http://dailyreckoning.com/four-market-signals-that-the-crack-ups-begun/
This is no small number. Compared to the peak MEW (Mortgage Equity Withdrawal) rate of 8% of disposal income, today’s negative 2% rate means there has been about a $1 trillion downward swing in household “spending.”
Almost week by week, we have another central bank — most recently it was Sweden — lowering their money market rates into negative territory. The Swiss National Bank is already there. Denmark’s Nationalbank is there. The European Central Bank is there on the deposit rate. The Bank of Japan is also there.
Why would anybody in their right mind own Italian debt earning 160 basis points a year?
There is now nearly $3 trillion of sovereign debt spread over Japanese issues and the major European countries that are trading at negative yields.
This is no small number. Compared to the peak MEW (Mortgage Equity Withdrawal) rate of 8% of disposal income, today’s negative 2% rate means there has been about a $1 trillion downward swing in household “spending.”
Almost week by week, we have another central bank — most recently it was Sweden — lowering their money market rates into negative territory. The Swiss National Bank is already there. Denmark’s Nationalbank is there. The European Central Bank is there on the deposit rate. The Bank of Japan is also there.
Why would anybody in their right mind own Italian debt earning 160 basis points a year?
There is now nearly $3 trillion of sovereign debt spread over Japanese issues and the major European countries that are trading at negative yields.
You can see that in iron ore, which is now barely holding $48 from a peak of almost $200.
You can see this in the oil patch too. Look at the Baltic Dry Index
According to the report, we’re now at the $200 trillion threshold. That’s up from only about $140 trillion at the time of the 2008 financial crisis. So we’ve had a roughly $60 trillion expansion worldwide of debt since 2008. Over that same time, global GDP only increased by about $15 trillion (roughly speaking, from $55 trillion to $70 trillion).
Owing to central bank money printing and all of this unprecedented monetary stimulus, we’ve added about $60 trillion of new debt. And we’ve gotten somewhere around $15 trillion of extra output in return. That’s not even one-third of the amount of debt.
The numbers from China are even more startling. In the year 2000, China had $2 trillion of credit outstanding. In 2008, Chinese debt was $7 trillion. It now has an unbelievable $28 trillion of credit outstanding.
And at the time of the 2008 crisis, China had allegedly — if you believe the numbers, which no one really should — $5 trillion of annual economic output. It’s now $10 trillion. So officially it’s doubled its GDP.
But China’s debt is up more than $20 trillion while its GDP is up just $5 trillion.
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