WHAT IS A “WORLD DEATH SPIRAL” SPEAKING ECONOMICALLY?
The perfect storm is upon us. First the world has entered a global DEFLATION and DELIVERING. This means that failed Fed policies world wide, are never corrected. Feds must be MERGED into their nations treasuries as antique failed institutions for policy making. Rebalancing interest on national debt proceeds from this policy using two hundred year SUPER BONDS to reschedule national debts and pay them off. A global G 100 Constitutional Economic Congress needs to produce the larges WORLD RE-THINK FOR REGULATION AND NEW BOX TOP RULES TO REMOVE SPECULATION FROM THE MARKET.
Today failed FED policy has placed 100 Trillion of funds into the market. This “easing” is now the subject of talk show jokes world wide. The institution making monetary policy is now a sit come joke. Any talk of “further easing” is seen as outrageous humor in todays market space. No one see’s the Feds’ as anything but FAILED ANTIQUE OBSOLETE POLICY MACHINES created when we had a telegraph world – without any equipment for the modern digital world we reside in today.
Normal market cycles have five years of expansion and several years of recession correction. We are entering 7.5 years of expansion. During this time more debt was introduced into the market than collectively in the past 2000 years. This debt is by the trillions becoming bad debt.
China has invested 1 Trillion of its currency reserves moving from 4.6 Trillion to 3.4 trillion in 180 days. This are of exhausting 30 years of accumulated currency reserves in say 18 months – is not sustainable. This huge downward wealth spiral ( deflation ) is taking place to avoid a catatropshic collapse of Yaun Currency value. The effort is failing from central bankers. The market is betting against the China central controllers. What does this mean. Think of a tsunami – an economic tsunami . First all the water leaves the shores of China – Trillions in a run on manufacturing, trade, buying, investing, levering, loans, everything. Then a SUPER WAVE of short bets and selling – into the mainland, destroys the value of everything. Real Estate – currency – everything deflates in a SUPER CRASH. The abuse of trying to manipulate the system too long over too may years has now created a CRISES OF CONFIDENCE in the economic planners and policies of China from the global market place. THAT IS NOT GOING TO CHANGE. The effects of the economic tsunami are not reversible once the earth quake that causes it ( the crises in confidence ) has been scale 8.0.
Across the world China’s devaluation creates enormous deflation of its worth and buying powers. China cuts back – and the entire world has to adjust. This creates a crises in VALUE – or Deflation. This creates a DEATH SPIRAL OF DE LEVERAGING where loans are called in. In regulated markets now less than 17% of the real market – the margin trading is put up a buck and buy two dollars of stock. 50% leverage. In ETF and structured asset contract world depending on the straddle complexity of those private contracts the leverage may be 50 to one – or 440 trillion of leverage betting against 2.4 trillion of stake holder trading ( the real market ). When one speculative money pool influences and manipulates the real market you have lost all control of the REAL WORLD MARKET. You have a casino capitalism – or the last ten years. Even 20.
Until the G 100 RE REGULATES a digital rating market globally and moderates unwanted speculation on price – a real market is beyond the world. The result is crazy growth until you have a crack – that creates DEFLATION and DE LEVERAGING. All the bad loans begin to fall first slowly then picking up speed like dominoes. As the bad loans are international held in syndicates today the entire financial system staggers under this weight. Liquidity or the CIRCULATION INDEX globally – withers and dies. CIRCULATION irrespective of the tens of TRILLIONS of DOLLARS placed globally into into the system is now at an all time LOW over 100 years. The circulation is now lower than 1929. This is the DEATH SPIRAL for a world wide recession or worse.
Liquidity is drying up. Great projects are being delayed. Why do anything when the price of EVERYTHING will only be lower tomorrow than today. Every dollar you spend or invest today is a fake dollar being invested in a manipulated PRICE that is not REAL. Why not WAIT until real market prices return on the OTHER SIDE OF THE DEFLATION when every project is so much cheaper and money will go so much father. During the first of the deflation if you invest you lose. So why invest?
Deflation. how doe nations fight it? In modern Terms the second largest economy entered a leverage nightmare – over leveraged – bad loans – and prices brought on by massive manipulations. Japan. For 25 years the nation of Japan pretty smart world leaders have used every modern post depression tool to fight the bad loans, the leverage cliff, and the deflation economy. They have released trillions into their economy. They have fallen to number three in the world and may sink to number five. They have not once in 25 years with all the EASING policies of their Fed – returned INFLATION to stop the DEFLATION. Now their delation is spreading throughout Asia and the entire world. Nations have no silver bullets to fight deflation. The only way they have gotten inflation started in the past and rebalanced world wealth and trade accounts brought to instability and collapse through ABUSIVE ECONOMIC REGULATIONS THAT NEVER WORKED – is – via world war. Historically. No other model is known in financial history.
This weekend CITI and Stubbs their leading prediction maven – suggested “the world is now inside the perfect economic DEATH SPIRAL. They note this does not serve anyone. To do something never done in history we have to DO SOMETHING NEW never done in history. I have advocated as a retired investment banker economist author and film producer – that – the world requires the LARGEST GLOBAL RE-THINK OF REGULATORY REFORMS in 100 years – do that FACT – the regulations today are all local and the trades are all go around those regulations in the cloud.
We have suggested:
- Only through G 100 COOPERATION can we save the world order from historic collapse.
- A three year ECONOMIC CONSTITUTIONAL CONFERENCE to reframe trade and playing rules sets for the G 100 and the world needs to convene over three years and shape a CONSTITUTION to be ratified by the majority of G 100 nations.
- Feds a totally obsolete and failed policy group must be MERGED into National Treasuries where forward policy is transparent and supervised by national treasury without interest being charged for currency issue – bridling debt interest weight from economic horses world wide. Inflation can be exchanged for deflation with such policy changes.
We do three to be free. We wait and its too late. History economically is a cruel teaching and never varies in her lessons. Why would anyone wish to repeat them?
So – today we have too much debt in the system at sovereign nation level. Economies expand when either the nation invests – the consumer and market invest – or both invest. If they all contract we have recession. They are all contracting today – the global DEATH SPIRAL. Plus there is no process to create required CIRCULATION. Following decades of failed global Fed policy on “easing” the members of the feds ( banks ) kept the money – used it for their own purposes becoming TOO LARGE TO JAIL – globally – and consolidated their wealth against national agenda’s – no trickle down save STOCK BUY BAKS at in the USA in 2015 over 1 Trillion for the fist time in American history ….manipulating stock prices which even with this manipulation have now crashed in the predictable DEATH SPIRAL lack of circulation – always brings.
- There is record debt de-leverging by 100 trillion in 2016. A rising % is bad debt.
- There is record low participation in the global market supported only by leverage.
- There are far more sellers than their are buyers – hence down prices.
- There is record low circulation of money world wide.
- The Price Earnings ratios rose to 32 when a high is historic at 16 meaning it takes 16 years to get your funds back – and the predictable crash when the PE ratio is too high. Irrational .
The Death Spiral begins in manufacturing. In 2015 we saw a manufacturing RECESSION many quarters contraction at all number levels. In 2016 we see a LIQUIDITY CONTRACTION and a DEFLATION on price in the world market sustained by DE LEVERAGING. Loans are being called by the 100 of billions and many will begin now to dominos into bankruptcy – big ones will begin before the summer.
No one is taking NEW ACTION to head of historic known sequences in such DEATH SPIRAL markets as called this weekend by CITI BANK. Without NEW ACTION the world has never ever seen before – that is FULLY COOPERATIVE VS COMPETITIVE – he world order will rebalance historically which is cruel. Predictable. Never varies.
President Bill Clinton has warned world G 100 leaders – WE EITHER COOPERATE OR WE PERISH. The world can’t meet its obligations unless the liquidity and circulations are met which requires rebalancing sovereign nation and deflation company balance sheet debt. Financial institutions can unwind into insolvency and close – banks investment banks the entire system – very quickly in these market conditions if widening rebalancing is not reframed with a PROGRESSIVE ECONOMIC PLAN the entire world embraces as a solution direction.
Tradition to DEATH SPIRAL MARKETS is that distrust grows, trade imbalances skyrocket – competition and every nation for themselves escalates into full on trade wars ( called by many other names and denied by leaders even while the World War III Digital Economic wars advance on multiple fronts never before seen ) . We COOPERATE or We PERISH. Competition is insane. Cooperation is sanity.
Will the crises of leadership ( insanity ) repair itself in time with GREAT LEADERSHIP ( sanity ) to foster he NEW COOPERATION in time?
Events are progressing very fast now and the information is data and it is never incorrect. Cattail today is about preservation versus investment.
In such a market the DEATH SPIRAL like a giant dark hole – pickup mass and velocity.
We seen no HOPE AND PROMISE without new an great world LEADERSHIP calling fora master plan to reset the world oder into a REGULATORY RETHINK to reign in unwanted leverage and speculation.
We continue to lobby for a lighthouse of HOPE AND PROMISE via sane policies for the world leaders coming together. The ANTI DAVOS. We suggest the staging for a WORLD ECONOMIC CONSTITUTIONAL CONGRESS be organized on the Big Island of Hawaii the world center point the cooperation SPACE on the Planet – between no and 2020. To COOPERATE our way into a great financial rebirthing.
Without war and all the DEATH SPIRAL cruelty.
Without such a reframe the burden of social catastrophes upon world populations – say war refugee’s is no longer resolvable and with millions at risk – violence will only rise between the have’s who are now with declining resources and the have not’s who have limited to no resources. HOPE AND PROMISE is the way forward. Sanity versus insanity is the way forward.
A united Cooperative Policy is the way forward.
Steering Star ship Earth economically with 287 admirals in the wheel house is no longer going to bring us to the horizon we all seek.
One path is insane ( economically ) placing us where insanity positions us in a world wide DEATH SPIRAL Citi Bank says in February we are now INSIDE OF.
Or sanity with a cooperage replacing that rebalances world financial trade without world war.
CEO SPACE March 6th brings CEO’s together and heads of practices to forge larger cooperative trading communities to foster prospering in any and every possible future market. Life insurance for your wallet. I’d buy your policy before you need it folks.
See you at the WESTIN LAKE LAS VEGAS and we’ll map out GPS for your growth in every possible future market. Stay tuned here and make a favorite and w’ll bring you our best thinking and data review as we receive them globally.
Thank you for reading.
Berny Dohrmann— February 8, 2016