i can't get the links to work, but i do know what the charts look like, and i agree on the potentially ominous implications. in case you're asking yourself WHY the broad aggregates have declined, the refi boom came to a screeching halt recently (well, at least compared to what went on before...) while at the same time, deflationary money destruction has gathered pace, in the form of Enron , Argentina, etc. claims waving goodbye. while the Fed continues the pumping, a somewhat Japanese-like reluctance on the part of borrowers and lenders to create new credit may be in its formative stages here. note that we've seen an absolutely incredible last-hurrah consumer debt expansion binge in qu.4, in fact outdistancing every previous record by miles , mainly due to the "how to best shoot ourselves in the foot" zero financing offered by the auto manufacturers (car leases are not counted as consumer debt by the Fed by the way! a major failing,and they also don't count margin debt, and thus underestimate consumer debt by several hundred billion dollars - thanx to Bob Bronson for pointing this out), one of which has imho one foot firmly planted in the grave already (Ford is the culprit) and the GSE-led post 9/11 refi excess that likewise put every previous reliquefication effort to shame.
however, the corporate debt hangover continues to loom larger and linger longer than the "promise to pay" purveyors would like, with both commercial paper markets and industrial&commercial loans at the banks continuing their shrinkage (commercial paper had a slight seasonal up-blip this January though). in fact it looks more and more like post bubble Japan...the same Japan, that after muddling through for 12 years has now come to the point where the prospect of a total systemic wipe-out has morphed from remote possibility to near-certainty.
Japan's banking system has no net worth left...it's insolvent, finito . and so is the rest of the world, actually. as for Argentina not being contagious, i give this idea a shelf life of another 6 to 8 weeks perhaps...
well, a shrinking US money supply is both future cause and current effect of the ever stronger deflationary forces gripping the world.
here's looking forward to the coming nationalization of the Japanese banks, coupled with a collapse in JGBs (finally) due to the BoJ monetizing the bad debt load, and frantic "innovative" (copied from John Law, actually) efforts by the other major CBs to head off the deflation/default tsunami by likewise monetizing every scrap of paper in sight. make sure you keep a stash of toilet paper somewhere...it could become money before you know it. or is it the other way around? -vbg- |
