Thursday, October 22, 2015

22/10/15: Ah, those repaired credit flows...

BIS data on 2Q 2015 cross border lending is ugly... on so many levels (see breakdowns here: But the ugliest is the aggregate rate of change:
Yep, that's right. In the economy repaired by multiple countries surrenders to the IMF, years of massive QEs, the printing presses perpetual overheating and all other policy shenanigans, 2Q 2015 has seen the sharpest decline in cross border lending by the banks in history of the series (from 1978 on).

Borrowing is down across all intermediaries:

and all currencies save Japanese Yen:

and for every borrowing region, save EMEs (read: China):

and if you think the rot is dominated by the Emerging Markets, think again:

So when some time ago I described the state of play in the global economy as being Japanified, I wasn't kidding. The monetary policy dream of 'repairing' credit flows by making credit dirt cheap has had... well... at best an underwhelming effect. Time to think about actual, real, economic demand, maybe?..

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