Category Archives: Debt

USA’s Day Of Reckoning – Hidden Secrets Of Money 7

Via Goldsilver (w/ Mike Maloney)

Mike Maloney makes the case for an upcoming deflationary scenario in the US and across the world, followed by hyperinflation similar to Weimar Germany after WW1.

The ‘Hidden secrets of money series’ is a must watch master class in production and explanation.

I highly recommend episode 4 ‘The Biggest Scam In The History Of Mankind – Who Owns The Federal Reserve?‘ Its a must watch and has just exceeded 5 million views incredible.

Got Bitcoin? IMF Sounds Alarm As Global Debt Hits Record $152 Trillion Or 225% Of World GDP

Via zerohedge.com

Read more here..

global-gross-debt

China facing full-blown banking crisis, world’s top financial watchdog warns

By Ambrose Evans Pritchard Via telegraph.co.uk 

  • “Outstanding loans have reached $28 trillion, as much as the commercial banking systems of the US and Japan combined. The scale is enough to threaten a worldwide shock if China ever loses control. Corporate debt alone has reached 171pc of GDP, and it is this that is keeping global regulators awake at night”

china-debt-to-gdp

Read more here..

 

2007 All over again – Banking crisis imminent

Via John Rubino @ Dollarcollapse.com

  • “The implication: Despite the headline numbers (like Friday’s largely-fictitious jobs report) that imply a stable, modest expansion, under the surface the financial system — composed of business loans, bank profits, etc. — is deteriorating fast”
  • “The outlook for U.S. stocks is terrible. GMO’s central forecast — which is a directional estimate more than a precise prediction — warns that U.S. large- and small-cap stock indices are now both so overpriced compared to history”

Read more here..

delinquency rates

Chinese Debt destruction & non-performing loan cycle could lead to huge debasement of Yuan

Via Kyle Bass @ wallstreetweek.com,

[Editors Note]

Debasement of the Yuan would be extremely bullish for alternate money/currency including Bitcoin and Precious metals.

China has $22 trillion in deposits part of which could soon find its way into these assets, if debasement and capitals controls for the Yuan hits.

  • “Given our views on credit contraction in Asia, and in China in particular, let’s say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there’s one thing that is going to happen:China is going to have to dramatically devalue its currency.”

Read more here..

 

The Elephant in the room – Rising Sovereign Debts, Rising Interest rates

[The following article is by Renegade Investor Chief Editor – Edward Blake] – Originally posted 2014

It’s been over 5 years since the epic events of 2008 that should have marked the end of the runaway fiat currency, debt saturated global economy which we have been thrown into by a combination of loose regulation and easy credit that was willingly administered by the quote, ‘too big to fail banks’.

However, since 2008 it is fair to say there has been no real fundamental reform of economic policy, banking regulation and the very nature of the institutions that brought us to our knees. As a result UK debt levels continue to escalate.

In addition to this there has also been no real evolution in the mainstream media’s (MSM) coverage and rhetoric on the fundamental reasons and critical state of sovereign debt levels.

In particular how the need to maintain low interest rates on these debts, make any chance of a genuine recovery a near impossibility.

Despite all the talk of recovery and ‘green shoots’ in the economy that I hear on a daily basis, backed up by the pseudo backdrop of record high equity markets, bond markets and a propped up housing market still benefiting from artificially low interest rates. It is still evident that sovereign debt levels mostly inherited by past bank bailouts and servicing of interest on that debt are growing worldwide and are predicted to grow further throughout 2014.

G7 Soverign Debt levels

Of course the chart above only shows sovereign debt, when corporate, financial sector, private debt and unfunded liabilities are factored in, the debt to GDP in the UK is estimated to be around 900% GDP.

G10 Debt DistributionThe UK’s approach to this crisis (as well as many other countries globally) has led them to quantitative easing (QE).  This is essentially money printing where the central bank (BOE) monetizes debt through the purchase of government bonds (Gilts) from other financial entities such as banks and corporations. The two main objectives of this is supposed to keep interest rate low by creating artificial demand for gilts and to stimulate growth by funding SME’s.

However, it could be argued that the very same forces designed to stimulate growth are actually undermining the real economy at the same time as the increase in base currency through QE and fractional reserve banking is causing asset price inflation in essential commodities.

This in turn not only drives up living costs and reduces disposable income for large parts of the population, but has the knock on effect of damaging businesses due to reduced demand, leading to layoffs that create an excess of labor and dropping wages.

What we have ended up with is a catch 22 situation that is not being widely discussed in the MSM. The very steps to try and resolve the crisis is undermining the real economy by driving up total sovereign debt which almost ensures the need for even more debasement of the currency through QE in the future, to roll over maturing debt and the interest on the sovereign debt.

This in turn will again lead to more inflation and the erosion of purchasing power of fiat currencies including the pound, creating a dangerous negative feedback loop in the economy.

With sovereign debt approaching £1.4 trillion and what looks like a reversal of the gilt bond market into a secular bear market in May of 2013, signaling rising interest rates on Index linked bonds and new gilt purchases.

The opportunity for the government to make and meaningful reduction on the UK’s sovereign debt to a sustainable level, is looking more and more insurmountable.

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