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Debt to GDP: Only 4 Major Countries Worse Off Than the US

Of major nations, only Japan, Greece, Italy, and Portugal have debt-to-GDP ratios higher than the US.

With the new tax overhaul, U.S. government debt will rise by one to two trillion dollars over the next decade. I view that assessment as majorly optimistic as it assumes no recession and unlikely growth.

Citing IMF statistics, the Wall Street Journal reports Just Four Large Countries Have a Higher Debt Burden Than the U.S.

Japan’s government carries debts at 240.3% of gross domestic product, far and away the world’s largest burden. Japan has struggled in recent decades to tackle its debt, in part because its economy has been stagnant. Attempts to raise revenue via higher taxes have often knocked the economy into recessions. Tax cuts haven’t generated enough growth to ease debt burdens.

The Bank of Japan has embarked on the world’s most aggressive monetary policies, including decades of rates near zero, and the world’s largest asset-purchase program. None of it has revived growth or inflation, meaning Japan’s debt burden has been slowly grinding higher. (Although the low rates have meant the costs to the government of servicing that debt have remained under control.)

Japan’s government debt has been a persistent fiscal challenge, but never quite blossomed into a full-blown crisis.

The next three nations haven’t been so lucky. Greece’s debt-to-GDP stands at 180.2% of GDP, Italy’s at 133% and Portugal’s at 125.7%. When the global financial crisis struck, and government revenues plunged around the world, Greece and Portugal found themselves unable to manage debts on their own. Both nations turned to international bailouts to make it through the years of weak growth that followed. All three nations have had to bail out some of their largest banks in order to keep their financial systems from collapsing.

…click on the above link to read the rest of the article…

Yuan-Priced Crude Futures Could Arrive Before Christmas

Yuan-Priced Crude Futures Could Arrive Before Christmas

Yuan

After years of setbacks and delays, China may be days away from launching a yuan-priced crude oil futures contract to make its currency more international and challenge the dominance of the petrodollar.

Many Chinese investors eagerly anticipate the start of yuan oil futures trading on the Shanghai International Energy Exchange, with hope it will come just in time for Christmas, when western markets will be either closed or calmer than usual.

Although local investors can’t wait to pour yuan into another commodity contract, international investors may not be as eager because it is not clear yet how much freedom China would allow in that trade. International traders may have to swallow Chinese intervention on the markets or rigid capital controls, Bloomberg reported last week.

In July, the Shanghai International Energy Exchange, INE, completed a four-step trial in crude oil futures denominated in yuan and said that it would carry preparatory works for the listing of crude oil futures, and would try to launch the contract by the end of this year.

The launch of the yuan oil futures contract will be a wake-up call for traders and investors who haven’t been paying attention to Chinese plans to create the so-called petroyuan and shift oil trade out of petrodollars, Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), said in October.

Although the petroyuan is not expected to immediately supplant the petrodollar, the world’s top oil importer launching a crude oil futures contract in its domestic currency is a sign that the Chinese want their yuan to play an increasingly important role in global trade, starting with the oil trade.

…click on the above link to read the rest of the article…

The Greek Fraud Reads Like a Crime Novel


Tamara de Lempicka The refugees 1937
Note: I feel kind of sorry this has become such a long essay. But I still left out so much. You know by now I care a lot about Greece, and it’s high time for another look, and another update, and another chance for people to understand what is happening to the country, and why. To understand that hardly any of it is because the Greeks had so much debt and all of that narrative.

The truth is, Greece was set up to be a patsy for the failure of Europe’s financial system, and is now being groomed simultaneously as a tourist attraction to benefit foreign investors who buy Greek assets for pennies on the dollar, and as an internment camp for refugees and migrants that Europe’s ‘leaders’ view as a threat to their political careers more than anything else.

I would almost say: here we go again, but in reality we never stopped going. It’s just that Greece’s 15 minutes of fame may be long gone, but its ordeal is far from over. If you read through this, you will understand why that is. The EU is deliberately, and without any economic justification, destroying one of its own member states, destroying its entire economy.

A short article in Greek paper Kathimerini last week detailed the latest new cuts in pensions the Troika has imposed on Greece, and it’s now getting beyond absurd. For an economy to function, you need people spending money. That is what keeps jobs alive, jobs which pay people the money they need to spend on their basic necessities. If you don’t do at least that, there’ll be ever fewer jobs, and/or ever less money to spend. It’s a vicious cycle.

…click on the above link to read the rest of the article…

IMF Stress Tests Find $280 Billion Black Hole In Chinese Banks’ Capital

IMF Stress Tests Find $280 Billion Black Hole In Chinese Banks’ Capital

The IMF released a new analysis on the instability stability of the Chinese financial system. Speaking to the media in an online briefing, some of the insights from Ratna Sahay, deputy director of the IMF’s Monetary and Capital Markets Department, hardly advanced our knowledge much.

Sahay noted that “Risks are large. Having said that, the authorities are really aware of risks and they are working proactively to contain these risks.”

That’s why the authorities are finally racing to contain the worst excesses of China’s insane credit boom following October’s Party Congress, for example overhauling the $15 trillion shadow banking and asset management sector. As we noted on the latter, the new measures don’t take effect until the end of June 2019, no doubt reflecting the enormity of the problems uncovered by Chinese regulators.

Sahay pointed to three main risks: credit growth, the complex and opaque financial system and implicit guarantees which “encourage excessive risk-taking” (think WMPs).

However, the IMF does a better job in explaining why a massive financial crisis in China is all but inevitable – the conflicting needs of social stability versus financial stability. According to Reuters.

But the near-term prioritisation of social stability seems to depend on credit growth to sustain financing to firms even when they are non-viable, it said. “The apparent primary goals of preventing large falls in local jobs and reaching regional growth targets have conflicted with other policy objectives such as financial stability,” the report said. “Regulators should reinforce the primacy of financial stability over development objectives,” the fund said.

Too late.

…click on the above link to read the rest of the article…

The Economic End Game Continues

The Economic End Game Continues

In November of 2014 I published an article titled ‘The Economic End Game Explained’. In it I outlined what I believed would be the process by which globalists would achieve what they call the “new world order” or what they sometimes call the “global economic reset.” As I have shown in great detail in the past, the globalist agenda includes a fiscal end game; a prize or trophy that they hope to obtain. This prize is a completely centralized global economic structure, rooted in a single central bank for the world, the removal of the U.S. dollar as world reserve currency, the institution of the SDR basket system which will act as a bridge for single a global currency supplanting all others and, ultimately, global governance of this system by a mere handful of “elites.”

The timeline for this process is unclear, but there is some indication of when the “beginning of the end” would commence. As noted in the globalist owned magazine The Economist, in an article titled “Get Ready For The Phoenix,” the year of 2018 seems to be the launching point for the great reset. This timeline is supported by the numerous measures already taken to undermine dollar dominance in international trade as well as elevate the International Monetary Fund’s SDR basket. It is clear that the globalists have deadlines they intend to meet.

That said, there have been some new developments since I wrote my initial analysis on the end-game strategy that I think merit serious attention. The end game continues, faster than ever before, and here are some of the indicators showing that the “predictions” of the globalists at The Economist in 1988 were more like self-fulfilling prophecies and 2018 remains a primary nexus point for a re-engineering of our economic environment.

…click on the above link to read the rest of the article…

Second Crash Warning From The IMF – This Time It’s About Vol

Second Crash Warning From The IMF – This Time It’s About Vol

Another week, another warning regarding financial crash scenarios from those keen minds at the IMF.

In “Here Is The IMF’s Global Financial Crash Scenario” last week, we highlighted the institution’s surprisingly candid discussion hidden away in its latest Financial Stability Report “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery”…or as we paraphrased the IMF’s “politically correct way of saying the financial system is on the verge of crashing”.

As we noted previously, in the section also called “Global Financial Dislocation Scenario” because “crash” sounds just a little too pedestrian, the IMF uses a DSGE model to project the current global financial situation, and ominously admits that “concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions” and – in modeling out the next crash, pardon “dislocation” – the IMF conducts a “scenario analysis” to illustrate how a repricing of risks could “lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability.”

This week the IMF has gone a step further, courting the mainstream financial media to publicise its warning about the dangers of historically low volatility and related short volatility strategies.

As The FT reports, The International Monetary Fund has warned that the increasing use of exotic financial products tied to equity volatility by investors such as pension funds is creating unknown risks that could result in a severe shock to financial markets. In an interview with the Financial Times Tobias Adrian, director of the Monetary and Capital Markets Department of the IMF, said an increasing appetite for yield was driving investors to look for ways to boost income through complex instruments.

…click on the above link to read the rest of the article…

 

Do You Really Think Politicians Can Stop Climate Change?

COMMENT: Mr. Armstrong; It appears that politicians are attributing any change in the climate to human activity. They have simply either gone mad or just insane, seriously distorting everything to gain more power and taxes. Now  Christine Lagarde said: “As I’ve said before if we don’t do anything about climate change now, in 50 years’ time we will be toasted, roasted and grilled.” She is not even elected by anyone yet is dictating the trend globally.

PD

REPLY: Yes, the phrase “climate change” has come to mean “blaming humans for changing the climate by using oil and gas and coal.” They act as if the climate should be linear and always the same from one year to the next. They fail to even account for the historical record of ice ages and warming periods long before we started using oil, gas, or coal. There is no doubt that the climate is changing for that is the cyclical nature of all things. The only thing more absurd than blaming humans for “climate change” is assuming politicians can stop it from changing. They cannot find the missing $3 trillion+ from the defense budget no less manage the economy and prevent the business cycle from booms and busts.

Here Is The IMF’s Global Financial Crash Scenario

Here Is The IMF’s Global Financial Crash Scenario 

Hidden almost all the way in the end of the first chapter of the IMF’s latest Financial Stability Report, is a surprisingly candid discussion on the topic of whether “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery”, which is a politically correct way of saying is the financial system on the verge of crashing.

In the section also called “Global Financial Dislocation Scenario” because “crash” sounds just a little too pedestrian, the IMF uses a DSGE model to project the current global financial sitution, and ominously admits that “concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions” and – in modeling out the next crash, pardon “dislocation” – the IMF conducts a “scenario analysis” to illustrate how a repricing of risks could “lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability.”

* * *

From the IMF’s Financial Statbility Report:

Could Rising Medium-Term Vulnerabilities Derail the Global Recovery?”

This section illustrates how shocks to individual credit and financial markets well within historical norms can propagate and lead to larger global impacts because of knock-on effects, a dearth of policy buffers, and extreme starting points in debt levels and asset valuations. A sudden uncoiling of compressed risk premiums, declines in asset prices, and rises in volatility would lead to a global financial downturn. With monetary policy in several advanced economies at or close to the effective lower bound, the economic consequences would be magnified by the limited scope for monetary stimulus. Indeed, monetary policy normalization would be stalled in its tracks and reversed in some cases.

…click on the above link to read the rest of the article…

This Is What The Death Of A Nation Looks Like: Venezuela Prepares For 2,300% Hyperinflation

This Is What The Death Of A Nation Looks Like: Venezuela Prepares For 2,300% Hyperinflation

Back in January 2016, we showed what the collapse of Venezuela looks like, when in addition to charting Venezuela’s imploding currency (which back then was trading at a positive expensive 941 bolivars to the dollar), we presented what at the time was the IMF’s latest Venezuela inflation forecast, which stunned us as it surged from 275% in the just concluded 2015 to a whopping 720% at the end of 2016.

Fast forward nearly two years until today, when the IMF released its latest estimate of what it believes will happen to Venezuela’s economy in the coming year and a half. What is striking, besides the fact that Venezuela has somehow still managed to avoid bankruptcy, is that the IMF now expects Venezuela’s hyperinflation to reach a staggering 2,349% in 2018, after rising by “only” 626% this year, the highest estimate for any country tracked by the IMF. While the South American country stopped reporting economic data in 2015, the IMF estimates that last year inflation clocked in around 254%, a number which is set to soar in the coming years for obvious reasons.

At the same time as residents scramble to find alternative currencies to the local paper which will lost all of its purchasing power over the next year, the IMF predicts the “intensification of the political crisis in Venezuela” will lead to a further decrease in economic output. As a result, GDP is expected to shrink 6% in 2018, after dropping an estimated 12% in 2017.

And, as oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21% .

…click on the above link to read the rest of the article…

Three Scenarios for the Global Economy

RMB banknotes in a walletZhang Peng/Getty Images

Three Scenarios for the Global Economy

The International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook. But is the IMF right to think that the recent growth spurt will continue over the next few years, or is a temporary cyclical upswing about to be subdued by new tail risks?
NEW YORK – For the last few years, the global economy has been oscillating between periods of acceleration (when growth is positive and strengthening) and periods of deceleration (when growth is positive but weakening). After over a year of acceleration, is the world headed toward another slowdown, or will the recovery persist?

The current upswing in growth and equity markets has been going strong since the summer of 2016. Despite a brief hiccup after the Brexit vote, the acceleration endured not just Donald Trump’s election as US president, but also the heightening policy uncertainty and geopolitical chaos that he has generated. In response to this apparent resilience, the International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook.

Will the recent growth spurt continue over the next few years? Or is the world experiencing a temporary cyclical upswing that will soon be subdued by new tail risks, like those that have triggered other slowdowns in recent years? It is enough to recall the summer of 2015 and early 2016, when investor fears of a Chinese hard landing, an excessively fast exit from zero policy rates by the US Federal Reserve, a stall in US GDP growth, and low oil prices conspired to undercut growth.

…click on the above link to read the rest of the article…

Dutch Central Bank Warns Of Market Calm Before The Storm:

Dutch Central Bank Warns Of Market Calm Before The Storm:

With one foot out of the door of Germany’s finance ministry, the former head of the German economy, Wolfgang Schäuble, 75, delivered a fire and brimstone warning over the weekend, telling the FT in an interview that there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets. Schäuble also warned of risks to stability in the eurozone, particularly those posed by bank balance sheets burdened by the post-crisis legacy of non-performing loans, something we warned about since 2012, and an issue which remains largely unresolved.

Taking a broad swipe at the current financial regime – which he helped design – Schauble warned that the world was in danger of “encouraging new bubbles to form”.

Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,” he said echoing the concern voiced just one day earlier by IMF head Christine Lagarde, who said the world was enjoying its best growth spurt since the start of the decade, but warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”.

And while Schauble’s dramatic warning was not surprising – prominent economists have a habit of telling the truth once their tenure is over, and once they start selling books warning about all the consequences of policies they helped adopt – one day later a more surprising, and just as urgent warning was delivered by the Dutch central bank, DNB, which on Monday said that ultra-loose monetary policy in the euro zone has run its course, and excessive risks seem to be building up in financial markets making the financial sector vulnerable to a sudden correction.

…click on the above link to read the rest of the article…

Kyle Bass Sounds Off On “Worthless” Puerto Rican Debt, The Crypto “Gold Rush”, And Guns

Kyle Bass Sounds Off On “Worthless” Puerto Rican Debt, The Crypto “Gold Rush”, And Guns

With the dollar’s recent post-Fed bout of appreciation providing some much-needed relief for Haymarket Capital’s P&L, its founder Kyle Bass sat for an interview on Friday with Bloomberg’s Erik Schatzker. During the 20 minute discussion, Bass expounded on the importance of holding gold, his cautiously optimistic view on digital currencies, the misguided notion that holders of Puerto Rican debt will someday be made whole – oh, and Bass’s next big call: Long Greece – particularly the stocks and debt of Greek banks.

A few weeks ago, Bloomberg view published a Bass-penned editorial in which the hedge fund founder and CIO called on the IMF to stop bullying Greece –  publicizing the fact that he is now effectively long Greece. Greek government bonds have performed reasonably well so far this year: They’re up about 16%.

And if Bass is right, they could have another 20% to 30% over the next 18 months if the IMF abandons its insistence on austerity and acknowledges that debt relief will need to be part of the long-term alleviation of debt. Bass added that, in the near future, voters will elect a more business-friendly government that will help reestablish the country’s creditworthiness, much like the government of Mauricio Macri did for Argentina.

I think you also have an interesting political situation in Greece where I think there’s going to be a handoff from the current Syriza government to kind of a more slightly-center-right but very economically independent new leadership in the next, call it, 18 months.

And so, I think you asked why now? And I think you’re starting to see green shoots. You’re starting to see the banks do the right things finally in Greece and you are about to have new leadership.

…click on the above link to read the rest of the article…

IMF Head Foresees the End of Banking and the Triumph of Cryptocurrency

IMF Head Foresees the End of Banking and the Triumph of Cryptocurrency

In a remarkably frank talk at a Bank of England conference, the Managing Director of the International Monetary Fund has speculated that Bitcoin and cryptocurrency have as much of a future as the Internet itself. It could displace central banks, conventional banking, and challenge the monopoly of national monies.

Christine Lagarde–a Paris native who has held her position at the IMF since 2011–says the only substantial problems with existing cryptocurrency are fixable over time.

In the long run, the technology itself can replace national monies, conventional financial intermediation, and even “puts a question mark on the fractional banking model we know today.”

In a lecture that chastised her colleagues for failing to embrace the future, she warned that “Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”

Here are the relevant parts of her paper:

Let us start with virtual currencies. To be clear, this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya.

Virtual currencies are in a different category, because they provide their own unit of account and payment systems. These systems allow for peer-to-peer transactions without central clearinghouses, without central banks.

For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks. Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.

…click on the above link to read the rest of the article…

John McCain Is Pushing For War With Russia: “What Has Been Set Into Motion Is Still In Motion”

John McCain Is Pushing For War With Russia: “What Has Been Set Into Motion Is Still In Motion”

mccain1

The “Founding Father” of Ukraine
Could only be Senator John McCain
As Civil War splits East and West
Johnny smiles and takes a breath
(A few brain cells short) …nonetheless,
His plans unfolding once again.

 

What has been set into motion is still in motion and coming around for a second lap.  The consortium of John McCain (the ringleader with the Soros connections), acted with the “authority” of Barack Hussein Obama II and “independently,” aided by Victoria Nuland (commissioned by Hillary Clinton, also acting on behalf of Soros) and Lindsay Graham (a ventriloquist dummy in the hands of McCain).  What a team!  Arseniy Yatsenuk quacked and chirped under orders, until it was determined that he was too weak.

Yatsenuk couldn’t stem the tide of fighting between the self-proclaimed autonomous Eastern districts of Ukraine and the Kiev government.  The IMF had offered to pay the Gazprom bill of $9 billion to Russia, and Ukraine was well on its way in 2014 to becoming a part of NATO and another IMF puppet of Europe.  The Separatists had other plans, though, and Russia aided them and offered to support them in the manner of South Ossetia in the Georgian War of 2005.

The IMF realized that Yatsenuk was not strong enough to hammer down the Separatists, and guarantee the enslavement with interest to pay the $9 billion.  The IMF realized that under Yatsenuk, perhaps the entire country would either revolt, be permanently split, or that the Russians might come in.  Soros had a vested interest in all of this: Soros wanted to purchase billions of dollars-worth of contracts, leases, and buy options for the paltry sum of $50 million.  US interests (and hence Soros’ interests indirectly) and those of the IMF were falling by the wayside.

…click on the above link to read the rest of the article…

Is Chinese Growth About to Falter?

  • The IMF revised Chinese growth forecasts higher in July – were they premature?
  • Retail sales, industrial output and fixed investment have slowed
  • The Real Estate sector is still buoyant but home price increases are moderating
  • Narrow money supply growth has slowed, other parts of the economy will follow

China has long been the marginal driver of demand for a wide array of commodities. In an attempt to understand the recent rise in the price of industrial metals, the strength of Chinese demand is a key factor. The picture is mixed.

The chart and commentary below is taken from Sean Corrigan’s August newsletter – Cantillon Consulting – China: Is the tide turning?:-

China_Money_Supply_-_Cantillon_August_2017

Source: Cantillon Consulting

As Corrigan goes on to say:-

As the deceleration has progressed, the PMI has shown its expected downward response. In due course, company revenues – and ultimately profits – will follow if this is long maintained.

Greater recourse to receivables financing (funded partly by recourse to shadow finance) can delay full recognition of this awhile, but it cannot fail to impair either the magnitude or the quality of earnings as it works through the economy.

At the heart of the credit equation lies the Real Estate market:-

China_Real-Estate_and_M1_-_Cantillon_-_August_2017

Source: Cantillon Consulting

During 2016 property prices in China increased by 19%, new homes by 12.4%, the fastest since 2011, but the market has cooled of late due to government intervention to subdue its speculative excess. New-home prices, excluding government-subsidized housing, gained from the previous month in 56 of 70 cities in July, compared with 60 in June. New Home Sales for August were the weakest in three years at +3.8%, however, investment in Real Estate development increased 7.8% last month – this is hardly a collapse. House prices are still forecast to rise by 6.8% in 2017 with growth driven by continued increases in second and third tier cities:-

…click on the above link to read the rest of the article…

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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