Tuesday, September 30, 2014

This is an economic must-read

I know many of my readers aren't economists, and don't like to wade through turgid reams of economic documentation.  Nevertheless, I want to highlight the importance of the 16th Geneva Report, titled 'Deleveraging? What Deleveraging?' (link is to an Adobe Acrobat document in .PDF format), produced by the International Center for Monetary and Banking Studies.

I mentioned it on Sunday, and I've been going through the 125-page report since then.  It makes truly appalling reading.  I don't propose to quote from it at length.  It really needs to be read in full and in context to make sense.  However, I will put up half a dozen graphics from the report, reduced in size to fit here.  If a picture tells a story, these are a horror movie.

As the Telegraph headlined its analysis (yesterday) about the report: 'Mass default looms as world sinks beneath a sea of debt'.  Go read the Telegraph's perspective for a concise view, or (highly recommended) make the time to download the full report and read the whole thing.  It's worth it.

I'll give the Telegraph the last word.  Bold print is my emphasis.

The only way the world can keep growing, it would appear, is by piling on debt. Not good, not good at all.

There are those that say it doesn’t matter, or that rising debt is merely a manifestation of economic growth. And in the sense that all debt is notionally backed by assets, this may be partially true. But when rising asset prices are merely the flip side of rising levels of debt, it becomes highly problematic. Eventually, it dawns on the creditors that the debtors cannot keep up with the payments. That’s when you get a financial crisis.



Old NFO said...

That time is right around the corner. We need to have a plan for when this occurs... Anything one can do to have enough on hand to 'subsist' for 6 months to a year may be the difference between dying and coming out the other end in one piece.

Anonymous said...

food, water, clothing, fuel and productive assets-farmland, machine shop, livestock, etc.

Anonymous said...

You will need items to barter for trade as well.

Precious meteal.... gold and silver, as well as the "other precious metals" like lead and brass, will be in demand.

Time to start getting ready has long since past. If you haven't started, you better get a move on.

Peter said...

@Anonymous at 11:58 AM and 1:41 PM: I don't think 'prepping' is going to get us through a crisis of the proportions this one's building up to be. I support basic 'prepping' anyway, and will continue to have up to three months' supplies in reserve (all I can afford or have room to store right now). However, if the world economy goes the way it looks like going, even up to three years' supplies in reserve probably won't be enough. It's going to take hard work to keep our heads above water.

Anonymous said...

That is productive asserts come in-the ability to create and shape our environment. Producers will always have a market of some sort. Unless the dieoff is so great that nearly everything is available for free pickup. Or if there is open warfare raging across the country- that will put a stop to a lot of trade.
Some say a nice neatly maintained and organized farm is the way to go. Everyplace I have ever been that was close to the bone(remote Indian villages, settlements in the Alaskan bush, etc) had a ton of discarded stuff in the yards. I am sure some was just because there was no place to get rid of it, but a lot of the stuff was raided for parts to repair other items. A junkyard is a cornucopia of useful stuff.

Anonymous said...

I am anonymous @ 1:41pm.

I never said that "prepping" would get us through this in and of itself.

But if one isn't prepping now in a big way, it won't matter how hard you work later. Prepping allows one to hit the ground running with some momentum behind him to allow him to make the transition to getting by vis hard work.