Credit Destruction = Credit Deflation

Mish has two articles, and discusses them from the point of view of an investor, which is his gig.  I'll discuss the same thing from the point of business start-up and expansion.  The first article is about credit  destruction, now keep in mind the article is about abusive credit, the asset-less backed usury based nothing-there credit extended.

March 2015 versus March 2014 
The year-over-year trend remains miserable and seems to be getting worse and thus far nearly all the blame can be laid at the feet of credit access. There is just not a lot of confidence in those that are doing the credit offerings these days.

Those who have credit to lend, which they can create out of thin air and essentially costs them nothing, are finding fewer and fewer people to whom they would lend it.  Why not lend it?  More likely, fewer and fewer borrowers want it.  People who will clearly not pay it back cause problems on the balance sheet, which the FED supervises.

So now to Mish's second article:

For the largest U.S. banking firms, the average tangible equity capital ratio – known inversely as the leverage ratio – is 4.97 percent (column 8). In other words, each dollar of assets is funded with 95 cents of borrowed money.

So from the point of view of investors, it is pretty easy to spot who will get hammered, especially since this is a rare replay, the result of massive hubris based on entitlement. Poor Mish, for that vast majority of his readers, they can do nothing.  The rules say where they can invest, and "sitting ducks" is where their pensions reside.  One reside they are sitting ducks is because the regulators decide where pension may reside.  Actually, that is the point of "regulation."

Anyway, from the point of view of small business start up, the game of "good credit destruction", "get big or get out" is dying.  Into the vacuum will arise good credit creation (100% asset-backed, privately issued, non-usurious) and the monster ready to pounce on the independent small bookshop, hamburger joint, coffee shop, hardware store, stationers, local delivery, Hi Fi Store.. and so on, all awaiting to be pounced upon by "roll-em-up" predatory asset-less backed fiat credit... the juice ain't there anymore.  The banks are so close to zero assets that even the powers-that-be will get nothing in a  correction.

Being self-employed, and to have your assets out as credit extended will be the one place they cannot reach.  You bring it in as you like, when you like.  So few people know how to run a small business that the few who do will gain outsized rewards relative to everyone else.

You can borrow money to retrain in java coding since there is no jobs as a roofer, and join the people retraining as roofers because there are no jobs for java-coders, why not find customers and borrow no money?

This is the path to hopes and dreams coming true for the next 40 years anyway: self-employment.

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