Wednesday, September 17, 2014

Pakistan Protest Update;

Little has been heard as of late about the protest that have continue for weeks in Pakistan. Reuters reported today that Pakistani Prime Minister Nawaz Sharif has threatened to clear a protest camp established more than a month ago outside government offices in Islamabad. Pakistan's opposition leaders ordered thousands of their supporters this weekend to resist government attempts to quash their protests, prolonging the political crisis in the coup-prone country.

Khan’s party that leads the protest said it had not backed down from its demand that Sharif quit and was ending dialogue with the government after 100 activists were jailed over the weekend. Some ruling party officials have accused the military of instigating the unrest in order to destabilize Sharif so that it can exert more influence over him, the army has denied such meddling in civilian affairs. Below you will find a recent article concerning the situation that is far from over and hangs in limbo.



Sunday, August 24, 2014

Pakistan Is Approaching A Crisis



Read more here: http://www.sacbee.com/2014/08/22/6646935/ap-photos-pakistani-protesters.html#storylink=cpy
Pakistan is approaching a crisis and America is more or less powerless to influence the outcome.  It also appears that few Americans care. The Islamic Republic of Pakistan is a sovereign country with a population of over 180 million people. What makes Pakistan so important is the fact that it has nuclear weapons and is politically unstable. Trouble has been brewing in our relationship with Pakistan for years even though America has poured billions of dollars in aid into the country, it could be argued that we were buying their cooperation rather than we had a strong interest in being their friend. When the Pakistan government failed to control  extremist elements in the country, America began to use drones to attack within the country's border, this has stirred outrage and protest against America.
Protest Are Growing In The Unstable Nuclear Power

What should alarm Americans after all the other recent problems in the region is that tens of thousands of protesters armed with sticks and wire cutters have swarmed into the fortified red zone in the center of Islamabad calling for Prime Minister Nawaz Sharif's resignation and the dissolution of parliament. The week-long protests in the capital are around the parliament building, the prime minister’s official residence and many Western embassies. The government said that security forces had been deployed to protect the area which includes the United States Embassy. The protesters, who have camped in the capital since Friday, are led by Imran Khan, the former cricketer, and a charismatic cleric named Muhammad Tahir-ul Qadri, who run separate campaigns but are united in their opposition to Prime Minister Nawaz Sharif.

Mr. Khan’s crusade received a major lift on Tuesday when his supporters merged with Mr. Qadri’s, forming a crowd that the police estimated at more than 40,000. In a speech Mr. Khan repeatedly attacked Mr. Sharif, whom he accuses of stealing the 2013 election through vote rigging. He has even challenged him to a duel. He described the prime minister as a thief and a corrupt politician and vowed to turn the space outside the Parliament building into “a Tahrir Square,” a reference to the site of the 2011 uprising in Egypt. While instructing his supporters to remain peaceful, he warned of the possibility of violence. This is widely seen as a final effort by Mr. Khan to rally his supporters after days of threats and political speech. Despite the festive atmosphere, problems exists to the demonstrations, an increased demand for food, water and toilets to accommodate the thousands of people many who are sleeping in the streets.

Mr. Sharif’s government, which came to power in June 2013, has struggled to quell the escalating political crisis, partly as a result of Mr. Sharif’s tense relationship with the Pakistani Army leadership. In recent days. Mr. Sharif’s administration failed to engage Mr. Khan and Mr. Qadri in negotiations to end the standoff and appeared to be hoping that the protests would simply fade. Yet, there was little sign of that Tuesday evening, as Mr. Khan and Mr. Qadri both gave impassioned speeches before sending their followers toward the city’s protected area, which was ringed by shipping containers and thousands of police and paramilitary officers.
Many reasons exist to be concerned about Pakistan going forward, for years the country has experienced internal violence and attacks from extremist groups within the country. With the government sometimes struggling to maintain order, and a military that sometimes threatens to take control over the country the political stability of Pakistan is often questioned. The fact that Pakistan, and India it's neighbor to the south both possess  nuclear weapons and have a history of problems and tensions is a huge worry and concern for the region. It would not be good to see more instability in this region that is already being rocked by ISIS. 
Pakistan's motive for pursuing a nuclear weapons program was to counter the threat posed by its principal rival, India, which has superior conventional forces. This is what makes Pakistan so important, at any time an unstable Pakistan could be sucked into, or be the one to start a nuclear war. Adding to this concern is that Pakistan is an obvious place for a jihadi organization to seek a nuclear weapon or fissile material, both the military and security services have been infiltrated by a number of jihadi sympathisers. Three key threats exist, a terrorist theft of a nuclear weapon, transfer of a nuclear weapon to another state like Iran and a takeover of nuclear weapons by a militant group during a period of instability. 

Pakistan is home to some of the the harshest variants of Muslim fundamentalism, and headquarters of  organizations that espouse extremist ideologies, these include Al Qaeda, the Haqqani network, and Lashkar-e-Tayiba. Nuclear bombs capable of destroying entire cities are transported in delivery vans on congested and dangerous roads. And sources say that since the American raid  to kill Osama bin Laden, the Pakistanis have provoked anxiety inside the Pentagon by increasing the pace of these movements. Ironically the Pakistani government makes its nuclear weapons more vulnerable to theft by jihadis in an attempt to hide them from the United States, the country that funds much of its military budget.

Adding to the current woes within Pakistan on Saturday they traded gunfire with India in the disputed Kashmir region. Officials said the exchange killed two villagers on each side and wounding several others. A top official with India's paramilitary force, said Indian forces retaliated after Pakistani troops fired guns and mortar rounds on more than a dozen Indian border posts and several villages. Kashmir is divided between India and Pakistan, and the rival neighbors claim the disputed Himalayan region in its entirety. Pakistan and India have fought three wars since gaining independence from Britain in 1947, two of them over Kashmir.

Pakistan and India have largely followed a 2003 cease-fire accord, but sporadic violations have occurred. Tensions escalated in Kashmir since earlier in the week India called off diplomatic talks with Pakistan because the Pakistani ambassador in New Delhi met with separatist leaders from the disputed region. India said the meeting undermined efforts to thaw relations between the nuclear-armed neighbors. India has tolerated such meetings in the past, this suggests the new government may be taking a harder line. While this all seems distant and unrelevant to most Americans it is important we remember Pakistan is in a position to start World War III. As of now Prime Minister Nawaz Sharif has been assured by the country's military there will be no coup, but in return he must "share space with the army", according to a government source.
 

Footnote; This post dovetails with many of my recent writings. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. Below is an article written a while back giving more background on Pakistan and detailing why the country is so important.
http://brucewilds.blogspot.com/2013/08/pakistan-why-it-is-important.html

Monday, September 15, 2014

Italy The Achilles Heel of Europe

It is ironic and only fitting that Italy is shaped like a boot. Italy is loved and often the travel destination by many Americans and for good reason, it is downright charming. Way back in 2011 Nouriel Roubini warned that Italy needed to pursue an orderly restructuring of it's debt to avert a default in coming years. At the time he saw the ECB and Berlin could impose a depression on Rome if things were to continue as they were.  Almost everyone agrees that Italy’s public debt is unsustainable and needs an orderly restructuring to avert a default, but as usual in the Euro-zone no action is happening. In many ways Italy could be viewed as the Achilles heel of Europe.
Italy A European Debt Bomb Waiting To Explode

Italy is the third largest economy of the Euro-zone after Germany and France, unfortunately it holds the largest public debt totaling over 2 trillion euro. This debt has been growing at an astonishing pace, even in more recent times and particularly as a ratio to GDP. The fact that the GDP is contracting has exacerbated the problem. This is not sustainable and the country is held together only because of the direct intervention of the ECB which made over 102 billion euro of Italian bond purchases in 2011-2012 alone. This has continued since then and the sum has gotten much larger. Only through the LTRO can the finances of the Italian state be kept afloat.

The truth is that in all reality Italy went bankrupt in summer 2011. Back then we saw interest rates on the national debt spike going out of control and Italy lost access to the financial markets. At that time  the ECB and political authorities in Europe agreed to create around the country’s finances an artificial market to give the impression of stability and the appearance that Italy could work its way through its problems. Italy it appears is now forced to stay on this artificial support until the economic conditions improve and confidence is restored to where the country will have again access to real and normal credit markets. This most likely will never happen because not only is the country mired in debt it is also a mess politically.

Because of the sheer dimensions of Italy as an economy and as a debtor it dwarfs the problems posed by the PIGS that had received so much attention. We must remember to put this in proper prospective, all countries are not equal in size and the reason for their woes will vary. However, propping up an economy is not a long term fix and the ECB loaning money to banks to have them purchase government-issued bonds is a scheme and instrument that allows international investors to do an orderly withdrawal from Italy. The French and German's, whose share of this public debt is falling reflects the rise of Italian banks purchasing public debt.

We should not let this important signal go unnoticed, it goes in the opposite direction of an increased interdependency which would be expected from a monetary union preparing for a political union. It seems that many investors are actually systematically reducing their exposure in South Europe, possibly hoping that a future breakup of the common currency will have less harmful consequences if their involvement in the financial and economy destiny of those countries has been reduced and curtailed to the minimum. For Euro-sceptics, it is a signal that, once foreign investors withdraw, Italy will crumbly under the weight of its debt.


Footnote; Thanks for reading, your comments are encouraged. This post dovetails with several other recent writings. Related  articles may be found in my blog archive. Below is an article giving more background on the political happenings in the Euro-zone.
           http://brucewilds.blogspot.com/2014/04/euro-zone-update.html

Sunday, September 14, 2014

Consumers Are Facing Protracted Weakness

Empty Wallets Make For Mostly Empty Aisles 
Almost two years ago during a television interview on Bloomberg, Harvard economist Steven Roach put a retail sales consultant in her place who was crowing about strong retail growth. Roach pointed out that after discounting for inflation growth in retail sales compared to past years is mostly an illusion. I wish he had gone to the next step and pointed out that what little growth does exist is built on a foundation of demand from huge government deficit spending. To make things worse the government has been forced to borrow much of that money. When we lookout over the landscape of retail sales today we find little has changed.

A very competitive sales environment has squeezed retailers margins. Part of the poor outlook for consumer spending comes from the inability of people to use their homes as a ATM, this abruptly ended in 2008 and was a large driver in causing the bubble to burst. While super low interest rates have allowed people to refinance homes and cut their monthly payments they have also devastated the incomes of those with savings causing them to curtail spending. Slow job creation, coupled with many of the jobs being created at the low end of the pay spectrum, is now being affected by another recent occurrence, many workers have seem their hours slashed because of Obamacare.

Absent a new stimulus package from Washington, which is not expected, consumer weakness will continue. The tailwinds from lower lower interest rates are mainly behind us. Sub-prime auto loans and doling out money to students for college can only carry us so far. As students end their educations and have to begin repaying their loans this will dampen growth and become a headwind going forward. Even a higher minimum wage during a time of rather weak job growth offers little relief. Sadly, few great options lay before us as policies poisonous to small business continue to flow out of Washington.

Bottom-line good jobs are far from plentiful, incomes are stagnate, and debt burdened consumers are out of money. Americans continue to face more deleveraging that will go on for years. Some consumers have worked hard and paid down the debt that they accumulated, others have simply walked away from their debts and taken the path of bankruptcy. Those that remain in houses where they have not paid their mortgage for months or years have supplemented discretionary spending. Roach was spot on when he predicted consumers as being in a protracted period of weakness and  you can stop talking about strong retail sales until more good jobs materialize.


Thank you for reading my post. Most economist see creating more jobs as a way out of this quagmire but this is no easy task. If you have time please read one or all of these post that focus on how difficult that tends to be;

          http://brucewilds.blogspot.com/2013/01/creating-jobs-in-mature-market.html
          http://brucewilds.blogspot.com/2013/09/implications-of-poor-job-creation.html
          http://brucewilds.blogspot.com/2013/06/obamacare-means-partime-work.html

Wednesday, September 10, 2014

Central Banks And IMF Clueless On How To Proceed

The recent drum beats and flames of war have distracted many people from focusing on the economy. The markets are extended beyond beyond, all this comes at a time when the IMF is calling for more QE. It seems this might be a good time to review the reasons this is economically unsound and a bad idea while markets are setting new record highs and economies continue to struggle. The policies of the last six years have yet to produce the desired and expected results promised. As a consolation many economist, bankers, and those who have benefited greatly tell us we would be in far worse shape if we had not taken this course.

It seems Central Banks and the IMF are clueless on how to proceed and a policy going forward. A glaring example of the current mess is one how the implied cost of borrowing for Spain and Italy for five years, which is close to the average maturity of their debt, is now lower than the cost of borrowing for the same period for the US and the UK. We see this when looking at the yield on five-year government bonds, which is 1.33% for Spain, 1.44% for Italy, 1.65% for the US and 2.02% for the United Kingdom. It was not long ago when Spain and Italy were basket cases close to collapse because of legitimate fears of default on the poisonously intertwined debts of their respective banks and governments.

The debts of Spain and Italy are not "made of gold" in fact their economies have massive issues that could fracture the entire euro-zone. If they were to stand alone it is blatantly obvious the risk of default by Spain and Italy is significantly greater than for the UK and US. This makes it seem a bit insane that "investors" are willing to buy the debts of Spain and Italy at a price that makes them appear more creditworthy than the US and UK. This is why the issue of world debt is again creeping to the forefront. Yes, the myth of an economic recovery is flawed and that is reflected in the massive growth of inequality across the world.

The Bank for International Settlements, which is the central bank for central banks, issued a report recently saying world debt levels are too high, and that continuing the current low interest rate policy has too many bad effects. Something needs to be done to normalize monetary policy. Everyone  is making statements about the issue of how to fix our current economic problems. Janet Yellen, Federal Reserve Chair, and Christine Lagarde, managing director or the International Monetary Fund both appear clueless as how to forge a new path forward.

Both these so called economic leaders have it seems long ago abandoned austerity as the answer and thrown under the bus anything that resembles tough love. Getting  back to the main point of this post, how is this debt crisis, and the likely outcome, different from previous crises?  One big difference is the economies of the world have become more intertwined leaving us open to more problems from contagion. Another is that we have tried to put patches on the problems for six years and after printing money at an unbelievable rate we are still unable to achieve a decent rate of growth.

Central banks are responsible for having made credit cheap in recent years because of all the "almost-free' money they've created since the financial crisis of 2007-08. Still it required the reckless lending and investing by financial institutions such as banks and hedge funds to push asset prices up to these high levels. This leads to the risk that asset prices will tumble, at just the wrong inconvenient moment, causing serious harm to these financial institutions and wreaking their ability to finance the economic activity crucial to our prosperity. In many ways it might appear we are back where we started six years ago only this time our base is weaker and the intertwined interest of contagion even greater.


 Footnote; This post dovetails with many of my recent writings, for more I might suggest reading the article below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.
             http://brucewilds.blogspot.com/2014/08/modern-monetary-theory-is-wrong-debt.html

Monday, September 8, 2014

9-11 In Prospective

Up to now I have heard little about 9-11 compared to all the coverage made in prior years as the anniversary of this day approaches. In past years we have always had a massive media buildup to the day we know as 9-11. It has not been uncommon for those in the media to stumble over each other in attempts to do something special. The media has reported in deep depth and rolled before us stories that stirred memories of the victims of 9-11 and the scar it left on the nation. So absent is the buildup I"m almost forced to ask, has a gag order been sent out to the main stream media or a request to downplay the day? Has the fear of bringing about attacks or chatter and threats caused the media and politicians alike to go mum? Are we that controlled?

Even as stories and articles dribble out it is nothing like the coverage in the years prior to the attack in Benghazi. As 9-11 approaches it is as if America begins to hold its breath and cross their fingers hoping we never again come under attack. Will terrorists kill innocent civilians in the years to come? Of course. They did so more than 100 years ago, when they were called anarchists—and a responsible nation-state must take reasonable measures to protect its citizens. But there is no way to completely eliminate terrorism.The challenge that confronts us is how we will live with that threat. We have created an economy of fear, an industry of fear, a national psychology of fear. Al Qaeda could never have achieved that on its own. We have inflicted it on ourselves.

Over the coming years many more Americans will die in car crashes, of gunshot wounds inflicted by family members and by falling off ladders than from any attack by al Qaeda. There is always the nightmare of terrorists acquiring and using a weapon of mass destruction. But, nothing would give our terrorist enemies greater satisfaction than seeing how we focus obsessively on that remote possibility, and restrict our lives and liberties accordingly. Knowing another attack will occur and it is merely a question of when not if, we should remain prudent but, we should not stray into where we are paranoid.

 In an opinion piece written by Ted Koppel and printed in the WSJ on August 7, 2013 titled;  "America's Chronic Overreaction To Terrorism" Kopple delves into terrorism over the last several decades and makes several strong points. Kopple wrote; Terrorism, after all, is designed to produce overreaction. It is the means by which the weak induce the powerful to inflict damage upon themselves. At home, the U.S. has constructed an anti-terrorism enterprise so immense, so costly and so inexorably interwoven with the defense establishment, police and intelligence agencies, communications systems, and with social media, travel networks and their attendant security apparatus, that the idea of downsizing, let alone disbanding such a construct, is an exercise in futility.

Like many Americans I still find myself amazed that the 9-11 attack ever succeeded and I'm shocked at how against all odds the unseemly plan proved so effective. As I write this I'm aware that if another major attack occurs those who have built the massive and expensive homeland security apparatus will use it as proof you can never do enough. I choose not to live in fear and I feel that there is a limit to how much of my money should be used to protect me. I choose not to sacrifice either my freedom or privacy. Those of us who want programs that spy on us disbanded have created a bizarre alliance that spans from those on the far left, the liberals that often call for more government action and the less government libertarians. For more on how Americans should press on and muster the courage to go forward with a stiff upper lip see the posts below,

              http://brucewilds.blogspot.com/2013/08/americans-should-show-little-spine.html
              http://brucewilds.blogspot.com/2013/09/a-terrorist-under-every-bed.html

   

Monday, September 1, 2014

The Turning Point May Be Soon Upon Us

Timing a market top is difficult. Last labor day I wrote the article below. It is appropriate because it is about money the main thing so many people trade their labor for. Again, I offer it up with some minor updates. Many people work hard for their money and even harder to save a bit of it but are lulled into complacency when it comes to protecting it. One of the saddest thing to witness is someone who has worked so hard loose all their money when an investment turns south. This reminds me of the story about how many people describe going bankrupt, slowly at first then quickly at the end. This market has far exceeded the upside expectations of many bulls while the economy has languished and in many respects failed to regain all the ground lost since 2007. The question I put forth is, are we reaching the turning point?

In the past I have written about the unpredictability of predictions so I will spare you having to read another one. A random black swan crashing through your front window plays havoc with the idea of always and never. America and much of the world has been washed along on a wave of freshly printed money and the momentum it creates. Housing and auto sales have flourished, maybe to much on super low interest rates. This mask the reality of serious structural problems within the economy. Washington has failed to make the reforms necessary to make America more competitive, problems have been ignored and allowed to fester.

Job creation has been the weakest seen during any recovery on record, not only not enough jobs have been created but the quality of them is poor. The mark is low pay, no or little in the way of benefits, and many are only part-time. Consumers are not in a position to spent the economy forward and out of this mess. Massive numbers of Americans have been unemployed forever and a day or simply dropped out of the work force giving the illusion that the unemployment rate while a bit high has returned to an acceptable level, it has not. The decay and harm being done and the toll this is taking can be seen on city streets throughout America as building and houses sit empty and unable to be sold. The cost of carrying and maintaining this underused resource is staggering.

This leaves the government with the burden of carrying a large number of people that need help, the projections made years ago had not envisioned such numbers. Noise that the budget deficit is rapidly coming down misleads many Americans into thinking that things will be fine, but make no doubt we are still spending far more then we take in, cutting more in the near future will be difficult, and last but not least is that in just a few years as entitlement programs kick in things will get really sticky. Even future budgets based on optimistic projections are ugly. Lies and changing rules such as recalculating how the GDP is figured only takes us further down the rabbit hole.

Congress will soon return from summer break, a thing most Americans would call "a paid vacation" to confront many of the issues they have continually kicked down the road. Cutting spending is always unpopular with many Americans who want more from their government but has become far more difficult in hard times and when all indications are that interest rates will be rising. Central banks have been printing money for years with mixed results. Figures show the rich have grown richer while the middle and lower class have been smacked in the chin. The "too big to fail" banks have become a symbol of what is wrong with America.

Let us ice this cake of  "difficulties" with a mix of troubles brewing throughout the world and the drumbeat of war in Syria, Iraq, Ukraine, and many other hot spots. Currency games, the carry trade, and money rapidly flowing across borders coupled with computer trading has distorted the markets. Forget all the hocus-pocus from the media and clowns about what historically is the best and worst months for the market or how well the market does when a certain team or party wins this or that. This bull market market has gotten long in the tooth and exceeded the average length they normally run, caution would be in order. It might not be a good time to go double or nothing.



Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest to you. The post below takes a closer look at the quality of recent growth.
                   
                     http://brucewilds.blogspot.com/2013/08/the-wrong-kind-of-growth.html

Savings And The Role It Plays In The Economy

Balance is important and like so many things in life when it comes to economic policy it is very important to balance the markets reward when it comes to savings and debt. Savings plays an important role in the economy  and has been shortchanged, this will come back to haunt us. Traits such as thrift, being frugal, and living within our means has not been given due credit, living by increasing debt is far too acceptable. When we find it necessary to discuss savings we are back to basics and it is a sign we have strayed far off course in our economic policy.
Many People Forget That Small Amounts Add Up

Savings really has two meanings it can refer to the increase in ones assets and their net worth or the money people place in accounts for a rainy day and future use. While the distinction seems small it is as important as is the motivation and intended future use of this money. The form in which we chose to hold this wealth also has an effect on economic growth. In recent years Fed policy and low interest rates have caused many savers to shift their assets into higher risk assets in search of higher yields.

The basic economic theory many of us were taught as children was laden with the virtues of saving. As children the concept of putting money away for a rainy day and delaying gratification was pounded into our heads, it was heralded as a good thing.  By making a habit of spending less than you make you could put a portion away on a regular schedule and before long you would have a nice little nest egg. To put icing on the cake when this money was put into a safe place like a bank account you would receive interest on your money and the account would grow faster and ever larger.

The idea that compounded interest was a powerful force and the picture of interest upon interest upon interest was put in our minds. This might explain why the fear an ever growing national debt looms large upon those of us who internalized this concept. The banks and financial institutions in which we place our money loans it out to those willing to pay a higher rate of interest. This money flows back into the economy for investment thus creating jobs. A key factor often overlooked is that society benefits when people save as government does not need to spend tax dollars to support individuals who have financial setbacks. Even a small savings account tends to insulate people from minor economic shocks that can send a persons world spiraling out of control.

The concept that saving is important has been thrown under the bus. If the markets, government, and society fails to reward people for saving it will not happen. In our world of instant gratification many people have dropped or never developed the habit of saving because it often requires a great deal of discipline. Instead of being rewarded for doing the right thing in our current system savers are punished by being required to show interest on savings as income that is then taxed. It would be wise for our "do nothing Congress" to reform taxes in a way that adds incentives for people to save such as passing a bill excluding the first two hundred dollars of interest from a savings account.

For years economist pointed to the high savings rate of several countries as a source of their economic growth and health. Japan and China rated high in this category. Much of the savings in Japan flowed into government bonds allowing the government to spend freely and still have the luxury of controlling its own fate. In China the money often was used for investment allowing the country to rapidly expand its production capacity.  The benefits flowing to a nation that saves cannot be overestimated, but today our culture is all about consuming and spending. Even Presidents have asked Americans to go out and spend to stimulate the economy.

To make saving a reasonable and rewarding act, Fed policy must be set so savers enjoy a fair return after factoring in inflation. People with savings have the ability to pay debts and obligations in a timely fashion and can avoid costly late charges and fees. This allows them to stretch their money and make better use of it. Not only should Congress reform taxes in a way to spur savings by excluding the first two hundred dollars of interest from a savings account they should go farther and match it with a tax credit. Saving was once seen as a virtue with sayings like "a penny saved is a penny earned", but not so much anymore. In some respects saving seems like the penny to have lost much of its value.



Footnote;  This post dovetails with many of my recent writings. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. Below are two articles written a while back one about the often misunderstood subject of debt and why it is risky to loan money, the other delves into how a failed business start-up can devastate a persons savings. 

    http://brucewilds.blogspot.com/2014/05/debt-mirage-always-moving-into-distance.html
    http://brucewilds.blogspot.com/2013/03/small-business-failures.html

Foot note #2;   Another post you might find interesting delves into how the economic efficiency of credit is beginning to collapse, see below.
    
    http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit-can.html