The monetary plumbers keep banging money market rates to zero, thereby ignoring what the money market rate really is in a financialized, debt-ridden system: the price of hot money, the single most important price in all of capitalism.
China isn’t just another booming Emerging Market economy trying to cool down excesses in fixed-asset investment and transition to a consumer-based economy. That notion is an odd-confluence of propaganda from Beijing and hopium from Wall Street.
In a decade or two, nearly 40% of the Japanese population will be retired; and the single-risk it should never take is to induce a collapse of its currency, and the resulting sharp inflation of its import bill for virtually all its energy and industrial materials.
In 2000, China had $1 trillion of credit market debt outstanding – a figure which has now soared to $25 trillion. No economic system can remain stable and sustainable after undergoing a 25X debt expansion in only 14 years.
New car prices are a good introduction to the world of inflation seen and not seen.
Q1 GDP growth is trending at a tepid 1.5%. But don’t worry. It’s the weather! Wall Street is predicting “escape velocity” for the fifth spring-summer in a row. Why? Because it’s already priced into the stock market!
The Fed prints $4 trillion and the national debt jumps $9 trillion in six years. We’re now in month 57 of the expansion, beyond the average 53 months – already on borrowed time. Now comes Professor Krugman proposing to “do something.”
David Stockman lashes out at the LBO of Extended Stay, a scam that made Blackstone billions, and saddled taxpayers with the detritus. It’s perhaps the most brilliant explanation ever as to why the Fed bailouts of Wall Street were an asinine idea that benefited the “0.0001%” but hurt everyone else, including taxpayers and the main-street economy.
Wachovia and other banks funded the $7.4 billion debt portion of the Extended Stay LBO, knowing the company was worth only $4.8 billion at the most. The loan was then rolled into structured finance securities – “designed to turn a sow’s ear into a silk purse,” David Stockman writes – and stuffed into the Wall Street meth labs until the very end.
“One of the hallmarks of financial manias is that propositions which are perfectly absurd nevertheless get widely embraced by those caught up in the excitement,” writes David Stockman – in this case, Blackstone’s LBO of Extended Stay Hotels, and its subsequent sale at a ridiculous three times replacement cost, funded by Citibank … a pre-packaged scam.