“The first quarter 2009 brought the greatest credit collapse of all time”

This is not Thailand related. Albeit… well yes it is totally Thailand related.

I said before that I was a fan of Mike Shedlock (Mish). This US blogger announced the crisis with an astonishing accuracy. As soon as 2005 (yes ladies and gentlemen)… He’s very prolific and he’s a hard core deflationist.

He wrote a few days ago a striking piece, based on an analysis of the official Flow of Funds Report for the first quarter of 2009 from the FED.

Sounds technical and boring ? Absolutly not.

Just an amazing HARD EVIDENCE (coming from the FED) that the credit crisis isn’t solved. At all. It’s even getting worse.

And as you know, credit is the lifeblood of our modern economies.

Excluding public sector borrowing (by the Treasury, government agencies, states, and municipalities), private sector credit was reduced at a mindboggling pace of $1,851.2 billion per year! […]

“In U.S. households alone, the losses have been massive: massive: $1.39 trillion in the third and fourth quarters of 2007 (not shown on page 105) … a gigantic $10.89 trillion in 2008 … $1.33 trillion in the first quarter of 2009 … $13.87 trillion in all, by far the worst of all time.” […]

Bottom line: The first quarter brought the greatest credit collapse of all time.

This article will show you that the Green Shoots are a pleasant joke. With such a credit implosion and wealth destruction, the US Economy (and the world economy) can’t fire up again. No way.

It’s not a “if”, it’s not a “may be”, nor a “theory”, but rather a burning fact.

This article is a must-read.

Let me rephrase : you must read it (along with the original analysis from Martin D.Weiss) . 😉

11 Responses to ““The first quarter 2009 brought the greatest credit collapse of all time””

  1. 1 Pricilla 21 June 2009 at 6:23 pm

    Yeah I read that on Kitco or the Market Oracle already, very interesting article. The Doom & Gloom mob as they are referred io really have some scary statistics, charts and figures to back up why they are so pessimistic.

    It is all so bad it is hard to believe that those clowns Geitner and Benanke are allowed to manipulate and potentially destroy an economy like that. Mind you all their banker friends have been bailed out, or at least given time to cover their arses, as always it will be the poor and middle class tax payer that gets screwed.

    Several sites also claim that US debt is so high now that massive taxes rises couldn’t even cover the interest let alone the principal, no doubt more bad news coming when it becomes clear how what con they plan to get rid of it, inflate it away?

  2. 2 fall 21 June 2009 at 6:31 pm

    Since when does the financial world stop providing financial service, but start being a pyramid-scheme?

    IMHO, a new economics indicator to indicate a core financial service(to provide a caution line) is require.

  3. 3 ThaiCrisis 21 June 2009 at 7:21 pm

    Fall : a bag of gold coins could do the trick. “Do you have a real collateral ? Yes I do.” 😉

    Pricilla :Bailed out ? I would rather say “given a last cigarette” like a guy on death row… Because, when taxes will be increased (they will, eventhough we could argue, enough to enough ?), this money will be removed from the system, leading to lower consumption, lower needs for financial services, lower fees etc.

    My point : we shouldn’t believe that the banksters have won. Eventually, we will lose. All of us.

    As for the “himalayan” topic of discussion : inflation or not… I believe I solved the problem : I believe in inflation on monday, and then in deflation on tuesday… etc. 😉

    I understand my inability to choose between those 2 propositions as the sign that… well… we will have both. 😉

  4. 4 Lothar 21 June 2009 at 7:29 pm

    @fall: since around the end eighties i would say. Thats when you see the exponential lines in all charts raising.

    I would like to point to LEAP. This european think tank also often have quite good analysis. I agree with there current point of view about the three rogue waves (be prepared for the Tzunami):


    But back to Thailand, isn’t our clown really funny. I think he deserves an additional applause:

    “””Abhisit said yesterday the government had set a very clear direction to effectively manage the economy in both the short and long term, which would help restructure the Thai economy to make it stronger, capable of competing in the global arena and dealing better with fluctuations in the global economy.

    “We have already passed the most difficult time of the economic crisis in the second half of last year. Even though there was a 7.1-per-cent contraction in GDP in the first quarter of this year, I strongly believe the decline will be less in the second and third quarters and the Thai economy will see some positive GDP growth in the fourth quarter,” he said.”””

  5. 6 ThaiCrisis 21 June 2009 at 8:09 pm

    Surreal !

    He’s betting on the… base effect.

    Q4 of 2008 was bad, at -4,2 % (compared to Q4 2007)… So eventhough the thai economy continues to contract… the % of change on Q4 2009 (compared to Q4 2008), could be lower than -4,2 % (for instance -2 %). So the clown could say : “you see, the situation is improving !”

    Pathetic trick.

  6. 7 antipadshist 21 June 2009 at 8:40 pm

    I was able to find few references thus far:

    Gov’t should waive duty on luxury goods

    Govt urged to waive import duty on luxury goods

    State to End Tariff on Imports

    this follows previos nes about steel imports :

    Import duty on auto steel to be waived

    Steel traders urged to tap benefits from JTEPA

    to me it looks pretty much more like for the benefit of the rich and big companies, rather than for the country as whole – aka so called “boost tourism” coverage. because, seriously – the economic situation is as bad in developed countries, and people are not inclined to travel abroad and especially for buying “luxury goods” ! therefore I think this is a very moronic idea or excuse to benefit all those local businessmen who can make a lot of money if import taxes are waved. imagine, if cars can be imported with ZERO customs duty !

  7. 8 Lothar 21 June 2009 at 8:54 pm

    He’s just doing what everybody is doing after october/november. Then the crisis is over as year-by-year comparisons will do show serious downturns anymore.

    I bet a bottle of Jonny Walker Black Label that all the newspapers, magazines and analyists will not use pre-crisis numbers but instead continue of month-by-month or last-year comparisons.

    So don’t worry – everything will be fine again soon.

    And if the people on main street gets hungry tell them to eat the cakes.

  8. 9 ThaiCrisis 21 June 2009 at 9:05 pm

    Yes Lothar. But… we still have a serious possibility of a “secound round” of the crisis… I believe that the situation will continue to deteriorate.

    Playing the base effect game won’t help in this case.

  9. 10 ratherbefishing 22 June 2009 at 7:21 am

    Mish makes for a good read. You might enjoy Zero Hedge (my favorite). See http://zerohedge.blogspot.com/

    Here is a great post on the above subject

  10. 11 thonglorgwm 22 June 2009 at 8:49 am

    The “green shoots” are simply a few investors talking up the stock market. Like the kids in the back of the car forever asking “Are we there yet?”, these investors are impatient for the bull market to resume.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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