LIQUDITY BREEDS CONTAGION TO DEPRESSION:
Economists know what I’m saying. It is hard to draft language for lay persons on the economics. The accumulated weight of 2.7 trillion in stake holder investing – is capital allocation. This capital allocation buys generally when unmanipulated from stock buy backs ( 2.9 trillion since 2010 ) and other speculations – into plant equipment and real economic growth. The mountain of structure passive asset investments, that contribute nothing to the economic growth of nations is reaching 440 trillion dominated by ETF and other structured assets. This is not capital allocation. This is capital consolidation out of the capital market space.
The result is liquidity sinks. Positions where liquidity balances freeze up. When there are more sells than buy bids. No reserves to execute. Liquidity sinks fry the system globally and create real quick without warning panics that lead to real contagion.
China’s growth has sunk to a level that the growth no longer will support the rising soaring debt. Even its plunging currency defacto devalued again and again in a trade war that has no end is not saving China.
Japan at zero growth can not support its rising debt.
The USA at zero growth can not support its rising debt.
The EU with marginal growth can not support its soaring debt.
The third world can not support its debt.
Russia a gas station that thinks it is still a real nation can not support its debt.
As the Debt Bomb explodes ETF’ s and the passive investment space will implode first. Short them first. Make trillions on their blame – they rain you gain.
The impact of capital imbalances and consolidation into non stake holder investing that is insane economics can not be stated clearly enough as SUPER RISK upon the entire system.
Meanwhile no one is doing anything because they are all making such foolish money in the wild manipulation and consolidation away from real economic growth investing. The liquidity drain this UNREGULATED INVESTMENT SINK is vortexing into the system is a tornado of liquidity unwinding just about to become reality. As the liquidity bomb is the expression of weapons of mass debt destruction – watch all this play out along the lines we have been reporting.
IT is sobering to watch it unfold.
Berny Dohrmann – The Cannery in the mine just for you….”ashes ashes all fall down dead”…financially. Ring around the Roses………2016
PS: The math suggests when growth declines and reaches y and debt soars to rise to reach x – than z is financial crash of the worst kind…pending right now….as market liqudity is crushed out of the system to never return in the near term. The system freezes up.
— August 25, 2016