Never have markets carried so much risk. And never have markets been as vulnerable to an abrupt change in perceptions with regard to central banker competence, effectiveness and capabilities. At the minimum, global markets will function poorly, but risk is now high for a disorderly – Party Crashing - "run" on financial markets, as faith in central banking begins to wane.
The signs of deflation are now flashing all over the globe and the possibility of an associated financial crisis is now dangerously high over the next few months. Our preferred model for how things are going to unfold follows the Ka-Poom! Theory, which states that this epic debt bubble will ultimately burst first by deflation (the "Ka!") before then exploding (the "Poom!") in hyperinflation due to additional massive money printing efforts by frightened global central bankers acting in unison. First an inwards collapse, then an outwards explosion.
After borrowing (and largely wasting) $15 trillion during the Great Recession, China now looks like a typical decadent developed-world country, complete with slow growth, anemic consumer spending and unstable financial markets. But it’s not France, Canada or the US, where recessions happen and voters peacefully replace one major party with the other. China, within living memory, has seen civil unrest beget open rebellion beget multi-decade civil war. Take a surplus of young men (the result of China’s one-child policy which put a premium on male children), combine it with a shortage of good jobs, and the obvious result is instability.
As powerful as the Fed is, it isn’t stronger than the markets. And the longer the Fed tries to sustain abnormalities like QE and 0% interest rates, the more likely it is that the whole business will end with the markets crushing the Fed. At the next sign of a market swoon or of a weakening economy, or with the next episode of deflationary jitters, the Fed will do whatever it takes, no matter what the eventual damage to the dollar’s value. Whatever the details, one thing should be clear. This politburo of unaccountable central planners is the greatest risk to your financial wellbeing today.
"Emerging Markets Are On The Verge Of Liquidation" Top Performing Hedge Fund Manager Warns; "QE4 Is Coming"Submitted by Tyler Durden on 09/21/2015 19:00 -0400
Having accurately foreseen the current events instead of just levering up on even more beta and praying the BTFDers return and bail out his underwater positions, John Burbank's opinion actually matters as does his outlook on what happens next. What he foresees is not pleasant.
The consequences of all this are grim, but the timing is hard to predict. Perhaps the government can somehow borrow amounts that no one previously thought possible. But its creditors will look for repayment. Either the creditors are going to walk away unhappy (in the case of default), or the holders of all dollars are going to be stuck with worthless paper (in the case of hyperinflation), or the taxpayers’ pockets will be looted (the longer things muddle along), or most likely a combination of all three will happen. This will not be a happy story for all but a few of us.
Major depressions do not occur overnight. They go in downward waves, interrupted at intervals by false recovery waves. But the collapse will continue, unstoppably. Like any house of cards, once it begins to actually fall, no further Band-Aids will stop the inevitable. So, what might that trigger be?
- Bail-ins, withdrawal limits and negative interest rates may be imposed - FT proposes a ban on “barbarous relic” cash - Central banks and banks would have citizen's wealth and people themselves “completely under their control” ...
We're beginning to believe the nation will not be unified behind a common cause when the coming financial eruption unleashes molten lava of chaos, punishing economic distress, civil strife, class warfare, race wars, and ultimately global war. As Strauss and Howe foretold, the establishment (aka corporate fascist military industrial surveillance state) has seen a sequential loss of popular trust as their blatant corruption, sociopathic stranglehold on the levers of power, and unrelenting greed have angered the critical thinking aware citizens of this country. The next leg down in this Greater Depression will sever the remaining trust, disintegrating any remaining support for the existing civic order. What comes next will be heavily dependent upon whether the 5% to 10% of liberty minded believers in the Constitution are able to gain the trust of the masses.
For longer than any of us have lived, we have been brainwashed via financial advertising (and our, own, beloved “financial advisors”) to believe that life insurance represents the best way for a responsible wage-earner “to protect his or her loved ones”.
"We believe a global recession scenario has become the most likely global macroeconomic scenario for the next two years or so. Helicopter money drops would be the best instrument to tackle a downturn in all DMs. We expect to see QE #N, where N could become a large integer, as part of the monetary policy response in the US and the UK, and QEE2 in Japan."
If you were to tell someone that the life insurance they had purchased was “a bad bet” or (even more judgmentally) “sheer stupidity”, almost certainly that person would feel insulted.
In the early days of central banking, one primary objective of the new system was to take ownership of the public's gold, so that in a crisis the public would be unable to withdraw it. Gold was to be replaced by fiat cash which could be issued by the central bank at will. This removed from the public the power to bring a bank down by withdrawing their property. A primary, if unspoken, objective of modern central banking is to do the same with fiat cash itself.
A repetitive flaw continues to circulate throughout much of the media – mainstream and Alternative, alike
Economies around the world are in shambles. All central banks and banking systems are overextended. So too are political entities. The geo-political situation is worse than any time since World War II. The nature of politics is to kick the can down the road. We are nearly out of road. The scam is likely at its end regardless of what is tried. The piper is coming for what he is owed.