|Six months since I've posted .... as the world turns |
When This Debt Bubble Bursts, Central Banks Will Turn to Money Printing... Again
by Phoenix Capital...
Sep 19, 2017
The only reason the financial system has held together so well since 2008 is because Central Banks have created a bubble in bonds via massive QE programs and seven years of ZIRP/NIRP.
As a result of this, the entire world has gone on a debt binge issuing debt by the trillions of dollars. Today, if you looked at the world economy, you’d find it sporting a Debt to GDP ratio of over 327%.
Well guess what? The REAL situation is even worse than this. The Bank of International Settlements (the Central Banks’ Central Bank) just published a report revealing that globally the financial system has $13 trillion MORE debt hidden via junk derivatives contracts.
Global debt may be under-reported by around $13 trillion because traditional accounting practices
exclude foreign exchange derivatives used to hedge international trade and foreign currency bonds, the BIS said on Sunday.
Source: Yahoo! Finance.
As has been the case for every single crisis since the mid’90s, the problem is derivatives.
Consider that as early as 1998, soon to be chairperson of the Commodity Futures Trading Commission (CFTC), Brooksley Born, approached Alan Greenspan, Bob Rubin, and Larry Summers (the three heads of economic policy) about derivatives.Born said she thought derivatives should be reined in and regulated because they were getting too out of control. The response from Greenspan and company was that if she pushed for regulation that the market would “implode.”
Fast-forward to 2007, and once again unregulated derivatives trigger a massive crisis, this time regarding the Housing Bubble
And today, we find out that once again, derivatives are at the root of the current bubble (debt). And once again, the Central Banks will be cranking up the printing presses to paper over this mess when the stuff hits the fan.
Already, Central Banks are printing nearly $180 billion per month in QE. When the next crisis hits, it’s going to be well north of $250 billion if not $500 billion per month.
As the world turns I'd suggest one read The Accidental Superpower by Peter Zeihan.
Zeihan, a protégé of George Friedman of Statfor, lays out the future in an incandescent manner based upon the collapse of Pax Americana. Cf. Bretton Woods, 1944 and the world that followed
... Cf. further to Zeihan above the idea of Demographic Collapse. I might add this V. Putin's greatest problem: Russia's startling demographic collapse not much covered in the west ....
Finnish Politician Tells Women 'Be Patriotic, Have More Babies' As Birth Rates Crashes To 150 Year Lowsby Tyler Durden Sep 20, 2017
For years, the Japanese government has been desperately trying to encourage its citizenry to have more sex to combat the collapsing demographics the nation faces, trying guilt ( blasting their "sexual apathy") and punishment ( imposing a "handsome tax" to make lief more even for ugly men), to no avail.
Now it appears Finland is suffering a similar fate. As Bloomberg reports, Finland, a first-rate place in which to be a mother, has registered the lowest number of newborns in nearly 150 years.
The birth rate has been falling steadily since the start of the decade, and there's little to suggest a reversal in the trend. Demographics are a concern across the developed world, of course. But they are particularly problematic for countries with a generous welfare state, since they endanger its long-term survival.
For Heidi Schauman, the statistics are "frightening."
"They show how fast our society is changing, and we don't have solutions ready to stop the development," the Aktia Bank chief economist said in a telephone interview in Helsinki. "We have a large public sector and the system needs taxpayers in the future."
As Bloomberg notes, that's a surprisingly low level, given the efforts made by the state to support parenthood.
Perhaps nothing illustrates those better than Finland's famous baby-boxes.
Introduced in 1937, containers full of baby clothes and care products are delivered to expectant mothers, with the cardboard boxes doubling up as a makeshift cot.The idea behind the maternity packages was prompted by concerns over high infant mortality rates in low-income families.
The starter kits were eventually extended to all families.
Offering generous parental leave and one of the best education system in the world doesn't seem to be working either.
Reversing the modern idea that it's ok not to have kids is impracticable. Opening the doors to immigrants is a political no-go area (Prime Minister Juha Sipila's center-right government relies on the support of nationalist lawmakers).
The leader of the opposition Social Democrats, Antti Rinne, caused a stir in August when he urged women to fulfill their patriotic duty and have more babies.
"The discussion has revolved around gender equality and the employment of women, with the issue of natality sent to the background," she said.
What Finland really needs is a political program that treasures the family and increases the value of parenthood, the economist argued.
The baby boxes that are delivered to expectant mothers contain all sorts of goodies. They include bodysuits, leggings, mittens, bra pads, talcum powder, lubricant, a hairbrush and a bath thermometer.