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China
by
charleshughsmith
Executive Summary
- The 6 Factors
- Rising inequality
- Reversion to the mean
- Cost overages
- Diminishing returns
- Misleading measurement
- Expertise mismatch
- Why the 'success' of the Federal Reserve and other world central banks is ultimately dooming them to failure
If you have not yet read Why Our Central Planners Are Breeding Failure available free to all readers, please click here to read it first.
In Part 1, we examined a variety of reasons why the apparent success of Keynesian monetary and fiscal policy may be transitional and brief rather than permanent.
Here in Part 2, we delve into the six other dynamics that make success destabilizing.
Rising Inequality—Perceived and Real
The highly touted “recovery” has been highly uneven in its distribution. The benefits of rising income and wealth have flowed disproportionately to the top 5%, 1% and even 1/10th of 1%. Those who didn't make it onto the limited-seating Recovery Bus feel the gap between the prospects and wealth of the top tier and their own wealth and prospects widening. Indeed, psychological studies find that we assess our wealth and social position not by our actual material prosperity, but by the narrowing or widening of the perceived wealth gap with our peers.
This is precisely the situation in the U.S. and China. Both economies are supposedly expanding smartly, but the gains are concentrated in a relative few hands; the Rising Prosperity Bus has few seats. The vast majority perceive themselves as being left behind, and that is highly…
The 6 Reasons The Next Economic Rescue Will Fail
PREVIEW by charleshughsmithExecutive Summary
- The 6 Factors
- Rising inequality
- Reversion to the mean
- Cost overages
- Diminishing returns
- Misleading measurement
- Expertise mismatch
- Why the 'success' of the Federal Reserve and other world central banks is ultimately dooming them to failure
If you have not yet read Why Our Central Planners Are Breeding Failure available free to all readers, please click here to read it first.
In Part 1, we examined a variety of reasons why the apparent success of Keynesian monetary and fiscal policy may be transitional and brief rather than permanent.
Here in Part 2, we delve into the six other dynamics that make success destabilizing.
Rising Inequality—Perceived and Real
The highly touted “recovery” has been highly uneven in its distribution. The benefits of rising income and wealth have flowed disproportionately to the top 5%, 1% and even 1/10th of 1%. Those who didn't make it onto the limited-seating Recovery Bus feel the gap between the prospects and wealth of the top tier and their own wealth and prospects widening. Indeed, psychological studies find that we assess our wealth and social position not by our actual material prosperity, but by the narrowing or widening of the perceived wealth gap with our peers.
This is precisely the situation in the U.S. and China. Both economies are supposedly expanding smartly, but the gains are concentrated in a relative few hands; the Rising Prosperity Bus has few seats. The vast majority perceive themselves as being left behind, and that is highly…
by
Chris Martenson
Executive Summary
- The 'Perfect Storm' of woe being applied to Russia
- Why the West may end up hurt worse by its efforts than Russia is
- Russia's most likely set of responses, and their global implications
- Why are we willing to let our leaders play nuclear "Russian roulette", for stakes we don't agree with?
If you have not yet read The Road To War With Russia available free to all readers, please click here to read it first.
The Perfect Storm
Russia, like Venezuela and other oil exporting nations is facing a very large set of financial and economic problems as a result of the low oil prices.
Besides the loss of oil export revenues, there are associated hits to their local currencies and rising yields on their sovereign debt which raises the cost of borrowing money. This is a triple whammy and if it goes on long enough can lead to the outright default of the country on its debt, which is a hugely destabilizing moment.
Russia faces 'perfect storm' as reserves vanish and derivatives flash default warnings
Jan 6, 2015
Russia’s foreign reserves have dropped to the lowest level since the Lehman crisis and are vanishing at an unsustainable rate as the country struggles to defends the rouble against capital flight.
Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.
Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.
Markit says this implies a 32pc expectation of a sovereign default over the next five years, the highest since Western sanctions and crumbling oil prices combined to cripple the Russian economy.
Total reserves have fallen from $511bn to $388bn in a year. The Kremlin has already committed a third of what remains to bolster the domestic economy in 2015, greatly reducing the amount that can be used to defend the rouble.
(Source)
It's clear that Russia is experiencing quite a bit of difficulty from all this, and as we saw above, they pin a lot of the troubles on a concerted effort by the west to bring about exactly the conditions that are troubling them.
However, left out of all the stories about Russia's relative difficulties is that fact that with oil's price slide there are winners and losers in every corner of the globe. In terms of the local impact based on the local currency Russia is the least impacted of them all because…
Why No One Should Want This To Devolve Further
PREVIEW by Chris MartensonExecutive Summary
- The 'Perfect Storm' of woe being applied to Russia
- Why the West may end up hurt worse by its efforts than Russia is
- Russia's most likely set of responses, and their global implications
- Why are we willing to let our leaders play nuclear "Russian roulette", for stakes we don't agree with?
If you have not yet read The Road To War With Russia available free to all readers, please click here to read it first.
The Perfect Storm
Russia, like Venezuela and other oil exporting nations is facing a very large set of financial and economic problems as a result of the low oil prices.
Besides the loss of oil export revenues, there are associated hits to their local currencies and rising yields on their sovereign debt which raises the cost of borrowing money. This is a triple whammy and if it goes on long enough can lead to the outright default of the country on its debt, which is a hugely destabilizing moment.
Russia faces 'perfect storm' as reserves vanish and derivatives flash default warnings
Jan 6, 2015
Russia’s foreign reserves have dropped to the lowest level since the Lehman crisis and are vanishing at an unsustainable rate as the country struggles to defends the rouble against capital flight.
Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.
Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.
Markit says this implies a 32pc expectation of a sovereign default over the next five years, the highest since Western sanctions and crumbling oil prices combined to cripple the Russian economy.
Total reserves have fallen from $511bn to $388bn in a year. The Kremlin has already committed a third of what remains to bolster the domestic economy in 2015, greatly reducing the amount that can be used to defend the rouble.
(Source)
It's clear that Russia is experiencing quite a bit of difficulty from all this, and as we saw above, they pin a lot of the troubles on a concerted effort by the west to bring about exactly the conditions that are troubling them.
However, left out of all the stories about Russia's relative difficulties is that fact that with oil's price slide there are winners and losers in every corner of the globe. In terms of the local impact based on the local currency Russia is the least impacted of them all because…
by
David Collum
by
Chris Martenson
Executive Summary
- What is 'deflation?'
- Why do central banks fear it so much?
- What falling prices really mean.
- Commodities are telling us that a global slowdown is already here.
- China's economic miracle is over.
- What happens next (please keep your preparations on track!)
If you have not yet read Oil And The Global Slowdown available free to all readers, please click here to read it first.
The title of this part says it all. So let's begin with an important definition. What is 'deflation'?
To hear the media and central banks tell it, it is something fearful and that must be avoided at all costs. Confusingly they then point to falling prices as evidence of the horror of which they speak.
The only problem is that you and I like falling prices. If my health insurance cost 10% less next year I’d be thrilled. But the central banks would be horrified.
The difference between these two positions lies in the definition of deflation. While the media always blindly regurgitates the central bank line that falling prices are an indication of deflation they really shouldn't.
The Central Banks Have Lost
PREVIEW by Chris MartensonExecutive Summary
- What is 'deflation?'
- Why do central banks fear it so much?
- What falling prices really mean.
- Commodities are telling us that a global slowdown is already here.
- China's economic miracle is over.
- What happens next (please keep your preparations on track!)
If you have not yet read Oil And The Global Slowdown available free to all readers, please click here to read it first.
The title of this part says it all. So let's begin with an important definition. What is 'deflation'?
To hear the media and central banks tell it, it is something fearful and that must be avoided at all costs. Confusingly they then point to falling prices as evidence of the horror of which they speak.
The only problem is that you and I like falling prices. If my health insurance cost 10% less next year I’d be thrilled. But the central banks would be horrified.
The difference between these two positions lies in the definition of deflation. While the media always blindly regurgitates the central bank line that falling prices are an indication of deflation they really shouldn't.
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