[MonteQuest]

I don't think this is the actual situation, though, so that's why I asked who is holding all the paper here.

[onlooker]

P, you can't eat guns and you can't eat gold.

[MonteQuest]

The thing that struck me most about that pie chart was, not how large the US share was, but how just how wee Canada and Mexico's was compared to ours.

Just seems odd....then you look closer, and bing! you see itty bitty teeny tiny Russia?

I'm beginning to think the reason America is "exceptional" is because we borrowed more from the future than anyone else.

[MonteQuest]

Monte suggested we turn in our gold and guns in for cartons of mini-liquor bottles, cigarettes, and of BIC lighters. Sounds right. High value in a small box. All stuff to deaden the pain.

No no no...to trade...barter..get laid, silly.

[ennui2]

I don't think this is the actual situation, though, so that's why I asked who is holding all the paper here.

That doesn't answer the question. You have to line up countries with how much debt they have and who they owe it to.

[onlooker]

http://www.usdebtclock.org/
Pretty intimidating clock

[MonteQuest]

That doesn't answer the question. You have to line up countries with how much debt they have and who they owe it to.

[MonteQuest]

You have to line up countries with how much debt they have and who they owe it to.

It's complicated, to say the least. But visually, pretty easy to read in relative size.



Interactive one here ennui2: http://www.zerohedge.com/news/2012-11-20/world-wide-web-debt Everything you want to know, I think.

[MonteQuest]

We must consider that, should oil prices and demand remain low for an extended period, new investment in oil production — not to mention renewables — will fall to such an extent that, with worldwide depletion of existing fields at 6.7 percent a year, there simply will not be enough new oil, or oil replacement energy, to power an economic recovery.

I wrote that in 2008. It was an observation of what might happen; something we should consider. Some have called it a prediction that didn't happen. That's true. Oil prices didn't stay low for an extended period of time. Also, the world's economy didn't recover to pre-crisis levels. Annual investment in renewables declined in 2012 and 2013. High prices spurred new oil production--plus zero interest rates and $60 trillion in new debt--but it was only enough for a recovery to an economy that now consumes 15.5 mbpd less than the historical trend line going back decades.

Now, 8 yrs later, I think that observation is still timely should we revisit the 2008 downturn, much less the even worse crash we have teed up. Whether demand rises with abandon due to low prices remains to be seen.

I think the over leveraged debt will curb demand. That's my only "prediction."

[MonteQuest]

The housing boom that caused the last financial crisis began as a natural reaction to the Federal Reserve lowering interest rates to ridiculously low levels from 2001 through 2004. Those low rates pale in comparison to the last 7 years.



Unrepayable debt gives the outward appearance of economic recovery, but the standard of living for most Americans has declined significantly. 17.5 million new cars were sold in 2015. A record. Yay!

But subprime loans are going through the roof. Oh…

Virtually every new car owner you see driving that fancy BMW, Lexus, or Volvo is underwater on their auto loan.



This is called rearranging the deck chairs on the Titanic by the big banks. But they are done. We have already drank the water we used to use to prime the pump. In my opinion, the next global financial crisis will be beyond the reach and control of the central banks. For example:

China decided to devalue its currency in August to give its slowing economy a boost. But China’s ability to control the renminbi’s continued slide is raising eyebrows. Fears of a run on the renminbi are large and growing. What can they do? Use reserves to prop up the renminbi to prevent the capital flight under way, as the Chinese people take their wealth out of the country? That’s just a short-term fix, as reserves aren't endless. Raise interest rates? Not on your life; the debt burden is too high. Let the renminbi slide into an abyss and implode the world economy? Hope not. But that’s where it is headed.



We could be seeing a liquidity drought. The exit doors become real small in a crowded room.

[ralfy]

FWIW, even with incredible improvements in manufacturing and food production decades ago, most people worldwide still earn only around $3 a day and can barely access one or more basic needs. Given that, in a way the sky fell some time ago, and the global population is still struggling to make things better.

[ennui2]

This is called rearranging the deck chairs on the Titanic by the big banks.

It's called another wave of reckless people living beyond their means when they should have learned to reign it in after the housing crisis.

[MonteQuest]

It's called another wave of reckless people living beyond their means when they should have learned to reign it in after the housing crisis.

Yeah, but we didn't. Now it continues apace. China has been on a binge. Borrow and build, then use the build for collateral to borrow and build more, ad infinitum.



And not just a massive overbuild of brand new empty cities with 70 million empty luxury apartments, but a worldwide glut in industrial capacity that global demand cannot absorb, hence their move to increase domestic consumption. The export-led model of economic of growth seems to have reached its end. Their steel, concrete, ship building, and other industrial capacities are at twice the possible through-put.



Shipments of excess steel, oil products and aluminum are reaching new highs, flooding the world with unwanted inventories, creating a deflationary tsunami. And when the finished exports stop, the demand for raw materials will stop, creating a deflation of commodity prices.

The other big wave--not yet a tsunami—is capital flight.



These are not speculative movements. They are a flight to safety. Some economists are seeing a repeat of the 1997 currency crisis on the horizon, which saw massive currency devaluations, contractions in global trade, economic turmoil, and social instability.

[JimBof]

but if everybody devalues we will just be in the same S**t, only deeper.

[MonteQuest]

but if everybody devalues we will just be in the same S**t, only deeper.

I think they call deep shit, a depression.

[Revi]

Meanwhile, OPEC may have peaked:

http://peakoilbarrel.com

[Revi]

I think the eye of the storm is passing over, putting us back in the hurricane. It's hard to tell exactly when, but it looks like some time this spring the economy is going back into recession. There are just too many signs that things are slowing. The BDI, cost of commodities, the stock market are all indicators.