Death-Watch Updates on the Collapsing Global Financial System

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Chart shows China’s debt bubble bigger than subprime bubble

Published: June 1, 2016 7:32 a.m. ET


‘Unproductive’ debt up sharply since 2009: Deutsche Bank

Getty ImagesChina’s credit bubble continues to grow.



Here’s yet another sign that China’s economy may be teetering on the brink of a massive debt crisis.

Unproductive debt in China—that is, debt that’s used to drive up asset prices—swelled in 2015, eclipsing the level seen in the U.S. in the run-up to the Great Financial Crisis, said Torsten Slok, chief international economist at Deutsche Bank, in a note to clients published Tuesday.

Slok’s findings are illustrated in the chart below, where he compares the level of credit growth required in the U.S. and China to generate 1 percentage point of gross domestic product growth. (He notes that the red bar for 2015 also grew, suggesting more credit growth is now required in the U.S. to produce one percentage point of GDP growth).


Deutsche Bank should know as they themselves are heading for a fall based on their own overleveraging, derivative trading all built on such asset bubbles....

if we are going to attempt to reform? or transform the system...we'd better get to understand it!!



no doubt! things are getting pretty scary out there!!...

from twomindsblog......

Each of these dynamics is easily visible in the global status quo.

As an example of doing more of what has failed spectacularly, consider how financialization inevitably inflates speculative bubbles, which eventually crash with devastating consequences. But since the status quo is dependent on financialization for its income, the only possible response is to increase debt and speculation—the causes of the bubble and its collapse—to inflate another bubble. In other words, do more of what failed spectacularly.

This process of doing more of what failed spectacularly appears sustainable for a time, but this superficial success masks the underlying dynamic of diminishing returns: each reflation of the failed system requires greater commitments of capital and debt. Financialization is pushed to new unprecedented extremes, as nothing less will generate the desired bubble.

Rising costs narrow the maneuvering room left to system managers. The central bank’s suppression of interest rates is an example. As the economy falters, central banks lower interest rates and increase the credit available to the financial system.

This stimulus works well in the first downturn, but less well in the second and not at all in the third, for the simple reason that interest rates have been dropped to zero and credit has been increased to near-infinite.

The last desperate push to do more of what failed spectacularly is for central banks to lower interest rates to below-zero: it costs depositors money to leave their cash in the bank. This last-ditch policy is now firmly entrenched in Europe, and many expect it to spread around the world as central banks have exhausted less extreme policies.

The status quo’s primary imperative is self-preservation, and this imperative drives the falsification of data to sell the public on the idea that prosperity is still rising and the elites are doing an excellent job of managing the economy.

Since real reform would threaten those at the top of the wealth/power pyramid, fake reforms and fake economic data become the order of the day.

Leaders face a no-win dilemma: any change of course will crash the system, but maintaining the current course will also crash the system.

Welcome to 2016-2019.



The Anglo-American Capitalist System's Regression, Reversion in the Modern World   -  by Prof James Petras

"The meaning of Anglo-America's long term, large scale structural regression is clearly evident across the world..."


The Wages of Neoliberalism, Poverty, Exile and Early Death - Michael Hudson, S Peries

"...Hudson predicts that the US will undergo the same trend, as greater hardship results from the passage of the TPP..."


Exclusive: Bilderberg Planning to Trigger Financial Collapse


Paul Joseph Watson
June 10, 2016


For the second time in the space of ten years, the powerful Bilderberg group is plotting to trigger a financial collapse, with elitists already positioning themselves to profit from the next economic meltdown.

As we reported back in 2006 during the Bilderberg Group’s meeting in Ottawa, Canada, leaked information from an American delegate revealed that insiders were preparing for the housing bubble to burst and a global market crash.

Over the course of the next two years, that exact scenario played out, culminating in the collapse of Lehman Brothers and a worldwide recession.

As the global financial picture begins to look increasingly bleak, with worries about a Chinese stock market collapse triggering a wider panic, Bilderberg is once again scheming to benefit from the fallout, while the “precariat,” those who are living paycheck to paycheck, are set to suffer the most.

According to veteran Bilderberg sleuth and former BBC journalist Tony Gosling, globalists at this year’s confab in Dresden, Germany are scheming to re-position their assets to ensure they exploit the coming market turmoil.

“There’s another thing going on here in that these guys control most of the money in the western world….and we’re looking at the potential for a massive economic crash,” said Gosling, adding that there aren’t enough resources left to save failing banks, “so it could be a catastrophic crash.”

“Some people, like some of the people in here (Bilderberg), they can bet on which way the market’s going to go now based on derivatives and things like this and they can make a lot of money out of a crash, they can clean up a lot of distressed assets, so they will be looking possibly at making money from such a thing, which is a crazy situation for the world to be in now,” said Gosling.

Noting that the merger of large corporations has created monopolies that make it easier for those in power to control the market, especially with regard to food, Gosling said that cartels were now intent on strangling their competition.

“They know that by controlling the financial system that they can control the outcome of a crash and they can clean up on the rest of us,” he concluded.


Billionaire elitist George Soros has also stepped back into trading personally over the last few months as he prepares to exploit the chaos of Europe’s migration crisis and a possible Brexit vote for Britain to leave the EU later this month.

As Breitbart reports, Soros, who was responsible for crashing the pound in 1992, is also betting against the American stock market.

Given that Bilderberg discussed an economic collapse almost immediately before it began to unfold ten years ago, the revelation that the clandestine cabal is once again plotting to profit from a financial catastrophe should be taken seriously by everyone who will be impacted by the fallout from another market meltdown.



Canada Economy Faces Sharpest Quarterly Contraction Since Financial Crisis

"The second quarter of 2016 is set to witness the sharpest contraction of Canada's economy since the depths of the global financial crisis in 2008-09. Canada is expected to have the lowest growth among the G7 in 2016 and among the 34 OECD countries. Only Switzerland, Norway and Greece have experienced less growth than Canada during the past year..."


Friday was one of those market days that left an uncomfortable feeling in the pit of my stomach. U.S. markets have been resilient thus far, with the S&P500 teasing near record highs. But something is amiss globally. The STOXX Europe 600 Bank Index sank 3.67% Friday (4.8% for the week), to near two-month lows. Deutsche Bank ended the week down 7.7%, trading back close to multi-year lows (down 35% y-t-d). Italian bank stocks were hammered 5.0% Friday (5.9% for the week) to lows goings back to 2013. UniCredit was hit 6.4% Friday. Spanish equities (IBEX) sank 3.5% this week to two-month lows (down 11% y-t-d), while Italian stocks (MIB) dropped 2.1% (down 20% y-t-d). The German DAX was down 2.7%, boosting 2016 losses to 8.5%. French stock lost 2.6% (down 7.1%)....

...this is a flight to safe haven, the core of the core of the global financial system!

And when the world loses confidence in the bankrupt US economy and petrodollar?

Inevitable what with the contagion from the collapsing European and global banking sector!


 Bloomberg reports,

Europe’s largest banks slumped, with Deutsche Bank AG and Credit Suisse Group AG hitting fresh record lows, reflecting investors’ concern in European economic prospects after the Federal Reserve scaled back its interest-rate outlook, citing a potential Brexit among risks.


“The trajectory of European banks is really worrying,” said Lorne Baring, a fund manager who helps oversee $500 million at B Capital in Geneva. “If banks are a main indicator of the health of a region, it gives you another reason to think ‘what the hell is going on in Europe?”’


Deutsche Bank, Europe’s largest investment bank, dropped 2.5 percent to 12.96 euros at 12:32 p.m. in Frankfurt after hitting the lowest since at least 1992, when Bloomberg first started compiling data. Credit Suisse slumped as much as 5.3 percent, bringing losses this year to about 48 percent. The 39-member Bloomberg Europe Banks and Financial Services Index fell 1.4 percent, with Spanish and Italian banks among the worst performers.


"Credit Suisse and Deutsche Bank are very fragile, they’re in restructuring mode and have capital issues,” said Tomasz Grzelak, an analyst at Main First. “Income at investment banks is very sensitive to downward market movements. While equity markets fall, companies may not issue capital or use investment-banking services, which has an immediate impact on the revenues of the securities units.”

....further evidence of the banking collapse of Europe........

but of course everything´s fine in Canada´s la la long have I been warning people of what´s to come?


It's the end of an era....from Bloomberg

Since 2008, the vast majority the flows in and out of certain exchange-traded funds (ETFs) have been driven by what the Federal Reserve was doing or saying. One word spoken by Former Fed Chair Ben Bernanke or his successor, Janet Yellen, would send billions in and out of the same ETFs in the same patterns. But this year is different as the Fed—and the fear of rising interest rates—have taken a back seat to a more natural cause: the fear of a collapse in the stock market....

...of course Bloomberg is just one more conspiracy theorist oriented site, everything is just fine...and we can stick our heads back in the sand and resume our normalcy so called democratic politics...which neoliberal party is gaining momentum ad nauseum...

wake up people!

Michael Moriarity Michael Moriarity's picture

iyraste1313 wrote:

wake up people!

You could be right about the coming collapse, but I've seen various Jeremiahs proclaiming essentially this same warning every year since I started paying attention in the early 1970s. So, you'll have to pardon me if I continue to suspend judgement until the the evidence becomes more conclusive.


since I started paying attention in the early 1970s..

lease try to understand....every crisis since the 70 s has just created new fabricated bubbles...the dot coms, the sub primes, the emerging marketss ad nauseum.....til now! this is the global finance bubble..the overwhelmingly biggest and final bubble...its component parts are being pierced one after another...we are now watching the piercing of the global banking bubble...

the elites are pulling out! They are getting ready for the final bursting!
What are we!! doing? sitting on the sidelines just watching and waiting? Sorry but pathetic!

if we as common progressive intelligentsia can t get it and prepare alternatives to the horrific martial law and economic collapse to come?

montrealer58 montrealer58's picture

Look at the German 10-yr Bund yield over the past 30 years. It is the best illustration of the collapse of the world financial system. What happens when interest rates fall this low is that pension funds become unable to send remittances, and insurance companies cannot write policies. This is a 'burning' process.  

The way Canada is staving this off is housing starts (generally over 200,000 while the US is struggling to do 1,600,000) and the inflows of foreign money into Toronto and Vancouver. Our small Canadian banks are fairly boring and make their money on these mortgages, credit cards, and some insurance. All fields in which there is competition. What should kill the Canadian banks is a housing crash, which may come along with deflation.

In the dirty 1930s we did not know about monetary easing and deficit spending. These things should buffer the effects of a global catastrophe better than in those times. Unlike those times it is not a shock in a few days, but a long slow grind.


'US Economy Is Like Botox' - Marc Faber

"Looks fine only on the outside..."


Jeff Gundlach: "Things Are Going To Get Pretty Scary"

One day before the Fed's June statement, Jeff Gundlach once again accurately predicted the somber mood that would ensue as a result of Yellen's Wednesday decision and press conference when he correctly said that "Central Banks Are Losing Control."

Specifically, he said that central banks are "out of control" because they don't understand the consequences of their own policies. On CNBC's "Halftime Report", the DoubleLine bond guru projected that markets are likely to see another round of negative interest rates before central bankers realize they aren't working and that fiscal stimulus may be the better option. "The policies that they're implementing don't have the consequences that they're looking for," he said.

He said that "it's really uncanny how the S&P500 rallied when they were doing QE and expanding their balance sheet, and how the S&P never goes anywhere when they stopped expanding their balance sheet. They stopped QE3 back in December of 2014 and the S&P500, the DJIA, the Nasdaq are all exactly the same when they stopped expanding their balance sheet. The S&P has been dead money for 18 months."

So what went wrong? According to Gundlach, chief among central bank mistakes was negative rates.  

"When you go to negative interest rates, you do not stimulate consumption, you necessitate saving," Gundlach said. "You cannot fight deflation with deflation. Negative interest rates are the definition of deflation. You cannot put out a fire by pouring gasoline on it," 



Keiser: Brexit Fallout Could Result in Systemic Collapse Bigger Than 2008 (and vid)

"Ornery Brits just put a gun to the global market's head and blew its brains out. Incredibly impressive. I must say I underestimated UK moxie..."


Systemic Collapse Bigger Than 2008?

There are some points that must be emphasized here...QE which saved the last collapse (23 trillion plus?) was just reinitiated by the European Commission and didn´t have any effects...their other resort to negative interest rates is having the boomerang effect of weakening the European banks, crying out to stop this Central bank manipulations of the low interest rates and QE...

It is out of control!! The banks are in a tailspin...this next collapse won´t just be bigger...

but of course you won´t convince the gatekeepers in these rabble threads.....


"The Global Economy Can No Longer Rely On Debt" - BIS Warns Central Bank Actions "Have Started To Backfire"by Tyler DurdenJun 26, 2016 2:03 PM


Fast forward one year and the song and dance has been repeated, with the issuance of the BIS' 86th Annual report in which we read that "Easy-money policies and unprecedented monetary stimulus have started to backfire in global financial markets" as Bloomberg summarizes the 130 page report, which is largely full of data and analyses quite familiar to regular readers.

In its report, the BIS "says that historically low interest rates and bond-buying programs - which have sent yields below zero on more than $8 trillion of government bonds, a record amount - are causing anomalies in asset values. 

"Monetary policy is running out of room for maneuver," said Hyun Song Shin, head of research at the BIS, in an interview. “It is not clear how much further stimulus of the real economy can be achieved using monetary-policy tools alone without inviting unwanted distortions.”

Like on virtually every occasion since 2013, the BIS on Sunday once again called on governments to reduce their reliance on extraordinary monetary policy for spurring economic growth. "Instead, they should redouble efforts on structural and financial reforms, it said. The stimulus produced by the world’s monetary authorities will approach the limits of its effectiveness, according to the BIS, which was formed in 1930 and acts as the central bank for many of those institutions." other words...with the mushrooming resistance of populist movements to any further austerity measures in rage against the corporate elite controls, this is checkmate for the system of globalization....



JGB Carnage Sparks Contagion Across Global Bond Market by Tyler DurdenAug 2, 2016 

Disappointing fiscal stimulus, loss of faith in The BoJ, and increasingly headless-chicken policymakers has sparked a sudden and severe rush for the exits from Japan's government bond markets. 10Y JGB yields exploded from -30bps to almost 0bps in the last 4 days - the biggest crash in prices in over 3 years. This bloodbath is roiling the rest of the global developed bond market with Bund yield spiking (+12bps in last 2 days, almost back to 0), Swiss, UK, and Danish bonds are all blowing out, and Treasury yields up 14bps since Friday alone.

As the world's third largest economy approved 13.5 trillion yen in fiscal measures on Tuesday,market sentiment remained bruised by the Bank of Japan's decision last week to ramp up its bond-buying scheme by less than many investors has expected. A shift in policy towards fiscal stimulus from monetary easing is seen as having less direct impact on asset prices...... often have we? skated so close to an inflexion point, only to again be rescued by central bank manipulations...

...but as such manipulations are caving the finances of the banks? checkmate scenario?

10Y JGB yields rising means the junk corporate bond markets and the entire system of finances built on desperate investment in high yield credit are facing crisis......will the panic come still this summer?



"When does our credit-based financial system sputter/break down?"

Bill Gross' answer:

When investable assets pose too much risk for too little return. Not immediately, but at the marginlow/negative yielding credit is exchanged for figurative and sometimes literal gold or cash in a mattressWhen it does, the system delevers as cash at the core, or real assets like gold at the risk exterior, become the more desirable assets. Central banks can create bank reserves, but banks are not necessarily obliged to lend it if there is too much risk for too little return. The secular fertilization of credit creation may cease to work its wonders at the zero bound, if such conditions persist.

He follows up with 4 more mini Q&As, as follows:

Can capitalism function efficiently at the zero bound?


No. Low interest rates may raise asset prices, but they destroy savings and liability based business models in the process. Banks, insurance companies, pension funds and Mom and Pop on Main Street are stripped of their ability to pay for future debts and retirement benefits. Central banks seem oblivious to this dark side of low interest rates. If maintained for too long, the real economy itself is affected as expected income fails to materialize and investment spending stagnates. 


Can $180 billion of monthly quantitative easing by the ECB, BOJ, and the BOE keep on going? How might it end?


Yes, it can, although the supply of high quality assets eventually shrinks and causes significant technical problems involving repo, and of course negative interest rates. Remarkably, central banks rebate almost all interest payments to their respective treasuries, creating a situation of money for nothing — issuing debt for free. Central bank "promises" of eventually selling the debt back into the private market are just that — promises/promises that can never be kept. The ultimate end for QE is a maturity extension or perpetual rolling of debt. The Fed is doing that now but the BOJ will be the petri dish example for others to follow, if/ when they extend maturities to perhaps 50 years.


When will investors know if current global monetary policies will succeed?


Almost all assets are a bet on growth and inflation (hopefully real growth) but in its absence at least nominal growth with some inflation. The reason nominal growth is critical is that it allows a country, company or individual to service their debts with increasing income, allocating a portion to interest expense and another portion to theoretical or practical principal repayment via a sinking fund. Without the latter, a credit-based economy ultimately devolves into Ponzi finance, and at some point implodes. Watch nominal GDP growth. In the U.S. 4-% is necessary, in Euroland 3-4%, in Japan 2-3%.



The One Trillion Dollar Consumer Auto Loan Bubble Is Beginning To Burst

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Michael Snyder
Economic Collapse
September 7, 2016

Do you remember the subprime mortgage meltdown from the last financial crisis? 

Well, this time around we are facing a subprime auto loan meltdown.  In recent years, auto lenders have become more and more aggressive, and they have been increasingly willing to lend money to people that should not be borrowing money to buy a new vehicle under any circumstances.  Just like with subprime mortgages, this strategy seemed to pay off at first, but now economic reality is beginning to be felt in a major way.  Delinquency rates are up by double digit percentages, and major auto lenders are bracing for hundreds of millions of dollars of losses.  We are a nation that is absolutely drowning in debt, and we are most definitely going to reap what we have sown.

The size of this market is larger than you may imagine.  Earlier this year, the auto loan bubble surpassed the one trillion dollar mark for the first time ever more of the bubbles bursting and here in the core of the global financial system....the artificial supports holding up the stock market indices of the core are faultering one after another...and if the core central banks werem´t buying stocks  and making payouts to the corporations at zero interest to buy back their doubt the system is going down!


Michael Moriarity Michael Moriarity's picture

I notice that this thread was started with quite a bit of urgency nearly 13 months ago. I was under the impression that the collapse should have happened by now. So, how long can a death watch like this last? Another year, 2 years, 5 years? When does it become a false alarm?

Doug Woodard

Michael Moriarity wrote:

I notice that this thread was started with quite a bit of urgency nearly 13 months ago. I was under the impression that the collapse should have happened by now. So, how long can a death watch like this last? Another year, 2 years, 5 years? When does it become a false alarm?

I don't know, but then neither did Lord Keynes, who said "The market can stay irrational longer than you can stay solvent."

Traditionally, predicting what will happen isn't hard, but predicting when it will happen is really hard.

Another of those good old lines is "What can't go on for ever, won't."


¨So, how long can a death watch like this last? Another year, 2 years, 5 years? When does it become a false alarm?......¨

...what has been happening now for this long a time, is the subsidy of the financial system, its corporate banks and quasi banks, by us the tax payer and consumer, via the central banks inflation of the currency through QE, through zero interest loans to the corporations for their own stock purchasing, through bond purchasing to keep the interest rates negative........

we are paying for this through the ongoing deterioration of the global economic system...

this is why this is so critical to understand, which makes nonsense of the mainstream political parties....

so why can`t we just continue to subsidize the corporations, without bothering to mention the total injustice of the States supporting the super elites!! 

The collapse of global trading is one result....when you squeeze the economies, consumers can no longer no more production and`s a downward spiral!

Some countries are waking up and removing themselves from the financial system to rebuild their economies regaining their national sovereignties....but Canadians? progressive leftists? continue to blissfully ignore reality...

No serious poliical movements in Canada will arise with the complaceny you demonstrate in this quote above!

Timebandit Timebandit's picture

Which countries?


Bonds, Stocks Fall as ECB Downplays Extra Stimulus; Crude Surges Stephen Kirkland Rita Nazareth Joseph Ciolli JoeCiolliSeptember 7, 2016 — 5:10 PM CSTUpdated on September 8, 2016 — Bond, Stock Slide Deepens as Stimulus Outlook Wanes; Oil Falls

Bonds declined with stocks, while the euro strengthened after the European Central Bank downplayed the need for more economic stimulus. Oil extended its surge.

The ECB rhetoric spurred a selloff in debt around the world, with yields on Treasuries and German bunds due in 30 years climbing the most in more than a month. Global equities halted a five-day advance, exporters led European shares lower while the S&P 500 Index retreated from near a record high.....

....this is just more confirmation of my thesis.......the financial system will accelerate its implosion as soon as the global central banks end their hyperinflating stimulus plans.....otherwise the financial collapse will just deteriorate as the economic base of the system declines into depression... 



And with each passing day, the rumblings of a new financial crisis grow louder.  For example, this week we learned that commercial bankruptcy filings in the United States in August were up a whopping 29 percent compared to the same period a year ago…

...yes it´s a boiling frog syndrome...we just maintain our complacency as the system collapses little by little, until of course the big bang!

Which is which big bank...Wells Fargo? Deutschebank? Creditsuisse...sooner or later one of these bankrupt banks will go more possible catalyst for the collapse...


Today's moves were impressive... Dow -392 points!! *S&P 500 SINKS 2.4% IN BIGGEST SELLOFF SINCE JUNE 24, *DOW AVERAGE LOSES 392 POINTS IN BIGGEST DECLINE SINCE JUNE 24....

...and why? because some financial guru claims that the Fed will raise rates 1 quarter point?...

just more confirmation...the system depends totally now on Government Central Bank manipulations, nothing to do with supposed free market forces or even economic when the Central Banks can no longer keep their rates in negative (accounting for manipulated inflation rates), the system is toast...and not just some elite bankers going down.....the system globally will be paralysed, for years to its crucial they do anything to keep this casino going...

...and as we sit back and enjoy the view, for now, these central bankers are sweating in spades!

And why will they not keep the system going for Central Bank manipulations?

Because its killing the banks, forcing everyone to invest in riskier and riskier investments...just like the subprime of the last collapse...but of course that time...the governments still had the cash to bail everyone in debt over their eyeballs, and with bailouts to be dozens of times bigger, sorry the game will be over...and those of us preparing for it, maybe will survive...and when will the political movements arise in preparation? 


Further confirmation of the thesis....the global system has collapsed, held up only by continuous central bank QE...what is now interesting is whetehr we are approaching check mate.....

Woes at Italy’s Biggest Bank Reverberate in EuropeTroubles could worsen already-weak economy, imperil continent’s fragile financial stabilityBy GIOVANNI LEGORANOSept. 11, 2016 6:35 p.m. ET

MILAN—For UniCredit SpA, the summer of discontent for Italy’s banks looks likely to stretch well into the fall—and possibly beyond.

UniCredit, Italy’s largest lender by assets, emerged as one of the weakest big banks in Europe in July’s stress tests, showcasing the failure of its attempts to respond to rock-bottom interest rates and a huge pile of bad loans...... Central bank hyperinflationism go on forever?

Or will it crush the banks?

...making of course the neoliberal political discussions ongoing in these pages...irrelevant



[Bloomberg] U.S. Stocks, Bonds Sell Off as Market Turmoil Resumes; Oil Drops

.....further confirmation of the thesis, that the global financial system is in terminal stage of collapse, held together only by Central Bank ongoing and increasing stimulus....what with the general mood that the central banks have lost control, can no longer meet the expectations...the natural unfolding of the collapse may now be permitted to continue....

what can stop this death spiral? The system may have now reached its point of further stimulus may crash the banks, what with zero interest rates...

what is also alarming is the collapse of the bond market...meaning the natural factors of the market may force up interest rates....which of course would collapse the system...and as I have repeatedly suggested...this next collapse cannot be rescued for the gigantestic debt at all levels...and this next one will not just be one more in a series....1997/8, 2001, 2008, 2012.....this is the final one!