World Inflation Falls To A New 5-Year Low

From Gavekal Capital Blog

World Inflation Falls To A New 5-Year Low

It’s become a running theme, at least since last September, but the latest release of CPI numbers from around the world has brought our simple average World CPI proxy to its lowest level since the financial crisis. For the period ending in February, our World CPI proxy hit just 1.01% year-over-year. This is the lowest rate of change since November 2009. The year-over-year rate in our World CPI proxy has been falling for six months straight.

Oil has undoubtedly dragged down the headline CPI for many countries around the world. However, our World CPI proxy has the highest correlation (0.78) to the Citi Inflation Surprise Index which is near its lowest levels ever. 14 of the 33 countries that we track currently have a year-over-year change in consumer prices at or below 0%.

Our World PPI proxy bounced back slightly in February but still remains squarely in negative territory year-over-year (-2.43%).


Imperial Collapse And A License To Kill

Submitted by Dmitry Orlov via Club Orlov blog,

The story is the same every time: some nation, due to a confluence of lucky circumstances, becomes powerful—much more powerful than the rest—and, for a time, is dominant. But the lucky circumstances, which often amount to no more than a few advantageous quirks of geology, be it Welsh coal or West Texas oil, in due course come to an end. In the meantime, the erstwhile superpower becomes corrupted by its own power.

As the endgame approaches, those still nominally in charge of the collapsing empire resort to all sorts of desperate measures—all except one: they will refuse to ever consider the fact that their imperial superpower is at an end, and that they should change their ways accordingly. George Orwell once offered an excellent explanation for this phenomenon: as the imperial end-game approaches, it becomes a matter of imperial self-preservation to breed a special-purpose ruling class—one that is incapable of understanding that the end-game is approaching. Because, you see, if they had an inkling of what's going on, they wouldn't take their jobs seriously enough to keep the game going for as long as possible.

The approaching imperial collapse can be seen in the ever worsening results the empire gets for its imperial efforts.

After World War II, the US was able to do a respectable job helping to rebuild Germany, along with the rest of western Europe. Japan also did rather well under US tutelage, as did South Korea after the end of fighting on the Korean peninsula. With Vietnam, Laos and Cambodia, all of which were badly damaged by the US, the results were significantly worse: Vietnam was an outright defeat, Cambodia lived through a period of genocide, while amazingly resilient Laos—the most heavily bombed country on the planet—recovered on its own.

Abewrongics: Nikkei/USDJPY Tankin’ After Terrible Tankan

Bad news isn’t even good news anymore in Japan. A sushi-boat-load of data this evening show once again that Abenomics is failing dismally. In no particular order… Large Manufacturing Index MISS (lowest in 9 months), Large Manufacturing Outlook BIG MISS, Large Services Outlook MISS, Small Manufacturing Index MISS, Small Manufacturing Outlook BIG MISS, and drum roll please… Tankan Large Industry Capex Outlook crashes to -1.2% (from +8.7%) – the lowest in 2 years (since Abewrongics was unleashed). The response… USDJPY and Nikkei are dumping…

This Is How Many Times Blogger Bernanke Use The Word “Debt” In A Post About Secular Stagnation

By now everyone, any by everyone we mean even that pillar of orthodox “economic wisdom” , McKinsey, has realized that the reason the world is blanketed in a period of secular stagnation and soon, contraction, is simple: an unprecedented, record amount of debt:

… debt which the world should have restructured as part of the resolution of the global financial crisis, however neither was the financial crisis resolved, nor was the debt overhang fixed. In fact, in all his brilliance, then Fed Chairman Ben Bernanke decided to “fix” record debt with more debt and so did all his other central bank peers leading to this:

Guest Post: Burning Down The House: Land, Water & Food

Submitted by Luke Eastwood

Burning Down The House: Land, Water & Food

I’m sure when Talking Heads wrote “Burning Down The House” that they didn’t exactly have financial collapse and environmental degradation in mind. Although with a verse like “Hold tight wait till the party's over. Hold tight we're in for nasty weather. There has got to be a way. Burning down the house” it’s hard not to see that song as strangely prophetic.

What we are now doing to the planet and to human society is exactly that – burning down the house while we are still living in it. Everyone needs fuel, especially during a bitter winter, but only a mad man starts deconstructing the house in order to burn bits of it in the stove or fireplace.

Almost as mad as that is stealing bits of other people’s houses to burn, but that at least is not soiling your own doorstep – well not at first. In a world of limited resources and limited space we’ve now reached the point where raiding our neighbours’ houses is the same thing as raiding our own house, because the net effect is the same – disaster on an unprecedented level.

Of course it’s easier to live in denial and keep on cannibalising the world’s vital resources at an ever-increasing rate and pretend that it’s business as usual, but in reality it is anything but that. The alarm bells from commentators from all sectors: science, economics, religion etc. are getting louder and more frequent, better argued and with the raw data to back it up, but we are still not listening.

Of course, the alarm bell was being rung fifty or more years ago by people such as Admiral Hyman Rickover in 19571, the now retiring Lester Brown2 and the late Rachel Carson3 (author of Silent Spring). Nobody really listened that well back then, although governments paid lip-service to these troublesome do-gooders. Now we know that what they said was entirely true, that we are headed for disaster and yet will still only get the tired old lip-service, as before or Koch Brother inspired denial.

The evidence is clearly there that we are depleting all of our resources far too quickly, especially the land we use to produce food and draw raw materials from4. In part a consequence of this, the fresh water supplies that are even more vital are also being depleted way too fast.