2020 at $11.76/ barrel. At this point petroleum will no longer be acting as a significant energy source for the economy. Its only function will be as an energy carrier for other sources. Production will continue as long as producers can realize the lifting costs at existing fields. E&D expenditures, and field maintenance costs will have been curtailed. All production from that point forward will be from legacy fields only. The economic impact that will result from the energy lost to the general economy is beyond the scope of this report.



 






The energy content of a unit of petroleum is fixed by its molecular structure. The energy to produce a unit of petroleum, and its products increases with time as a result of the entropy production of the PPS (Petroleum Production System). The energy remaining for use by the general economy declines, and the economic activity that the petroleum can power also declines. Chart# 161 below shows the historical, and projected economic activity in 2014 dollars that a barrel of petroleum (37.5° API crude) has, and will be able to power.


 


Historically, petroleum has been a primary beneficiary to the economy. The economic activity that it powered was greater than the cost of the petroleum. Its historical effect can be seen in Graph# 25 (World GDP vs Cumulative Production). That benefit is now declining, and by the early 2020's an increased use of petroleum will no longer add to GDP. It will become more cost effective for society to begin limiting its use of petroleum as the use of petroleum transitions from a GDP enhancer to a GDP reducer.



The Hills Group isn't alone in having modeled this crash, Steve Ludlum on Economic Undertow modeled it also when he noticed two converging and irreconcilable trends, the increasing cost of what it takes Drillers to extract the Oil and Natural Gas vs. the decreasing price the customers can afford to pay.  Back in August of 2012 Steve published the first of his Triangle of Doom TM charts predicting the crash in Oil prices.



TriangleofDoomWe all know what occurred in November of 2014:



Triangle-of-Doom-1101141



…and here's the LATEST in Triangle of Doom Charts…



Triangle-of-Doom-041515



 



The rest, as they say, is History.  Steve predicted TO THE MONTH the collapse in the Oil Price, so when you read in the MSM "Who Cooda Node?" this would occur, you can tell them we knew.



Where does it go from here?  First off, as is obvious above here, Drillers are going Bankrupt and Outta Biz, the smaller operators first.  Rig counts in the Bakken and Marcellus drop daily (see the interactive map from Bloomberg above), and the most expensive to extract Oil is getting shut in first.  The biggest companies and largest exporters like the Saudis with the deepest pockets will last the longest, but they also inevitably will succumb to the downward spiraling demand from increasingly impoverished consumers.  As noted in the Hills Group Report, by 2020 Oil will be a negligible part of the economy as the cost to extract versus the price that can be paid to burn it becomes uneconomic for everyone.  It may even occur before that, since many enterprises driven by Oil such as Refineries can only operate at large scale.  Once refineries start shutting in, it doesn't matter if there is still some Oil left in the ground or a few people still with functioning money who could buy it.  It simply will not be available at ANY price.



How will our society function without Oil and it's products?  Simply stated, IT WON'T.  Not in its current form anyhow.  What sort of new society we will transition into and how we will cope with the many problems resultant from this kind of radical change is an open question.  The only thing you can say for certain is the transition will not be an easy one, and that life a decade into the future will not resemble much the life we are still living now, at least if you haven't yet fallen off the Economic Cliff.



The Dominoes are falling as we speak.  It is only a matter of time before it Comes to a Theater Near You.





 



 photo mr_know-it-all_zpsdea49f76.jpgMore Rogue Economist  Articles & Rants:



Money Valve I, Money Valve II, Money Valve III, Money Valve IV,David Korowicz Podcast:Financial Contagion & Tipping Points,Financial WWIII, Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money,Theory of Everything I, Theory of Everything II, Energy-Money Equilibrium I, Energy-Money Equilibrium II, Energy-Money Equilibrium III,Da Fed: Central Banking According to RE,Kurrency Kollapse,Large Public Works Projects I,Large Public Works Projects II,Large Public Works Projects III,Waste Based Society I, Waste Based Society II, Waste Based Society III,Smokin' Economista Crack,Demand Destruction, Swissie Capitulation,Energy & Banking Criminal Racketeering,Economic Ebola,Competitive Currency Devaluation & Deflation,Inflation, Deflation & FOOD!,Financial WWIII: Secessions, Sanctions & Anti-Dollars, Anti-Dollars III: Fining Putin,Anti-Dollars II,Anti-Dollars,Eurobanksters Pray for Jesus,Wealth Confiscation & Destruction,Monetary Kabuki,Peak Credit,Fictional Wealth & Putin's Billions,Student Loan Forgiveness,Deflation Doom,The Death of Debt,Emerging Markets & Peripheral Currency Collapse,Tower of Babel Moment,Submerging Markets,Musical Dollars,Energy, Money & Gold,History & Future of Coinage & Money,The Future of Money,Whither Gold?,Conduits,The Crucifixion of Money,Banks: Unsafe at Any Speed,More Musings on Money,Liquidity Traps & Asset Class Sinkholes,Small Bizness in the Sea of Irredeemable Debt,Now Why Don't They SHOP?,Debt Monetization Economics,Financing the Industrial Revolution,Manufacturing Money,Capital Controls,F7 Print Button in Lockup,Moving Beyond Capitalism,On Dignity & Comparative Wealth,Avalanche Theory of Debt Cascade Failure,The Concepts of Money & Capital,Dollar-Oil Nexus,Hyperinflation vs. Deflation: Rebutting FFOA,Hyperinflation vs. Deflation Continued,Energy, Money & Oil: Inter-relationships,Banksters go ALL IN,History of Economic Collapse & the End of the Age of Oil,Capital Flight & Unions: 40 years of History in the FSoA,Hyperinflation or Deflation?,In the Debtrix, there is no Red Pill,



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Offline RE

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #1 on: April 26, 2015, 02:33:20 AM »
Did I get enough Graphics into this one?  I can find some more if it is a little thin...LOL.

RE
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Offline azozeo

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #2 on: April 26, 2015, 10:53:43 AM »
Cheesy Graphics  ;D
(just kidding)


The other "thing" that's growing is the level of intensity
when it comes to bankster mental masturbation !
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline Ka

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #3 on: April 26, 2015, 01:17:54 PM »
Some comments:

Yes, 'degrowth' is an ugly word, but it is handy as a search term, while 'decline' or 'contraction' are not.

I take it your answer to your question is 'yes', the CB's know we are in contraction. That leads to two more questions: who else (in power) knows? The military? The deep state? POTUS? and what will they do about it? As I see it, the power structure has three legs: the corporations (including the banks), the politicians, and the military (including police). Currently, they are all working in tandem, but I have to wonder if the latter two realize that when TSHTF, they can continue in power by turning on the first.

Offline RE

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #4 on: April 26, 2015, 01:40:19 PM »
Some comments:

Yes, 'degrowth' is an ugly word, but it is handy as a search term, while 'decline' or 'contraction' are not.

I take it your answer to your question is 'yes', the CB's know we are in contraction. That leads to two more questions: who else (in power) knows? The military? The deep state? POTUS? and what will they do about it? As I see it, the power structure has three legs: the corporations (including the banks), the politicians, and the military (including police). Currently, they are all working in tandem, but I have to wonder if the latter two realize that when TSHTF, they can continue in power by turning on the first.

They'll do exactly what they are doing, which is to REACT to events as they occur, generally with reactions which have BLOWBACK they didn't forsee or discounted as a "tail-end risk".

You know how we have arguments all the time on the Diner on what the best way to proceed would be?  You think these clowns got it figured out any better than we have?  They also have one overarching principle which limits their thinking that we do not have.

Everyone in a position of power to make or implement policy, be it a Politician, a Tycoon or Military Commander is guided mainly by SELF-INTEREST.  Whatever they do is designed mainly to try and keep their position in the society and the power they have.  So nobody wants to "rock the boat".  Because of that, nobody is pro-active, only reactive.

When it does fall apart, there will be divisions between the Military and the Political ends of the Power struggle, that always occurs.  You saw it in Egypt, and it's an ongoing struggle in Russia too between the Security Apparatus of the old KGB (Putin's Power Base) and the Military.  So at some point here there will likely be a Military Coup d'Etat, but here in the FSoA still probably a few years away because the credit system hasn't completely failed here yet.

It's very predictable in terms of what will occur, just the timeline on it is muddy and difficult to predict.

RE
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Offline Palloy

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #5 on: April 26, 2015, 11:23:29 PM »
Definitely not enough charts.
How about the world price of coal, iron ore, copper, aluminium, timber?
How about the Price:Earnings ratio for Amazon, Facebook, Apple, IBM and other industry leaders?
How about yield on 10-year sovereign bonds, of US, China, Japan, South Korea, UK, Europe?
How about the cuckoo clock exports of Switzerland and CHF:EUR ?

And when you plug in ShadowStats figures for inflation, instead of USG's dodgy figures, and do it all again with the revised GDP figures and USD value, ...

... people will say "How did they pull the wool over our eyes for so long?"
The State is a body of armed men

Offline RE

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #6 on: April 26, 2015, 11:42:13 PM »
Definitely not enough charts.
How about the world price of coal, iron ore, copper, aluminium, timber?
How about the Price:Earnings ratio for Amazon, Facebook, Apple, IBM and other industry leaders?
How about yield on 10-year sovereign bonds, of US, China, Japan, South Korea, UK, Europe?
How about the cuckoo clock exports of Switzerland and CHF:EUR ?

And when you plug in ShadowStats figures for inflation, instead of USG's dodgy figures, and do it all again with the revised GDP figures and USD value, ...

... people will say "How did they pull the wool over our eyes for so long?"

Get me the links to the charts, I'll plug them in as an Appendix.  :icon_sunny:

RE
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Offline JoeD

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #7 on: April 27, 2015, 05:41:57 PM »
Excellent work as usual RE. Thanks.
one minor item... technocrat = technologist and beaurucrat; not democrat.

Offline RE

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #8 on: April 28, 2015, 06:37:00 AM »
NOW #1 ON REDDIT r/COLLAPSE!  :icon_sunny:

http://www.reddit.com/r/collapse

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #9 on: April 28, 2015, 01:35:22 PM »
NOW #1 ON REDDIT r/COLLAPSE!  :icon_sunny:

http://www.reddit.com/r/collapse

RE

Still at #2!  Also 30  :emthup: Votes, most on the Homepage of r-Collapse! This one has some legs!

Now with 525 Reads from 37 Countries!

No.CountryDate of Last VisitPercent & Number of Visits ↓
1
United States
Apr 28, 2015   62.48% 328  
2
Canada
Apr 28, 2015   9.71% 51  
3
United Kingdom
Apr 28, 2015   4.95% 26  
4
Australia
Apr 28, 2015   3.43% 18  
5
New Zealand
Apr 28, 2015   1.90% 10  
6
Germany
Apr 28, 2015   1.90% 10  
7
Ireland
Apr 28, 2015   1.71% 9  
8
Netherlands
Apr 28, 2015   1.52% 8  
9
Spain
Apr 28, 2015   1.33% 7  
10
Brazil
Apr 28, 2015   0.95% 5  
11
Poland
Apr 28, 2015   0.95% 5  
12
Norway
Apr 28, 2015   0.76% 4  
13
India
Apr 28, 2015   0.76% 4  
14
Switzerland
Apr 28, 2015   0.76% 4  
15
Hong Kong
Apr 27, 2015   0.76% 4  
16
Austria
Apr 28, 2015   0.76% 4  
17
South Africa
Apr 26, 2015   0.57% 3  
18
Philippines
Apr 27, 2015   0.38% 2  
19
Denmark
Apr 28, 2015   0.38% 2  
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Finland
Apr 28, 2015   0.38% 2  
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Slovenia
Apr 28, 2015   0.38% 2  
22
Korea, Republic of
Apr 28, 2015   0.38% 2  
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Estonia
Apr 27, 2015   0.19% 1  
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Bulgaria
Apr 27, 2015   0.19% 1  
25
Luxembourg
Apr 27, 2015   0.19% 1  
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France
Apr 27, 2015   0.19% 1  
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New Caledonia
Apr 27, 2015   0.19% 1  
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Belgium
Apr 27, 2015   0.19% 1  
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Portugal
Apr 28, 2015   0.19% 1  
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Hungary
Apr 28, 2015   0.19% 1  
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Czech Republic
Apr 28, 2015   0.19% 1  
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Sweden
Apr 28, 2015   0.19% 1  
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Romania
Apr 28, 2015   0.19% 1  
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Thailand
Apr 28, 2015   0.19% 1  
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Pakistan
Apr 28, 2015   0.19% 1  
36
China
Apr 28, 2015   0.19% 1  
37 - Apr 27, 2015   0.19% 1  

RE
« Last Edit: April 28, 2015, 01:43:02 PM by RE »
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Offline RE

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The Bigger Short
« Reply #10 on: May 27, 2015, 05:38:54 PM »
When Billionaires Speak, Zero Hedgies Listen!

RE

Billionaire Hedge Fund Manager Paul Singer Reveals The "Bigger Short"

Submitted by Tyler Durden on 05/27/2015 18:07 -0400

First it was Gross, then Gundlach. Now billionaire hedge fund manager Paul Singer of Elliott Management has unveiled what he believes is the trade of this generation: being short "long-term claims on paper money, i.e., bonds." He calls it the "bigger short." First hinted at during the Grant's Spring 2015 conference, he now goes into excruciating detail.

Select excerpts from Paul Singer's latest letter.

The Big Short, of course, refers to short positions in credit in the period 2005-2007, more specifically structured credit. To be even more precise, it refers to subprime residential mortgage securitizations. It is also the name of a best-selling book by Michael Lewis about the housing and credit bubble. It was called the Big Short because many forms of credit were so overpriced that the risk/reward of taking on short positions before the financial crisis was extraordinarily favorable.

Today, six and a half years after the collapse of Lehman, there is a Bigger Short cooking. That Bigger Short is long-term claims on paper money, i.e., bonds.

History shows that it is fiendishly difficult to preserve the value of money which is backed by nothing but promises, because it is so tempting for rulers to debase their currency when they think it will help them repay their debts. The long-term preservation of the real value (i.e., the purchasing power) of fiat money and bonds is obviously of little or no importance to today’s creators of money – the major central banks – who currently can’t debase money fast enough for their tastes. Yet, the current prices of bonds are at all-time highs, and thus yields are at record lows, because the central banks are buying bonds with trillions of dollars of newly printed money, despite the facts that 1) the global financial emergency ended over six years ago and 2) the developed world has not suffered a renewed financial collapse or deep recession. The central bank actions are unprecedented under these conditions, and their policies are partially responsible for the sluggishness of the economic recovery in the developed world since the 2008 crash. Below we discuss why that is the case, and we set out a number of elements that  lead us to the conclusion that the risk/reward profile of owning long-term high-quality bonds at today’s prices and yields is uniquely poor.

...

Our view is that central bankers have chosen, and doubled down on, a palliative (super-easy money and QE), which is unprecedented and extreme, and whose ultimate effects are unknowable. To be sure, the collapse in interest rates all along the curve, and a bull market in equities, “trophy real estate” and other assets, has had some effect on job creation. However, the effect is indirect, and in our opinion the benefits of complete reliance on monetary extremism are overwhelmed by the negatives and the risks. To begin with, such policies are inefficient in actually creating jobs and growth, and they worsen inequality: Investors prosper and the middle class struggles. The goal of leaders of developed nations and their central bankers should be more or less the same: enhanced growth and financial stability. But somehow the principal policy goal of both has become to generate more inflation. Both extreme deflation (credit collapse) and extreme inflation (which forces citizens to forego normal economic activities and become traders and speculators in a desperate attempt to keep up with the erosion of savings and value) are threats to societal stability, and we don’t actually think there is much to choose from between those  extremes. But central bankers are completely focused on erasing any chance of deflation, and the tool to do so – currency  debasement – is certainly near to hand. Therefore, the likelihood of deflation is highly remote. By contrast, the central bankers’ universal belief that inflation is easy to deal with if it accidentally overheats is arrogant and not supported by the historical record.

Furthermore, we fail to comprehend how owners of claims on money (that is, bondholders) can continue to ignore the fact that the goal of generating more inflation is aimed precisely at reducing the value of their capital. Central bankers obviously do not understand that the modern financial system is almost impossible to “manage,” and is fundamentally unsound as currently structured and leveraged. Given that reality, why should bondholders believe that central banks are capable of creating just enough inflation, and not a farthing more, in their current quest to rebubble-ize the world? We also question why bondholders believe that if inflation bursts its dictated boundaries despite central bank scolding, that policymakers can indeed, as a former Fed chairman and now immodest citizen blogger and incoming hedge fund advisor (Ben Bernanke) has said, cure it in “10 minutes.” We call to your attention the hand-wringing and agonizing now underway about raising U.S. policy rates by 25, 50 or 75 basis points over the next few months. Imagine the caterwauling in global financial markets if inflation surprises everyone on the upside and the right policy rate should be 2%, 4% or higher. Given the fragility of the financial system and its still-extreme leverage, even a few points of inflation and a few hundred basis points of increase in medium- and long-term interest rates could cause a renewed financial crisis.

Inflation is more or less a generalized diminution in the value of money. A bond is an instrument by which a promise to return, in the distant future, a fixed-in-currency amount of invested money is supplemented by periodic interest payments in the  meantime. That’s it, and that’s all you get. Such interest payments are meant to compensate the investor for the use of his or her money, taxes (if any) and expected inflation. At currently prevailing interest rates in the developed world, if there is ANY inflation in the next 10 to 30 years, investors who buy or hold bonds at today’s prices and rates will have made a bad deal. And if inflation emerges from the stone-cold dead and walks, trots or (heaven forbid) gallops into the future, they will have made a very, very bad deal.

Equity values depend to an important degree on confidence that policymakers will continue to allow private enterprise, profits and private ownership of assets. But bonds, in our view, represent a greater leap of confidence. It is so much easier to purloin value from bondholders, and so tempting to rulers; in fact, the current leaders and policymakers have said in so many words that there is not enough debasement (that is, inflation) underway at present. You don’t need a weatherman to know which way the wind blows (according to Bob Dylan), but bondholders nevertheless continue to think, up to basically this moment, that it is perfectly safe to own 30-year German bonds at a yield of 0.6% per year, or a 20-year Japanese bond (issued by the most thoroughly long-term-insolvent of the major countries) at a little over 1% per year, or an American 30-year bond at scarcely above 2% per year.

Asset prices are skyrocketing because of massive public-sector purchases. The tinkering and experimentation that characterizes each round of novel central bank policy leads to more and more complicated unwanted consequences and convolutions. Central bankers are, in our view, getting “pretzeled” by all this flailing, yet they deliver it with aplomb and serene selfconfidence. Are they really taming volatility with their bond-buying, or just jamming it into a coiled spring?

* * *

Sometimes inflection points take a while to actualize, even when they are long overdue. For example, the unsustainable dotcom stock boom went on and on in the late 1990s, with the American stock market PE passing its all-time historical high in 1995, before topping out in March 2000 at a level twice the previous 1929 and 1972 peaks. All it would take at the present time for a collapse in developed-country bond markets to begin is a loss of confidence in paper money, central bankers or political leadership. Any combination of these could occur due to the market’s fear or projection of future increased inflation, which could bring about or accompany a self-reinforcing cycle of securities depreciation and other asset price and or wage/cost appreciation. Or perhaps a bond market collapse could ensue as part of a currency crisis in which one or more of the major currencies suffer an unexpected precipitous decline. Up to now, bond markets have acted more like puppets on a string. It would be a large and unpleasant surprise, shaking a lot of assumptions, if bond markets softened as QE continues to build and  expand globally.

Current conditions are extraordinary. There has been no global deleveraging since the GFC; in fact, worldwide debt has experienced a further massive increase in the last six years. Long-term entitlement programs have not been pared down to accommodate reality. Derivatives have not lessened in complexity and have actually grown in global size. Moreover, the  financial statements of global financial institutions have not moved from opacity to transparency. The ingredients for a renewed financial crisis are in place, as is a possible “surprising” transformation of money debasement into highly-visible inflation.

A good or great trade is not created by just the prospect of a big move in a direction. The ability of investors to engage in a superior risk/reward profile, and to finesse the question of when the expected move will occur, is what separates “just-ok” trades from great trades. It is the extreme overpricing of bonds, and the universal confidence (unjustified, in our opinion) of investors in central banks and in the current mix of perceptions about what is safe and what is not, that makes the Bigger Short into possibly a great trade. To be sure, while a great trade is not a guarantee, at current prices the bond markets of Europe, the U.S., the U.K. and Japan present precious little future reward and a great deal of risk. No investor’s actuarial requirements or investment return goals can possibly be met by today’s long-term bond interest rates, but investors are holding them nonetheless because they have been making money on their bond holdings persistently and seemingly inexorably for the last few years. The day when their perceptions are challenged and they change their minds, only to find that the exit door has been blocked by everyone else doing an about-face at the same time, is going to be one heck of a day for those who  have positions in bonds, whether long or short.

The Big Short was compelling pre-2007 because the pricing aberration in a specific type of debt was so huge that it didn’t cost much to wait for the trade to go right (the precise timing being impossible, as usual). We became interested in The Big Short when we saw data that subprime mortgages were defaulting at high rates even while house prices were rising. Today, the   Bigger Short is in a much larger marketplace, so it can be undertaken in whatever size one can stomach, and the cost of effectuating it during the waiting period is really low. However, the power of the herd on the current upward bond price stampede is beyond anyone’s control, so one can lose money waiting for the trade to work out.

In terms of directional trades representing extremes of value, the Bigger Short is in a rare category. It is certainly not riskless, because nobody can predict how much staying power policymakers can have when they are unconstrained and have a theory (as unnerving as their theory is), and when citizens are passive and complicit in what we regard as central bankers’ risky policies. Of course, not every trader or investor is in a position to actually short bonds, but our reasoning is equally applicable to the decision of whether or not even to continue owning medium- and long-term bonds at today’s prices and yields.

This analysis is not just about one of the more interesting asymmetries of risk and reward in market history. Rather, it is about leaders abnegating their responsibilities to their citizens (in the case of presidents, prime ministers and legislators), and other policymakers (central bankers) engaging in risky, extreme and untried policies to the point where they are in way over their heads and violating (by design) the moral compact between governments and citizens that is the basis of paper money. Central bankers like to protect their “independence,” but that is absurd in the current context. In what sense are central bankers independent if their extreme policies just give cover to political leadership to do next to nothing to restore sustainable levels of  growth? Central bank independence is a concept meant to protect the value of fiat money against grasping politicians, not to empower central bankers to pick winners and losers, allocate credit and behave as if they are fiscal authorities. Certainly the Fed’s “dual mandate” to pursue both monetary stability and maximum employment ought to be replaced with a single mandate to focus on financial and price stability. It doesn’t matter that the other major central banks are engaging in similar practices (QE and ZIRP or NIRP) despite lacking a maximum-employment mandate of their own; eliminating the dual mandate would still be an important symbolic act aimed at pushing back against the arrogance of the Fed and forcing the President and Congress to face up to their responsibilities for optimizing growth and sustainable employment.

The central bankers of the developed world are the architects and enablers of a policy mix whose most powerful result is to further enrich the already well-off, which is clearly posing a challenge to the social fabric of the developed world. It is possible that this situation could worsen if central bankers, frustrated by their economies’ refusal to dance to their incessant piping, step up the pace of their bond-buying and possibly convert it to more direct forms of money-printing, which at some point is certain to ignite the inflation that they have been trying merely to kindle. Don’t fall out of your seats if inflation then burns right through the finely-tuned “target” and keeps on going. If this happens, we all may find out whether they indeed can, or have the courage to, stop inflation in “10 minutes.

 

We, as usual, agree with most of what Singer has said, with one exception - the same exception we noted in "So You Want To Fight The Central Banks? Then Short Treasurys." Here is the key part:

    As central banks have scrambled to push risk assets ever higher in hopes of creating that elusive Keynesian inflationary "trickle down", they are limited in the security they can buy. In fact, most can only purchase government treasurys, which they have done en masse. This is known as QE.

     

    According to BofA calculations, central banks now own $22 trillion in "assets" - almost entirely in the form of government debt (an amount greater than the GDP of the US and Japan combined) - which they have to buy in order to create the balance sheet liability, reserves, which primary dealers and the world's commercial banking system use to bid up risky assets.

     

    Furthermore, according to Citigroup, the amount of debt monetizations in 2015 will be the greatest in history: so great is the scramble to reflate that central banks around the globe (most recently the BOJ's expanded QE and the ECB's brand new Q€) that the money printing academics have now gone all in.

     

     

    As the chart above shows, the global financial situation is so grotesque, central banks will monetize all net debt issuance around the entire world just to push everyone into the riskiest of assets: stocks.

     

    If there is still any question why nobody believes the fallacy of a "recovery", the chart above should be sufficient to prove to anyone that there is no self-sustaining economy in the world anymore just one massive printing orgy and a doomed attempt to reflate $200 trillion in global debt at all costs.

     

    But back to the topic of QE: as central banks rush to issue reserves, they have no choice but to buy government bonds. Some $22 trillion of them as we noted above. And what happens when epic, epic amounts of government debt are purchased by central banks (just yesterday the BOJ monetized about $10 billion in debt in its daily POMO - and this happens several time per week)? Well, as we have shown since 2012, the bond markets freeze up because central banks soak up all the liquidity, but more to the point, bond prices go up and yields go down.

     

    And this is where traditional economists #Ref! out. Because what is the fundamental prerogative behind QE? It is not to push the S&P to 2100, 3100, or higher. It is to stimulate inflation. The problem however arises when central banks just can't get enough of government Treasurys and their yields, as witnessed recently, go negative. In fact it was just a month ago when we showed that 53% of all global government bonds are yielding 1% or less!

     

     

    And the punchline: what are bond yields? Well, in a normal world, they telegraph the market's long-term inflation expectations. However, in this parallel banana universe in which everything is planned by a few clueless academics, all they "telegraph" is that central banks are the first, last and increasingly (hi Greece) only buyer of sovereign debt. The irony is that the higher stocks go, not because they should but because central banks push them higher, the lower yields slide as central banks buy more bonds to inject more reserves, to push stocks higher, to blow an ever greater asset bubble across all asset classes: both bonds and stocks.

     

    Even more ironic is that not a day passes without one clueless pundit after another appearing on TV and reading from the teleprompter like a stoned zombie that one must not fight the Fed (and central banks) and buy stocks while shorting bonds. And yet what are central banks buying?

     

    Not stocks (at least not officially in the case of the Fed; only the BOJ and the SNB admit to openly monetizing equities).

     

    The answer: bonds.

In other words by simple bond math, the more central banks monetize, i.e. buy, bonds in hopes of pushing stocks, and inflation higher, the lower yields go. Along the way you get such monetary abortions as ZIRP, NIRP and so on, but the math is clear: central banks hope to push up risk assets by kicking everyone out of so-called riskless assets. Which is precisely why bonds have performed so well in the past several years: everyone has been frontrunning central banks!

And the more central banks push, the more bonds they have to monetize. Indeed, as shown in the chart above, in 2015 central banks will inject a record amount of liquidity into the global market, surpassing even the year of the Great Financial Crisis! All this liquidity pushes stocks higher... and drives yields lower.

At the same time, and here we fully agree with Singer, the global economy continues to deteriorate as ever more zero-cost, money equivalent debt is piled up, debt which will implode the second yield shoot higher and lead to a global domino-like default wave while the rich get richer courtesy of their risk asset holdings, pushing class inequality to record levels and beyond, and leading other legendary hedge fund managers such as Paul Tudor Jones to hint that it all will end in either war or revolution.

So what do central bankers do? They have no choice but push harder, and do more of the same, as in the BOJ and the ECB, both of which have either launched or boosted their bond monetization program in the past year. End result: more than half of all global bonds traded under 1% recently. Why? Because bond investors know central banks will be there to buy these bonds.

And hence the biggest paradox: the more deflation there is, the more QE there will be, the lower the yields, the more deflationary signals, the higher stocks go, and so on, in the most paradoxical circular argument in monetary history. Of course, for the Fed to stimulate inflation, it has to step away from monetization altogether, but that would mean an uncontrollable collapse in bond prices, an epic "taper tantrum" and a surge in yields (see Bunds as of a month ago), and worse, a collapse of faith in central planning.

Central banks can not have that, which would mean they would promptly re-engage once more and double down on their bond purchases restarting the cycle afresh. And so on, and so on.

Which brings us to the other definition of Singer's bigger short: that of "long-term claims on paper money" which this complete sense, because Singer's real short is not on bonds, but the economic system as we know it: one built on trillions of obligations to the future, also known as debt, also known as paper money.

As such we are left scratching our heads: if Singer is really advocating shorting the entire closed monetary system, why short bonds? After all, you may be right, but...  in what denomination do you get your profits paid out: Dollars? Worthless. Euros? Just as worthless. Yen? Yeah, funny.

The point is that for Singer to be right, and he will be right one day, one can't bet on a collapse of the current monetary system with hopes of being paid out in claims of the current monetary system.

It just doesn't work.

Which leads us to believe that the real message in Singer's latest letter is what is unsaid. Yes, bonds will crash, and stocks will explode in a hyperinflationary supernova, but the currency they are denominated in will become worthless the moment the claim is transferred. But one thing will remain: the thing that has stood the test of millennia, and has survived all man-made monetary crises to date. The one thing that will also survive the next market crash. That one item, of course, is what the former Fed Chairman and current blogger, called nothing but "tradition" (which he then admitted he does not really undestand).
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Offline azozeo

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #11 on: May 30, 2015, 02:57:48 PM »
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As Goes The Credit Market, So Goes The World
« Reply #12 on: June 06, 2015, 03:57:23 AM »
http://www.peakprosperity.com/blog/92757/goes-credit-market-so-goes-world


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As Goes The Credit Market, So Goes The World

When confidence cracks, we'll see it there first
Friday, June 5, 2015, 11:46 AM

During the prior economic cycle of 2003-2007, one question I asked again and again was: Is the US running on a business cycle or a credit cycle?

That question was prompted by a series of data I have tracked for decades; data that tells a very important story about the character of the US economy. Specifically, that data series is the relationship of total US Credit Market Debt relative to US GDP.

Let’s put this in simple English. What is total US Credit Market Debt? It's an approximation for total debt in the US economy at any point in time. It’s the sum total of US Government debt, corporate debt, household debt, state and local municipal debt, financial sector and non-corporate business debt outstanding. It's a good representation of the dollar amount of leverage in the economy.

GDP is simply the sum total of the goods and services we produce as a nation.

So the relationship I like to look at is how financial leverage in the economy changes over time relative to the growth of the actual economy itself. Doing so reveals an important long-term trend. From the official inception of this series in the early 1950’s until the early 1980’s, growth in this representation of systemic leverage in the US grew at a moderate pace point to point. But things blasted off in the early 1980’s as the baby boom generation came of age. I find two important demographic developments help explain this change.  

First, there's an old saying on Wall Street: People don't repeat the mistakes of their parents. Instead, they repeat the mistakes of their grandparents. From the early 1950’s through the early 1980’s, the generation that lived through the Great Depression was largely alive and well, and able to “tell” their stories. A generation was taught during the Depression that excessive personal debt can ruin household financial outcomes. Debt relative to GDP in the US flat-lined from 1964 through 1980.  As our GDP grew, our leverage grew in commensurate fashion. We were living much closer to our means compared with what happened afterwards.

In contrast, from the early 1980’s onward, we witnessed an intergenerational change in attitudes toward leverage. Grandparents that lived through the Depression were no longer around to recite personal stories. The Baby Boom generation moved to the suburbs, bought larger houses, sent the kids to private schools, financed college educations with home equity lines of credit, and carried personal credit balances that would have been considered nightmarish to their grandparents. What was the multi-decade accelerant that sparked this trend of ever-increasing systemic leverage relative to GDP?  Continuously lower interest rates for thirty five years -- falling to a level no one ever believed imaginable, grandparents or otherwise. Which is where we find ourselves today:

My underlying point: Increasing leverage has been responsible for total US economic growth for over 30 years.

And don’t let the slight decline in the last years of this series fool you. While the ratio of US total debt relative to GDP has fallen since the peak of 2008, in absolute Dollar terms, US total credit market debt has actually increased from $50 to near $60 trillion over this time. The numbers have just become so big that a $10 trillion increase over 7 years is now actually a 'taper'(!):

A lot of the taper came in the form of defaults on mortgages and corporate debt seen in the wake of the 2008 crisis. But, US Federal debt has grown from $8 trillion to close to $18.5 trillion since January 1, 2009, very much offsetting the deflationary pressures of such private sector debt defaults. Back to my main point: credit expansion has been a key support -- indeed, the most important one -- to the real US economy.

Why shout about this now? Two important, timely reasons.

First, we know the US Fed will need to raise interest rates. The bottom line is the Fed will be perceptually powerless if we enter the next recession with the Fed still at the zero bound. We’re now six years into this economic 'recovery' and yet interest rates just marked their seventh year at 0%. Hard to believe, but it has actually been 11 years since the Fed last raised rates. Although Wall Street is obsessing over when the Fed will start hiking them, I’d suggest the much more pertinent question is: Has the Fed waited too long? The answers to both of these questions lays ahead, but when we're talking about the Fed raising interest rates, we're talking about the repricing of credit inside the US financial system. If you believe, as I do, that credit is indeed the one big horse that has powered our economic growth over the last three decades, then anything that acts to reprice that cost of credit -- repricing in a manner that will handicap continued credit expansion -- will have direct and immediate repercussions on our economy.

Second, the current trend in a critical but oft-overlooked indicator of US credit conditions is flashing a yellow light.

In Part 2: The Central Banks Are Losing Control Of The System we analyze the cautionary alarm the data in the NACM Credit Managers Index is sounding, and note the increasing evidence that the central bankers are becoming increasingly panicked about losing control of the bond markets.

The stock market is a sideshow. It’s the credit markets where we see the most extreme bubble. It’s the credit markets that have danced most vigorously to the pied piper Central Banker music of the last six years, which is why we are watching them closely. When confidence in the Central Bankers finally cracks, I believe this is exactly where we'll see it first. And it’s this loss of confidence that will mark the decisive turn in the cycle for credit. 

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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #13 on: June 06, 2015, 08:11:53 AM »
Quick, borrow some money while you still can.
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Re: Do Central Bankers Recognize there is NO GROWTH?
« Reply #14 on: June 07, 2015, 08:28:17 AM »

Does R.E./D.D./etc. Recognize there is NO GROWTH?

(Or at least not much growth, and slowing growth, except where growth is needed)

Quote

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 alan2102
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 Re: Official Chinese Toast Thread
 « Reply #319 on: June 05, 2015, 08:47:34 AM »
   
Quote from: Eddie on June 05, 2015 - "Alan, the whole problem civilization faces is that economies based on perpetual growth are unsustainable, and will rapidly exhaust any and all the remaining resources on the planet, at currently projected rates of population growth."

"Perpetual growth" of what? Currently projected rates of population growth have us hitting a plateau around mid-century, followed probably by slow decline. Population in all of the developed countries is declining. Economies in the developed world are flatlining and will probably decline. Growth in China is slowing to around 7%, which is good (appropriate for their level of development). India will keep growing rapidly for a few decades, but then it NEEDS to; it is behind China. Same with Africa. At this moment the indications are that growth is going to slow and even halt at such time as it needs to slow and halt, i.e. when things have grown as much as they need to. I would agree with you to this (modest) extent: the U.S. and some other economies have over-grown, somewhat. The U.S. should have stopped growing in, say, 1980 or 1990. We had plenty by then and there was no need to grow anymore. So, we've had a couple or three decades of unnecessary growth, but I would not call that "perpetual".  It is likely that the U.S. will plateau or even start declining, which is good. We're too rich.

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 alan2102
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 Re: Official Chinese Toast Thread
 « Reply #328 on: June 05, 2015, 12:45:04 PM »

Reiterating, with new emphasis: it seems that, by some big macro-measures, things are unfolding approximately the way they SHOULD unfold. Growth is slowing down or even halting in the places where it ought to slow down and halt (U.S., E.U.). Growth is medium in places where it ought to be medium (China, ~7%). Growth is high in India and some other places (a few African countries) where it should be high. Population GROWTH is declining rapidly, along with fertility, worldwide. All of this is exactly what we want. There are exceptions to this: high fertility and population growth in some African countries, low economic growth in some African countries, etc. I'm not saying everything is rosy. But some -- quite a few -- of the big macro-indicators are going about the way I want them to go, about the way they need to go, in order for humanity and the planet to have a decent future. Now, of course there are several very big issues (cough-cough --climate-- cough-cough) that need to be addressed, urgently. But maybe those things, too, are in the offing. That IMF report was a mind-blower. Is it possible that humanity is "getting it" in the nick of time? I don't know. Just some observations. Things could be going a whole lot worse than they are.

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 alan2102
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 Re: Official Chinese Toast Thread
 « Reply #350 on: Today at 07:41:29 AM »

Quote from: monsta666 on Today - "in the end the Chinese are using the same economic models of the west which are growth dependent. You cannot have infinite growth in a finite environment"

Yes, that is endlessly intoned, but it wears thin. We cannot have infinite growth in a finite environment, true, and we WILL NOT, and we DO NOT. Growth will slow down, JUST AS IT IS NOW DOING in the places where things have already grown enough (or too much). The system appears to have a built-in pressure gauge that works.

Quote: "In the longer term especially if you pursue a policy of economic growth these environmental costs will exceed the Earth's capacity to recover from leading to environmental degradation."

Who needs economic growth after growth has been sufficient? Growth is already flat where it should be flat -- U.S., E.U. The policy-makers in the West have been trying, mightily, to stimulate growth for the past 7 years; they have not succeeded. The policy-makers in China tried to stimulate growth, and were partially successful; they headed off a depression after the GEC. At present they are running ~7%, which is about right. That's about where China SHOULD be right now. Other places are at higher levels of growth -- which is where they should be right now. Some places need to grow.

Strangely, you guys keep up this mantra of "you can't have unlimited growth",  seeming not to realize that YOU ARE RIGHT -- YOU CAN'T HAVE IT, AND THIS IS PROVEN BY THE FACT THAT YOU DON'T HAVE IT. IT IS NOT HAPPENING. We grew and grew and grew -- AND THEN WE STOPPED GROWING. Get it?  You were right. What wasn't right was the implication that the stop-growing part had to be in the form of a great catastrophic collapse of industrial modernity, dieoff, road-warrior and all that bullshit.  False. Stop-growing does NOT have to be that way. We are stopping growing right now, and it is not happening. (Yeah, I know: next year. Just wait. It is coming. Collapse and descent into malthusian hell. Any year now.) We are stopping growing, and there will be a crisis moment, true. But it will not be of the total-and-unmitigated-permanent-collapse sort that you guys seem to think.

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 alan2102
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 Re: Official Chinese Toast Thread
 « Reply #346 on: Today at 06:15:33 AM »

SNIP

DD staff and whoever: If you want your message to remain relevant, and be consistent with the most likely direction of things, do this: focus on them up, us down. That's what's going to happen. The world is not going to collapse in flames. We are not looking at the end of industrial modernity.  Rather, the world will have a monetary/financial crisis moment and debt reset, and BRICS will emerge from it in relatively good shape, and WE WILL  NOT. We will struggle and flounder for the remainder of this century, probably, and that's good insofar as we are/were overgrown, too big, too rich. They will continue growing, and begin to level off as they approach maturity (like China is doing now). There will be no "perpetual growth on a finite planet"; there will be growth where and when it is needed, approximately. Renewable energy will keep coming on like gangbusters, probably faster even than current trajectory, and energy issues will (after a 2-decade crunchy period) mostly evaporate. Agriculture will make huge strides toward efficiency in water and fertilizer use. There will be no mass die-off. Climate change will be with us for a long time, but no McPherson-oid collapse.

That's how it is going to go, in a nutshell.  In case you were wondering.  :)


 

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