Mish's Global Economic Trend Analysis

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IMF Fears $3 Trillion Credit Crunch; Lagarde Says "IMF Credibility at Stake", Calls for US to Give China More Voting Power Posted: 11 Oct 2015 08:56 PM PDT IMF head Christine Lagarde says "IMF credibility is at stake". She blames the US for that development, and calls on US to give more voting power to China to solve the problem. Link if video does not play: "IMF Credibility at Stake" Credibility? I have a simple question: Precisely what credibility does the IMF have? To address my simple question, please consider the ZeroHedge report This Is How The IMF "Predicted" China's Slowdown As the following chart compiling the IMF's various quarterly economic forecasts over the past 5 years clearly shows, what the IMF had actually forecast, was a constant hockeystick rebound in China growth starting in 2011... until 2014 when the monetary fund finally gave up. Credibility Recovery In a "credibility boosting" exercise Zerohedge comments ... "The IMF's forecast of China's growth after the fact is now so negative, it is well below the consensus projections, as the IMF is all too happy to boast ..." Ta-Da! The IMF's credibility has been magically restored by impressive revisionist history. But as we see today, that credibility is once again at stake. 3 Trillion Credit Crunch Coming Up Meanwhile, please note the IMF is concerned that a $3 Trillion Corporate Credit Crunch Looms as Debtors Face Day of Reckoning. Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world. Emerging market companies have "over-borrowed" by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF's Global Financial Stability Report. This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF's twice yearly report. Mercy! Q. How did this happen? A. The answer of course is corporations took on insane amounts of debts precisely as central banks and the IMF wanted them to do. Q. Why did the IMF and central banks encourage this debt? A. To help stimulate the global economy. Q. Did it work? A. Obviously not. Q. So why do they think still more debt will fix a problem caused by debt? A. You tell me. Mish Proposal If the IMF wants China in the name of credibility, please let them have it. In return, I ask one simple thing: The US cuts off all IMF funding, as it should have done long ago. Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

TPP and Free Trade Canadian Style Posted: 11 Oct 2015 10:57 AM PDT As I have commented before alleged "free trade" agreements are anything but. We now have confirmation from Canada as to what it took for other signatories to agree to the monstrosity of TPP. Reader TB passed along Alan Guebert's Free Trade's Cheap Talk is Big Money. These easy-to-find challenges to NCBA's silly Trans-Pacific cheerleading point to several underlying myths at the heart of Big Ag's rock-ribbed belief that free trade is the past, current, and future salvation of American farms and ranches. One myth is that all U.S. farm and ranch profits are tied directly to free trade. The Obama White House made that connection again Oct. 5 when it noted "roughly 20 percent of all farm income in the United States," is "provided" by "exports." True, but farm income is not farm profit. If it were, U.S. net farm income would have risen when ag exports rose from $141 billion in 2013 to $152 billion in 2014. Instead, U.S. net farm income fell from $135 billion to $126 billion in that period. Another myth about free trade is that trade agreements are about freedom to export. In truth, most trade deals "specify who will be protected from international competition and who will not," explains the Economic Policy Institute in its overview of the TPP. Clear evidence comes from America's giant neighbor, Canada, whose ag minister announced his dairy and poultry farmers will be compensated for "any losses" caused by TPP before the deal was even signed. It confirms Nobel Prize-winning economist Joseph Stiglitz's long-held belief that free trade deals are "managed trade agreements, tailored for corporate interests…" American farmers and ranchers know this in their bones but not their hearts. They are farmers and ranchers, not exporters. Big Agbiz — Cargill, JBS, Smithfield, ADM and the like — are global buyers and sellers who, when able to play both sides of any trade-leveled playing field the world over, rarely lose. Maybe that's why the Big Boys aren't saying squat about the TPP; they got everything they demanded during negotiations. Now they want you to pressure Congress to pass it for them and their shareholders. In fact, they're betting on it and, already, their bets are paying off. Related Posts Obama's Trans-Pacific Partnership Fiasco vs. Mish's Proposed Free Trade Alternative; How Will TPP Function in Practice? Legacy Skills and Capital; Sugar and Steel; Turning TPP to TP Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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