Submitted by John Rubino via DollarCollapse.com,
Critics of today’s fiat currency/fractional reserve banking world have (for what seems like forever) made the common sense point that when debt rises faster than cash flow, bad things are bound to happen. In every cycle since 1980 this has been dismissed by the vast majority who benefit from inflating bubbles — until the bubble bursts.
With European markets increasingly jittery on Italian bank concerns, now that after 7 years of build up those staggering Italian non-performing loans were finally noticed by traders, resulting in speculation that the creation of an Italian bad bank is imminent, overnight Citi's Azzurra Guelfi released a note trying to qualify just how exposed Italian banks are to rising bad loans, and quantify which banks have the most exposure.
For the 13th month in a row, The Dallas Fed Manufacturing Outlook was contractionary with a stunning -34.6 print following December's already disastrous collapse back to -20.1, post-crisis lows. With "hope" having plunged back into negative territory (-2.2) in December, January saw a complete collapse to -24.0 as one respondent exclaimed, "we expect the continued depression in the oil and gas industry to negatively impact our customer base and result in significant demand reduction."
Bloodbath...
It's midnight in Japan - so it makes perfect sense that this headline - SOME BOJ OFFICIALS ARE SAID TO VIEW MORE STIMULUS AS CLOSE CALL - would drop and spark a spike in USDJPY which in turn drives Crude oil and stocks surging higher...
Once again, as we detailed over the weekend, fundamentals are simply irrelevant:
While not as dire as his Davos forecast, in which he warned that "if assets remain correlated and things continue to move in the “wrong” direction, "there’ll be a depression", earlier today Ray Dalio released a new Op-Ed in the FT in which the manager of the world's largest hedge fund (excluding Apple's Breitburn of course), once again implores the Fed and other central banks to stop tightening and boost global easing.