Large economies are like supertankers. There are no brakes to use if you want to change direction in a hurry. Instead, you have to put the engine into reverse, and hope you can slow down fast enough to avoid the rocks. That is what happened in China last month, as the new leadership began to unwind the largest lending bubble ever seen. Short-term corporate loans, the lifeblood of small companies, In pre-Supercycle days this would have been called a squeeze”. Suddenly, credit “credit tightens and investors worry about of capital’ instead of on capital’. Or as ‘return ‘return the blog’s major in was titled: Bank Lending: from $1tn to $10tn and Back Again?” “China At the same time, gold sales are tumbling, with jewellery sales in Q2. Clearly is hitting its targets - no official would now dare to wear a new gold watch. Elsewhere in NEA, in , as expected, is coming to an end of its life as a supposed cure’ for the world’s third largest economy. As former Bank of Japan Governor ‘miracle Shirakawa keeps : main problem in the Japanese economy is not deflation, its demographics. The is “The whether monetary policy is effective in restoring economic recovery. My observation is, it is quite limited.” Thus the Great Unwinding of the failed stimulus policies since 2008 has now begun. Over on the other side of the world, financial markets are slowly beginning to rediscover their role of price discovery. For 6 years, central banks have supplied them with endless amounts of free money. This has forced prices upwards in what became known as the . But now, oil markets are starting to follow and other commodities in refocusing on the fundamentals of supply and demand. And as the International Energy Agency noted in its latest supplies were ample, and the Atlantic market was even reported to be facing a glut”, “Oil whilst Reuters that oil demand in China fell 6% last month“. ”implied In Europe, hopes that stimulus policies will finally lead to a sustained recovery are also unwinding. The Eurozone economy in Q2: Germany’s economy declined; France showed no growth; Italy fell back into recession. Meanwhile in the USA, were flat in July, whilst housing remains weak due to . This is a bad omen for GDP, as consumer spending is more than two-thirds of the economy. Thus we are
Large economies are like supertankers. There are no brakes to use if you want to change direction in a hurry. Instead, you have to put the engine into reverse, and hope you can slow down fast enough to avoid the rocks. That is what happened in China last month, as the new leadership began to unwind the largest lending bubble ever seen. Short-term corporate loans, the lifeblood of small companies, In pre-Supercycle days this would have been called a “credit squeeze”. Suddenly, credit tightens and investors worry about ‘return of capital’ instead of ‘return on capital’. Or as the blog’s major in was titled: “China Bank Lending: from $1tn to $10tn and Back Again?” At the same time, gold sales are tumbling, with jewellery sales in Q2. Clearly is hitting its targets - no official would now dare to wear a new gold watch. Elsewhere in NEA, in , as expected, is coming to an end of its life as a supposed ‘miracle cure’ for the world’s third largest economy. As former Bank of Japan Governor Shirakawa keeps : “The main problem in the Japanese economy is not deflation, its demographics. The is whether monetary policy is effective in restoring economic recovery. My observation is, it is quite limited.” Thus the Great Unwinding of the failed stimulus policies since 2008 has now begun. Over on the other side of the world, financial markets are slowly beginning to rediscover their role of price discovery. For 6 years, central banks have supplied them with endless amounts of free money. This has forced prices upwards in what became known as the . But now, oil markets are starting to follow and other commodities in refocusing on the fundamentals of supply and demand. And as the International Energy Agency noted in its latest “Oil supplies were ample, and the Atlantic market was even reported to be facing a glut”, whilst Reuters that ”implied oil demand in China fell 6% last month“. In Europe, hopes that stimulus policies will finally lead to a sustained recovery are also unwinding. The Eurozone economy in Q2: Germany’s economy declined; France showed no growth; Italy fell back into recession. Meanwhile in the USA, were flat in July, whilst housing remains weak due to . This is a bad omen for GDP, as consumer spending is more than two-thirds of the economy. Thus we are
The-pH-Report-Great-Unwinding-Sept14.docx