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In 2017, the financial world was filled with talk of synchronized sustainable growth in major economies for the first time since before the 2008 global financial crisis. This was being proclaimed by global financial elites including Christine Lagarde, head of the IMF.

Now that vision is in ashes. Synchronized global growth has turned into a synchronized global slowdown. Growth has already turned negative in two of the world’s largest economies, Japan and Germany, and is slowing rapidly in the world’s biggest economies, China and the U.S.

China may report something like 6.8% GDP growth, but when all the waste in its economy is stripped out the actual growth is probably closer to 4.5%. That’s still growth, but not nearly enough to sustain China’s massive debt overload. Its debt is growing faster than the economy and its debt-to-GDP ratio is even worse than the U.S.

For a sense of perspective, China had about $2 trillion total debt in 2000. Today, it’s about $40 trillion. That’s an unbelievable 2,000% increase in under 20 years.

Growth is also slowing in the U.S. The 2009–2018 recovery has already been the weakest recovery in U.S. history despite a few good quarters here and there. And there’s little reason to expect it to pick up from here.

GDP expanded 3.5% last quarter, which looks good on paper. But the trend is pointing down. Since this April, we’ve seen growth of 4.2% (Q2), and 3.5% (Q3). This trend tends to confirm the view that 2018 growth was a “Trump bump” from the tax cuts that will not be repeated. And Q4 GDP will probably be lower than Q3.

Goldman Sachs, for example, projects fourth-quarter GDP to expand at 2.5%. It further expects growth to drop to 2.2% by the second quarter of 2019, and to 1.6% by the end of the year.

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

Sacks Of Cash, Martial Law, And All Smiles: IMF’s “Constructive” Phone Call With Ukraine’s President

December 1, 2018

Sacks Of Cash, Martial Law, And All Smiles: IMF’s “Constructive” Phone Call With Ukraine’s President

Funny how it works… The same week Ukrainian President Petro Poroshenko imposed martial law on much of the country, the International Monetary Fund assured him that key parameters of the 2019 budget were on track for a proposed $3.9 billion new aid programagreed to last month which is designed to help the country maintain financial stability and the trust of investors especially ahead of an uncertain election period next year.

IMF Managing Director Christine Lagarde personally made the assurance in a phone call with Poroshenko on Wednesday — the same daythe Ukrainian president signed the new martial law legislation into effect. According to Ukraine’s popular independent news agency Unian:

It was particularly underlined that the introduction of the martial law does not influence the interaction with the IMF.

*Prior file photo of IMF Managing Director Christine Lagarde and Ukrainian President Petro Poroshenko, via Reuters *

Poroshenko’s press service said in a follow-up of a telephone conversation with Lagarde: “The Head of State informed Madame Lagarde about the adoption and the key parameters of the state budget of Ukraine for the year 2019. Madame Lagarde noted that, according to the IMF’s preliminary estimates, the key indicators of the state budget of Ukraine are in line with the parameters agreed with the Fund.”

Lagarde called the conversation “constructive” according to Reuters. An official statement released by Lagarde after the Wednesday phone call said:

The president informed me about the key parameters of the 2019 budget, which was recently approved by parliament and is currently under review by IMF staff. The preliminary assessment is satisfactory and the process is expected to be completed shortly.

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

Relentless Totalitarianism Toward What End? Depopulation and Global Rule

December 1, 2018

Relentless Totalitarianism Toward What End? Depopulation and Global Rule

We’re going to open up this article with a summary of some things that have happened just in the past week, with sources attributed where applicable or necessary:

As of November 23, 2018, it was reported in an article by Guns in the News entitled “Red-Flag laws only lead to gun confiscation,” that 46 gun grabs by red-flag laws have occurred in Oregon, and another 36 in Maryland with 114 requests for the grabs being filed in the courts in the latter state.

The New York Times’ Liz Alderman reported on 11/21/18 that 4,000+ Swedes have accepted microchips to eliminate the use of cash (erroneously believing the desire to do so is theirs). The article is entitled “Sweden’s Push to Get Rid of Cash Has Some Saying, ‘Not So Fast’.” Later on, the article mentions Christine Lagarde, the woman who heads the IMF (International Monetary Fund) as stating that digital currency needs to be investigated further. If she is involved in it, and the IMF? You had better run for cover. Half of Sweden’s banks no longer accept cash deposits, and the article leads off with a photo of a couple of “soy boys” (Ragnar Lodbruk must be turning over in his grave) in a cafe that accepts no cash.

An article by Strange Sounds from 11/20/18 is entitled “Is the government concealing California’s wildfire death toll?” The depth to this one comes not only in the form of potentially-concealed numbers, but in this excerpt, with the “kicker” parts emboldened:

According to our sources, an anonymous White House official and a pair of California firefighters, the Trump administration and CAL Fire are acting in collusion, underreporting a catastrophic death toll because “they don’t want people to freak out and panic,” said our White House source. He said CAL Fire has found the charred remains of 480 people, and that number increases hourly.

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

Central Banks Looking at Creating Their Own Cryptocurrencies

November 26, 2018

Central Banks Looking at Creating Their Own Cryptocurrencies

The IMF has recommended that all Central banks should issue their own cryptocurrencies. Indeed, they are looking at using Block Chain to keep track of taxes and to enforce negative interest rates with
cryptocurrencies which would allow them to impose negative interest rates whenever necessary. With adopting cryptocurrencies that governments would control, we will come one step closer to losing all our freedom. Central banks could enforce negative interest rates with cryptocurrencies and thus people would find their accounts just garnished. This technology is also causing those in hunt of tax revenues to lick their lips.

The issuance of digital currencies would allow central banks to remain in control of the money supply far more so than they are today. Sweden is moving forward and there we see that the use of cash is rapidly disappearing.
Cryptocurrency technology would allow also the taxman to just cometh and take whatever he desires in the midst of the economic crisis we face. The Central Banks would be able to maintain greater control over the creation of money through the process of leverage (bank lending).

While policymakers in Canada have already researched the idea. The IMF head Christine Lagarde called on central banks to focus on issuing digital currencies. All of this attention is being applied as the fear of rising interest rates in the marketplace is really beyond the control of central banks. It is true that central banks can control the short-term rates, but long-term rates are established by the free market. This is why the Federal Reserves was buying in 30-years bonds hopefully to impact the long-term rates which the Fed cannot directly control.

IMF Reveals That Cryptocurrency Is The New World Order End Game

November 22, 2018

IMF Reveals That Cryptocurrency Is The New World Order End Game

There are two kinds of globalist schemes: First, there are the schemes they spring on the public out of nowhere haphazardly in the hopes that the speed of the event along with some shock and awe will confuse the masses and make them psychologically pliable. This strategy loses effectiveness quickly, though; the longer the plan takes to implement, the more time the people have to reconsider what is actually happening and why.

Second, there are schemes they slowly implant in the collective psyche of the citizenry over many years, much like subliminal messaging or hypnosis. This strategy is designed to make the public embrace certain destructive ideologies or ideas as if these ideas were their own.

The cryptocurrency scam is of the second variety.

I have been suspicious of the cryptocurrency narrative of a “decentralized and anonymous monetary revolution” since 2009, when I was first approached by people claiming to be “representatives” of bitcoin and asked to become a promoter of the technology. After posing a few very simple questions and receiving no satisfactory answers, I declined to join the bandwagon or act as a frontman.

The “currency” was backed by nothing tangible (and no, math is not a tangible resource). Anyone could create a cryptocurrency out of thin air that had attributes identical to bitcoin, therefore there was no intrinsic value to the technology and nothing stopping the creation of thousands of similar currency systems, eventually making bitcoin worthless. The scarcity argument for crypto was fraudulent. And, in the event of a grid down or an internet lock-down scenario (as has occurred in the past in nations under crisis), crypto was useless because the blockchain ledger was no longer accessible.

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

A Chinese recession is inevitable – don’t think it won’t affect you

November 9, 2018

A Chinese recession is inevitable – don’t think it won’t affect you

A man sits on a rock near demolished in Xiancun, an urban village in Guangzhou, southern China. Photograph: Anadolu Agency/Getty Images

When China finally has its inevitable growth recession – which will almost surely be amplified by a financial crisis, given the economy’s massive leverage – how will the rest of world be affected? With US President Donald Trump’s trade war hitting China just as growth was already slowing, this is no idle question.

Typical estimates, for example those embodied in the International Monetary Fund’s assessments of country risk, suggest an economic slowdown in China will hurt everyone. But the acute pain, according to the IMF, will be more regionally concentrated and confined than would be the case for a deep recession in the United States. Unfortunately, this might be wishful thinking.

First, the effect on international capital markets could be vastly greater than Chinese capital market linkages would suggest. However jittery global investors may be about prospects for profit growth, a hit to Chinese growth would make things a lot worse. Although it is true that the US is still by far the biggest importer of final consumption goods (a large share of Chinese manufacturing imports are intermediate goods that end up being embodied in exports to the US and Europe), foreign firms nonetheless still enjoy huge profits on sales in China.

Investors today are also concerned about rising interest rates, which not only put a damper on consumption and investment, but also reduce the market value of companies (particularly tech firms) whose valuations depend heavily on profit growth far in the future. A Chinese recession could again make the situation worse.

I appreciate the usual Keynesian thinking that if any economy anywhere slows, this lowers world aggregate demand, and therefore puts downward pressure on global interest rates.

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

Misesians gather as ghost of dead economist haunts the planet

November 1, 2018

Misesians gather as ghost of dead economist haunts the planet

Growing stock market volatility is increasingly reminding investors of downturns that twice crashed valuations by more than 50% since the turn of the century. Many Americans remain perplexed as to why the economy appears to teeter perennially on the brink.

A small group of radical economists, followers of the late Ludwig von Mises, think they know why.

“Conventional economists believe that free markets cause booms and busts,” said George Bragues, an adjunct professor at the University of Guelph-Humber, who will be speaking at the International Conference of Prices and Markets taking place in Toronto this weekend.

“That’s only partially true,” said Bragues . “There is a good argument that governments themselves, more specifically central-bank driven borrowing, are the biggest creators of economic euphoria and subsequent depression.”

Do governments cause depressions?

Von Mises’s free-market ideology— so radical it makes the American Republican party look communist—is almost completely ignored by governments, ivy league university economics departments and central banks.

However, that ignorance comes at a price.

Today, the ghost of Von Mises’s ideas haunts much of the planet, where governments have quietly, often secretly, fostered colossal debt bubbles that will almost be impossible to deflate without calamity.

Von Mises’s suggestion that credit bubbles are the key drivers of booms and depression, broadly known as the Austrian Business Cycle Theory, was first outlined in his 1912 book Theory of Money and Credit.

Murray Rothbard built on this theory in his own 1963 work America’s Great Depression, which provided a convincing case study on how the U.S. government fueled the 1920s stock market expansion, collapse and the ensuing spillover effects.

Mises’s out-of-the-box works are particularly important as the planet inches towards peak debt and what the IMF warns could be an impending depression, because populist socialist politicians such as Bernie Sanders will almost certainly blame the free markets.

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

Not Waving But Drowning–Stocks, Debt and Inflation?

October 30, 2018

NOT WAVING BUT DROWNING – STOCKS, DEBT AND INFLATION?

The US stock market is close to being in a corrective phase -10% off its highs
Global debt has passed $63trln – well above the levels on 2007
Interest rates are still historically low, especially given the point in the economic cycle
Predictions of a bear-market may be premature, but the headwinds are building

The recent decline in the US stock market, after the longest bull-market in history, has prompted many commentators to focus on the negative factors which could sow the seeds of the next recession. Among the main concerns is the inexorable rise in debt since the great financial recession (GFR) of 2008. According to May 2018 data from the IMF, global debt now stands at $63trln, with emerging economy debt expansion, over the last decade, more than offsetting the marking time among developed nations. The IMF – Global Debt Database: Methodology and Sources WP/18/111 – looks at the topic in more detail.

The title of this week’s Macro letter comes from the poet Stevie Smith: –

I was much further out than you thought

And not waving but drowning.

It seems an appropriate metaphor for valuation and leverage in asset markets. In 2013 Thomas Pickety published ‘Capital in the 21^st Century’ in which he observed that income inequality was rising due to the higher return on unearned income relative to labour. He and his co-authors gathering together one of the longest historical data-set on interest rates and wages – an incredible achievement. Their conclusion was that the average return on capital had been roughly 5% over the very long run.

This is not the place to argue about the pros and cons of Pickety’s conclusions, suffice to say that, during the last 50 years, inflation indices have tended to understate what most of us regard as our own personal inflation rate, whilst the yield offered by government bonds has been insufficient to match the increase in our cost of living.

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

Gold Reserves Surge 1,000% In Hungary As It Joins Poland, Russia, China and Other Central Banks Buying Gold

October 20, 2018

Gold Reserves Surge 1,000% In Hungary As It Joins Poland, Russia, China and Other Central Banks Buying Gold

News, Commentary, Charts and Special Podcast on Direct Access Gold

Here is our Friday digest of the important news, commentary, charts and videos we were informed by this week including our special podcast on Direct Access Gold.

From our perspective, the most important developments were the IMF’s financial warnings and the escalation in central bank gold buying with Hungary increasing its gold reserves by a whopping 1,000% due to increasing “safety concerns.”

For the first time since 1986, Hungary’s central bank is buying gold bullion – a lot of gold bullion.

The Eastern-European country announced that it had boosted its gold reserves ten-fold, up to 31.5 tons. It not only dramatically increased its reserves but also repatriated the gold from the Bank of England to Budapest due to concerns about “financial stability”.

Central banks in Europe are diversifying into gold or moving to repatriate and take “possession in country.”

Hungary and Poland are the most recent central banks to do this but they follow in the footsteps of Austria, Netherlands and the powerful German Bundesbank all of which have been repatriating their gold from the Bank of England and the Federal Reserve in recent months and years.

Source: Bloomberg

“Gold is still considered to be one of the world’s safest assets,” in the words of the Hungarian central bank.

This view is shared by the President of the ECB Mario Draghi who in February 2013 spoke about how “gold is a reserve of safety” which “gives you a value-protection against fluctuations against the dollar.”

Central bank gold reserves remain very small versus the scale of their massive foreign exchange holdings and their significant exposure to the vulnerable dollar in particular but also the euro and other fiat reserve currencies.

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

Oil Markets Tremble As Chinese Stocks Crash

October 19, 2018

Oil Markets Tremble As Chinese Stocks Crash

China’s stock market fell sharply on Thursday, dragged down by a range of concerns that should offer a warning to the broader global economy.

The Shanghai Composite Index fell nearly 3 percent on Thursday, falling to its lowest point in nearly four years. The problems in China are dragging down markets across Asia, including in Japan and South Korea.

The Shanghai Composite is now down more than 25 percent since the start of the year, and is down more than 10 percent in the last three weeks alone. Viewed another way, the Chinese stock market has lost more than $3 trillion in the last six months.

(Click to enlarge)

Shanghai Composite Index, last 12 months

The troubling thing about the recent declines is that the factors driving the losses are multiple. The trade war with the United States, mountains of debt held by local governments within China, a broader slowdown in growth, a weakening yuan and high oil prices are all creating headwinds for the Chinese economy.

China’s central bank said that it still has plenty of tools that it could use defend against the trade war. Looser reserve requirements took effect a few days ago, a move the central bank made to inject money into the economy.

The IMF says that China’s GDP growth could slow from 6.6 percent this year to just 6.2 percent in 2019, although the risks are skewed to the downside because of the trade war. The Fund said that a worst-case scenario in which the U.S. slaps stiff tariffs on nearly all imports from China would shave off 1.6 percentage points from Chinese growth.

China won’t see any relief from the U.S. Federal Reserve. Minutes of the Fed’s last meeting in late September were released on Wednesday, and they reveal a determination on the part of the central bank to continue to tighten interest rates.

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

IMF Issues Dire Warning – ‘Great Depression’ Ahead?

October 17, 2018

IMF Issues Dire Warning – ‘Great Depression’ Ahead?

– “Large challenges loom for the global economy to prevent a second Great Depression” warn IMF
– Massive government debts and eroded fiscal buffers since 2008 suggest global dominos await a single market crash
– 2008 crisis measures cast long, dark “terrifying” shadow

Is another “Great Depression” on the horizon?

It would be easier to dismiss these words from Nouriel Roubini, Marc Faber or other doom-and-gloom prognosticators. Coming from Christine Lagarde’s team, though, they take on a new dimension of scary.

The International Monetary Fund head isn’t known for breathlessness on the world stage. And yet the IMF sounded downright alarmist in its latest Global Financial Stability report, stating that “large challenges loom for the global economy to prevent a second Great Depression.”

Even some market bears were taken aback. “Why,” asks Michael Snyder of The Economic Collapse Blog would the IMF use this phrase “in a report that they know the entire world will read?”

Perhaps because, unfortunately, the findings of other referees of global risks – including the Bank for International Settlements – hint at similar dislocations.

Ten years after the Lehman Brothers crisis, these worrisome warnings that will be explored in depth at this week’s annual IMF meeting in Bali. The tranquil setting, though, will offer few respites from cracks appearing in markets everywhere – from Italy to China to Southeast Asia, where currencies are cratering like it’s 1998 again.

Source: Wikipedia

Potential flashpoints and a long line of dominos

Italy is the current flashpoint – and the latest target of “domino effect” chatter in frothy world markets. China’s shadow-banking bubble, and the extreme opacity and regulations that enable it, also came in for criticism. And, of course, the 800-pound beast in any room where global investors gather these days: Donald Trump’s assault on world trade.

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

Lies, Damn Lies & Statistics: How the US Weaponizes Them to Accuse China of Debt Trap Diplomacy

October 16, 2018

Lies, Damn Lies & Statistics: How the US Weaponizes Them to Accuse China of Debt Trap Diplomacy

With China and Russia named as the two greatest threats to continuing American hegemony end of last year, the velvet gloves have come off the Washington establishment, baring their knuckles against the Middle Kingdom in plain view of the entire world. In recent weeks, anti-China rhetorics and vitriol emanating from the Oval Office and Capitol Hill have reached feverish, even hysterical, proportions.

The total warfare on all fronts is being waged against Beijing, assisted and amplified by the corporate media. The empire’s propaganda machine is in overdrive, churning out fake news and lies on a 24/7 basis to smear and demonize China. One of such lies is the alleged neo-colonization of developing countries through debt traps sprung by China.

This article puts together all the numbers in four countries – Sri Lanka, Pakistan, Maldives and Malaysia – which are misrepresented by the western press as victims of China’s “debt trap diplomacy”.

SRI LANKA

Lie : Western media have spun tall tales that Sri Lanka, with Chinese loans up to its eyeballs, used 90% of government revenue to service Chinese debts and was forced to “cough up a port” to Beijing.

Fact : China accounted for only ONE-EIGHTH of Sri Lanka’s $65 billion debts. Beijing didn’t demand immediate payment of loans falling due from Colombo. Instead, China acceded to Sri Lanka’s request to restructure the loans. Colombo OFFERED to settle the loans past due by giving a 70% equity in the LOSS-MAKING Hambantota port to a Chinese company. To bring the port up to the operational level, the Chinese company has to spend another $700 million. No competing offer from other parties to take over the port was received before and after the restructuring proposal was completed.

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

World Finance Leaders Scramble For A Solution To Escalating Trade War, Rising Rates

October 16, 2018

World Finance Leaders Scramble For A Solution To Escalating Trade War, Rising Rates

The main takeaway from the IMF and World Bank Group annual meeting in Bali, which hosted financial ministers and central bank governors from around the world this weekend, was that global trade tensions were having a profound effect on global growth and need to be solved.

Most of the participants – save for China and Mexico – seemed united and in agreement that trade talks have to continue. Bank of Japan Governor Haruhiko Kuroda stated that it was essential to have dialogue on trade while at the same time, the president of Brazil’s central bank, Ilan Goldfajn, noted that the trade wars were one of the biggest threats to emerging markets. Indonesia’s president Jokowi Widodo said starkly that “winter is coming” for the global economy if there is no solution on trade.

However, not everybody was prepared to find a solution at any cost. Bank of China governor Yi Gang stated that he was preparing for the worst, despite still seeking a constructive resolution to the problem. Gang stated at the meeting: “You see a lot of people in China now preparing for this trade tension to be a prolonged situation. The downside risks from trade tensions are significant.”

Mexico also stepped in to voice its support for China. Former Mexican president Ernesto Zedillo told China that they should follow the example set by Mexico and Canada during their negotiations with the United States, because they both were able to secure the terms that they wanted, even though some may disagree violently with this hot take.

Zedillo said, “Mexico and Canada made clear that they’d rather not have Nafta than having the deal that the U.S. wanted. In the end, Mexico and Canada got their way in every single issue that had been drawn as a red line. So I hope China doesn’t blink.”

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

Stock Market Chaos Sparks Oil Selloff

October 12, 2018

Stock Market Chaos Sparks Oil Selloff

The plunge in global equities on Wednesday and Thursday dragged down crude oil, with even concerns about falling Iranian supply not enough to keep crude from a steep selloff.

Brent fell more than 1.2 percent on Wednesday and was down another 1.5 percent in early trading on Thursday, falling back to the low-$80s per barrel, down from over $86 last week.

The same supply concerns are still there – Iran’s oil exports are dwindling, and it is unclear if OPEC can fill the gap. But the sudden cracks in the global economy took on a higher priority.

The conditions for an equity selloff have been building for quite some time. On October 9, the International Monetary Fund cut its forecast for global growth to 3.7 percent for 2018 and 2019, down from a previous estimate of 3.9 percent. The Fund said that “growth has proven to be less balanced than hoped,” and that the “likelihood of further negative shocks to our growth forecast has risen.” Also, the ongoing trade war between the U.S. and China, combined with the strength of the dollar and the turmoil and emerging markets could also lead to an economic slowdown.

China’s economy is already showing some signs of strain, and China’s central bank just slashed the amount of cash that banks have to hold in reserve, the so-called reserve ratio, by one percentage point. The move is seen is an attempt to keep growth aloft amid worrying signs of trouble.

In the U.S., the Federal Reserve has been going in the opposite direction, tightening interest rates in an effort to avoid inflation.

These various red flags for the global economy have been known for a while and are the background context for the sudden and painful selloff in global equities that began mid-week.

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

IMF Warns About Emerging Markets: Hello “Always Late” IMF, Global Crisis Coming

October 11, 2018

IMF Warns About Emerging Markets: Hello “Always Late” IMF, Global Crisis Coming

The IMF is finally warning that there may be an emerging market crisis. Hello IMF, it’s already here. Look ahead.

The IMF is perpetually late in its forecasts. Here’s the latest hoot: IMF Warns of Possible Emerging-Markets Crisis.

A new study by the International Monetary Fund projects emerging economies will muddle through recent market turbulence without a severe shock to their financial systems, but flags an outside chance of a crisis.

In a “severely adverse” scenario, the IMF says capital could flood out of countries at a pace not seen since the 2008 global financial crisis.

Outside Chance of a Crisis? What the Hell?

Argentina and Turkey are both in a full-blown crisis. So is Pakistan which last week went to the IMF for help.

Here’s a hint: It’s a certifiable crisis to go to the IMF for a bailout.

And what about Venezuela deep in hyperinflation.

Wake-Up Call

“This should serve as a wake-up call,” Ms. Lagarde said of the mounting debts and risks of capital outflows.

Wake-up call to do what? Please tell us Ms Lagarde.

The emerging market crisis is already underway.

When the global junk bond and equity bubbles pop, we will not just be talking about emerging markets that are in trouble.

Hello IMF, please wake up.

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