In Australia, economist Steve Keen describes the RBA’s upcoming meeting as “High Noon Tuesday”.

In Europe, Mike Shedlock covers the ongoing escalation of the Euro’s existential nightmare, as Italian, Belgian and Spanish bond yields hit Euro era highs in what at this stage may have become a self-fulfilling crisis.

In China, property loans in 2nd and 3rd tier cities have been halted, driving another nail in the coffin of their property bubble.

In Canada, GDP has unexpectedly contracted.

And the USA appears to be on the verge of a significant slowdown, with a Dow Jones ESI indicator and a fall in petroleum products consumption adding to the mounting evidence that a recession is a real risk.

Some might call this a chance coincidence of unrelated events. Some might be wrong: please consider the Baobab post titled Avalanches of Sand for a related discussion on the theory of catastrophic network failures.

First, the Australian Jenga Blocks Skyscraper from Steve Keen’s perspective. For readers not familiar with the differences that make Steve’s analysis uniquely interesting, here is the nutshell of the nutshell:

But this can only happen if aggregate demand grows smoothly, which it can’t do unless debt not merely grows, but accelerates. This is so because, since aggregate demand is GDP plus the change in debt, the change in aggregate demand is the change in GDP plus the acceleration of debt. Accelerating debt is thus necessary for a constant rate of growth of aggregate demand, but if debt continually accelerates, it must ultimately grow faster than GDP.

This is what happened in the period from 1993 till 2008—when the RBA, like Central Banks around the globe, ignored the role of private debt even as the biggest debt bubble in history developed, because their neoclassical models of the world ignored the role of credit. The acceleration in debt averaged over 2 percent of GDP in Australia between 1993 and 2008, so much of the recorded 3.8% growth in output over that period—and most of the growth in asset prices—was driven by accelerating debt.

Second, the Eurozone Jenga Skyscraper where the source of instability is once again the inability to continue growing total (private + public)debt. The message of the Euro-era record bond yields for Italy, Spain and Belgium in the present context is that the markets are forcing the dithering and wavering politicians to either undo the Eurozone and be done with it, or to consummate the currency marriage by a credible fiscal transfer union. Mike Shedlock is not optimistic about the latter option as we can glean from his rhetorical question:

The idea that the latest Greek bailout plan would solve anything is officially dead. Government bond spreads of Spain, Italy, and Belgium are at all-time highs. The yield on 10-year bonds of Spain and Italy are now both well North of 6%. Here are a few charts to consider.

….

Any bets on when the EU has another emergency meeting? I suspect two more days of this action might do it. Now answer this: what can they do that makes any sense?

Third, the Chinese Jenga Pagoda where the source of instability is once again untrammeled credit growth which can neither continue nor can it stop without serious consequences either way:

Residential and commercial property development have been such a big component of growth in recent years that anything that damages the property market risks upsetting the entire apple cart. Nobody can forecast with any certainty when the crash will come, but come it will. You cannot cram that much development into such a short space of time without there eventually being a correction.

And when it comes, its knock on consequences are going to be extreme, possibly just as seismic as the rolling series of banking crises we’ve had here in the west. As noted in the IMF’s latest staff report on China, published this week, the property sector occupies a central position in the Chinese economy, directly making up some 12pc of GDP. It is also highly connected to the health of basic industries such as steel and cement, and to the success of downstream industries like domestic appliances and other consumer durables.

Finally, Canadian GDP surprising many with a 0.3% contraction in May. Mike Shedlock again on this one:

Canadian apologists say weakness is overstated and temporary. I say it’s understated because few realize what is happening and how serious this is.

Global stimulus has faded. It’s gone. Kaput. And that stimulus was the only thing holding this global economy together.

Strip out government spending, QE madness in the US, and unsustainable credit growth in China and you have a flatline global economy at best.

At the start of this post there was reference to mounting evidence of a US recession. If that happens on top of the above threats, the ensuing global slowdown is bound to be massive.

Last November, as the Xmas shopping season began, I wrote a doom-and-gloom post titled the Global Jenga Blocks for the New Year. Since then, the towers of interlinked global instability have continued rising. The higher they rise, the more spectacular the crash will be. And crash they must, because piling debt upon unsustainable debt means playing under the iron grip of Jenga rules. Here is the conclusion of my post from November 2010 on this issue:

As global problems continue to mount, nations teetering on the brink of insolvency or deflation – large and small – look towards China for solutions. But China has its own problems, far more than it permits the world to see, and so China cannot possibly be the solution that everyone appears to have pinned their hopes on. And so the global Jenga Block Tower is rising higher and higher. Contagion from the impending spectacular collapse of the EuroJenga Blocks Tower is highly unlikely to stop at Europe’s borders.