'..a 30-year bear market..'

<blockquote>'Price deflation is not damaging at all to banks or anyone else. Asset bubble deflation is.'

- Mish (Context: ('The Age of Deleveraging (2012 - 2025)) - '..Few readers believe chronic deflation is in the wings..')</blockquote>


<blockquote>'Berg’s view is on a 30-year bear market is on a “real inflation-adjusted basis, not a nominal basis”. '

- “One Big Worldwide Bubble”: Cusp of 30-Year Bear Market in Stocks and Bonds, May 13, 2016</blockquote>


<blockquote>'Instead, China risks falling into a pattern of chronic low growth, much as Japan did starting in 1990, as ever more credit is required to fuel a slowing economy. In China last year, 10 percent of new credit went toward servicing existing debt, UBS Securities estimates. “They may never deleverage—Japan never did,” Chen says. “But then you are stuck long term with slower growth. You end up with a lot of zombie companies holding back the economy.” '

- China Decides Debt Can Be Dangerous, May 12, 2016</blockquote>


'..Downward price pressures globally on so many things should be no mystery. And by now it should be indisputable that so-called “deflationary pressures” are not the consequence of insufficient “money.”

In the name of “shortfalls in aggregate demand,” central bankers have flooded the world with “money” and Credit. Predictably, this unprecedented global monetary inflation has wreaked havoc on financial market behavior and investment patterns, while spurring self-reinforcing asset inflation and Bubbles. And aggregate demand? It is not - will never be - "sufficient". As we’ve witnessed, Credit Bubbles redistribute and destroy wealth. Bubbles distort investment and spending patterns, which in the end ensures too much of a lot of stuff that the general population either cannot afford or does not desire.'

<blockquote>'The downshift of Credit and “hot money” flows helps explain the weakness in both corporate profits and the overall stock market. And with stock prices down year-on-year, Household Net Worth has essentially stagnated. Keep in mind that Net Worth inflated from $56.5 TN at year-end 2008 to a record $86.8 TN to close 2015. Over the past six years, Net Worth increased on average $4.76 TN annually. Such extraordinary inflation in household perceived wealth supported spending – which bolstered profits and underpinned asset price inflation and more spending.

Let’s return to the irony of positive retail sales data and negative earnings. It’s easy to forget that retail had been significantly overbuilt during the mortgage finance Bubble period. The worst of the shakeout was avoided as Household Net Worth inflated from 384% (2008) to a record 484% (2015) of GDP. And while inflating perceived wealth boosted spending, zero rates and manic financing markets ensured another period of booming retail investment (bricks and mortar and Internet). There has, as well, been extraordinary growth in various services, certainly including telecommunications.

In contemporaneous analysis during the Great Depression, there was insightful debate questioning whether over-investment or malinvestment was primarily to blame. Well, there was ample blame to go around. And this gets back to the fundamental thesis: It was not insufficient “money” after the 1929 Crash that was the root cause of economic depression, but instead gross excess of “money,” Credit and speculation throughout the Roaring Twenties.

A few weeks back I noted analysis that placed excess global energy sector investment at several Trillion. And this week from Bloomberg (Agnieszka De Sousa), “Glencore CEO Lists Mining's Mistakes After $1 Trillion Spree.” And how many Trillions of over/malinvestment were spent in recent years throughout “tech,” biotech, pharmaceuticals and retail? Tens of Trillions throughout China and Asia more generally? Downward price pressures globally on so many things should be no mystery. And by now it should be indisputable that so-called “deflationary pressures” are not the consequence of insufficient “money.”

In the name of “shortfalls in aggregate demand,” central bankers have flooded the world with “money” and Credit. Predictably, this unprecedented global monetary inflation has wreaked havoc on financial market behavior and investment patterns, while spurring self-reinforcing asset inflation and Bubbles. And aggregate demand? It is not - will never be - "sufficient". As we’ve witnessed, Credit Bubbles redistribute and destroy wealth. Bubbles distort investment and spending patterns, which in the end ensures too much of a lot of stuff that the general population either cannot afford or does not desire.

..

May 9 – Reuters (Samuel Shen, Pete Sweeney and Kevin Yao): “China may suffer from a financial crisis and economic recession if the government relies too much on debt-fueled stimulus, the official People's Daily quoted an ‘authoritative person’ on Monday as saying. The People's Daily, official paper of the ruling Communist party, in a question and answer interview quoted the person as saying excessive credit growth could heighten risks and trigger a financial crisis if not controlled properly. ‘Trees cannot grow to the sky. High leverage will inevitably bring about high risks, which could lead to a systemic financial crisis, negative economic growth and even wipe out ordinary people's savings,’ the person… said in response to a question on whether stimulus should be used in future economic policy. ‘We should completely abandon the illusion of reducing leverage by loosing monetary conditions to help accelerate economic growth.’”

China’s “authoritative person” sounds like he really knows what he’s talking about. Chinese officials face a quite serious dilemma. They’ve inflated history’s greatest Bubble and they apparently have come to appreciate that the current policy course is unsustainable. Housing Bubble to stock market Bubble to commodities Bubble to runaway Credit Bubble. At this point, it seems completely reasonable to me that Chinese officials recognize that there really is no alternative than to rein in destabilizing Credit excess. I doubt they appreciate the complexities, myriad challenges and extraordinary risks that await.'

- Doug Noland, Ominous Portents, May 14, 2016</blockquote>


Context

<blockquote><a href="[www.youtube.com] Graham Centre - Value Investing Conference 2013 | Keynote: Gary Shilling</a> (PowerPoint presentation) (The Ben Graham Centre for Value Investing)

Ontario's Game Changing Opportunity? May 11, 2016

'..the worst offender is the Federal Reserve..'