S&P finally checked in on credit quality. Perhaps they have insights into the innards of the cancer patient? Regardless, this commentary isn’t really rocket science, nor is extrapolating that the leveraged hedge-fund central banks that hold this credit are going to experience massive losses — that is unless they can successfully foreclose on the patient. Although I suspect Deutsche Bank (see) and Italy (see) will be the triggers, it is such a moving target that it could come from anywhere.
S&P notes the Ponzi unit effect: “Central banks remain in thrall to the idea that credit-fueled growth is healthy for the global economy. In fact, our research highlights that monetary policy easing has thus far contributed to increased financial risk, with the growth of corporate borrowing far outpacing that of the global economy.”
Continuing on, S&P notes: “Nearly half of corporate debt issuers are estimated to be highly leveraged.”
To that, S&P might just as well add the levered-up sovereigns that have back stopped all this highly leveraged credit and banking caca. The sovereign collapse will be like a backed-up toilet or sewer.
The fact of the matter is that defaults on a global basis are already on pace to exceed 2009, and this doesn’t even include the European banking morass and the detritus that has been pawned off on the ECB. These coming defaults will be many, many multiples more than 2009 and will also involve derivatives.
The Coming Revolt Against Banksters
There is a myth that if a central bank or the IMF or World Bank owns defaulted credit, it doesn’t really count as a loss. Inevitably, in a replay of 1933 National Socialist Germany reneging on the Dawes Plan (a stretched-out bailout scheme like Greece) and kicking out the Rothschild central bank (as Andrew Jackson did), a nationalist political movement in one or more of the defaulting sovereigns of Europe or elsewhere, such as Brazil, is going to tell the Troika powers and the too-big-to-fail banks to jump in the river. Prison time would be no small surprise, and perhaps rides in helicopter as well.
The countries that take the movement path will begin to revive out of debt slavery, leading others to follow. This conflict and the debt-slave movement may not include the goose-steppers but will have a similar tone to this. It will orient around the production of labor and away from capital. Once the population in the movement countries realize their deposits and pensions are going to creditors, the movement will gain full support just as it did in Germany by 1934 and in Austria in 1938. And just like in the 1930s, there will be a response and reaction to the movement.
The biggest risk to the defaulter movement is not to their economies but the threat of war, or something similar to the fate of Libya. This could include asymmetric war, including massive sabotage, sanctions, boycotts or weaponized migrations. The only way for movement countries to protect themselves from this is through organized national resistance.
If global defaults ramp up the way I expect, this may not be too far away. The endgame at that point is a matter of who will take the losses: international banksters and creditors or the people.
That’s why you hear so much thinly veiled chatter in Cabal media about slashing and looting pensions. That is one key method of banksters to foreclose on countries and take the assets.