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Page added on May 30, 2015
The Crash of 2015: Going Global
Just in the past week, the headlines have been coming like triphammer blows: in Bloomberg News, “Something has gone wrong with the global consumer,” (according to JP Morgan); in International Business Times, “G7 Finance Ministers to address faltering global growth;” in London’s Telegraph, “HSBC fears world recession with no lifeboats left;” in OilPrice.com, “Clock running out for struggling oil companies;” and even in the mainstream vanilla Washington Post, a column by Robert Samuelson predicts “China’s coming crash,” then puts a question mark at the end to make sure we don’t worry too much.
When you add these concerns to longer standing ones about wild gyrations in the world’s stock and bond markets; the advent of peak oil in pretty much every oil-exporting country in the world; the onset of the effects of global climate change in California, the Middle East, North Africa, Brazil and elsewhere; it becomes apparent that optimism ought to be listed as a disorder requiring medical intervention.
What’s wrong with the global consumer? In the imortal words of Howard Davidowitz, a leading expert on retail, consumers “don’t have any f’ing money.” It is slowly — way too late — dawning on the Masters of the Universe that unless ordinary people have money to spend — and by that we mean real money, not more credit cards or a third mortgage — the Masters are toast.
According to J.P. Morgan economist Joseph Lupton, “It would be difficult to overstate the recent downside surprise in global consumer spending.” Lower gas prices were supposed to stimulate spending. They didn’t. The high stock markets were supposed to encourage enough job creation to seriously dent unemployment rates and stimulate spending. They didn’t. The lackluster numbers of early spring were supposed to be the result of bad weather. They weren’t. “Clearly,” says Lupton, “something is off track.”
Indeed. International shipping is at historic lows. Energy consumption is declining. In the US, the trucking industry is starting to show weakness. At the same time rail-freight shipments are declining sharply. Retail stores are closing by the thousands. While, obliviously, the stock market soars to new heights.
Meanwhile, says International Business Times, “Finance ministers from the world’s largest developed economies meet in Germany this week against a backdrop of faltering global growth, scant inflationary pressures and a bond market in turmoil.” They’ll get to all this after they have figured out how to keep Greece from nuking the European Union by defaulting on its obligations because Greece hasn’t got any f’’ing money, either. Even if they can figure out how to amputate Greece without getting an infection, they will still be looking at either anemic growth or actual contraction in the powerhouse economies of the United States, China, Canada and Europe.
Now, even if you believe, as I do, that the notion of infinite growth on a finite planet is ridiculous, and the notion that all growth is always good is suicidal, you still live, as I do, in a system that will crash if its faith on growth is broken. So pay attention to these idiots. They’re driving.
Meanwhile, a report written by and for HSBC, the world’s third largest bank, likens the world economy to the Titanic, “sailing across the ocean without any lifeboats.” In fact the report is titled “The World Economy’s Titanic Problem,” and was written by a writer of financial horror stories appropriately named Stephen King. In his relentless account, the world’s central bankers have expended every bit of ammunition they have to stop the approaching iceberg of debt and depression, and the iceberg is bigger and closer than ever. You will stifle a scream as you read.
This gathering emergency is only invisible to those whose paychecks require that they do not see it. Unfortunately, that includes many journalists and virtually all politicians. The rest of us need to take another look at the pile of boards on the aft deck of the Titanic and get to work on our personal lifeboats. Now.
25 Comments on "The Crash of 2015: Going Global"
Rodster on Sat, 30th May 2015 1:50 pm
We entered a global depression in 2008 but the propaganda from world Govts and the MSM has been calling it the “Great Recession”.
This is only going to get worse until the entire global economic system collapses. Maybe the Banksters and e-CON-omists should realize and admit that you can’t have infinite growth in a finite world.
The current money system used around is nothing more than a Ponzi Scheme.
Apneaman on Sat, 30th May 2015 1:51 pm
This piece was written by Tom Lewis and first appeared on his blog THE DAILY IMPACT a few days ago. How come yous guys don’t link directly to his site and give him the credit for his work?
http://www.dailyimpact.net/2015/05/26/the-crash-of-2015-going-global/
Another neat little feature at Tom’s blog is he does an audio version (mini podcast) of each peice.
http://www.dailyimpact.net/?powerpress_pinw=2908-podcast
BC on Sat, 30th May 2015 2:05 pm
Yes, Rodster, most of the world has been in a slow-motion depression since 2008, joining Japan since they commenced their deflationary depression in 1998.
I don’t subscribe to the crash predictions, however; rather, I suspect that we will see an inexorable slow-motion depression regime for as long as it matters, including a bumpy descent for the net energy regime per capita and accelerating automation and elimination of paid employment and purchasing power of the bottom 90%+, i.e., those who are not secure within the cartel-like sectors, including gov’t, “health” care, “education”, and the “winners” in financial services.
Perk Earl on Sat, 30th May 2015 2:37 pm
“What’s wrong with the global consumer? In the imortal words of Howard Davidowitz, a leading expert on retail, consumers “don’t have any f’ing money.” It is slowly — way too late — dawning on the Masters of the Universe that unless ordinary people have money to spend — and by that we mean real money, not more credit cards or a third mortgage — the Masters are toast.”
The last ditch effort since 08 has been to stick stimulus into the hands of the super wealthy and hope that expanding asset bubbles would draw the less fortunate into a cauldron of economic fervor that would extend the Ponzi morass beyond net energy constraints. That routine has an expiration date quickly racing towards us.
BobInget on Sat, 30th May 2015 5:02 pm
I’ll pose this scare headline a slightly different way;
US In Transition.
Housing prices are going up 5% per year.
Why? Fewer homes are being built.
More people are renting rather then buying.
Instead of detached housing, more multi-units are being built. A permanent renter class take fewer risks but never build equity (forced savings).
More evidence of a shrinking middle class.
I don’t agree lower gasoline prices didn’t help the economy. Just reverse that scenario: gasoline at
$4. a gallon instead of $3. Then what?
I do agree, an oil shock now will rock the boat something awful. As it appears, to me at least,
higher oil prices, oil wars with no end, (for the living) are a distinct reality.
Every so called ‘progressive ‘ measure to
create good paying blue-collar jobs rebuilding infrastructure etc is shot down for lack of funds.
Finding finance for obsolete or outmoded weapons systems or, what was once called ‘foreign expeditionary forces’ however, never fails
to get deficit funding.
Weapons systems are akin to borrowing money to spend on booze.
Only a tiny portion of society benefits. Servicing that loan from quixotic pleasures derived is impossible unless, a person resells booze to another. In the end, nothing constructive is achieved.
Building living units continues a revenue stream for
decades, even centuries.
Even automobiles continue to provide employment
for a decade or longer.
When that 100 year flood zone becomes a one or two year flood zone, residents take note.
It’s hard to be worried about a black man in a White House when your house is swept off its foundations and headed downriver.
IMO, we are reaching a tipping point for AGW recognition. As each disaster touches an individual directly, suddenly, lights go on.
The next time another so called ‘conservative’
calls what just hit ya upside the head, a ‘hoax’,
most folks might be offended enough bothering to vote.
It’s too late stopping climate changes.
It’s almost never too late to adapt.
shortonoil on Sat, 30th May 2015 6:09 pm
“Housing prices are going up 5% per year.”
Housing prices have been going up because very wealthy foreigners have been coming to the US to buy ultra high end housing. That has run the average price of housing up. That also seems to now be running its course. Another factor has been firms like Blackstone that have gotten into the buy to rent market. That was because they had ready access to cheap FED money. Most of the US housing market is still in the 2008 crash recession/depression. That is not likely to change because the average home buyer today doesn’t have any f’ing money.
Makati1 on Sat, 30th May 2015 6:12 pm
BobInget, I pretty much agree with you, but I don’t think ‘voting’ is more than picking between equals. A sop to the citizens who think they live in a Democracy.
I don’t see anything changing until revolt and riot takes them out of the picture permanently and forces a new path.I don’t see that happening, in the US, for too many reason to list here. And even Europe is fracturing again into separate countries with most of the old rivalries and hates still in place.
The options seem to be:
1. Eventual total collapse of the financial system and a one world government, NOT run by the West, or
2. The White House War Monger (whomever) pushing the red button, or the modern day equivalent.
I don’t see a long, bumpy ride down to 3rd world levels. When the main export of the Empire of Chaos is weapons and war, there is no acceptable option left for them but to increase those exports. (Japan/China, ASEAN/China, Israel/Iran, Ukraine/Russia, NATO/Russia, Australia/China, ISIS, KSA/Yemen, Syria/Iraq/Iran, Afghanistan, US Citizens/police, etc)
When your only tool is a hammer(weapons), everything looks like a nail(war). America was built on war profits. That is difficult to give up. Even at the price of extinction. If TPTB believe they can survive a nuke exchange, they will eventually try it. Am I wrong? I hope so!
Apneaman on Sat, 30th May 2015 6:25 pm
Is Peak Oil Behind Economic Disintegration?
“Something is wrong with the economy. No kidding, you might reply, but what is the underlying cause? Is it Peak Oil? Or is capitalism just a system that doesn’t work and is destined to failure? Are we just stuck with inevitable deterioration in living standards for the majority, or is there at least theoretically something we can do about it? Would political decisions help or are we just doomed to watch the disintegration of civilization as the oil runs out?”
http://hipcrime.blogspot.ca/2015/05/is-peak-oil-behind-economic.html
GregT on Sat, 30th May 2015 7:12 pm
HSBC fears world recession with no lifeboats left
The world authorities have run out of ammunition as rates remain stuck at zero. They have no margin for error as economy falters
HSBC’s Mr King says the global authorities face awful choices if the world economy hits the reefs in its current condition. The last resort may have to be “helicopter money”, a radically different form of QE that injects money directly into the veins of economy by funding government spending.
It is a Rubicon that no central bank wishes to cross, though the Bank of Japan is already in up to the knees.
The imperative is to avoid any premature tightening or policy error that could crystallize the danger. As Mr King puts it acidly. “Many – including the owner of the Titanic – thought it was unsinkable: its designer, however, was quick to point out that ‘She is made of iron, sir, I assure you she can’.”
http://www.telegraph.co.uk/finance/economics/11625098/HSBC-fears-world-recession-with-no-lifeboats-left.html
BobInget on Sat, 30th May 2015 7:30 pm
“Mother” Takes Her Revenge.
http://www.cbc.ca/m/touch/canada/calgary/story/1.3087985
Excerpt:
Provincial officials told CBC News Tuesday evening there are 70 fires across Alberta, 19 of which are burning out of control. They said a fire northwest of Cold Lake, near the affected oilsands operations, is “of concern.” A government update on Tuesday evening described the fire as about 17,500 hectares in size.
++++++++++++++++++++++++++++++++++++
Isn’t it early for Alberta’s ‘normal’ fire season?
As I recall, there were early fires last year that shut-in several oil wells and pumping stations.
When will victims begin to understand 70 fires in May is unusual?
Rodster on Sat, 30th May 2015 8:35 pm
“When will victims begin to understand 70 fires in May is unusual?”
How about 91 degrees in Fairbanks, Alaska?
GregT on Sat, 30th May 2015 9:20 pm
There are over 18 million hectares of dead forests in BC, directly attributed to climate change. Many of those forests are in very difficult to access areas. A few lightening strikes in the wrong places, accompanied by winds, and we are facing firestorms of biblical proportions.
Apneaman on Sat, 30th May 2015 9:58 pm
Greg and an other Canadians out there, I’m sorry but we are no longer allowed to comment on climate change, except to say it does not exist and Stephan Harper is awesome. If you hear the thumping of jack boots coming up your driveway it means you said the wrong thing. Ain’t it grand to live in a democracy?
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Bill C-51: Canada’s new McCarthy era where advocating for action against climate change is terrorism
http://thinkpol.ca/2015/05/31/bill-c-51-canadas-new-mccarthy-era-where-advocating-for-action-against-climate-change-is-terrorism/
Apneaman on Sat, 30th May 2015 10:13 pm
Summer tropical storms don’t fix drought conditions
http://www.sciencedaily.com/releases/2015/05/150527150948.htm
hiruitnguyse on Sat, 30th May 2015 10:26 pm
This site will have to be updated….http://killedbypolice.net/
Won’t get outta water, Kill, Kill, Kill:
http://kfor.com/2015/05/30/oklahoma-highway-patrol-high-water-rescue-leads-to-shooting/
GregT on Sat, 30th May 2015 11:01 pm
Ya Apnea,
Bill C-51 is alarming to say the least. Harpo is following in the footsteps of the US. How long before we have our own DHS? Not long I figure.
GregT on Sun, 31st May 2015 1:40 am
And also,
In regards to C-51; I have no intentions what-so-ever to cause a disturbance, besides, nobody would believe me anyways.
Shaved Monkey on Sun, 31st May 2015 6:42 am
Its combinations of lots of factors combining to create the perfect storm.
One of which is
Ageing Populations demanding dividends over growth so companies are not incentivised to expand,but are rewarded by sharing their profits with their share holders.
This alone creates under investment and lack of employment and growth that keeps the cycle going.
joe on Sun, 31st May 2015 7:24 am
Ok, let’s be sure of 1 thing, house prices do not indicate economic health. A house to investors are another asset to buy low and sell high. Higher prices mean only another more desperate sucker has chanced slightly more money in hopes on conning sombody else. A better picture of the health of the economy is weather or not people are risking more to gain more. Since housing is off the menu then there is really not much for Joe Average to risk the banks money on. Banks are banned from lending to average people to invest in markets like 1929, now the have totally damaged themselves as trustworthy partners in housing, what’s left? Nothing, health care? Pay massive money from loans to buy the best Healthcare? I bet that’s allowed somewhere. Supply and demand curves only reach equilibrium in fair and free markets, didn’t 2007 show anyone that the free market is a myth? People choose to live in apartment blocs because they are lower risk than a big house, investors will only buy into schemes where they will get their money back and thousands of people won’t be leaving their keys at the bank. Low risk means low profit, it also means lower consumption as services can be more efficiently offered to consumers who are risk averse. This so happens to be a global phenomenon as globalisation has more or less integrated the world.
paulo1 on Sun, 31st May 2015 7:52 am
Greg T
Harper will soon be gone. He won’t win a majority, again. The pendelum always swings back. At least, this is what I am hoping for.
Cloud9 on Sun, 31st May 2015 8:38 am
I would submit that our decline began in the early seventies when the U.S. reached peak oil production. Abandoning the gold standard and reserve currency status allowed us to postpone collapse. We printed our way to the present. Every collapsing government has done the same thing.
The transition from cheap oil to expensive oil is on going. The death of a consumer economy based on cheap energy is clearly evident.
We are being drug kicking and screaming back the the energy consumption levels of the 19th century. We are shedding jobs and businesses at an ever increasing rate. At some point we will start to shed population. Then it gets crazy.
dave thompson on Sun, 31st May 2015 9:52 am
Yes Cloud9,”The transition from cheap oil to expensive oil is on going. The death of a consumer economy based on cheap energy is clearly evident.” I would only add the word “net” cheap energy.
zoidberg on Sun, 31st May 2015 11:38 am
Creative destruction is our salvation and the gateway to a glorious new future for the people who embrace winning strategies. Ignorance or running away or giving up aren’t viable strategies though…
JuanP on Sun, 31st May 2015 11:44 am
Short “Housing prices have been going up because very wealthy foreigners have been coming to the US to buy ultra high end housing. That has run the average price of housing up. That also seems to now be running its course. Another factor has been firms like Blackstone that have gotten into the buy to rent market.”
I copied the whole thing from Short’s comment because it is worth reading more than once. My wife and I know from personal experience that every one of those words applies to the Miami residential real estate market. While I no longer work in RE, I am a licensed broker with 25 years of living here and more than 10 involved in RE and my wife works FT as a realtor. We know that more than 80% of residential properties sold here are bought by foreign millionaires. I have personally known many of them for over a decade. Most of this people own between 5 and 5,000 residential units of all types through LLCs and other specific corp types. Some are rented systematically, many sit empty year round and a few get a little owner use. There are more tenants and less homeowners.
I have seen RE bubbles before and, IMO, this market is in a huge bubble. I am not giving any financial advice here, but I expect prices in Miami beach to drop at least 50% in the short to medium term future. And I expect this to happen before the dollar devalues significantly in a drop, which is something else I expect to happen.
hiruitnguyse on Sun, 31st May 2015 12:23 pm
I wonder what Miami property is going to be worth below Sea Level?
http://www.miaminewtimes.com/news/sea-level-rise-threatens-to-drown-miami-even-faster-than-feared-um-researcher-finds-6537603