mago gambamerlo
Xx Phuket xX
The gamblers betting on Britain going bust - Telegraph
Hedge Fund scomettono mld sul default britannico.
Hedge Fund scomettono mld sul default britannico.
Macroeconomia Crisi finanziaria e sviluppi
- Creatore Discussione METHOS
- Data di Inizio
Comandante Gerard
Forumer storico
Derivati Usa in mano a sole 5 top bank di Wall Street Il 95% degli scambi su mercati poco trasparenti - Il Sole 24 ORE
Spaventoso il controvalore dei contratti scambiati...
Spaventoso il controvalore dei contratti scambiati...
Imark
Forumer storico
anche la svizzera esposta all crisi
Lo ha affermato Philipp Hildebrand, della BNS
Il presidente della Banca centrale svizzera ha partecipato al Swiss Economic Forum a Interlaken (BE) - I bilanci delle banche svizzere ammontano a 7 volte il PIL elvetico
La Svizzera rimane fortemente esposta al pericolo di una crisi del mondo finanziario, in particolare riguardante una grande banca, e occorre quindi agire per porre rimedio alla situazione. Lo ha affermato il presidente della Banca nazionale (BNS) Philipp Hildebrand nel suo discorso al Swiss Economic Forum in corso a Interlaken (BE).
Oggi gli attivi degli istituti elvetici ammontano a sette volte il Prodotto interno lordo elvetico: UBS e Credit Suisse raggiungono già da sole quattro volte il PIL, e questo nonostante il fatto che le somme di bilancio degli ultimi due anni siano regredite del 35%, ha spiegato Hildebrand.
Considerata questa esposizione estrema sarebbe irresponsabile aspettare la conclusione del processo di riforma delle regolamentazioni in atto a livello internazionale. Questo anche perché la crisi finanziaria ha mostrato in modo chiaro due aspetti centrali: in primo luogo, nonostante i mercati globali, la responsabilità di una stabilizzazione o di salvataggi spetta alle autorità nazionali, e secondariamente la fattura di queste operazioni deve alla fine essere pagata dal contribuente locale. La Svizzera ha così avviato alla fine del 2008 un'ambiziosa riforma per migliorare capitalizzazione e liquidità delle grandi banche. Questo non vuole però dire che vi sia disinteresse per il processo di revisione delle regole a livello sovranazionale: al contrario, la BNS si impegna intensamente nei lavori avviati dal Financial Stability Board. Anche a livello internazionale la priorità deve essere data ai temi del capitale e della liquidità, nonché al problema del «troppo grande per fallire».
cdt, oggi
Situazione migliorata molto: il rapporto fra attivi delle banche svizzere e PIL era sopra l'11% un anno fa... secondo me l'apprezzamento del CHF ha molto a che vedere con la cessione di asset denominati in altre valute da parte di UBS e CS e rientro sul CHF, questa indicazione da te postata mi dà una conferma della bontà di tale assunto...
mostromarino
Guest
é possibile
ma io ho visto un enorme impegno della banca nazionale ch a difendere euro
solo che ora non ce la fa piu`
possibile che ubs e cs remassero contro ?
si parlava di acquisti euro per 70 mdi, di euro, sul mercato, per la manovra
non ho visto dati scritti..solo orecchiato in tv
aggiunta successiva:
http://www.cdt.ch/commenti-cdt/commento/25166/la-bns-dovra-cambiare-politica.html
ma io ho visto un enorme impegno della banca nazionale ch a difendere euro
solo che ora non ce la fa piu`
possibile che ubs e cs remassero contro ?
si parlava di acquisti euro per 70 mdi, di euro, sul mercato, per la manovra
non ho visto dati scritti..solo orecchiato in tv
aggiunta successiva:
http://www.cdt.ch/commenti-cdt/commento/25166/la-bns-dovra-cambiare-politica.html
Imark
Forumer storico
é possibile
ma io ho visto un enorme impegno della banca nazionale ch a difendere euro
solo che ora non ce la fa piu`
possibile che ubs e cs remassero contro ?
si parlava di acquisti euro per 70 mdi, di euro, sul mercato, per la manovra
non ho visto dati scritti..solo orecchiato in tv
Più che un remare contro, è una situazione necessitata: l'esposizione su asset dei colossi era tale che una loro riduzione (con rientro sulla valuta nazionale) era necessaria, altrimenti in caso di guai, chi avrebbe potuto soccorrere una delle due ?
Ed i guai c'erano già stati con l'esposizione della UBS alla finanza strutturata USA, quando poi, in virtù della tempestività dell'intervento della BNS, si era risolto, ed alla fine lo stato svizzero ci aveva pure guadagnato ...
Però è chiaro che, quando c'è rientro sul CHF delle due big bank, è come quando un paio di elefanti si dimenano sulla scialuppa: la BNS sta facendo il suo lavoro, che è quello di cercare di bilanciare la nave... certo, ha grosse difficoltà contingenti, ma credo sia il prezzo da pagare per ridurre rischi futuri... il rapporto fra asset delle grandi banche CH e PIL all'inizio della crisi eccedeva pure quello islandese, che è tutto dire... anche se le situazioni erano diverse, visto che le banche IS si finanziavano sui mercati interbancari, mentre le banche CH fanno affidamento anche su consistenti depositi della clientela non svizzera...
PS: letto anche l'aggiunta successiva, ma non so se il problema reale sia il trattarsi di una moneta rifugio... sicuramente lo è meno, ma meno che in passato...
stockuccio
Guest
vedo che l'Italia deve rifinanziare quest'anno 208 miliardi ed è un problema, gli Usa solo 2000 ...
sono usciti i dati dell'occupazione USA, non entusiasmanti nonostante appena 564.000 anime temporaneamente occupate nel censimento, caleranno nei dati del mese prossimo di pare la metà ... e calano ancora la gente in cerca di occupazione Calculated Risk: Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks e Calculated Risk: May Employment Report: 20K Jobs ex-Census, 9.7% Unemployment Rate
finiti gli incentivi l'immobiliare riprecipita http://www.housingwatch.com/2010/06/04/housing-demand-crashes-as-effects-of-tax-credit-wane/
i cinesi dicono che la loro situazione immobiliare è un casino AFP: China bank adviser says property woes worse than US
insomma, seduti tranquillamente sulla santa barbara si aspetta la miccia, magari piccolina e ungherese ...
sono usciti i dati dell'occupazione USA, non entusiasmanti nonostante appena 564.000 anime temporaneamente occupate nel censimento, caleranno nei dati del mese prossimo di pare la metà ... e calano ancora la gente in cerca di occupazione Calculated Risk: Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks e Calculated Risk: May Employment Report: 20K Jobs ex-Census, 9.7% Unemployment Rate
finiti gli incentivi l'immobiliare riprecipita http://www.housingwatch.com/2010/06/04/housing-demand-crashes-as-effects-of-tax-credit-wane/
i cinesi dicono che la loro situazione immobiliare è un casino AFP: China bank adviser says property woes worse than US
insomma, seduti tranquillamente sulla santa barbara si aspetta la miccia, magari piccolina e ungherese ...
stockuccio
Guest
il punto 36 quantifica sinteticamente il calo dell'immobiliare finiti gli incentivi 
50 Statistics About The U.S. Economy That Are Almost Too Crazy To Believe
[ame="http://www.amazon.com/gp/product/B0015T963C?ie=UTF8&tag=shatteparadi-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=B0015T963C"]
[/ame]Most Americans know that the U.S. economy is in bad shape, but what most Americans don't know is how truly desperate the financial situation of the United States really is. The truth is that what we are experiencing is not simply a "downturn" or a "recession". What we are witnessing is the beginning of the end for the greatest economic machine that the world has ever seen. Our greed and our debt are literally eating our economy alive. Total government, corporate and personal debt has now reached 360 percent of GDP, which is far higher than it ever reached during the Great Depression era. We have nearly totally dismantled our once colossal manufacturing base, we have shipped millions upon millions of middle class jobs overseas, we have lived far beyond our means for decades and we have created the biggest debt bubble in the history of the world. A great day of financial reckoning is fast approaching, and the vast majority of Americans are totally oblivious.
But the truth is that you cannot defy the financial laws of the universe forever. What goes up must come down. The borrower is the servant of the lender. Cutting corners always catches up with you in the end.
Sometimes it takes cold, hard numbers for many of us to fully realize the situation that we are facing.
So, the following are 50 very revealing statistics about the U.S. economy that are almost too crazy to believe....
#50) In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.
#49) It is being projected that the U.S. government will have a budget deficit of approximately 1.6 trillion dollars in 2010.
#48) If you went out and spent one dollar every single second, it would take you more than 31,000 years to spend a trillion dollars.
#47) In fact, if you spent one million dollars every single day since the birth of Christ, you still would not have spent one trillion dollars by now.
#46) Total U.S. government debt is now up to 90 percent of gross domestic product.
#45) Total credit market debt in the United States, including government, corporate and personal debt, has reached 360 percent of GDP.
#44) U.S. corporate income tax receipts were down 55% (to $138 billion) for the year ending September 30th, 2009.
#43) There are now 8 counties in the state of California that have unemployment rates of over 20 percent.
#42) In the area around Sacramento, California there is one closed business for every six that are still open.
#41) In February, there were 5.5 unemployed Americans for every job opening.
#40) According to a Pew Research Center study, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.
#39) More than 40% of those employed in the United States are now working in low-wage service jobs.
#38) According to one new survey, 24% of American workers say that they have postponed their planned retirement age in the past year.
#37) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005.
#36) Mortgage purchase applications in the United States are down nearly 40 percent from a month ago to their lowest level since April of 1997.
#35) RealtyTrac has announced that foreclosure filings in the U.S. established an all time record for the second consecutive year in 2009.
#34) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in March 2010, an increase of nearly 19 percent from February, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
#33) In Pinellas and Pasco counties, which include St. Petersburg, Florida and the suburbs to the north, there are 34,000 open foreclosure cases. Ten years ago, there were only about 4,000.
#32) In California's Central Valley, 1 out of every 16 homes is in some phase of foreclosure.
#31) The Mortgage Bankers Association recently announced that more than 10 percent of all U.S. homeowners with a mortgage had missed at least one payment during the January to March time period. That was a record high and up from 9.1 percent a year ago.
#30) U.S. banks repossessed nearly 258,000 homes nationwide in the first quarter of 2010, a 35 percent jump from the first quarter of 2009.
#29) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
#28) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009.
#27) U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant.
#26) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. That was almost twice the level of a year earlier.
#25) In 2009, U.S. banks posted their sharpest decline in private lending since 1942.
#24) New York state has delayed paying bills totalling $2.5 billion as a short-term way of staying solvent but officials are warning that its cash crunch could soon get even worse.
#23) To make up for a projected 2010 budget shortfall of $280 million, Detroit issued $250 million of 20-year municipal notes in March. The bond issuance followed on the heels of a warning from Detroit officials that if its financial state didn't improve, it could be forced to declare bankruptcy.
#22) The National League of Cities says that municipal governments will probably come up between $56 billion and $83 billion short between now and 2012.
#21) Half a dozen cash-poor U.S. states have announced that they are delaying their tax refund checks.
#20) Two university professors recently calculated that the combined unfunded pension liability for all 50 U.S. states is 3.2 trillion dollars.
#19) According to EconomicPolicyJournal.com, 32 U.S. states have already run out of funds to make unemployment benefit payments and so the federal government has been supplying these states with funds so that they can make their payments to the unemployed.
#18) This most recession has erased 8 million private sector jobs in the United States.
#17) Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of 2010.
#16) U.S. government-provided benefits (including Social Security, unemployment insurance, food stamps and other programs) rose to a record high during the first three months of 2010.
#15) 39.68 million Americans are now on food stamps, which represents a new all-time record. But things look like they are going to get even worse. The U.S. Department of Agriculture is forecasting that enrollment in the food stamp program will exceed 43 million Americans in 2011.
#14) Phoenix, Arizona features an astounding annual car theft rate of 57,000 vehicles and has become the new "Car Theft Capital of the World".
#13) U.S. law enforcement authorities claim that there are now over 1 million members of criminal gangs inside the country. These 1 million gang members are responsible for up to 80% of the crimes committed in the United States each year.
#12) The U.S. health care system was already facing a shortage of approximately 150,000 doctors in the next decade or so, but thanks to the health care "reform" bill passed by Congress, that number could swell by several hundred thousand more.
#11) According to an analysis by the Congressional Joint Committee on Taxation the health care "reform" bill will generate $409.2 billion in additional taxes on the American people by 2019.
#10) The Dow Jones Industrial Average just experienced the worst May it has seen since 1940.
#9) In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
#8) Approximately 40% of all retail spending currently comes from the 20% of American households that have the highest incomes.
#7) According to economists Thomas Piketty and Emmanuel Saez, two-thirds of income increases in the U.S. between 2002 and 2007 went to the wealthiest 1% of all Americans.
#6) The bottom 40 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
#5) If you only make the minimum payment each and every time, a $6,000 credit card bill can end up costing you over $30,000 (depending on the interest rate).
#4) According to a new report based on U.S. Census Bureau data, only 26 percent of American teens between the ages of 16 and 19 had jobs in late 2009 which represents a record low since statistics began to be kept back in 1948.
#3) According to a National Foundation for Credit Counseling survey, only 58% of those in "Generation Y" pay their monthly bills on time.
#2) During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.
#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.
50 Statistics About The U.S. Economy That Are Almost Too Crazy To Believe
[ame="http://www.amazon.com/gp/product/B0015T963C?ie=UTF8&tag=shatteparadi-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=B0015T963C"]
But the truth is that you cannot defy the financial laws of the universe forever. What goes up must come down. The borrower is the servant of the lender. Cutting corners always catches up with you in the end.
Sometimes it takes cold, hard numbers for many of us to fully realize the situation that we are facing.
So, the following are 50 very revealing statistics about the U.S. economy that are almost too crazy to believe....
#50) In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.
#49) It is being projected that the U.S. government will have a budget deficit of approximately 1.6 trillion dollars in 2010.
#48) If you went out and spent one dollar every single second, it would take you more than 31,000 years to spend a trillion dollars.
#47) In fact, if you spent one million dollars every single day since the birth of Christ, you still would not have spent one trillion dollars by now.
#46) Total U.S. government debt is now up to 90 percent of gross domestic product.
#45) Total credit market debt in the United States, including government, corporate and personal debt, has reached 360 percent of GDP.
#44) U.S. corporate income tax receipts were down 55% (to $138 billion) for the year ending September 30th, 2009.
#43) There are now 8 counties in the state of California that have unemployment rates of over 20 percent.
#42) In the area around Sacramento, California there is one closed business for every six that are still open.
#41) In February, there were 5.5 unemployed Americans for every job opening.
#40) According to a Pew Research Center study, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.
#39) More than 40% of those employed in the United States are now working in low-wage service jobs.
#38) According to one new survey, 24% of American workers say that they have postponed their planned retirement age in the past year.
#37) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005.
#36) Mortgage purchase applications in the United States are down nearly 40 percent from a month ago to their lowest level since April of 1997.
#35) RealtyTrac has announced that foreclosure filings in the U.S. established an all time record for the second consecutive year in 2009.
#34) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in March 2010, an increase of nearly 19 percent from February, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
#33) In Pinellas and Pasco counties, which include St. Petersburg, Florida and the suburbs to the north, there are 34,000 open foreclosure cases. Ten years ago, there were only about 4,000.
#32) In California's Central Valley, 1 out of every 16 homes is in some phase of foreclosure.
#31) The Mortgage Bankers Association recently announced that more than 10 percent of all U.S. homeowners with a mortgage had missed at least one payment during the January to March time period. That was a record high and up from 9.1 percent a year ago.
#30) U.S. banks repossessed nearly 258,000 homes nationwide in the first quarter of 2010, a 35 percent jump from the first quarter of 2009.
#29) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
#28) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009.
#27) U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant.
#26) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. That was almost twice the level of a year earlier.
#25) In 2009, U.S. banks posted their sharpest decline in private lending since 1942.
#24) New York state has delayed paying bills totalling $2.5 billion as a short-term way of staying solvent but officials are warning that its cash crunch could soon get even worse.
#23) To make up for a projected 2010 budget shortfall of $280 million, Detroit issued $250 million of 20-year municipal notes in March. The bond issuance followed on the heels of a warning from Detroit officials that if its financial state didn't improve, it could be forced to declare bankruptcy.
#22) The National League of Cities says that municipal governments will probably come up between $56 billion and $83 billion short between now and 2012.
#21) Half a dozen cash-poor U.S. states have announced that they are delaying their tax refund checks.
#20) Two university professors recently calculated that the combined unfunded pension liability for all 50 U.S. states is 3.2 trillion dollars.
#19) According to EconomicPolicyJournal.com, 32 U.S. states have already run out of funds to make unemployment benefit payments and so the federal government has been supplying these states with funds so that they can make their payments to the unemployed.
#18) This most recession has erased 8 million private sector jobs in the United States.
#17) Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of 2010.
#16) U.S. government-provided benefits (including Social Security, unemployment insurance, food stamps and other programs) rose to a record high during the first three months of 2010.
#15) 39.68 million Americans are now on food stamps, which represents a new all-time record. But things look like they are going to get even worse. The U.S. Department of Agriculture is forecasting that enrollment in the food stamp program will exceed 43 million Americans in 2011.
#14) Phoenix, Arizona features an astounding annual car theft rate of 57,000 vehicles and has become the new "Car Theft Capital of the World".
#13) U.S. law enforcement authorities claim that there are now over 1 million members of criminal gangs inside the country. These 1 million gang members are responsible for up to 80% of the crimes committed in the United States each year.
#12) The U.S. health care system was already facing a shortage of approximately 150,000 doctors in the next decade or so, but thanks to the health care "reform" bill passed by Congress, that number could swell by several hundred thousand more.
#11) According to an analysis by the Congressional Joint Committee on Taxation the health care "reform" bill will generate $409.2 billion in additional taxes on the American people by 2019.
#10) The Dow Jones Industrial Average just experienced the worst May it has seen since 1940.
#9) In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
#8) Approximately 40% of all retail spending currently comes from the 20% of American households that have the highest incomes.
#7) According to economists Thomas Piketty and Emmanuel Saez, two-thirds of income increases in the U.S. between 2002 and 2007 went to the wealthiest 1% of all Americans.
#6) The bottom 40 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
#5) If you only make the minimum payment each and every time, a $6,000 credit card bill can end up costing you over $30,000 (depending on the interest rate).
#4) According to a new report based on U.S. Census Bureau data, only 26 percent of American teens between the ages of 16 and 19 had jobs in late 2009 which represents a record low since statistics began to be kept back in 1948.
#3) According to a National Foundation for Credit Counseling survey, only 58% of those in "Generation Y" pay their monthly bills on time.
#2) During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.
#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.
stockuccio
Guest
Into the Abyss: The Cycle of Debt Deflation
June 03rd, 2010
[FONT="]One of the most famous [/FONT][FONT="]quotations of Austrian economist Ludwig von Mises[/FONT][FONT="] is that “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.” In fact, the US economy is in a downward spiral of debt deflation despite the bold actions of the federal government and of the US Federal Reserve taken in response to the financial crisis that began in 2008 and the associated recession. Although the vicious circle of debt deflation is not widely recognized, precisely what von Mises described is happening before our eyes.[/FONT]
[FONT="]A variety of positive economic data has been reported in recent months. [/FONT][FONT="]Retail sales rose 0.4% in April[/FONT][FONT="] 2010 as consumer spending rose and the US gross domestic product (GDP) [/FONT][FONT="]grew at a rate of 3%[/FONT][FONT="]. In May 2010, [/FONT][FONT="]home sales rose to a five-month high[/FONT][FONT="] and [/FONT][FONT="]consumer confidence rose 17% (from 57.7 to 63.3[/FONT][FONT="]). [/FONT][FONT="]Industrial production rose 0.8%[/FONT][FONT="] and [/FONT][FONT="]durable goods orders rose 2.9%[/FONT][FONT="], more than had been forecast. However, the modest gains reported represent the continuing adaptation of economic activity at dramatically lower levels compared to the pre-recession period and most of the reported gains have been substantially manufactured by massive government deficit spending.[/FONT]
[FONT="]Despite the widely reported green shoots, in May, [/FONT][FONT="]the unemployment rate rose to 9.9%[/FONT][FONT="] while [/FONT][FONT="]paychecks in the private sector shrank[/FONT][FONT="] to historic lows as a percentage of personal income, and [/FONT][FONT="]personal bankruptcies rose[/FONT][FONT="]. Roughly [/FONT][FONT="]14% of US mortgages are delinquent or in foreclosure[/FONT][FONT="], [/FONT][FONT="]credit card defaults are rising[/FONT][FONT="] and [/FONT][FONT="]consumer spending hit 7 month lows[/FONT][FONT="]. To make matters worse, [/FONT][FONT="]the reported increase in consumer credit[/FONT][FONT="], in fact, points to a further deterioration because consumers appear to be borrowing to service existing debt. Outside of the federal government, which is borrowing at record levels and expanding as a percentage of GDP, and outside of the bailed out financial sector, debt deflation has continued unabated since 2008.[/FONT]
[FONT="]Money Supply vs. Debt Service[/FONT]
[FONT="]A contraction of the broad money supply is taking place[/FONT][FONT="] because the influx of money into the US economy, i.e., lending to consumers and non financial businesses, has fallen below the rate at which money is flowing out of general circulation as a function of debt service (interest and principle payments on existing debt), thus a net drain of money from the broad US economy is taking place. As a result, additional borrowing, as consumer spending falls, appears to be servicing existing debt in a pattern that is clearly unsustainable and that signals a further rise in debt defaults in coming months.[/FONT]
[FONT="]The estimate of the broad money supply (the Federal Reserve’s M3 monetary aggregate) is crashing and the Federal Reserve’s M1 Money Multiplier, a measure of how much new money is created through lending activity, fell off of a cliff in 2008, and remains practically flat-lined.[/FONT]
[FONT="]The contraction of the broad money supply points to a potential slowing of economic activity and indicates that consumers and non financial businesses will be less able to service existing debt. Despite easing somewhat in March 2010, [/FONT][FONT="]credit card losses are expected to remain near 10% over the next year[/FONT][FONT="] and [/FONT][FONT="]mortgage delinquencies, are currently at a record high[/FONT][FONT="]s, and these dismal predictions implicitly assume a stable or growing money supply.[/FONT]
[FONT="]A tsunami of eventual mortgage defaults seems to be building and loan modifications have been a failure thus far. There have been only a small number of [/FONT][FONT="]permanent loan modifications (295,348) under the Home Affordable Modification Program (HAMP) in 2009[/FONT][FONT="], out of 3.3 million eligible (60 days delinquent) loans and [/FONT][FONT="]more than half of modified loans default[/FONT][FONT="].[/FONT]
[FONT="]Although it has been reported that [/FONT][FONT="]American consumers are saving at a rate of 3.4%[/FONT][FONT="], the contraction of the broad money supply suggests savings liquidation. Given a [/FONT][FONT="]contracting money supply[/FONT][FONT="], [/FONT][FONT="]ongoing debt defaults[/FONT][FONT="] and [/FONT][FONT="]declining consumer spending[/FONT][FONT="], the increase in non-mortgage consumer loans indicates that consumers are borrowing where possible to consolidate debts, cover debt service, or [/FONT][FONT="]borrowing to continue operating financially as their total debt grows[/FONT][FONT="], thus as they approach insolvency.[/FONT]
[FONT="]The increase in non-mortgage consumer loans has not prevented an overall decline in total household debt attributed to [/FONT][FONT="]ongoing deleveraging by consumers[/FONT][FONT="]. While deleveraging (paying down debt) has been interpreted as caution on the part of consumers, or as low consumer confidence, the decline in outstanding credit reflects a reduced ability to borrow, i.e., to service additional debt. This suggests that the recovery of the US economy may be illusory and that the economy is likely to contract further in coming months.[/FONT]
[FONT="]Commercial borrowing has declined more sharply than household debt suggesting that the [/FONT][FONT="]nominal return to growth estimated at 3%[/FONT][FONT="] has not been matched by debt financed expansion in the private sector.[/FONT]
[FONT="]The broad US money supply is no longer being maintained or expanded by normal lending activity. If federal government deficit spending ([/FONT][FONT="]$1.5 trillion annually[/FONT][FONT="]), [/FONT][FONT="]debt monetization and emergency actions by the Federal Reserve[/FONT][FONT="] (totaling an estimated $1.5 trillion since 2008) to recapitalize banks are considered separately, there remains a net drain effect on the broad money supply. The scarcity of money hampers economic activity, i.e., money is less available for investment, and directly exacerbates debt defaults as consumers and businesses experience cash shortfalls, while at the same time being less able to borrow. Since unemployment is a key indicator of recession, then if the US economy were contracting, it would be evident in unemployment statistics.[/FONT]
[FONT="]Structural Unemployment[/FONT]
[FONT="]Unemployment and labor force data suggest that the US labor market is in a structural decline, i.e., millions of jobs have been and are being permanently eliminated, perhaps as a long term consequence of offshoring, outsourcing to other countries and the ongoing deindustrialization of the United States. However, the immediate meaning of the term “structural” has to with the fact that jobs created or sustained during the unprecedented expansion of debt leading to the financial crisis that began in 2008, e.g., a substantial portion of service sector jobs created in the past two decades now appear not to be viable outside of a credit expansion.[/FONT]
[FONT="]Officially, the US unemployment rate rose to 9.9% in April 2010, which represents the percentage of workers claiming unemployment benefits. However, [/FONT][FONT="]the total number of unemployed or underemployed persons, including so-called “discouraged workers” (Bureau of Labor Statistics U-6), rose to 17.1%[/FONT][FONT="]. [/FONT][FONT="]Using the same methods that the BLS had used prior to the Clinton administration, U-6 would be approximately 22%[/FONT][FONT="], rather than the official 17.1% statistic.[/FONT]
[FONT="]With official U-6 unemployment of 17.1% and a [/FONT][FONT="]workforce of 154.1 million[/FONT][FONT="] there are roughly 26,197,000 people officially out of work. Using the pre-Clinton U-6 unemployment calculation of approximately 22%, there would be 33.9 million unemployed. If the average US household consists of 2.6 persons and if 33% of the unemployed are sole wage earners, then 55.5 million US citizens currently have no means of financial support (17.9% of the population).[/FONT]
[FONT="]While it has been reported that [/FONT][FONT="]the labor force is shrinking[/FONT][FONT="], the characterization of workers permanently exiting the workforce by choice may be inaccurate. While a shrinking workforce could reflect demographic changes, the rate of change suggests that tens of millions of Americans are simply unemployed.[/FONT]
[FONT="]Setting aside the question of whether or not those “not in the workforce” are, in fact, permanently unemployed, the workforce, as a percentage of the total US population, is currently at 1970s levels. Since many more households today depend on two incomes to meet their obligations, compared to the 1970s, a marked drop in the percentage of the population in the workforce points to a decline in the labor market more significant than official unemployment statistics suggest. What is more important, however, is that structural unemployment suggests structural government deficits, e.g., unemployment benefits, welfare, food stamps, etc. Since more than 2/3 of US GDP (roughly 70%) consists of consumer spending, a sustainable recovery from recession seems improbable if unemployment is worsening or if the labor force is in a structural decline, since that would imply unsustainable government deficits, whether or not they are masked by nominal GDP gains thanks to economic stimulus measures.[/FONT]
[FONT="]Government and GDP Growth[/FONT]
[FONT="]The US federal government is a growing portion of GDP, thus reported GDP growth is largely a byproduct of government deficit spending and stimulus measures, i.e., reported GDP growth is unsustainable. Total government spending at the local, state and federal levels accounts for as much as [/FONT][FONT="]45% of GDP[/FONT][FONT="], thus nominal gains would be expected when government deficit spending increases. According to some measures, reported gains in GDP are a byproduct of relatively new statistical methods and, using earlier methods of calculation, GDP remains negative.[/FONT]
[FONT="]Government borrowing and spending may have offset declines in the private sector but only to a degree and only temporarily. The resulting growth in US public debt has an eventual mathematical limit: insolvency. Of course, the actual limit to US borrowing remains unknown. The continuing solvency of the US depends on the ability and willingness of governments, banks and investors around the world to lend to the US, which in turn depends on the tolerance of lenders for the US government’s profligacy and money printing by the Federal Reserve, e.g., quantitative easing and exchanging new cash for worthless bank assets. US Treasury bond auctions will fail if lenders conclude that a sufficiently large portion of their investment will be diluted into oblivion by proverbial money printing. In that event, the US dollar will surely plummet, despite deflationary pressures within the domestic US economy, and the cost of foreign goods, e.g., oil, will rise causing high inflation or triggering hyperinflation.[/FONT]
[FONT="]According to the [/FONT][FONT="]Bank for International Settlements[/FONT][FONT="] (BIS), the federal budget deficit increased from 3.1% of GDP in 2007 to 9.2% in 2010. Rather than being the result of one-time expenses, such as temporary stimulus measures, much of the deficit represents permanent increases in government spending, e.g., due to the growing number of federal employees. If increased government spending is removed, GDP appears to be declining significantly.[/FONT]
[FONT="]Of course, sustainability has more to do with total debt than with deficit spending because a deficit assumes that there is an underlying capacity to service additional debt.[/FONT]
[FONT="]Unsustainable Debt[/FONT]
[FONT="]While asset prices have declined, e.g., real estate and equities, debt levels have remained high due to [/FONT][FONT="]the federal government’s policy of preserving bank balance sheets[/FONT][FONT="], which had ballooned prior to the financial crisis to the point that overall debt in the US economy reached unsustainable levels.[/FONT]
[FONT="]The absolute debt to GDP ratio of the US economy peaked in 2007 when debt levels exceeded the ability of the economy to service debt from income based on production, even at low interest rates. Although US GDP began to decline prior to the advent of the global financial crisis, debt coverage had been in decline approximately since the 1970s, coincidentally, around the time that the US dollar was decoupled from gold.[/FONT]
[FONT="]Government deficit spending cannot correct the situation because, for every dollar of new borrowing, the gain in GDP is negligible and some have argued that the US economy has passed the point of “debt saturation.”[/FONT]
[FONT="]In a growing economy, additional debt can result in a net gain in GDP because the money supply grows and economic activity is stimulated by transactions that flow through the economy as a result. The debt saturation hypothesis is that, as debt levels rise, additional debt has less impact on GDP until a point is reached where new debt causes GDP to decline, i.e., the capacity of the economy to service debt has been exceeded and, not only is it impossible for the economy to grow at a rate sufficient to service existing debt (since interest compounds), but economic activity actually declines further as a function of additional debt.[/FONT]
[FONT="]A Downward Spiral[/FONT]
[FONT="]The process of debt deflation is straightforward. New lending at levels that would maintain or expand the broad money supply is impossible for two reasons: (1) asset values and incomes have fallen and millions remain unemployed; and (2) debt levels remain excessive compared to GDP, i.e., real economic activity (outside of the government and financial services industry) cannot service additional debt. The inability to lend, actually the result of prior excess lending, results in a net drain of money from the economy. The drain effect, in turn, leads to further defaults as cash strapped consumers and businesses fail to service existing debt, and as debt defaults impact bank balance sheets, putting a damper on new lending and completing the cycle of debt deflation.[/FONT]
[FONT="]Keynesian economic policies, i.e., government deficit spending, are irrelevant vis-à-vis excessive debt levels in the economy and bailing out banks is not a solution since it cannot stop the deterioration of their balance sheets. The process is self-perpetuating and cannot be stopped by any government or monetary policy because it is not a matter of policy, but rather one of [/FONT][FONT="]mathematics[/FONT][FONT="].[/FONT]
[FONT="]Since the presence of excess debt (beyond what can be supported by a stable GDP, or by sustainable GDP growth) impacts the broad money supply, efforts to preserve bank balance sheets, i.e., to keep otherwise bad loans on the books of banks at full value, will ultimately cause bank balance sheets to deteriorate more than they would have otherwise. The fact that US banks issued trillions in bad loans cannot be corrected by [/FONT][FONT="]changing accounting rules[/FONT][FONT="], nor can the consequences be avoided by government deficit spending or by [/FONT][FONT="]unlimited bailouts[/FONT][FONT="], and the problem cannot be papered over by [/FONT][FONT="]dropping freshly printed money from helicopters[/FONT][FONT="] flying over Wall Street. The major problems facing the US economy today—a tsunami or debt defaults, structural unemployment, massive government budget deficits, a contraction of the broad money supply outside of the federal government and the financial system, and a lack of sustainable growth—cannot be addressed as long as excess debt levels are maintained. As von Mises clearly understood, sound economic conditions cannot be restored unless and until the excess debt, which resulted from a boom brought about by credit expansion, is purged from the system. The alternative, and the current policy of the United States, is a downward spiral into a bottomless economic abyss.[/FONT]
[FONT="]Ron Hera[/FONT]
[FONT="]Hera Research[/FONT]
June 03rd, 2010
[FONT="]One of the most famous [/FONT][FONT="]quotations of Austrian economist Ludwig von Mises[/FONT][FONT="] is that “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.” In fact, the US economy is in a downward spiral of debt deflation despite the bold actions of the federal government and of the US Federal Reserve taken in response to the financial crisis that began in 2008 and the associated recession. Although the vicious circle of debt deflation is not widely recognized, precisely what von Mises described is happening before our eyes.[/FONT]
[FONT="]A variety of positive economic data has been reported in recent months. [/FONT][FONT="]Retail sales rose 0.4% in April[/FONT][FONT="] 2010 as consumer spending rose and the US gross domestic product (GDP) [/FONT][FONT="]grew at a rate of 3%[/FONT][FONT="]. In May 2010, [/FONT][FONT="]home sales rose to a five-month high[/FONT][FONT="] and [/FONT][FONT="]consumer confidence rose 17% (from 57.7 to 63.3[/FONT][FONT="]). [/FONT][FONT="]Industrial production rose 0.8%[/FONT][FONT="] and [/FONT][FONT="]durable goods orders rose 2.9%[/FONT][FONT="], more than had been forecast. However, the modest gains reported represent the continuing adaptation of economic activity at dramatically lower levels compared to the pre-recession period and most of the reported gains have been substantially manufactured by massive government deficit spending.[/FONT]
[FONT="]Despite the widely reported green shoots, in May, [/FONT][FONT="]the unemployment rate rose to 9.9%[/FONT][FONT="] while [/FONT][FONT="]paychecks in the private sector shrank[/FONT][FONT="] to historic lows as a percentage of personal income, and [/FONT][FONT="]personal bankruptcies rose[/FONT][FONT="]. Roughly [/FONT][FONT="]14% of US mortgages are delinquent or in foreclosure[/FONT][FONT="], [/FONT][FONT="]credit card defaults are rising[/FONT][FONT="] and [/FONT][FONT="]consumer spending hit 7 month lows[/FONT][FONT="]. To make matters worse, [/FONT][FONT="]the reported increase in consumer credit[/FONT][FONT="], in fact, points to a further deterioration because consumers appear to be borrowing to service existing debt. Outside of the federal government, which is borrowing at record levels and expanding as a percentage of GDP, and outside of the bailed out financial sector, debt deflation has continued unabated since 2008.[/FONT]
[FONT="]Money Supply vs. Debt Service[/FONT]
[FONT="]A contraction of the broad money supply is taking place[/FONT][FONT="] because the influx of money into the US economy, i.e., lending to consumers and non financial businesses, has fallen below the rate at which money is flowing out of general circulation as a function of debt service (interest and principle payments on existing debt), thus a net drain of money from the broad US economy is taking place. As a result, additional borrowing, as consumer spending falls, appears to be servicing existing debt in a pattern that is clearly unsustainable and that signals a further rise in debt defaults in coming months.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of [/FONT][FONT="]Shadow Government Statistics[/FONT]
[FONT="]Chart courtesy of [/FONT][FONT="]Shadow Government Statistics[/FONT]
[FONT="]The estimate of the broad money supply (the Federal Reserve’s M3 monetary aggregate) is crashing and the Federal Reserve’s M1 Money Multiplier, a measure of how much new money is created through lending activity, fell off of a cliff in 2008, and remains practically flat-lined.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]The contraction of the broad money supply points to a potential slowing of economic activity and indicates that consumers and non financial businesses will be less able to service existing debt. Despite easing somewhat in March 2010, [/FONT][FONT="]credit card losses are expected to remain near 10% over the next year[/FONT][FONT="] and [/FONT][FONT="]mortgage delinquencies, are currently at a record high[/FONT][FONT="]s, and these dismal predictions implicitly assume a stable or growing money supply.[/FONT]
[FONT="]A tsunami of eventual mortgage defaults seems to be building and loan modifications have been a failure thus far. There have been only a small number of [/FONT][FONT="]permanent loan modifications (295,348) under the Home Affordable Modification Program (HAMP) in 2009[/FONT][FONT="], out of 3.3 million eligible (60 days delinquent) loans and [/FONT][FONT="]more than half of modified loans default[/FONT][FONT="].[/FONT]
[FONT="]Although it has been reported that [/FONT][FONT="]American consumers are saving at a rate of 3.4%[/FONT][FONT="], the contraction of the broad money supply suggests savings liquidation. Given a [/FONT][FONT="]contracting money supply[/FONT][FONT="], [/FONT][FONT="]ongoing debt defaults[/FONT][FONT="] and [/FONT][FONT="]declining consumer spending[/FONT][FONT="], the increase in non-mortgage consumer loans indicates that consumers are borrowing where possible to consolidate debts, cover debt service, or [/FONT][FONT="]borrowing to continue operating financially as their total debt grows[/FONT][FONT="], thus as they approach insolvency.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]The increase in non-mortgage consumer loans has not prevented an overall decline in total household debt attributed to [/FONT][FONT="]ongoing deleveraging by consumers[/FONT][FONT="]. While deleveraging (paying down debt) has been interpreted as caution on the part of consumers, or as low consumer confidence, the decline in outstanding credit reflects a reduced ability to borrow, i.e., to service additional debt. This suggests that the recovery of the US economy may be illusory and that the economy is likely to contract further in coming months.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Commercial borrowing has declined more sharply than household debt suggesting that the [/FONT][FONT="]nominal return to growth estimated at 3%[/FONT][FONT="] has not been matched by debt financed expansion in the private sector.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]The broad US money supply is no longer being maintained or expanded by normal lending activity. If federal government deficit spending ([/FONT][FONT="]$1.5 trillion annually[/FONT][FONT="]), [/FONT][FONT="]debt monetization and emergency actions by the Federal Reserve[/FONT][FONT="] (totaling an estimated $1.5 trillion since 2008) to recapitalize banks are considered separately, there remains a net drain effect on the broad money supply. The scarcity of money hampers economic activity, i.e., money is less available for investment, and directly exacerbates debt defaults as consumers and businesses experience cash shortfalls, while at the same time being less able to borrow. Since unemployment is a key indicator of recession, then if the US economy were contracting, it would be evident in unemployment statistics.[/FONT]
[FONT="]Structural Unemployment[/FONT]
[FONT="]Unemployment and labor force data suggest that the US labor market is in a structural decline, i.e., millions of jobs have been and are being permanently eliminated, perhaps as a long term consequence of offshoring, outsourcing to other countries and the ongoing deindustrialization of the United States. However, the immediate meaning of the term “structural” has to with the fact that jobs created or sustained during the unprecedented expansion of debt leading to the financial crisis that began in 2008, e.g., a substantial portion of service sector jobs created in the past two decades now appear not to be viable outside of a credit expansion.[/FONT]
[FONT="]Officially, the US unemployment rate rose to 9.9% in April 2010, which represents the percentage of workers claiming unemployment benefits. However, [/FONT][FONT="]the total number of unemployed or underemployed persons, including so-called “discouraged workers” (Bureau of Labor Statistics U-6), rose to 17.1%[/FONT][FONT="]. [/FONT][FONT="]Using the same methods that the BLS had used prior to the Clinton administration, U-6 would be approximately 22%[/FONT][FONT="], rather than the official 17.1% statistic.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of [/FONT][FONT="]Shadow Government Statistics[/FONT]
[FONT="]Chart courtesy of [/FONT][FONT="]Shadow Government Statistics[/FONT]
[FONT="]With official U-6 unemployment of 17.1% and a [/FONT][FONT="]workforce of 154.1 million[/FONT][FONT="] there are roughly 26,197,000 people officially out of work. Using the pre-Clinton U-6 unemployment calculation of approximately 22%, there would be 33.9 million unemployed. If the average US household consists of 2.6 persons and if 33% of the unemployed are sole wage earners, then 55.5 million US citizens currently have no means of financial support (17.9% of the population).[/FONT]
[FONT="]While it has been reported that [/FONT][FONT="]the labor force is shrinking[/FONT][FONT="], the characterization of workers permanently exiting the workforce by choice may be inaccurate. While a shrinking workforce could reflect demographic changes, the rate of change suggests that tens of millions of Americans are simply unemployed.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Setting aside the question of whether or not those “not in the workforce” are, in fact, permanently unemployed, the workforce, as a percentage of the total US population, is currently at 1970s levels. Since many more households today depend on two incomes to meet their obligations, compared to the 1970s, a marked drop in the percentage of the population in the workforce points to a decline in the labor market more significant than official unemployment statistics suggest. What is more important, however, is that structural unemployment suggests structural government deficits, e.g., unemployment benefits, welfare, food stamps, etc. Since more than 2/3 of US GDP (roughly 70%) consists of consumer spending, a sustainable recovery from recession seems improbable if unemployment is worsening or if the labor force is in a structural decline, since that would imply unsustainable government deficits, whether or not they are masked by nominal GDP gains thanks to economic stimulus measures.[/FONT]
[FONT="]Government and GDP Growth[/FONT]
[FONT="]The US federal government is a growing portion of GDP, thus reported GDP growth is largely a byproduct of government deficit spending and stimulus measures, i.e., reported GDP growth is unsustainable. Total government spending at the local, state and federal levels accounts for as much as [/FONT][FONT="]45% of GDP[/FONT][FONT="], thus nominal gains would be expected when government deficit spending increases. According to some measures, reported gains in GDP are a byproduct of relatively new statistical methods and, using earlier methods of calculation, GDP remains negative.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of [/FONT][FONT="]Shadow Government Statistics[/FONT]
[FONT="]Chart courtesy of [/FONT][FONT="]Shadow Government Statistics[/FONT]
[FONT="]Government borrowing and spending may have offset declines in the private sector but only to a degree and only temporarily. The resulting growth in US public debt has an eventual mathematical limit: insolvency. Of course, the actual limit to US borrowing remains unknown. The continuing solvency of the US depends on the ability and willingness of governments, banks and investors around the world to lend to the US, which in turn depends on the tolerance of lenders for the US government’s profligacy and money printing by the Federal Reserve, e.g., quantitative easing and exchanging new cash for worthless bank assets. US Treasury bond auctions will fail if lenders conclude that a sufficiently large portion of their investment will be diluted into oblivion by proverbial money printing. In that event, the US dollar will surely plummet, despite deflationary pressures within the domestic US economy, and the cost of foreign goods, e.g., oil, will rise causing high inflation or triggering hyperinflation.[/FONT]
[FONT="]
[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]Chart courtesy of the [/FONT][FONT="]Federal Reserve Bank of St. Louis[/FONT]
[FONT="]According to the [/FONT][FONT="]Bank for International Settlements[/FONT][FONT="] (BIS), the federal budget deficit increased from 3.1% of GDP in 2007 to 9.2% in 2010. Rather than being the result of one-time expenses, such as temporary stimulus measures, much of the deficit represents permanent increases in government spending, e.g., due to the growing number of federal employees. If increased government spending is removed, GDP appears to be declining significantly.[/FONT]
[FONT="]Of course, sustainability has more to do with total debt than with deficit spending because a deficit assumes that there is an underlying capacity to service additional debt.[/FONT]
[FONT="]Unsustainable Debt[/FONT]
[FONT="]While asset prices have declined, e.g., real estate and equities, debt levels have remained high due to [/FONT][FONT="]the federal government’s policy of preserving bank balance sheets[/FONT][FONT="], which had ballooned prior to the financial crisis to the point that overall debt in the US economy reached unsustainable levels.[/FONT]
[FONT="]The absolute debt to GDP ratio of the US economy peaked in 2007 when debt levels exceeded the ability of the economy to service debt from income based on production, even at low interest rates. Although US GDP began to decline prior to the advent of the global financial crisis, debt coverage had been in decline approximately since the 1970s, coincidentally, around the time that the US dollar was decoupled from gold.[/FONT]
[FONT="]Government deficit spending cannot correct the situation because, for every dollar of new borrowing, the gain in GDP is negligible and some have argued that the US economy has passed the point of “debt saturation.”[/FONT]
[FONT="]In a growing economy, additional debt can result in a net gain in GDP because the money supply grows and economic activity is stimulated by transactions that flow through the economy as a result. The debt saturation hypothesis is that, as debt levels rise, additional debt has less impact on GDP until a point is reached where new debt causes GDP to decline, i.e., the capacity of the economy to service debt has been exceeded and, not only is it impossible for the economy to grow at a rate sufficient to service existing debt (since interest compounds), but economic activity actually declines further as a function of additional debt.[/FONT]
[FONT="]A Downward Spiral[/FONT]
[FONT="]The process of debt deflation is straightforward. New lending at levels that would maintain or expand the broad money supply is impossible for two reasons: (1) asset values and incomes have fallen and millions remain unemployed; and (2) debt levels remain excessive compared to GDP, i.e., real economic activity (outside of the government and financial services industry) cannot service additional debt. The inability to lend, actually the result of prior excess lending, results in a net drain of money from the economy. The drain effect, in turn, leads to further defaults as cash strapped consumers and businesses fail to service existing debt, and as debt defaults impact bank balance sheets, putting a damper on new lending and completing the cycle of debt deflation.[/FONT]
[FONT="]Keynesian economic policies, i.e., government deficit spending, are irrelevant vis-à-vis excessive debt levels in the economy and bailing out banks is not a solution since it cannot stop the deterioration of their balance sheets. The process is self-perpetuating and cannot be stopped by any government or monetary policy because it is not a matter of policy, but rather one of [/FONT][FONT="]mathematics[/FONT][FONT="].[/FONT]
[FONT="]Since the presence of excess debt (beyond what can be supported by a stable GDP, or by sustainable GDP growth) impacts the broad money supply, efforts to preserve bank balance sheets, i.e., to keep otherwise bad loans on the books of banks at full value, will ultimately cause bank balance sheets to deteriorate more than they would have otherwise. The fact that US banks issued trillions in bad loans cannot be corrected by [/FONT][FONT="]changing accounting rules[/FONT][FONT="], nor can the consequences be avoided by government deficit spending or by [/FONT][FONT="]unlimited bailouts[/FONT][FONT="], and the problem cannot be papered over by [/FONT][FONT="]dropping freshly printed money from helicopters[/FONT][FONT="] flying over Wall Street. The major problems facing the US economy today—a tsunami or debt defaults, structural unemployment, massive government budget deficits, a contraction of the broad money supply outside of the federal government and the financial system, and a lack of sustainable growth—cannot be addressed as long as excess debt levels are maintained. As von Mises clearly understood, sound economic conditions cannot be restored unless and until the excess debt, which resulted from a boom brought about by credit expansion, is purged from the system. The alternative, and the current policy of the United States, is a downward spiral into a bottomless economic abyss.[/FONT]
[FONT="]Ron Hera[/FONT]
[FONT="]Hera Research[/FONT]
Geller
Banned
«La crisi è stata ben assorbita»
07 giugno 2010 - IlSole24Ore
1) La crisi del debito in Grecia ha indebolito l'euro e ha portato a un deflusso di capitali dai mercati asiatici, che, denominati in dollari, sono rimasti relativamente stabili. La liquidità è il fattore principale a guidare la correzione, perché profitti e fondamentali economici stanno sostenendo la crescita. Le preoccupazioni in merito alla crisi europea hanno senza dubbio creato venti contrari al l'export dei mercati emergenti, ma l'impatto negativo è relativamente gestibile. Nel complesso, le esportazioni nette davano un contributo marginale alla crescita totale del Pil cinese durante il primo trimestre del 2010, e gli scambi con i paesi dell'eurozona ammontavano a meno del 20% dell'export complessivo. Anche se ci aspettiamo che gli indicatori macro mostreranno una riduzione del l'export verso i mercati europei, lo scenario economico complessivo appare intatto, grazie alla forte domanda globale dalla Cina e al miglioramento della ripresa economica negli Stati Uniti.
2) La crescita dei prezzi nei mercati emergenti asiatici rispecchia la forte ripresa a confronto con l'Occidente e ha spinto alcuni governi asiatici a cominciare a dare una stretta alle loro politiche monetarie per battere l'inflazione. Comunque, data la situazione in Europa, l'Asia ha riluttanza ad alzare aggressivamente i tassi di interesse, proprio mentre la domanda di export dei mercati sviluppati si sta sgonfiando. Considerando il contesto attuale, è improbabile che la Cina comincerà a innalzare i tassi di interesse nel prossimo futuro, fino a che non appaia più evidente a livello macroeconomico l'avvio di una ripresa sostenibile e di maggiore stabilità in Europa.
3) Il governo cinese, vista la ripresa economica, ha cominciato a normalizzare le politiche fiscali e monetarie per sostenere la crescita di lungo periodo. La decisione di innalzare le riserve bancarie, operare una stretta creditizia e reindirizzare le politiche di incentivi genera una crescita economica sostenibile, nonostante le reazioni negative del mercato.
4) I mercati azionari indiano e cinese condividono alcune somiglianze, così come differenti opportunità di investimento. La Cina resta il baluardo dell'economia globale e gli incentivi politici favorevoli, uniti ai forti consumi domestici, continueranno a essere "motori gemelli" della crescita. Per gli investitori a lungo termine anche l'India è attraente, perché l'abbassamento dei tassi di povertà continua a sostenere la fioritura di una nuova classe media. L'India sta seguendo un percorso di crescita simile a quello cinese. Tuttavia, basandoci sulla dimensione delle singole economie, è improbabile che possa rimpiazzare la Cina al comando dell'economia globale. A noi piace anche il mercato vietnamita, perché è un'economia con una forte crescita interna e una robusta domanda infrastrutturale.
07 giugno 2010 - IlSole24Ore
1) La crisi del debito in Grecia ha indebolito l'euro e ha portato a un deflusso di capitali dai mercati asiatici, che, denominati in dollari, sono rimasti relativamente stabili. La liquidità è il fattore principale a guidare la correzione, perché profitti e fondamentali economici stanno sostenendo la crescita. Le preoccupazioni in merito alla crisi europea hanno senza dubbio creato venti contrari al l'export dei mercati emergenti, ma l'impatto negativo è relativamente gestibile. Nel complesso, le esportazioni nette davano un contributo marginale alla crescita totale del Pil cinese durante il primo trimestre del 2010, e gli scambi con i paesi dell'eurozona ammontavano a meno del 20% dell'export complessivo. Anche se ci aspettiamo che gli indicatori macro mostreranno una riduzione del l'export verso i mercati europei, lo scenario economico complessivo appare intatto, grazie alla forte domanda globale dalla Cina e al miglioramento della ripresa economica negli Stati Uniti.
2) La crescita dei prezzi nei mercati emergenti asiatici rispecchia la forte ripresa a confronto con l'Occidente e ha spinto alcuni governi asiatici a cominciare a dare una stretta alle loro politiche monetarie per battere l'inflazione. Comunque, data la situazione in Europa, l'Asia ha riluttanza ad alzare aggressivamente i tassi di interesse, proprio mentre la domanda di export dei mercati sviluppati si sta sgonfiando. Considerando il contesto attuale, è improbabile che la Cina comincerà a innalzare i tassi di interesse nel prossimo futuro, fino a che non appaia più evidente a livello macroeconomico l'avvio di una ripresa sostenibile e di maggiore stabilità in Europa.
3) Il governo cinese, vista la ripresa economica, ha cominciato a normalizzare le politiche fiscali e monetarie per sostenere la crescita di lungo periodo. La decisione di innalzare le riserve bancarie, operare una stretta creditizia e reindirizzare le politiche di incentivi genera una crescita economica sostenibile, nonostante le reazioni negative del mercato.
4) I mercati azionari indiano e cinese condividono alcune somiglianze, così come differenti opportunità di investimento. La Cina resta il baluardo dell'economia globale e gli incentivi politici favorevoli, uniti ai forti consumi domestici, continueranno a essere "motori gemelli" della crescita. Per gli investitori a lungo termine anche l'India è attraente, perché l'abbassamento dei tassi di povertà continua a sostenere la fioritura di una nuova classe media. L'India sta seguendo un percorso di crescita simile a quello cinese. Tuttavia, basandoci sulla dimensione delle singole economie, è improbabile che possa rimpiazzare la Cina al comando dell'economia globale. A noi piace anche il mercato vietnamita, perché è un'economia con una forte crescita interna e una robusta domanda infrastrutturale.
TheLondoner
Forumer storico
attenti che la (ri)discesa dei mercati azionari potrebbe essere solo all'inzio...
ovviamente nulla è sicuro e nulla è scontato...Ma quando parla questa signora qui.....
Recovery on Track, Worst Priced In: Goldman's Cohen*
di solito, negli ultimi 10 anni .....ho imparato che è sempre bene fare il contrario...
*l'unica volta che c'ha preso è stata da agosto 09 ... ma poi la crisi greca.... ha rovinato la festa
Ricordo ancora cosa predicava poco prima dello scoppio della bolla hitech.
ovviamente nulla è sicuro e nulla è scontato...Ma quando parla questa signora qui.....
Recovery on Track, Worst Priced In: Goldman's Cohen*
di solito, negli ultimi 10 anni .....ho imparato che è sempre bene fare il contrario...
*l'unica volta che c'ha preso è stata da agosto 09 ... ma poi la crisi greca.... ha rovinato la festa
Ricordo ancora cosa predicava poco prima dello scoppio della bolla hitech.
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