World Economy Melting Down

 

QUESTION: Mr. Armstrong; You have indeed sparked my curiosity. With both the velocity of money and the trading volume declining since 1998, this seems to be a very dangerous position and your work is really eye opening. I read your Transactional Banking and it seems that this has changed everything for the worse. Your Big Bang seems to have been on target starting with 2015.75 as that was the peak in government and we have seen a further decline in economic growth. With trading volume bottoming in 2014 and your War Cycle turning up also in 2014, the picture is starting to come into focus. Your warning of a Phase Transition building is also starting to make sense for the volume is at the lows not the highs and it appears you are forecasting a big rush out of government debt into private. I think I am beginning to see the future and this looks crazy indeed. Am I on the right track?

Global Recession Coming – Even “Powerhouse” Germany and UK Slow “Dramatically”

IMF 2015 Global National Debt Map – IMF

 

– IMF warn of “fresh financial crisis”
– German exports fall 5.2%, largest slump since recession of 2009
– German imports also fall 3.1%
– Many sectors across German economy see unexpected declines in factory orders and industrial production
– UK Chief Financial Officers (CFOs) report sharp rise in uncertainty
– UK PMI has fallen to lowest level since April 2013
– Hope for the best but be prepared for less benign scenarios

The IMF have been growing more vocal in recent weeks about the possibility of another financial crisis and severe recession. The head of financial stability at the IMF, José Viñals has said that this outlook “does not rely on extreme assumptions at all”.

Bundesbank “Reassures” Re. Gold Bullion Reserves as Deutsche Bank Shocks With €6 Billion Loss Warning

 

The central bank said its gold reserves amount to 3,384 tonnes of gold worth just €107 billion at today’s prices.

The move is the latest by the central bank, which is in the process of trying to move its gold reserves back to Germany after the eurozone sovereign debt crisis broke out in 2012 and led to public concerns and questions about the safety of Germany’s gold reserves.

Yellen Is Trapped in the Worst Nightmare Ever

Fed is really caught between a rock and a very dark place. Yes, they have the IMF and the world pleading with them not to raise rates for it will hurt other debtors who borrowed excessively using dollars to save money. The Fed is also caught between domestic policy objectives that dictate they MUST raise rates of they will bankrupt countless pension funds and international where emerging markets will go into default because commodities have collapsed and they have no way of paying off this debt that has risen to about 50% of the US national debt.

The War on Cash Is Going Completely Nuts in Europe

Austria is where the Sovereign Debt Crisis began with a bank failure in 1931. Today, Austria continues to have a raging controversy over the abolition of bank secrecy. Just look at how far they are going against the citizens because of bank mismanagement, once again, and it is scaring the hell out of a lot of people behind the curtain. The government is monitoring taxpayers in a manner that will lead to the elimination of all private rights in the future. They are now introducing new laws, which forces all taxpayers to submit their fingerprints, as well as their IP e-mail addresses, to the tax office so that the government can track every piece of loose change.

Top German body calls for QE blitz to avert deflation trap in Europe

Head of German Institute for Economic Research demands €60bn of bond purchases each month to halt contraction of credit and avert Japanese-style trap

A leading German institute has called for full-blown quantitative easing by the European Central Bank (ECB) to head off a deflation spiral, marking a radical shift in thinking among the German policy elites.

Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin, demanded €60bn (£50bn) of bond purchases each month to halt the contraction of credit and avert a Japanese-style trap.

Wealthy Chinese snap up homes in Southern Europe as governments offer visas for buying

Southern Europe’s cash-strapped governments are courting wealthy Chinese homebuyers, seeking to bolster their battered real estate markets by offering visas to those who purchase prime properties.

Cyprus, Greece and Portugal are providing resident permits to foreign buyers, while Spain is about to adopt a similar measure. The chance to purchase a home at depressed prices in southern Europe and gain what’s known as a golden visa is mostly being sold to Chinese investors, according to brokers.

There Will be Contagion

Great article, great insight:

But let’s make no mistake. The sovereign debt crisis is not over. Not in Europe, not in Japan, and not in the US. It is in a lull period. And don’t give me that old shibboleth, “The market is telling us that the crisis is over.” The market knows a lot less than many pundits believe. What did the market know in mid-2007? Not very much, although the warning signs were clear, at least to some of us.

Full article: There Will be Contagion (John Mauldin) (Note: Article is a .pdf file. Download link is below title.)

China Considers Offering Aid in Europe’s Debt Crisis

HONG KONG — Prime Minister Wen Jiabao said Thursday that China was considering whether to work with the International Monetary Fund to play a greater role in financing Europe’s efforts to end a sovereign debt crisis, but he left it unclear whether China was willing to drop conditions that would make its help unappealing for European countries.

Mr. Wen, speaking at a press conference in Beijing after a meeting with Chancellor Angela Merkel of Germany on the first day of her three-day visit to China, said that officials were studying whether China should be “involving itself more” in Europe’s debt troubles through investments in the European Financial Stability Facility and the European Stability Mechanism. This could be done through the I.M.F., he said.

One idea under consideration by China in recent months is whether it could lend money to the I.M.F., which would then lend it to Europe. This would transfer the risk of a European default to the I.M.F.

Russia embraced this approach in December, but was willing to lend only $20 billion. China had $3.18 trillion in foreign exchange reserves at the end of December, dwarfing the reserves of every other country and potentially giving it the financial power to make a much bigger contribution.

Mrs. Merkel is the first of several European leaders scheduled to visit China this month, the latest in a series of signs that China’s huge foreign exchange reserves have begun to give it financial influence to rival Washington’s.

Full article: China Considers Offering Aid in Europe’s Debt Crisis (New York Times)