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Posts Tagged ‘Global Recession’

Why the Coming Wave of Defaults Will Be Devastating

In an economy based on borrowing, loan defaults & deleveraging matter. Defaults mean loans & bonds won’t be paid back. The owners of the bonds & debt (mortgages, auto loans, etc.) will have to absorb massive losses. Having unleashed tens of trillions of dollars in new credit since 2008, the central banks have simply increased the likelihood & scale of the coming default conflagration.

The Greatest One Day Global Stock Market Loss In World History

Worldwide markets haemorrhaged more than $2 trillion in paper wealth on Friday, according to data from S&P Global, the worst on record. For context, that figure eclipsed the whipsaw trading sessions of the 2008 financial crisis. This could be the tipping point that turns the existing global slowdown of 2016 into a global recession. Friday may turn out to be just the tip of the iceberg.

Why is the Whole Pie Shrinking? Well - It's Recession Time

We are picking up signals from a source even more powerful than central banks. This source is the specter of global recession. One of the other signals is the shrinkage in world trade. You can have a reduced trade deficit but still find that exports and imports are both shrinking. It means the global trading economy is shrinking: a sure sign of recession.

Financial Collapse Could be Farther and Faster Than Pundits Expect

Financial collapse isn’t “out of the blue,” any more than a heart attack is “out of the blue.” Recall that the global “recovery” 2009 – 2015 was entirely based on the expansion of debt taken on by marginal borrowers. Systemic fragility doesn’t respond to central bank jawboning or Keynesian claptrap; unlike those “policy tools,” fragility is real.

Currency Wars Become Much Nastier During Recession Times

All central banks have printed trillions of dollars in their respective currencies under various QE programs. They are at the point where they simply cannot print trillions more without risking the collapse of confidence in their currencies. How will central banks stop the recession when they’ve used up their dry powder fighting the currency wars?

How Inflation Could Be Caused in 15 Minutes

So-called “money printing” is seen as a certain path to inflation. The Fed has printed almost $4 trillion since 2008. Yet inflation (at least as measured by official statistics) is barely noticeable. With so much money around, where’s the inflation? Increased money supply alone does not cause inflation. The money must be borrowed and spent.

The Echo Bubble in Housing Is About to Pop

Here’s the knife in the heart of the Echo Housing bubble: household income– stagnating for decades for 90% of households has declined since the Bubble Top when adjusted for inflation. Please explain how declining real income can support nosebleed home prices now that mortgage rates have bottomed & started their inevitable rise from absurdly low levels.

Why the Fed Would be Insane to Raise Rates: The Rising U.S. Dollar

What happens when the Fed makes the US Dollar more attractive to global capital? Capital flows even faster out of emerging economies and China. The tidal flow of capital out of emerging markets and China threatens to surge into a veritable tsunami should the Fed raise rates. What happens as capital flees emerging markets and China? Lots of bad things.

Currency Devaluation: The Crushing Vice of Price

When stagnation grabs exporting nations by the throat, the universal solution offered is devalue your currency to boost exports. Currency Devaluation is a bonanza for exporters’ bottom lines, but has a negative consequence: The cost of imports skyrockets. When imports are essential, the benefits of devaluation may be considerably less than the pain caused by rising import costs.

Will the Oil Patch Bust Trigger US / Global Recession?

Since early 2010, energy producers have raised $550 billion of new bonds & loans as the Federal Reserve held borrowing costs near zero. This seemingly inexhaustible credit line is now drying up, with severely negative consequences for oil producers with debt that’s coming due. Could the oil patch bust triggered by oil plummeting to $50/barrel kick the U.S. into recession?

The Illusion that Lower Oil Prices Are Positive

The Oil Head-Fake: The essence of the Oil Head-Fake Dynamic is the inevitable drop in oil prices resulting from a sharp decline in oil demand (i.e. global recession) will trigger disruption of the global oil supply chain that will eventually push oil prices higher than most currently think possible.

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