Developing Market Debt Hits $58.6Tn on Bailout Mania

Here's another thing we can pretend doesn't matter.  

Emerging-market debt has grown $28Tn since 2009, according to the Institute of International Finance, which on Monday introduced a database tracking 18 developing markets. Global debt has soared $50Tn during the period to surpass a total of $240Tn, or 320% of global gross domestic product, in early 2015.  That's right, the Planet Earth is now more than 3 TIMES it's annual gross salary on debt!  

Non-financial corporate sector debt in emerging markets has risen $13Tn since 2009, increasing more than five-fold over the past decade to surpass $23.7Tn in the first quarter of 2015. The advance has been most concentrated in emerging Asia, where it rose to 125% of GDP.  As noted in the chart above, OVER 100% of the GDP growth since 2007 has simply been more debt:  more stimulus, more bailouts, more ZIRP policies by our Central Banksters - all masking NEGATIVE real economic growth.  

Take China... please.   Today we got a NEGATIVE 5.9% reading in their PPI Report with CPI up just 1.3% - clearly in a deflationary state yet The State continues to claim the economy is growing at a 6.9% annual pace.  That is totally and completely B*LLSH*T and shame on you for putting up with it!  

Yes, shame on you if you are a fellow Financial Analyst, shame on you if you are a Financial Writer and shame on you if you are a consumer of this information and just passively let yourself be lied to - SHAME!!!  Where is the outrage?  Don't you deserve to know the truth?  Shouldn't there be an investigation or are we so frightened of China that we don't even have the balls to demand an audit?  

That's right, China is our biggest trading partner - it is in the interest of the United States in general and investors in particular to have a fair and accurate assessment of their real economy.  Why does no one demand this?  Conveniently, we have a GOP debate tonight - let's ask the candidates what they plan to do about it!  

Chinese Imports fell 18.8% in October and Exports were down 6.9% vs. an 8% growth target that was set by the Party at the beginning of the year.  We know the real trade numbers because we can check them with trade partners on the other side but, magically, we are supposed to believe that, despite these TERRIBLE numbers, once inside the Chinese borders this total lack of goods multiplies over and over again to somehow cause 6.9% growth in the economy.  Come on, what are we - 5???

China's trading partners are certainly feeling the pain.  This morning the Philippines reported a 24.7% collapse in exports and NEGATIVE 0.3% CPI "growth".  Hey, it's just one more warning Global warning signal we can ignore as we take our markets to record highs, right?  After all, the Mainstream Media is telling us everything is fine and when have they ever steered us wrong?  

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I know, that was so 8 years ago - things are different now.  Well, they are a little different in that oil is not over $100 and the Financial sector doesn't have Trillions of Dollars of bad debt categorized at AAA - that's a good thing.  Of course "THEY" are not going to lie to you the same way they did 8 years ago - even "THEY" don't think you are that dumb...

This time the myth is that things are going great in far away lands where strange people speak different languages and have customs we don't understand - so don't ask any questions and just BUYBUYBUY is the brand of BS the media is peddling now in order to part you with your hard-earned savings in exchange for vague promises of future gains.  

In truth, as you can see from the above chart - unless you were lucky enough to have bought into China in one of it's big dips over the past 5 years, you have probably lost money on your investment while the US markets have more than doubled.  Compare that with how many times in the past 5 years you've been told China is the World's growth engine and, more importantly, compare that with China's claim that their economy has grown 7% or more in 2011, 2012, 2013, 2014 and 6.9% in 2015. 

Starting the Hang Seng at 22,500 and multiplying it by 1.07% 5 times gives us 31,557, not 22,400.  Maybe the Hang Seng is completely mispriced and maybe the actual Chinese investors don't see how great their economy has become in relation to their economic growth or maybe, just maybe, their economic growth numbers are B*LLSH*T!!!  

We report - you decide...

Of course the running narrative in the MSM is that all this bad news is good news because it means the Central Banksters can give us MORE FREE MONEY and, to some extent that's true but that brings us back to the MASSIVE GLOBAL DEFICIT at the top of this page.  If a guy is going bankrupt and you give him a $250,000 credit card - he can party like it's 1999 for quite a while and then, when that card maxes out, you can give him another and another and another.  As long as no one ever has to pay back all those credit cards - everything is AWESOME!  

In fact, while this guy is out spending borrowed money, you might be fooled into thinking the local economy is strong as an endless supply of party balloons, kegs, pizza, etc. are delivered to his home.  He might even hire some clowns an put in a new pool.  Why not, the money's free, isn't it?  All these things would not have happened had we forced our friend to actually face up to his financial shortcomings and everyone is much happier - there's no doubt about that.  

As long as we can keep giving our friend additional $250,000 credit cards and as long as we're willing to ignore the fact that the first 2, 3, 4, 5.. cards have still not been paid back - all shall be well.  When we run our economic reports, we can say how awesome things are - especially in the local pizza and beer business and even the pool guy says orders are picking up - all good signs in the economy.  The pizza place may hire another delivery guy and the pool guy orders cement and wise economists point to this as strong signs that our economy is turning around - all based on borrowed money that is being poorly spent by a single person.  

Does this sound like any economies you might know?  The World's Governments have borrowed $57 TRILLION Dollars in the past 7 years - that's $8Tn per year, or more than 10% of the Global GDP - in order to make it look like the Global GDP was growing at a 2% pace, rather than face the ugly truth that we have been and still are in a Global Recession.  

If we never have to pay back this debt and if we never run out of new rounds of money to spread around, then all shall be well for as long as the game continues.  We happily ignored a 100% debt to GDP ratio and we ignored 200% and now we are ignoring 300% - by the time our debt to GDP ratio passes 400%, what's another 100% going to mean anyway?  

Amazingly, gold is at $1,088 (we're long /YG Futures, GLD ETF) because conventional wisdom dictates you don't own gold when the Fed is hiking rates.  Another long position we hold, which I've discussed before, is natural gas (/NG Futures, UNG ETF) and you only have to listen to KMI's conference call to know why and we will talk more about that this afternoon - at our FREE LIVE WEBINAR (1pm, EST) - I hope you can join us.  

Be careful out there!