Saturday, April 18, 2015
World Economy Crumpling NOW! Must see evidence of financial catastrophe in the making.
World stock indices plummet. This is the first time I have seen ALL major indices go negative since the last big crash...
The world economy stands on the brink of a second credit crisis as the vital transmission systems for lending between banks begin to seize up and the debt markets fall over. The latest round of quantitative easing from the European Central Bank will buy some time but it looks like too little too late.
The second global credit crisis is now already unfolding in China some 6,800 miles away from the epicentre of the first in the US. The bonds of Chinese real estate companies are now falling like dominoes. Kaisa, a Shenzhen-based, Hong Kong-listed developer that raised $2.5bn on international markets had to be bailed out by rival group Sunac last week after it defaulted onits debts. The bonds of other Chinese real estate groups such as Glorious Property and Fantasia have also sold off heavily as the contagion spreads.
Chinese authorities have responded to try and contain the situation. The People’s Bank of China introduced a surprise 50-point cut in the Reserve Requirement Ratio (RRR) from 20pc to 19.5pc. But this misses the point, the credit system in China is completely unsustainable unless new money is printed every year to refinance the old, simply tinkering to ease liquidity won’t cut it.
The strain in its banking system is highlighted by the elevated levels of the Shanghai Interbank Offered Rate (SHIBOR), which shows Chinese banks are worried about lending to each other.
There is no schadenfreude in watching China unravel. The idea that this is an isolated incident is laughable, remember the very same was said of US subprime. The problem is that banks such as Standard Chartered and HSBC have both rapidly increased their lending operations in Asia since 2008.
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STOP KIDDING YOURSELVES. NO DAILY PRICE STOCK INDEX IS AN INCIDATION FOR AN ECONOMIC STRENGTH OR WEAKNESS. EVEN GOLD CAN´T JUST POP UP AND DOWN FROM DAY TO DAY WITH VARYING VALUES. THESE VALUES ARE ALL ARBITRARY AND ARE NO MORE REAL THAT BETTING ON THE HORSES OR THROWING CRAPS IN LAS VEGAS. IT IS PART OF THE UNREAL WORLD.
ReplyDeleteWHAT´S REAL IS COMMODITIES AND THESE CAN´T POSSIBLY GO UP AND DOWN IN A FEW DAYS UNLESS THERE IS SOME MAJOR EARTH QUAKE OF DISASTER. THE REST IS JUST A PSYCOPATHIC OBSESSION WITH THE UNREAL FLUCTUATION OF SO CALLED MONEY. AN EGG TODAY IS STILL WORTH AN EGG TOMORROW, UNLESS CHICKENS SUDDENLY GO ON STRIKE ETC.