Royal Bank of Scotland to investors: 'Sell everything'

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Federal Reserve Economic Data

Federal Reserve Economic Data | FRED | St. Louis Fed

I do have an account and sometimes pull stuff from their database (particularly when it comes to the explosions in the sizes of all the central bank's balance sheets that you can pull up from their database), but I lifted that particular chart from something else I had recently seen -- I wanted something that showed the S&P 500 to now and that was from within the last month.

 

@dixiehack



He or she thinks you're the most clever person on the Internet (and no, that photo doesn't sum up anything I have posted -- as eager as you are to treat my post like a cartoon with the trite response). I actually thought better of you.

@qtlaw

Of course we are a richer world than we were 80 years ago. Much richer. Just as the world in 1937 was much richer than it had been in 1857. And the world in 1857 was much richer than it had been in 1777. Without getting too far into it, I'd say a major reason for what you pointed out about people's choices right now is that we fell into the trap of trying to socialize the costs of various things over several decades, and it has created some perverse and skewed incentives. When you don't perceive (or bear) the costs of your decisions, you act differently than if you directly bear those costs. It's a major change of more recent times. It's a completely different discussion, though, that doesn't relate to the quagmire the global economy has been over the last 9 years, and whether the "secular stagnation" (the euphemism people like Larry Summers have been using to avoid calling it a depression while we go through it) we are living through actually exists. Of course, many of the same people trying to argue with me that reality isn't reality didn't understand how the outcome in the presidential election that we got happened. It doesn't compute in the bubble (literally and figuratively) they are living in.

 

Yes, I know "anecdotes are not data." You chose to ignore my post and post a trite photo -- your version of an anecdote, to ignore what I said and try to box me into a dumb cartoon that didn't even address my response to you. So clever.

Economic growth (the lack of it) over the last decade is not an opinion or a matter of "create a narrative you absolutely need to believe and bullshit around it."

It's not "slightly above stagnation," the way you said. Actually, the term "secular stagnation" is the most widely used euphamism by people like Ben Bernanke, and Larry Summers and Janet Yellen and Mario Draghi to avoid using the word "depression," so the people who caused that stagnation can avoid taking responsibility for blowing credit-induced bubbles via monetary manipulation over a period of years that ended with a serious financial crisis in 2008 that should have seen a massive deleveraging (and a lot of pain with it, unfortunately). Even as they have resorted to manipulating our debt markets using very extreme and destructive measures for the last 9 years, to hold off that necessary (and still coming) deleveraging (that will be bigger and more painful than it would have been) via more and more debt creation by escalating degrees of extreme measures, they are eager to paint the cause and effect as some mystical thing that isn't a matter of the cause (their reckless actions) and effect (the depression they caused and have kept us in).

No one with a sense of economic history and a clue about what they were talking about characterize our economy as "maturing," the way you said. That doesn't say anything. What does it even mean? This all started when I pointed out (yet again) that earnings have stagnated in a depressed U.S. (but also global) economy. Cue a post from someone who thought that was hysterical because they think a contracting economy is what makes a depression -- making it so the great depression wasn't a depression, which was what I pointed out. Yet, stocks have reached valuations that only exceeded these levels one other time -- the dot.com bubble (again a debt mess created by a central bank). I pointed out how everything we have seen has been being predicated on massive credit expansion, and who has been behind that and how. I tried to give you that "data," as you said, making the correlation between the size of central bank balance sheets and the direction of equity markets. I suggested that that is precisely what we are seeing right now and it is not going to end well -- something I have said in many other posts. There have certainly been appropriate responses to what I am saying if you don't think we are sitting in a big monetary-induced sea of asset bubbles that are going to end predictably. It would be, "No, this time is different. Valuations don't matter anymore. Earnings don't matter. Central banks can keep creating credit forever. Etc. etc." Of course, I'd suggest that is ridiculous. Just as the people pointing out the brewing housing bubble they were blowing in 2003 and 2004 and 2005 and 2006 and the stock market bubble that came along with it, were the ones who were actually sane.

BTW, this thread essentially started when China's credit bubble (this is a global thing, not just a U.S. phenomenon) started to deflate in late 2015, early last year. I thought that could be the catalyst that was going to put an end to their ability to keep creating escalating amounts of credit (and the misallocations of capital that has caused -- ghost cities, empty train stations, etc). It wasn't -- China was rather remarkably able to stabilize the yuan and make it appreciate by dumping foreign reserves, and in a somewhat coordinated effort, central banks around the world panicked at the asset bubbles they have induced popping, and started buying up debt at a furious clip to expand credit even more and reinflate the bubbles (including our equity market, which is a relatively small piece of the picture but has gone parabolic on the back of more than a trillion dollars of quantatative easing this year alone) that were starting to pop. Central banks are very powerful, and the markets they are flooding with debt to try to create an illusion of economic prosperity are eager to keep the punch bowl spiked for as long as they can. It's denegerate gambler / casino behavior. But when it ends, it is going to end quickly and with a bang. It has ground higher. It will go down like an elevator in a free fall.

As this thread got revived again (for specious reasons yesterday). China is buckling again -- their shadow financing of tens of trillions of dollars that has created massive misallocations of capital that passed for economic growth over a period of years is going to end with massive defaults. There have been some serious signs of distress again over the last few weeks. Things like the interbank lending rate spiking several times (Chinese banks not trusting each other enough to lend money on a short term basis). Shadow financed products that Chinese banks were selling to mom and pops for greater yield (this is what repressed rates does) that weren't backed by any real assets starting to default. And even the ones that were backed by hard commodities, suddenly seeing the prices of those commodities get hit, as margin calls have created forced selling. We'll see if it escalates now. Either way, China is just ONE potential black swan that now exists because of the recklessness of all of that debt creation central banks deliberately embarked on to live a fantasy. Too bad we didn't get a GOOD party from it. That debt is now the anchor that has depressed the global economy -- permanently. It will continue until they lose control (or much less likely, deliberately step away) and allow the pain necessary pain they created to filter through -- A LOT of deleveraging that unfortunately is going to bring a lot of misery with it.