LIFE IN NEOLIBLAND: CURRENCIES & STOCKS & RETAIL SPENDS GOING DOWN, DEBT GOING UP.

trouserdownAll part of life’s ups & downs, nothing to see here

Yesterday Wall Street Wolf guest Bill Bonner was pointing the finger at US retail sales in a very persuasive manner:

‘Recent sales figures from America’s retailers show how deep the rot has become. Sales have been rising at an alarmingly slow rate – just 0.5% since 2007.

Between 2000 and 2007, they went up four times as fast. In the 1990s recovery, they went up six times as fast.

Especially rotten are sales at America’s four largest mall retailers – Macy’s, Kohl’s, Sears, and JCPenney. Together, their sales are falling at a 10% rate per year… or four times faster than the fall in department store sales generally.

What is interesting about these four companies is that they have been among the most aggressive of the stock market manipulators. Between 2005 and 2014, they earned a combined total of $13 billion. But their top execs spent $34 billion deceiving investors about the true value of their firms, by way of share buybacks, pocketing billions for themselves in the process.’

Today, I’m able to do the same for UK retail. This is the sector the Conservatives always turn to when everything else is giving the game away. In net terms, multiple retailing actually worsens the UK trade gap because a huge proportion of what it sells is imported; but because it usually sounds sort of solid (and nobody big has as yet gone bankrupt) Camerlot love to quote it. Something tells me today might be an exception.

Versus a year ago, July retail sales were up 4.2%. Not bad at all. However, month on month sales were nearly static at 0.1% – four times less than expected by the consensus of economists. And of course, share is moving away from the big old brands towards the foreign owned price-cutters…more lost income for UKplc, and, um, not terribly consistent with a recovery during a good summer month.

Nobody’s bankrupt yet because everyone in every form of distribution can keep whacking QE and Zirp non-trading profits to the bottom line. And to date, that same stimulant QE (that has yet to stimulate anything beyond the stock market) has kept the FTSE rising happily atop a fountain of wee-wee.

But since May, the truth about debt, export balance and China has started to sink in. This chart show that gradually developing series of slumps and half-hearted rallies:

SincemayFTSE15At 6381, the FTSE is now in correctionland. Oh dear, and it was all going so well. Especially in China, says Android Eaven-Elpus at the Telegraph, because business confidence there is now zooming up. But confidence is a fickle mistress, and not quite as mind-concentrating as a plummeting stock market.

There was huge relief yesterday when the Politburo (having banned nearly 50% of all selling in the markets) stepped in and started buying everything. In this the era of free markets, it’s important to have all the bases covered, and sure enough the Shanghai Composite rose 1.2%. If it hadn’t, to be honest, we’d have been searching for a poltergeist, but either way the euphoria stopped abruptly overnight, when the index fell 3.4%.

But even if the UK’s retail scene is a little patchy, surely more people have the security to spend now given that unemployment is falling under Camerlot? Ah but ah but yes but no but, as thousands of us have been yelling to the deaf voters for three years, people don’t have enough work or get paid anywhere near enough for it. Here’s a chart showing this rather conclusively:

debtbyhholdsIn a nutshell, what this shows is that household debt for the young and the old has doubled in nine years, and accelerated since the 2010 Election in all households….except the 55-64s.

I suppose this is why the DWP of IDS has to make everything up. But one thing not made up is the speed with which The Slog’s prediction of Asian retaliation to China’s Yuan has come true: Kazakhstan devalued the Tenge by 4.5% today, the Turkish lira dropped 1.3%, the Vietnamese Dong 1.2%, the Korean Won over 2.5%, the Indian Rupee 1.5%, Taiwanese dollar 1.2%, Malaysian Ringgit 2.7%, and the Indonesian Rupiah 1.4%.

What can a chap say, other than “Yuan Kazahk Stan are going to need an inflating Dong to do the Tenga before anyone can Ringgit, shout ‘Rupee!’ and say they Won over the Lira”.

Sorry. The more time goes on, the harder I find it to take much of this seriously.

24 thoughts on “LIFE IN NEOLIBLAND: CURRENCIES & STOCKS & RETAIL SPENDS GOING DOWN, DEBT GOING UP.

  1. The periphery of empire is getting hammered whilst Janet and the Yellens are shouting for joy.Funny how none of the periphery get upset at the interior of empire.

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  2. ‘..Sorry. The more time goes on, the harder I find it to take much of this seriously…’
    I quite agree. There is so much spin and dishonesty, not to mention surprises…in the end there are other things that really matter. Economics and politics are dead ducks. Bring on Crash 2, and screw all the players. The best things in life are free.

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  3. The thing is debt is not going up enough to stop a collapse. Credit expansion was over 810% before Lehman’s (although I find this hard to believe). It fell to 34% but believe it has fallen further still. Without ongoing Credit / Debt growth the economy is f**ked.
    Bill Gross
    http://moslereconomics.com/2014/02/06/bill-gross-on-credit-expansion/
    It used to grow pre-Lehman at 810% a year, but now it only grows at 34%. Part of that growth is due to the government itself with recent deficit spending.

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  4. Indeed, China is the other strong evidence for your point, they tried to keep the plates spinning by printing/stimulating/deficit spending – in fact pulling all levers simultaneously.

    Now it’s not looking so good over there and whatever Ambrose Evans Pritchard says, they cannot continue to grow at 8% and in the act of trying to keep the vehicle in motion have in fact done immense damage to their debt sustainability, environment and the viability of their stock markets and financial systems.
    The huge chemical warehouse explosion should stand as an example of what happens when the only statistic you are looking at is the bottom line, when you sacrifice everything to make money there will always be casualties.

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  5. Govt deficit spending is the key to keep the economy growing. But Govt do not do this enough hence the unemployment and poor living standards for some. It’s fine for people who have it good to criticize but we could have a fairer better world for all not just a few. But Govt debt needs to grow to achieve this. But focused in the right areas. Like housing and non polluting energy sources as an example.

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  6. Are you referring to Euro zone countries? If so they are in the euro so are not monetary sovereign so Govt debt is a big issue for them

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  7. Surely Govt deficit spending as effective economic stimulus was disproved back as far as Jim Callaghan.
    Further increasing Govt debt = taxpayer debt, surely just further enslaves our children & grandchildren to bankster fiat money out of thin air bondage?
    Finally, to regard solar & wind power as non-polluting & long term viable as reliable producers of energy sufficient to sustain our civilisation, what little is left of it, is IMHO the height of juvenile or simple minded brainwashed stupidity.
    John Doran.

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  8. I am rather referring to the global situation.
    Govt debt is taxpayer debt is our debt & any debt we cannot repay ourselves is a debt we hand on to our children & grandchildren.
    While an ever increasing portion of our taxes go toward paying interest on central bankster fiat money created out of thin air, the rewards for hard work & ingenuity are being diverted in a manner which can only be termed as perverse, or perverted.
    Take your pick.
    John Doran.

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  9. That’s what the financiers wants people to believe. You and many others have swallowed clever misinformation hook line and sinker.

    Govt debt is the only way out for the West now. Without it the West is finished. And rather than your children being lumbered with Govt debt that will NEVER be paid off and simple rolled over. They will have a future where jobs are almost impossible to find and living standards are low. All because of an irrational fear of monetary sovereign Govt debt. Created by the UK Govt BY JOURNAL ENTRY as and when required. Read Warren Mosler free book on the 7 deadly economic frauds if you want the truth.

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  10. Pingback: A rose by any other name would smell as… Hang on, can anyone smell burning? | Library of Libraries

  11. RJ, the point I think you’re missing is that, at present, money is created as interest bearing debt, while that need not be the case. Look into http://www.ulcolumn.org for the Bradbury £, which this country had 1913, when once again the Banksters were in trouble. Lincoln’s Greenbacks were also issued “on the credit of the nation” & the pre-revolutionary American colonial scrip. I believe Guernsey operates a similar system to this day. Google Bill Still Money Masters for a 3.5 hr documentary on money.
    Money is most definitely NOT created by Govt, it’s created by banksters, at interest, & the ponzi scheme is inflated by the evil of fractional reserve lending. Try also: Pawns in the Game by William Guy Carr for a bankster expose going way back in history.
    JD.

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  12. Sorry, http://www.ukcolumn.org.
    Ponder seriously this question: The Banksters caused the world financial collapse, 2008, so why are their debts put on the backs of small taxpayers, who, in addition, are saddled with “austerity”? While the Banksters still get their bonuses?

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