Asian collapse in early stages but picking up steam very quickly.

Mish points out significant new releases from Asia today:

Japan GDP plunged a whopping 6.8%:
http://globaleconomicanalysis.blogspot.com/2014/08/japan-gdp-plunges-68-consumption-down.html

Shadow banking in China collapses:
http://globaleconomicanalysis.blogspot.com/2014/08/new-yuan-loans-and-shadow-banking.html

Chinese and Japanese people are pulling their money out of their banks. Clearly they are losing confidence in their respective governments.  I don't blame them.  Both are in serious trouble which precludes any kind of soft landing.  Most of the problems in both countries center around debt.  Today we now understand that debt is fungible.  In various articles I read things like:

• It's just government debt, it doesn't affect me.
• The Chinese government doesn't have much debt, it's all private debt and shadow banking debt
• The people are OK and the government is OK, there is just too much corporate debt

All of these may be true but none of them matter.  Debt is debt is debt.  Someone loaned them that money and it was the banks.  If the banks go down, the ability of the government to float debt collapses and then we are all Argentina.  So it doesn't matter if the bad debt is all student loans, corporate loans, shadow banking loans, government debt, credit card debt, housing debt, etc.  It just doesn't matter who racked it up.  It only matters that everyone will go down when the banks go down because we share this dishonest money supply.  This is why we have to be personally concerned that liberals and RINOs racked up trillions in debt that they never intend to repay.  They know we will all be sharing the bill in some way.


The old saying goes that the marginal players will get hit the first and the the worst.  And so we have the above news from China and Japan.  As China goes, so goes Australia just a few months later.  Russia cannot be far behind.  They might call it "Asian contagion" again but I prefer the more accurate term which is "global debt Ponzi".  Folks, no Ponzi ever lasted forever and as I have been warning for a long time now, no it won't be different this time.  Forget asking government to "do something".  There are two reasons for this:

1. It was government greed and trying to goose productivity (read "their ability to collect taxes which pay their ridiculous salaries and lifetime benefits) using piles of debt (the debt based growth scam) which got us in this mess in the first place.  None of it would be possible without the help of fiat currency and fractional reserve lending.  IT JUST WOULD NOT BE POSSIBLE IF WE HAD AN HONEST MONEY SUPPLY.  Honest money requires paygo.  Paygo is honesty.  Anything else is a scam.  If you don't believe or remember anything else you read in these pages, remember and believe that dishonest money is the root of all economic and most social evil.
2. Even if I wanted the government to run the Ponzi as long as it could, they have already thrown the kitchen sink at it.  They shot their wad folks.  Japan is proof of this.  Wages down while food and other necessity prices are up.  This is coming to the US as well.  Increasing the monetary base in order to keep the completely inevitable credit collapse from occurring simply screws the middle class for the sake of keeping asset prices propped up for the rich and the corporations.  Sooner or later out come the pitchforks and AR15s are the new pitchforks.  Eventually, no matter how hard they try or how cleverly they package it, the whole thing is going to collapse anyhow because rich people need middle and poor class people more than the other way around and same for corporations: they need paying customers more than people need them.  People can just go grow their own food, etc. to get along and to be honest, many people would have better lives doing just that.  Their lives would be more real, more meaningful.

 Keep an eye on Asia.  When things begin to collapse they tend to do so with exponential speed because the truth is that they have already collapsed without having been reported.  You can only hide a dead cat for so long before the stench alerts everyone to its presence.