Tuesday, August 16, 2016

Tuesday roundup (08-16-2016)

Quotes of the Day:

"Just like the phantom economy is bigger than the real economy, just like the black market for derivatives is bigger than the visible market for derivatives, this off-balance-sheet debt [in companies] is much bigger than their on-balance sheet debt, so it's become inverted. We live in a world where people are buying bonds for capital gains and buying stocks for income. That’s a complete repudiation of everything we've known about economics for 200 years, and an inversion of how things work, and will lead inextricably to devastation. ... As I told Dave Blanchflower years ago, the monetary solutions to the credit crisis by creating more debt and credit was CAUSING, not fighting, deflation. I've been proven right." -- Max Kaiser, host of The Kaiser Report (Russia Today)

"Central banks remain in thrall to the idea that credit-fueled growth is healthy for the global economy. In fact, our research highlights that monetary policy easing has thus far contributed to increased financial risk, with the growth of corporate borrowing far outpacing that of the global economy.” ,” S&P Global Ratings analysts (Marketwatch)

Global central banks dump U.S. debt at record pace [in "a sign of pockets of weakness in the global economy"] (CNNMoney)

Banks across Europe are considering taking a drastic step [= physically storing cash in vaults] to avoid negative rates (The Business Insider)

‘Something is VERY broken’: Deutsche Bank at DANGER level that could SMASH markets: GERMANY'S biggest bank is in more trouble than people even think and could drag down some of Europe's biggest lenders to trigger a market meltdown, according to a hedge fund manager who is betting against the firm. (The Express) Deutsche Bank ADMITS it is preparing for market crash as fears over bail out grow: GERMANY'S largest bank has ADMITTED it is in "financial repression mode" as it desperately scrambles to implement financial buffers to prevent collapse. (The Express)

Vicenza: dark heart of Italy's banking crisis where locals have lost millions: Collapse of BPV has left citizens with nothing and the ramifications could damage the whole of Italy and the eurozone [July 26] (The Guardian)

[In the United States:] At least 11 killed, 40,000 homes damaged by historic Louisiana flooding (The Chicago Tribune) Louisiana’s 1,000-year floods inundated 80,000 homes and businesses: 4 trillion gallons of water. 20,000 rescues. Worst Louisiana flooding since Katrina. (Ars Technica)

     The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats exist today that could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. Key threats include excessive risk-taking by financial firms, unchecked by effective regulation; the continued existence of "too big to fail" institutions; and most especially, the amassing of levels of public and private debt which could become unsustainable.

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