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Tag Archives: credit
Coronavirus and credit – a perfect storm
Coronavirus and credit – a perfect storm This article posits that the spread of the coronavirus coincides with the downturn in the global credit cycle, with potentially catastrophic results. At the time of writing, analysts are still trying to get to grips with the virus’s economic impact and they commonly express the hope that after […]
MacroView: The Next “Minsky Moment” Is Inevitable
MacroView: The Next “Minsky Moment” Is Inevitable In 2007, I was at a conference where Paul McCulley, who was with PIMCO at the time, was discussing the idea of a “Minsky Moment.” At that time, this idea fell on “deaf ears” as the markets, and economy, were in full swing. However, it wasn’t too long before the 2008 “Financial Crisis” brought […]
China Central Bank Warns Downward Pressure On Economy Increasing
China Central Bank Warns Downward Pressure On Economy Increasing Several weeks ago, the People’s Bank of China (PBOC) said it would “increase counter-cyclical adjustments” to prevent downward pressure on the economy. Now the PBOC is warning that it might not be able to ward off these downward pressures in the short term, reported Reuters. The PBOC’s […]
Chinese Media Stunner: China Will Be The Next Country To Cut Rates To Zero
Chinese Media Stunner: China Will Be The Next Country To Cut Rates To Zero One week ago, we showed in one chart why the global economic recovery that so many expect is just a few months away, won’t happen: as the chart below shows, China’s credit intensity since 1994 has exploded. This means that before the Global Financial […]
Is the Fed Secretly Bailing Out a Major Bank?
Is the Fed Secretly Bailing Out a Major Bank? Prettifying Toxic Waste The promise of something for nothing is always an enticing proposition. Who doesn’t want roses without thorns, rainbows without rain, and salvation without repentance? So, too, who doesn’t want a few extra basis points of yield above the 10-year Treasury note at no added […]
China’s Credit Creation Unexpectedly Collapses At The Worst Possible Time
China’s Credit Creation Unexpectedly Collapses At The Worst Possible Time Over the weekend, we observed that China’s slumping wholesale inflation, or PPI, which is so critical for corporate profits and sparking benign, demand-driven inflation in the economy, and which in October tumbled to a three year low assuring that Chinese dumping and exports of deflation will only further […]
Global Debt Is Up To $188,000,000,000,000 – This Is Officially The Biggest Debt Bubble The World Has Ever Seen
Global Debt Is Up To $188,000,000,000,000 – This Is Officially The Biggest Debt Bubble The World Has Ever Seen The world is now 188 trillion dollars in debt, and that number continues to grow rapidly each year. It is a form of enslavement that is deeply insidious, because most of those living on the planet […]
Global Economy Paralyzed In Low-Growth Trap As QE Can’t Ward Off Next Crisis
Global Economy Paralyzed In Low-Growth Trap As QE Can’t Ward Off Next Crisis The global economy is paralyzed, now stuck in a low-growth trap where conventional monetary policy by global central banks is less effective than ever before. The world is on the brink of a global trade recession, week by week, economic data from Asia, Europe, […]
Pondering the Collapse of the Entire Shadow Banking System
Pondering the Collapse of the Entire Shadow Banking System What’s behind the ever-increasing need for emergency repos? A couple of correspondents have an eye on shadow banking. Shadow Banking The shadow banking system consists of lenders, brokers, and other credit intermediaries who fall outside the realm of traditional regulated banking. It is generally unregulated and […]
How Fractional Reserve Banking Contributes to Increases in Money Supply
HOW FRACTIONAL RESERVE BANKING CONTRIBUTES TO INCREASES IN MONEY SUPPLY Some commentators consider fractional reserve banking as a major vehicle for the expansion in the money supply growth rate. What is the nature of this vehicle? We suggest that fractional reserve banking arises because banks legally are permitted to use money placed with them in […]
The Fed Created The Everything Bubble And A Liquidity Crisis – What Happens Next?
The Fed Created The Everything Bubble And A Liquidity Crisis – What Happens Next? It’s an interesting dynamic that the Federal Reserve has conjured in the decade after the 2008 credit crash. They spent several years using artificial stimulus measures to inflate perhaps the largest financial bubble in the history of the US, and then […]
Weekly Commentary: Comeuppance
Weekly Commentary: Comeuppance The Chinese Credit machine sputtered in July. Growth in Total Aggregate Financing dropped to $144 billion, almost 40% below consensus estimates. This was less than half of June’s $320 billion increase and the slowest expansion since February. The sharp slowdown was beyond typical seasonality, with the month’s growth in Aggregate Financing 18% […]
The Fed’s Dangerous Game: A Fourth Round of Stimulus in a Single Growth Cycle
The Fed’s Dangerous Game: A Fourth Round of Stimulus in a Single Growth Cycle The longer the signals in capital markets go haywire under the influence of “monetary stimulus,” the bigger is the cumulative economic cost. That is one big reason why this fourth Fed stimulus — in the present already-longest (but lowest-growth) of super-long […]
The Rich Get Richer when Central Banks Print Money
The Rich Get Richer when Central Banks Print Money The Netherlands Central Bank has just published a fascinating new paper, titled “Monetary policy and the top one percent: Evidence from a century of modern economic history”. Authored by Mehdi El Herradi and Aurélien Leroy, (Working Paper No. 632, De Nederlandsche Bank NV: https://www.dnb.nl/en/binaries/Working%20paper%20No.%20632_tcm47-383633.pdf), the paper “examines […]
