The Global Economy

October6

Deflation Warning: The Next Wave


From the article:

We’ve been tracking the deflationary impulse for a while, and declared deflation the winner back in July of this year.

A Failed Strategy

What exactly do we mean by deflation?  Back in 2008 the central banks of the developed world, as well as China, had a choice:

  1. admit that prior policies geared towards encouraging borrowing at a faster rate than income growth were a horrible idea, or

  2. double down and push those failed policies even harder

As we all know, they chose option #2. And so here we are, just 8 years later, with nearly $60 trillion in new debt piled on top of the prior mountain

http://www.zerohedge.com/news/2015-10-01/deflation-warning-next-wave

What a Mess

January26

Get Ready For Negative Interest Rates In The US


 From the article:

With Fed mouthpiece Jon Hilsenrath warning – in no lesser status-quo narrative-deliverer than The Wall Street Journal – that The ECB’s actions (and pre-emptive collapse in the EUR) means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad, potentially slowing both U.S. growth and inflation; and Treasury Secretary Lew coming out his crypt to mention “unfair FX moves,” it appears The Fed (and powers that be) are worrying about King Dollar.

More:

Europe’s new program of money printing—and the resulting fall in the euro—means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad.

The stronger dollar could slow both U.S. growth and inflation, giving the Fed some incentive to hold off on its plan to raise short-term interest rates later this year from near zero.

http://www.zerohedge.com/news/2015-01-24/get-ready-negative-interest-rates-us

New Jobs, Less Pay

January22

U.S. Jobs Rose Since ’08 Crisis, but Pay is 23 Percent Less


 From the article:

Jobs growth in the U.S. since the 2008 recession has been undermined by lower wages, with workers earning an average 23 percent less than earnings from jobs which were lost, a report by an organization representing U.S. cities said on Monday.

http://www.reuters.com/article/2014/08/11/us-usa-mayors-jobs-idUSKBN0GB1T920140811

One thing you should remember is that the people clapping can vote their own raises. Nothing corrupt about that, huh?

Yes, More Student’s are in College

January22

From U.S. News and World Report:

Average Student Loan Debt Approaches $30,000


From the article:

The average amount of student loan debt again crept up for the Class of 2013, and is approaching $30,000, according to a new report from the Institute for College Access and Success.
In its ninth annual report on student loan debt, TICAS found nearly 7 in 10 graduating seniors in 2013 – 69 percent – left school with an average of $28,400 in student loan debt, an increase of 2 percent from 2012. But the amount of student debt and the likelihood of graduating with debt varied greatly between both states and colleges. Some states had average debt amounts as low as $18,656, while others topped $30,000. Between different colleges, average debt amounts ranged from $2,500 to $71,000.

http://www.usnews.com/news/articles/2014/11/13/average-student-loan-debt-hits-30-000

So, the day a student gets out of college with degree in hand, he or she owes up to 30 grand on average.

Will This Move by Switzerland Set Off a European Financial Crisis?

January22

What In The World Just Happened In Switzerland?


From the article: (Jan 15th)

Central banks lie.  That is what they do.  Not too long ago, the Swiss National Bank promised that it would defend the euro/Swiss franc currency peg with the “utmost determination”.  But on Thursday, the central bank shocked the financial world by abruptly abandoning it.

http://theeconomiccollapseblog.com/archives/world-just-happened-switzerland

Swiss Shocker Triggers Gigantic Losses For Banks, Hedge Funds And Currency Traders


From the article: (Jan 19th)

The absolutely stunning decision by the Swiss National Bank to decouple from the euro has triggered billions of dollars worth of losses all over the globe.  Citigroup and Deutsche Bank both say that their losses were somewhere in the neighborhood of 150 million dollars, a major hedge fund that had 830 million dollars in assets at the end of December has been forced to shut down, and several major global currency trading firms have announced that they are now insolvent.   And these are just the losses that we know about so far.

http://theeconomiccollapseblog.com/archives/swiss-shocker-triggers-gigantic-losses-banks-hedge-funds-currency-traders

Economic News

September24

Sudden USDollar Surge Sparks Silver & Stocks Smackdown

From the article:

EURUSD is back under 1.28 (for the first time since July 2013) as sustained USD demand since around 845ET has driven the USD Index up to fresh 4-year highs. Bonds are not reacting much to this significant move (for now) but stocks are pushing to the lows of the day as carry-induced euphoria is failing fast. Precious metals are sliding led by Silver.

As the dollar gets stronger and the euro gets weaker it drives the prices of commodities down. Precious metals are a commodity.

http://www.zerohedge.com/news/2014-09-24/sudden-usdollar-surge-sparks-silver-smackdown

Risky Business…..

July7

“This Could Be The Last Straw” 90% Of China Loan Guarantors Bankrupt


From the article:

As The South China Morning Post reports,

 Mainland loan guarantors have found themselves ensnared in the woes of the underground banking sector following a fresh wave of bankruptcies around the country.

Creaking under the weight of bad debts, hundreds of guarantee groups would be unable to bear even more, although their services are critical for the economic system and the millions of small firms that provide the majority of the mainland’s jobs.

http://www.zerohedge.com/news/2014-07-07/could-be-last-straw-90-china-loan-guarantors-bankrupt

Don’t Put All Your Eggs in One Basket….

June27

Referring to the title of this post:

From the Free Dictionary…

…..based on the idea that if all the eggs you got from your chickens are in one basket ( container) and you drop it, you will lose all your eggs

http://idioms.thefreedictionary.com/put+all+eggs+in+one+basket

This applies to your savings too. As you will see in the following article:

Lessons For US Citizens From The Deposit Confiscation In Cyprus

From the article:

It was almost exactly one year ago to the day that an entire nation was frozen out of its savings… overnight.

Cypriots went to bed on Friday thinking everything was fine. By the next morning, they had no way to pay bills or buy food.

It’s certainly a chilling reminder of how quickly things can change. And why.

This was written a couple of months ago. It is a reminder that no matter where you live….things can change overnight.

I also posted it because there is a reference to Cypress in the next article.

http://www.zerohedge.com/news/2014-03-17/lessons-us-citizens-deposit-confiscation-cyprus

When Someone Gives You a Hint…. You Ought to Take It

June27

NIRP Strikes: Spain To Create Tax On Bank Deposits

(NIRP: Negative Rate Interest Program)

From the article:

It was a little over a year ago, just as the Cyprus deposit confiscation aka “bail in” was taking place, when we asked, rhetorically, if “Spain is preparing for its own deposit levy” when an announcement by Spain’s Finance Minister, Montoro, hinted at the imminent arrival of just that.

How do you like that term, “bail in”? That’s when instead of printing money, “they” just take the money YOU have in the bank.

I suppose in one way it doesn’t matter because you are on the hook either way you go. (Printing money devalues your money). Unless you are rich and have accountants that can find loopholes and places to stash your money.  Like offshore accounts. Or, you put your money into other things that have value. Like precious metals. Or, other commodities.

As I learned in the previous article I posted….any country that is part of the European Union cannot print it’s own money. I didn’t know that. Did you? I guess that only makes sense?

No, I’m not savvy about economics. But I’m learning.

And what a mess that the “so-called” intelligent people that run things make. (Maybe an intentional mess?) Honestly.

We are being robbed blind.

Also, from the article:

Specifically we said:

While Spain’s economy minister Luis De Guindos proclaimed in the Senate today that bank deposits under EUR100,000 are “sacred”and that “Spanish savers should stay calm,” Spain, it would appear, has changed constitutional rules to enable a so-called ‘moderate’ levy on deposits – as under previous Spanish law this was prohibited. For now, they claim the ‘levy’ will be “not much higher than 0%” and is mainly aimed at regions in Spain that have “made no effort to collect taxes” based on new revenue expectations.

I guess this means if areas of Spain have not raised taxes….Spain will get it one way or the other. They will tax deposit.s

And those who thought because they made under EUR100,000 that they won’t tax theirs? Probably isn’t so “sacred” after all. Let that be a lesson to you.

Reminds me of how Obamacare was pushed….If you like your doctor, you get to keep your doctor. Expect to be lied to and act accordingly.

http://www.zerohedge.com/news/2014-06-26/nirp-strikes-spain-create-tax-bank-deposits

A few comments:

Thu, 06/26/2014 – 23:03 | 4900937 7.62x54r

The hint means that not all of his friends have their cash into hard assets yet.

This is a clue.

Fri, 06/27/2014 – 00:37 | 4901073 TeamDepends

If you willingly “deposit” your “money” into Crazy Clown Bank and expect a “return” on/of your “money”, you’s a sucka chump,…..

Fri, 06/27/2014 – 00:40 | 4901162 y3maxx

…Obambo will never allow “Direct Govt. Bail Ins”

He will utilize a safer method to protect American Citizen’s savings….like “MYRA”…..

Sure…. “Safe”.  Somehow, I don’t feel so “Safe”.

Housing Bubble, Deflating

May2

Leaked Recording Reveals True State Of Chinese Housing Market

Since the U.S. does business with China, anything done economically on a large scale can, and most probably will affect the U.S. That is why in my opinion, I think it’s important to keep an eye on China.

From the article:

The numbers of flats and houses for sale has suddenly doubled. “Many owners are trying to get rid of high-priced houses as soon as possible, even at the cost of deep discounts. As a result, ordinary people who want to sell homes in the secondary market must face deep price cuts,” he said.

http://www.zerohedge.com/news/2014-05-02/leaked-recording-reveals-true-state-chinese-housing-market

Something To Pay Attention To…..

April16

The Richest Man In Asia Is Selling Everything In China

From the article:

Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.

I don’t know about you? But when the richest man in Asia pulls up stakes there is a reason for it. Is he getting out while the getting is good?

Also from the article:

After years of unprecedented monetary expansion that has put the economy in a precarious state, the Chinese government has been desperately trying to reign in credit growth.

The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.

The Terms: (If you’re not accustomed to financial things. I’m learning too.)

An example of Shadow Banking for instance would be Mortgage Companies, or Money Market Mutual Funds. Financial Institutions outside of regular banking.

The IMF: It stands for International Monetary Fund. This organization has been around since 1944. The IMF’s stated goal was to assist in the reconstruction of the world’s international payment system post–World War II.

Countries contribute funds to a pool through a quota system from which countries with payment imbalances temporarily can borrow monies and other resources.

That’s not all….

Through this fund, and other activities such as surveillance of its members’ economies and the demand for self-correcting policies, the IMF works to improve the economies of its member countries.

The IMF is a self-described “organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” (This information is from Wikipedia)

Also from Wikipedia: Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time.

Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.

These two lines are the heart of the situation. And…just a bit scary if you consider the Chinese will not be the only ones affected by this. The next two lines are the possible outcomes of this situation. In either of the cases it has worldwide implications.

If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices.

I like the way the article says “If” they’re successful and “the world will ONLY see major drops”. Oh, that’s all. (sarcasm) That’s supposed to be the good news.

If they fail,…..the spillover could become pandemic.

That’s the bad news.

http://www.zerohedge.com/news/2014-04-16/richest-man-asia-selling-everything-china

For Your Own Good – NOT!

April7

Government Confiscation And Lifting The Veil On “The 401(k) Scheme”

http://www.zerohedge.com/news/2014-04-06/government-confiscation-and-lifting-veil-401k-scheme

Because about 1/2 of the video that is linked to in the article is covered up here’s the video where you can see all of it:

And…..the link to the information at the end of the video:  (your choice whether to check it out or not)

http://futuremoneytrends.com/401k/

China: The World’s Second Largest Economy In Trouble

March28

~China’s Liquidity Crunch Slams Importers Who Are Defaulting, Reneging On Deals

I’ve  given you some pieces to the puzzle from the article. It’s definitely worth reading the whole article.  I’m not some financial whiz of course, and I admit that. But what is going on in China is a big deal and does, or at least WILL eventually effect the world economy as a whole.

From the article…..

…..the world’s greatest debt bubble is starting to burst, resulting not only in the first ever corporate default but also in the bursting of the associated biggest ever housing bubble.

…..While apologists of China’s collapse have been quick to point out that China’s credit collapse would be largely a domestic issue…..

(In other words…..mostly affect China)

…..one thing nobody can deny is that if and when Chinese trade routes grind to a halt, the downstream impacts would be devastating, and spread like wildfire as the offshore supply chain is Ice 9’ed.

…..traders at Asian trading firms say they are seeing a sharp rise in canceled contracts this year while other buyers are demanding heavy discounts.

The U.S. Department of Agriculture confirmed that China has canceled orders for 517,000 metric tons of soybeans…..   South American soybean contracts have also been canceled because of weak demand, says trade journal Oil World.

http://www.zerohedge.com/news/2014-03-27/chinas-liquidity-crisis-slams-importers-who-are-defaulting-backing-out-deals

China Trying to Ease Fear

March26

Banks in Chinese city show stacks of cash to reassure depositors

From the article…

…..the rush for cash appears to be an isolated incident so far.

I’m thinking….so far, so good.

And this?

Huanghai and Jiangsu Shenyan banks declined to comment. An official at Jiangsu Sheyang referred media inquiries to Yancheng city’s propaganda department.

Propaganda Department?  Yeah, that’s where I would go (sarcasm). Uh, not really. Somehow I see people being directed by someone saying, “Please go to our happy, happy, joy, joy, department.”

http://news.yahoo.com/chinas-sheyang-county-says-funds-protected-rumors-spark-010251702–sector.html;_ylt=AwrSyCMARzJTfAUAb67QtDMD

Keeping an Eye on China

March25

What A Bank Run In China Looks Like: Hundreds Rush To Banks Following Solvency Rumors

From the article:

Why are bank runs like these only set to accelerate? Simple – unlike the US China has zero deposit insurance.

It wasn’t that long ago that I read that the U.S.  FDIC doesn’t have enough money to cover depositors. I would think it is(?) still the case today. I’ll let you do the research.

http://www.zerohedge.com/news/2014-03-25/what-bank-run-china-looks-hundreds-rush-banks-following-solvency-rumors

Pop Goes the Weasel…

March20

Chinese Housing Bubble Pops

The Music Just Ended: “Wealthy” Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash 

 From the article:

And once the Hong Kong liquidation frenzy is over, and leaves the city in a state of shock, watch as the great Chinese selling horde stampedes from Los Angeles, to New York, to London, Zurich and Geneva, and leave not a single 50% off sign in its wake.

Also, from the article:

And like every game theoretical outcome, he who defects first, or in this case sells, first, sells best. In fact, since panicked selling will only beget more selling, watch as prices suddenly plunge in what was until recently one of the most overvalued property markets in the world.

http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash