Friday, October 23, 2015

The Great Deflation No One Wants To Acknowledge..........MORE PESKY FACTS!

The Great Deflation No One Wants To Acknowledge

We are witnessing a momentous debt deleveraging, or debt deflation, in real time.

Central banks can postpone the deflation of a gigantic debt bubble like the one we're in, but only temporarily and at a huge cost. And it looks like we've now reached the point where they're essentially powerless to do anything more.

After a debt bubble must come the 
hangover. And how anyone can even attempt to deny we're in a gigantic debt bubble is hard to understand. Our entire economic system is propped up, if not built completely on debt.

When you see that Chinese producer prices are down 5.9%, in the 43rd straight month of declines, and Chinese imports are down 20% (with Japan imports off 11%), don't you hear a bell ringing? What does it take?

If the dramatic fall in oil prices hasn't done it, how about steel? How about the tragedy British steel has been thrown into, how about the demise of Sinosteel even as China is dumping steel on world markets like there's no tomorrow?

How about the reversal of funds that once flowed into emerging markets and are now flowing right back out?

How about major global banks, all of whom see their profits and earnings deplete, and many of whom are laying off staff by the thousands?

How about global wealth down by 5% since 2008 despite all the QE and ZIRP policies? And global trade off by -8.4% YoY?!

How about Credit Suisse's latest global wealth outlook that shows that dollar strength has led to the first decline in total global wealth (which fell by $12.4 trillion to $250.1 trillion) since 2007-2008.

How about from HSBC: "We are already in a global USD recession. Global trade is also declining at an alarming pace, the year on year change is -8.4%. To find periods of equivalent declines we only really find recessionary periods. This is an interesting point. On one metric we are already in a recession, global GDP expressed in US dollars is already negative to the tune of $1,37 trillion or -3.4%.

How about companies like Walmart and Glencore, just two of the many large entities that have large troubles? These are not individual cases, they are part of a global trend: deflation. As evidence also by the increase in US corporate downgrades and defaults.

Moody's issued 108 credit-rating downgrades for U.S. nonfinancial companies, compared with just 40 upgrades. That's the most downgrades in a two-month period since May and June 2009, the tail end of the last U.S. recession. Standard & Poor's downgraded U.S. companies 297 times in the first nine months of the year.

Everything and everyone is over 
indebted! 

All of the above stats, point to the beginning of a deleveraging of that debt, something that curiously enough hasn't happened at all since the 2007/8 crisis. On the contrary, a massive amount of additional debt has been added to a global system already drowning in it. China alone added $20-15 trillion, and that kept up appearances.

But now China's slowing down and there is no other country or region left that can take the place of China in propping up the western debt extravaganza.

The only way a system that looks like this could be kept running is by issuing more debt. But even that won't keep it going forever.

As long as politicians and media keep talking about disinflation and central bank inflation targets, and all they talk about is consumer prices, the sheeple 
will all fail to acknowledge what's really happening right before their very eyes. The system is imploding. Deflating. Deleveraging. Sadly this has a very long way to go down before any healing can begin.

Before this is over we will all have a very hard time recognizing our world.

No comments:

Post a Comment