Throwing away money on fantasies: patrons of prostitutes have got nothing on the world’s investors. At least johns get something for their money, and even a really expensive evening is small change compared to the trillions being blown in the world’s investment casinos. David Stockman exposes financial fantasies at davidstockmanscontracorner.com:
I mistakenly took Squawk Box off mute this morning. It was just in time to hear one of the regular anchors—–the one who makes Joe Kernen sound slightly insightful by comparison——forecast a pick-up in global growth on the grounds that “China is recovering”.
Yes, the credit intoxicated land of the Red Ponzi just tied one on for the record books. During Q1 it generated new debt at a madcap annual rate of $4 trillion or nearly 40% of GDP.
And that incendiary deposit of more unpayable debt, which came on top of the $30 trillion already smothering history’s greatest construction site and open air gambling den, did indeed goose China’s real estate prices, state company CapEx, infrastructure building and steel production. Call it fiat growth because even pyramid building adds to stated GDP, at first.
Even then, the overwhelming share of this explosion of new credit went to pay interest on the existing mountain of IOUs. Charles Ponzi could never have imagined a scam so audacious.
Nor are the red suzerains of Beijing unique in the headlong dash toward the financial cliff. Except for the nicety that Japan’s 30-year and 40-year bonds are trading at a microscopic fraction this side of zero (0.3%), Kuroda and his tiny band of mad men at the BOJ have driven the entirety of Japan’s monumental public debt——which is now actually measured in the quadrillions of yen—–into the netherworld of negative yield.
Needless to say, the visage of an old age colony being hurtled toward the edge of a debt cliff by central bankers who have taken leave of their faculties does not bring the idea of economic recovery and growth immediately to mind.
The same can be said for the ECB’s $90 billion per month bond buying bacchanalia. Having made German bunds so scarce as to have eviscerated any semblance of yield and turned Italy’s sovereign junk into super-bluechips, the ECB will soon be slurping up the corporate bonds of any global company that can fog a BBB credit breathalyzer and plant an SPV within the borders of the EU-19.
What happens when Draghi is finally stopped and the Big Fat Bid of the ECB and its fast money front-runners disappears?
The hopeful CNBC anchor-lady didn’t say. And about what happens if he isn’t stopped, she didn’t say, either.
The fact is, Simple Janet has already proven the end game. Money printing central bankers can’t stop. Were they to allow financial prices to normalize and trillions of bad credit to be liquidated, the whole financial house of cards they have built around the planet would blow sky high. The “soft landing” case is a null set.
To continue reading: The Lemmings Of Wall Street
