Europe Faces Japan Syndrome as Credit Demand Implodes!
- The world is facing an insurmountable debt mountain. But the Illuminist central banksters want us to believe that they can stimulate more credit growth and thus more demand by creating money out of thin air. When a person or country is bankrupt, can you expect him to borrow more money?
– - “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
– Ludwig von Mises, Austrian Economist
– - QE is about bailing out the banks. It is about buying the toxic debt crap from the banks and dumping the toxic crap onto the shoulders of the sheeple. It is about building even more government debts ie. enslaving the sheeple with debts. Corrupt governments will spend public funds by giving to Illuminist causes, corporations, the military industrial complex ie. wars … etc. Western governments have been captured by Illuminist banksters!
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Europe faces Japan syndrome as credit demand implodes!
By Ambrose Evans-Pritchard, http://www.telegraph.co.uk/
Europe (minus Germany) looks more like post-bubble Japan each month. The long-feared credit crunch has mutated instead into a collapse in DEMAND for loans. Households and firms are comatose, or scared stiff, in a string of countries.
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Demand for housing loans fell 70pc in Portugal, 44pc in Italy, and 42pc in the Netherlands in the first quarter of 2012. Enterprise loans fell 38pc in Italy. The survey took place in late March and early April, and therefore includes the second of Mario Draghi’s €1 trillion liquidity infusion (LTRO).
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The ECB said net demand for loans had fallen “to a significantly lower level than had been expected in the fourth quarter of 2011, with the decline driven in particular by a further sharp drop in financing needs for fixed investment.” Demand fell 43pc for household loans, and 30pc for non-bank firms.
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Mr Draghi told MEPs today that his three-year loans had at least averted a horrendous crunch. “Our LTROs have been quite timely and successful. I think buying time is not a minor achievement.” He is certainly right about that. The mess he inherited from the Merkel/Sarkozy expropriations of bondholders in Greece, and the Trichet/Stark tightening of monetary policy was calamitous.
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This slump in loan demand is more or less what happened during Japan’s Lost Decade as Mr and Mrs Watanabe shunned debt. Zero interest rates did nothing. The Bank of Japan was “pushing on a string” (though it never really launched bond purchases with any serious determination).
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It is true that banks have slowed the pace of credit tightening, but they are nevertheless still tightening. “A banking crisis remains very much in play for much of the region,” said David Owen from Jefferies Fixed Income.
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The credit squeeze is entirely predictable – and was widely predicted – given that banks must raise their core Tier 1 capital ratios to 9pc by July to meet EU rules, or face nationalisation. (The pro-cyclical folly of this beggars belief: by all means impose higher buffers, but not during a recession, and not by letting banks slash their balance sheets. The US at least forced its banks to raise capital, an entirely different policy since it does not lead to a lending crunch.)
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The IMF said last week that Europe’s banks would slash their balance sheets by €2 trillion – or 7pc – by next year. This amounts to an economic shock. The Fund said deleveraging on this scale at a time of sharp fiscal tightening risks a “bad equilibrium”.
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Indeed it does. It ensures hell for countries containing 200m people, or more. Judging by the rise of Sinn Fein, the Dutch Freedom Party, the Dutch Socialist Party (hard-Left), France’s Front National, and some true fire-breathers in Greece, they victims will not readily put up with this.
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… read more!
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