Expect Royal Bank of Scotland (RBS) to be a disastrous year in 2016 in
terms of the spread of the downturn in various global economies with
global stock markets tumbled. And mayors of this bank to instruct the investors investing in Treasury bonds.
This means depriving the stock market - that is, investment in the economy - from the capital. The bank accounts for this is the importance of the return of capital rather than capital revenues it means implicitly that the market will lose investments. This frightening it would without doubt to huge losses in the financial markets.
deflation
Shrinking economic phenomenon is a decrease in the general price level (or not in sync with a decrease in the money supply) with a decrease in production. This phenomenon, which begins in a decrease in prices lead to interest rate cuts in order to increase the money supply and thus increase inflation to absorb the lower prices.
And lower interest than real interest and therefore there is difficulty in filling the public debt and corporate debt that find it more difficult to bridge the debt means the erosion of profitability and failure to investment and wage cuts for employees and lower consumption and production which are considered vertically economy. As expectations of lower prices is the master of the situation, it is postponed to the future consumption leads to a drop in demand and hence investment exponentially.
This fact leads to a decline in the growth and contraction of the economy. And the most difficult in the phenomenon of deflation lack of any effective policy to fight deflation allows the example of the Japanese crisis in the nineties of the last century.
The Japanese government has proceeded at that time to intervene on the basis of Keynesian theory and has cut interest rates in order to encourage investment and consumption at the expense of deposits and increasing the money supply and public spending. This has led to increased public debt without any increase in consumption with high unemployment. And the long of it that way until we were out of the crisis increased external demand.
World economic Erwin Fischer showed through his research that there is another kind of deflation: «deflation public debt». It is a phenomenon where players Economists consider that a large volume of their religion and therefore begin to sell assets they own plug this religion. In the case of a large number of economists Allaobeian implementation of sales, this leads to a reduction in asset prices to the extent that the ratio of debt to assets above a lot.
One reason for the downturn religion General excess speculation in the stock market that lead to give greater value of the assets of real value means for companies to get a large amount of funds for investments and this causes in any panic pay the investor to sell its assets results in a significant drop in prices concludes funding loss companies and thus enter the market to shrink.
This means depriving the stock market - that is, investment in the economy - from the capital. The bank accounts for this is the importance of the return of capital rather than capital revenues it means implicitly that the market will lose investments. This frightening it would without doubt to huge losses in the financial markets.
deflation
Shrinking economic phenomenon is a decrease in the general price level (or not in sync with a decrease in the money supply) with a decrease in production. This phenomenon, which begins in a decrease in prices lead to interest rate cuts in order to increase the money supply and thus increase inflation to absorb the lower prices.
And lower interest than real interest and therefore there is difficulty in filling the public debt and corporate debt that find it more difficult to bridge the debt means the erosion of profitability and failure to investment and wage cuts for employees and lower consumption and production which are considered vertically economy. As expectations of lower prices is the master of the situation, it is postponed to the future consumption leads to a drop in demand and hence investment exponentially.
This fact leads to a decline in the growth and contraction of the economy. And the most difficult in the phenomenon of deflation lack of any effective policy to fight deflation allows the example of the Japanese crisis in the nineties of the last century.
The Japanese government has proceeded at that time to intervene on the basis of Keynesian theory and has cut interest rates in order to encourage investment and consumption at the expense of deposits and increasing the money supply and public spending. This has led to increased public debt without any increase in consumption with high unemployment. And the long of it that way until we were out of the crisis increased external demand.
World economic Erwin Fischer showed through his research that there is another kind of deflation: «deflation public debt». It is a phenomenon where players Economists consider that a large volume of their religion and therefore begin to sell assets they own plug this religion. In the case of a large number of economists Allaobeian implementation of sales, this leads to a reduction in asset prices to the extent that the ratio of debt to assets above a lot.
One reason for the downturn religion General excess speculation in the stock market that lead to give greater value of the assets of real value means for companies to get a large amount of funds for investments and this causes in any panic pay the investor to sell its assets results in a significant drop in prices concludes funding loss companies and thus enter the market to shrink.
Indeed , the current scary
Known in economic theory that every economy is growing, accompanied by inflation and by virtue of that growth is an increase in the intake and thus there is an increase in demand means higher prices. But inflation for the economy is to the human body such as heat, which means that higher inflation kills the economy, as does the sharp drop in inflation. Under international standards, the acceptable rate of inflation advanced economies is in the range of 2%.
However, the current reality is different so that inflation in most advanced economies swinging in the range of 1% and this is not enough, and therefore there are fears that the risk of deflation at the level of these economies.
China has come in this game to make matters worse with its economy suspend exports to these countries and to countries producing it. However, with the downturn in Western economies and the decline in oil prices is the form of damage to the economies of oil-producing countries, taking the Chinese economy to decline significantly portends serious crisis in global markets. This risk comes from the decline in the stock market for Chinese loans will reflect negatively on the rest of the markets, especially the European seed brittle about the negative shocks.
But these markets are not the only, markets are loans in developing countries recorded a significant decline represents withdraw investments since mid-2014 and worsen the situation dramatically in late 2015 also historical data for international trade show declining growth to zero in late 2015, which means it is poised to decline in negative in 2016.
As for the loans, we see that China has become a clear threat of capital in terms of its commercial debt and the size of which has become a real danger with the decline in China's growth means that China is on the road to entering into deflation cycle.
The question remains about the possibility of China out of the downturn in the case entered into him? The answer is unknown because there is no theoretical recipe out of the downturn. If we re-Japanese commercial vehicles, we will fail by the fact that other countries will be in the large economic and financial crisis.
Known in economic theory that every economy is growing, accompanied by inflation and by virtue of that growth is an increase in the intake and thus there is an increase in demand means higher prices. But inflation for the economy is to the human body such as heat, which means that higher inflation kills the economy, as does the sharp drop in inflation. Under international standards, the acceptable rate of inflation advanced economies is in the range of 2%.
However, the current reality is different so that inflation in most advanced economies swinging in the range of 1% and this is not enough, and therefore there are fears that the risk of deflation at the level of these economies.
China has come in this game to make matters worse with its economy suspend exports to these countries and to countries producing it. However, with the downturn in Western economies and the decline in oil prices is the form of damage to the economies of oil-producing countries, taking the Chinese economy to decline significantly portends serious crisis in global markets. This risk comes from the decline in the stock market for Chinese loans will reflect negatively on the rest of the markets, especially the European seed brittle about the negative shocks.
But these markets are not the only, markets are loans in developing countries recorded a significant decline represents withdraw investments since mid-2014 and worsen the situation dramatically in late 2015 also historical data for international trade show declining growth to zero in late 2015, which means it is poised to decline in negative in 2016.
As for the loans, we see that China has become a clear threat of capital in terms of its commercial debt and the size of which has become a real danger with the decline in China's growth means that China is on the road to entering into deflation cycle.
The question remains about the possibility of China out of the downturn in the case entered into him? The answer is unknown because there is no theoretical recipe out of the downturn. If we re-Japanese commercial vehicles, we will fail by the fact that other countries will be in the large economic and financial crisis.
Gold big winner
Although tips RBS bank bought Treasury bonds, investors are expected to proceed to also invest in gold and this will push up prices by virtue of that gold is a safe haven.
The hardest thing is, economically, it will be the withdrawal of funds from the stock market and investing in the gold market. It is worth mentioning that it is currently difficult to predict price levels without knowing what was to become of the US economy in the first quarter of this year
Although tips RBS bank bought Treasury bonds, investors are expected to proceed to also invest in gold and this will push up prices by virtue of that gold is a safe haven.
The hardest thing is, economically, it will be the withdrawal of funds from the stock market and investing in the gold market. It is worth mentioning that it is currently difficult to predict price levels without knowing what was to become of the US economy in the first quarter of this year
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