G7’s Sheeple Distraction in IQALUIT, Canada, while Central Bankers Meet Secretly in Australia.

We don’t know what the Central Bankers will be discussing during their secret two day meeting in Australia, but what we know is that you don’t hold a well publicized G7 economic ministers meeting at the same time for no reason. If the CBs need a distraction that means that something is very grave and serious is going on. Whether we are on the verge of a new panic and financial crisis or something else, but it cant be good. Perhaps the sovereign debt issues in Europe are on the verge of causing a big monetary implosion and stock markets collapse.

Dubai default is DEFLATION.

When a debtor reneges on its loan repayment obligations or asks to postpone them this is deflation by definition. The debts that cannot be repayed are defaulted on and so the total debt outstanding in the economy deflates. And what about prices? The prices on real estate in Dubai are down as much as 50% since the beginning of the world financial crisis. So when debt deflation takes hold assets lose value and cause even more defaults. We say that we are in a deflationary spiral then. When it stops is a big question, but given world wide government intervention in free markets this almost assures that the so much needed adjustment will take a long and painful haul. Yet the prices will get to their natural level in spite of all government actions to support them.

One can hope that the Dubai default situation will give a much needed kick to accelerate the process of deflation and wipe out the speculators and their central bank friends.

Here goes Dubai.

Is China betting on deflation in US?

China is reportedly loading up on US treasuries in the face of weakening dollar. This means they are quite happy to collect low interest payments on their massive holdings of US Treasuries for years to come and are not concerned about dollars weakening at the same time. This sound deflationary to me.

Japanese bonds and Swiss National Bank err on the side of deflation.

Unlike Government orchestrated propaganda campaign to proclaim imminent recovery, the Government bonds investors and Central Bankers know that deflation is no where near the end. Both Japanese Government bond prices and Swiss National Bank officials tells us – deflation is here and not going away.

Bank of Japan Said to See Deflation Stretching Through 2011.

Japan is decades ahead of US and the rest of the world in fighting deflation by all means necessary. US is now following the same exact failed policies of reflation and Quantitavie Easing as has the Bank of Japan for the last 15 years.

Taiwan reports biggest fall in CPI in nearly 40 years.

Taiwan’s consumer-price index posted its largest fall since 1970 in June as the government warned prices will remain depressed for the rest of the year.

Deflation is sweeping South East Asia: Thailand, South Korea see CPI decreases.

The deflationary forces of the collapsing credit are putting pressure on Consumer Price Index measures throughout the whole world. Fresh evidence of deflation in Asian countries