Business

Last night when previewing today's main event, the "secret" meeting between the Saudi and Russian oil ministers, we explicitly said this deal would not "lead to a cut in production", and sure enough just two hours ago the meeting between the two oil superpowers concluded and as expected the two failed to agree to any production cut; instead what they did agree on was to "freeze" production at January's already record levels, and furthermore make the agreement contingent on other OPEC members complying, something Iran has al

Yes, you read that right. Amid a tumbling stock market, plunging trade data, weakening Yuan, and soaring volatility, China's aggregate debt (so-called total social financing) rose a stunning CNY3.42 trillion (or an even more insane-sounding $520 billion) in January alone.

In fact, since October, China has added over 1 trillion dollars of credit... and has nothing but margin calls, ghost-er cities, and over-supplied commodity-warehouses to show for it... oh and even-record-er debt-to-GDP ratio.

While both sellside analysts and buyside investors are panicking over the collapse in bank stock prices and the evaporation of market liquidity as virtually nobody trades any more, perhaps it is time someone looked further east, specifically in China where in January the results reported by local brokerages have confirmed what we have been warning about, namely the local investors - disgusted with China's stock "market" which is not only a burst bubble now but also rigged beyond any measure - have pulled their money en masse, and left China's brokerage to disintergated into a revenueless, p

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Financial bubbles blown on the back of massive amounts of debt, of necessity lead to debt deflation (it’s just entropy, really). Fighting this is futile, and grossly costly to boot. The only sensible thing to do is to guide the process as best you can and try to minimize the damage, especially at the bottom rungs of society, because that’s where the deflation first takes hold, and where it spreads out from.

Submitted by Keith Dicker of IceCap Asset Management

What goes up can also come down

Whether unknowingly or not, the media and the investment industry has created an information gap wedging the 2008 debt crisis with today’s debt crisis. Chart 4 shows the difference in debt outstanding from 2008 compared to today. The Public Sector consists of government and tax payers, while the Private Sector is made up of individuals and companies.