Plunging Into Difficult Economic Times: “Worst Global Dollar GDP Recession In 50 Years”

Plunging Into Difficult Economic Times: “Worst Global Dollar GDP Recession In 50 Years”


This article was written by Tyler Durden and originally published at Zero Hedge.

Editor’s Comment: Those who follow this website and others who cover similar information have known of these trends for a while, but it is revealing nonetheless to see how deep the recession has reached in raw numbers. The role of the Federal Reserve has been disastrous for the American people, and the more that its chairmen and chairwoman intervene – in either direction – the worse it seems to get.

If the graph can be interpreted literally, we are clearly headed for the most severe restructuring of wealth and power since shortly after the last world war. How long until the next war heads our way?

The Truth Comes Out: “This Is The Worst Global Dollar GDP Recession In 50 Years”

The following brief summary of the global economic situation should, once and for all, end all debate about whether the world is “recovering” or is now mired deep in a recession.


Failure of Government

From DB’s 2016 Credit Outlook

Debt has continued to climb since the crisis with Global Debt/GDP still on the rise, with no obvious sign of when this rise stops for many major countries. Indeed much of the post GFC increase in debt has been raised on the back of the commodity super-cycle which is currently unraveling in EM and the US HY market. Outside of this, the US overall has de-levered to some degree but even there debt levels remain very high relative to all of history excluding the GFC period.

With limited tolerance from the authorities to see defaults erode the huge debt burden, the best hope for a more normal financial system is for activity levels to increase so we can slowly grow the economy into the debt burden. However this requires strong nominal GDP growth and we continue to see the opposite. The left hand graph of Figure 6 looks at a global weighted average of Nominal GDP growth in the G7. On this measure we are still seeing historically weak activity.

In dollar terms the situation is even worse. The right hand chart of Figure 6 shows a much more volatile global NGDP series which converts the size of each economy in dollar terms and then looks at the growth rate YoY. With the recent strength in the USD we are seeing a huge global dollar nominal GDP recession – the worst since the 1960s. Whilst this might not be a series that is followed, it does show the sharp contraction of dollar activity levels in the global economy over the last year or so which has to have ramifications given it’s the most important global financial market currency.

What DB did not point out but is obvious, is that the synthetic dollar squeeze of the past year has made the global collapse now even worse than what was experienced during the great financial crisis, and it is getting worse by the day. We are at the End of the Road for the FED

And so, with the world trapped in the worst USD-based GDP recession in 50 years, here is the question for Yellen: with every other central bank easing and the Fed tightening, what happens to i) the USD in the future and ii) to future world growth in USD. When does the war start ? Very soon.

Zeitgeist movie here, worth the time to watch the US endtimes.

Top .01% Super Wealthy Americans

Top 0.01% of Super Wealth Americans  Gain as Income Clusters at Peak

Boom and Bust Man

Boom and Bust Man

It was the biggest share of income clustered at the very top of the distribution scale since 1929.
Richard Rubin  May 27, 2015 — reprinted here from Bloomberg Politics News

The top 0.01 percent of Americans — fewer than 14,000 households — received 5.6 percent of adjusted gross income in 2012, according to data released Wednesday by the IRS that underscore the increasing concentration of income.
It was the biggest share of income clustered at the very top of the distribution scale since 2007. Those in that group had a minimum income of $12.1 million, up from the $8.8 million it took to reach that club in 2011.
An even more exclusive club — the top 0.001 percent — also had its best year since 2007.
“The middle class really has stagnated.”  Harry Stein

Greed and Wealth

Greed and Wealth

The average tax rate of that group — with a minimum income of $62.1 million — was 17.6 percent. That’s lower than the average rate for the top 10 percent of the U.S. population, a demonstration of the power of preferential tax rates on investment income.
The Internal Revenue Service data provide fodder for the 2016 presidential campaign, with candidates from both parties searching for policies that would reduce income inequality.
Measured in inflation-adjusted dollars, the threshold needed to be in the top 50 percent of the income distribution declined from 2003 to 2012.
“The middle class really has stagnated,” said Harry Stein, director of fiscal policy at the Center for American Progress, a Washington group aligned with Democrats. “You see people at the top doing very well, and it’s not trickling down to anybody else.”
Unusual Situation
High earners faced an unusual tax situation in 2012, because it was the end of the 15 percent top rate on capital gains and dividends. The increase to 23.8 percent on Jan. 1, 2013, prompted many high earners to sell appreciated assets before the deadline and take advantage of the lower rates.
The IRS report also shows how the U.S. tax system remains broadly progressive — meaning those with higher incomes pay higher tax rates. The top 3 percent of households, who received 30.9 percent of adjusted gross income, paid more than half of individual income taxes. And that was before tax increases for top earners took effect in 2013.
Because of tax credits that operate as wage supports, relatively few households in the lower half of the income distribution pay income taxes. The top 50 percent of households received 89 percent of the income and paid 97 percent of the income taxes.
Payroll taxes and state taxes are typically regressive and counteract the leveling effect of the federal income tax.  Income Inequality  and PDF of report here 

Death of the Dollar

The Death of the Dollar interview with Peter Schiff by Stefan Molyneux

also audio MP3 available HERE