Back in the day, a quip that used to be popular was this:
Q: How do you make a small business?
A: You give a large business to Hugh Fletcher and wait ten years.
We might try a quip along similar lines that has much wider implications:
Q: How do you get an economy-wide bust?
A: You give an economy to a central banker and tell him (or her) to fix it.
You might notice that this quip is not funny. That’s because it isn’t funny. Not funny at all. Not for anyone, except perhaps for those first in line for the central bankers’ money.
Of course, post-2009 when the central bankers were spinning counterfeit capital out of their rear ends, everyone but everyone was punting for safety. Those safety punts are the proximate cause of the next bust to consume the counterfeit capital and more. The primary cause, never forget, is the central banks themselves.
As the man says, Spot the credit-based mal-investment boom:
One of these things is a non-financialised index of real transaction costs in the real world... and the other is an index of assets that are heavily financialised.
It appears the artificially-inflated financialised 'boom' has busted...
Keith Weiner explains briefly what went wrong:
Post-2009, people believed that:
1) central banks were "printing" money
2) printing would lead to higher prices of commodities
3) besides, commodities were going up
4) so they bought commodities
This had the effect, among other ill effects, of incentivising malinvestment in commodity production.
The overhang of excess capacity will be with us for a long time, crushing profitability in commodity production and refining, crushing bank balance sheets with badly performing loans, burdening the unemployment rolls, and of course having deprived sectors which could have used the resources from having been able to grow.
Just thank those central bankers.