Sunday, November 1, 2015

The only way a system that looks like this could be kept running is by issuing more debt.

"...after a debt bubble must come a hangover.

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

Everything and everyone is overindebted. All of the above stats, and a million more, 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 everywhere but in its official GDP numbers. And unless we build a base on the moon, there is no other country or region left that can take the place of China in propping up western debt extravaganza.

...the debt that has been inflated to such extreme proportions, must lead to deflation, and do so in spectacular fashion.

As long as politicians and media keep talking about disinflation and central bank inflation targets, and all they talk actually about is consumer prices, we will all fail to acknowledge what’s happening right before our very eyes. That is, the system is imploding. Deflating. Deleveraging. And before that is done, there can and will be no recovery. Indeed, this current trend has a very long way to go down.

So far down that you will have a very hard time recognizing the world, and its economic system, on the other side of the process. But then again, you have a hard time recognizing the world for what it is on this side as well."
"...most American households to be living on the brink of catastrophe, but continuing to act in a reckless and delusionary manner. There have certainly been economic factors beyond the control of average Americans that have resulted in real median household incomes remaining stagnant for the last 36 years. The unholy alliance of mega-corporations, Wall Street and bought off corrupt politicians have gutted the nation of millions of good paying jobs under the guise of globalization, while utilizing debt, derivatives and financial schemes to enrich themselves. The malfeasance of the sociopathic privileged class does not discharge the personal responsibility of citizens for living within their means. A lack of discipline, inability to delay gratification, failure to understand basic mathematical concepts, materialistic envy, absence of critical thinking skills, and a delusionary view of the world have left the majority of Americans broke and in debt.

...Every car eventually needs new tires or an engine repair. Every home will need a new hot water heater or roof at some point. It is foolish and short sighted to not expect “unexpected” expenditures. Living in the moment and fulfilling your immediate desires may feel good today, but leaves you susceptible to disaster tomorrow. Gradually building a rainy day fund over time is what adults should do. Only immature children operate with no safety net. Everyone has an excuse for why they end up living on the edge, but the data exposes us to be an infantile nation of spendthrifts incapable of distinguishing between wants and needs.

“The fault, dear Brutus, is not in our stars, but in ourselves.”

William Shakespeare
Julius Caesar

...the vast majority of Americans have chosen to live beyond their means by allowing themselves to be lured into debt by the Wall Street debt peddlers and their Madison Avenue media maggots selling dreams to willfully ignorant delusional consumers.

...And the Federal Reserve has been willing and able to accommodate them.

“Sometimes people don’t want to hear the truth 
because they don’t want their illusions destroyed.” 

Friedrich Nietzsche

Those who control the levers of this perverted economic system utilize Fed easy money, propaganda advertising messages, and the susceptibility of an oblivious populace, suffering from delusions of grandeur, to create generations of debt enslaved hamsters running on the wheel of life. But, we were not forced into this enslavement. Millions have chosen to live lives of quiet desperation in order to keep up with the Joneses. They would rather portray themselves as successful and wealthy, rather than make the necessary sacrifices required to achieve success and wealth."
"...while the world has clearly hit its debt-saturation point, corporations - at least the highly rated ones - seem to have no problems with accessing debt markets and raising capital, even if the biggest use of proceeds is stock buybacks, thereby creating a vicious, Munchausenesque close loop scheme, in which the rising stock prices courtesy of more debt, is giving debt investors the impression that the company is far healthier than it actually is precisely because it has more, not less, debt!

The reality, as we first showed in January of 2014, is that for all the talk of "fortress" balance sheets, and record cash buffers, the debt build up among US corporations has more than surpassed the increase in cash. In fact, as of early 2014, total debt was 35% higher than its prior peak

...just look at what happened to IBM when, as we predicted, it bought back so much stock its investment grade rating was put in jeopardy and the company has seen its stock languish ever since unable to lever up any more just to repurchase its own stock."