Debt Rattle Jan 20 2014
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Jack Allison Street scene, NYC: shiny shoes and “dancing on the water” Summer 1938 Debt Rattle Jan 20 2014 China growth numbers (well, estimates) are
[See the full post at: Debt Rattle Jan 20 2014]“It takes just the richest 85 people in the world to get the same net worth as the poorest 50%. Whoever thinks that’s a good thing, good luck. The other 99% of you, do something about it if you don’t like it.”
As long as you keep using money, ’cause even if that ratio changes (temporarily), we’ll still be exploiting you. Thank you, The One Percent.
And to follow up on the Chinese “wealth management products” you wrote about a few weeks ago, Karl Denninger agrees there is trouble in his “It Comes from the East (and Soon)”:
“On Friday, Chinese state media reported that China Credit Trust Co. warned investors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.
The Industrial and Commercial Bank of China sold the China Credit Trust product to its customers in inland Shanxi province. This bank, the world’s largest by assets, on Thursday suggested it will not compensate investors, stating in a phone interview with Reuters that “a situation completely does not exist in which ICBC will assume the main responsibility.
Why does all this matter? Because this “investment” was “offered” under terms that were essentially impossible to fulfill at the outset.
They included a 10% annual return to investors, or three times bank deposit rates in China. This means that the company had to be paying more than that (since nobody lends intentionally at a loss.)
Obviously the firm that did the borrowing was desperate. The Forbes article details some of the probable reasons, but it doesn’t matter why. What matters is that this is an instance of a facially-fraudulent scheme if looked at with any sort of diligence at all.
That’s very much like our so-called “pension plans” that promise 8% returns in their portfolios, all of which are scams because there is no possibility of ever earning that return except by stealing it over very long periods of time. A person’s work-life is about 45 years (20-65), and thus if we were to assume such a pension plan had a ~40 year time horizon, the first dollar put in would have to have expanded by 21.7x over that 40 years. For that to be sustainable the economy would have to expand by 21.7x over the same 40 year period.”
SteveB – “As long as you keep using money, ’cause even if that ratio changes (temporarily), we’ll still be exploiting you.” Store sales shows our use of money is decreasing.
“The Retail Death Rattle:
If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. […]
The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.”
From the comments: Only 6% of all retail sales in the entire country are done on-line. It accounts for Amazon and every other on-line retailer.
https://www.theburningplatform.com/2014/01/20/the-retail-death-rattle/#comments
“Mega Default in China” (Forbes) is the article that Karl Denninger is referring to.
https://www.forbes.com/sites/gordonchang/2014/01/19/mega-default-in-china-scheduled-for-january-31/
What is going on with the U.S government? Janet Yellen was appointed to head the FED and there was not much of a hearing on it no real questioning of the FED spending. Spending of over a Trillion dollars is approved without much fanfare… are they finally getting the picture and so scared that they don’t know where to stand anymore? I know Janet Yellen must be scared and if she is not, she is not very bright; which may be why she got the job. I know people talk about slow collapse but that is not the nature of collapse; when people see what the readers here and elsewhere they will run for the hills as fast as their chubby legs can carry them. I know it is coming I just don’t know how my government will react and how much panic there will be. But I have noticed a lot more chatter on the anti BAU sites…so if that is any guage I think we are getting really close….Ted
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